While highlighting that smuggling of gold into India causes a cascading effect on the economy of the country, which is obviously preceded by payment of consideration either in Indian or foreign currency, which is another aspect of alarming levels of actionable money laundering, venturing into generation of black money and other unlawful activities including financing terrorism, the Delhi High Court held that there is no gainsaying that as per Section 123 of the Act, the burden of proving that the goods are not smuggled' goods is placed upon the person from whom the goods are seized or the person who claims to be owner.

The High Court explained that a plea that another passenger on the same day was apprehended with huge commercial quantity of gold, namely, Ridhima Bajaj but let off by the Custom Authorities inasmuch as release/redemption was allowed, is hardly of any legal consequence, since it is manifest that such decision was contrary to the law but then one bad precedent does not legally entitle the petitioner to claim similar benefit.

After considering the plea of the petitioner that she had been gifted the gold items of such huge quantity weighing about 3100 grams, the High Court held that deed was neither bearing any acceptance nor had any legal sanctity.

The Division Bench of Justice Yashwant Varma and Justice Dharmesh Sharma observed that “the expression "prohibited goods" as used in Section 2(33) and the concept of "prohibition" must, therefore, and necessarily draw colour and meaning from the specific exclusion of goods which have come to be imported or exported upon due compliance with the conditions prescribed. If compliance with conditions for import or export were irrelevant and the expression prohibition were to be understood in absolute terms, there clearly does not appear to be any justification for the definition clause to also deal with those goods which enter the territory of India after complying with the various conditions for import that may have been prescribed”.

Advocate Nitin Ahlawat appeared for the Petitioner, whereas Senior Advocate Tarun Gulati appeared for the Respondent.

Briefly, the issues involved were as to whether bringing of gold into India falls within the ambit of a 'prohibited' article under section 2(33) read with Section 11 of the Customs Act, and if so, to what legal effect as to its release/redemption on payment of fine/penalty under section 125 besides 112 and 114 of the Act. The adjoining issue was at the same time as to whether bringing of gold into India without declaring it on arrival at Customs amounts to "smuggling" of gold into India in violation of Section 2(39) read with Section 111 of the Act and/or under any other analogous statutes inviting not only confiscation of the gold but also action of imposition of fine/penalty.

After considering the submission, the Bench observed that the Revisional Authority was correct on facts and law to hold that the claim of the petitioner in gold items weighing about 3000 grams was dubious and the documents regarding ownership were found to be plainly fabricated.

The Bench went on to observe that the Union Government stood empowered to prohibit the export of all or any goods including a class of goods specified in a notification issued in that respect, unless the exporter had furnished to the prescribed authority a declaration in terms as contemplated in that provision.

“The Circular of CBEC dated 10 May 1993 takes note of the fact that while gold may not be included in the list of prohibited items in the import policy, its import clearly fell in the restricted category of goods. It also took note of the restriction of its import being allowed only against a license and in accordance with any public notice that may have been issued”, added the Bench.

The High Court explained that Section 2(33) of the Customs Act defines "prohibited goods" to mean any goods the import or export of which is subject to any prohibition under the Act or any other law for the time being in force, whereas Section 111 of Customs Act, apart from speaking of dutiable or prohibited goods also brings within its net, goods which have come to be imported either in violation of conditions prescribed or goods which have been concealed as well as imported articles which may have otherwise not complied with the conditions prescribed under the Act.

“Reading of the latter part of Section 2(33) clearly leads us to conclude that goods which have been imported in violation of a condition for import would also fall within its ambit. If Section 2(33) were envisaged to extend only to goods the import of which were explicitly proscribed alone, there would have been no occasion for the authors of the statute to have spoken of goods imported in compliance with import conditions falling outside the scope of "prohibited goods”, added the Court.

Accordingly, the High Court concluded that an infraction of a condition for import of goods would also fall within the ambit of Section 2(33) of the Act and thus their redemption and release would become subject to the discretionary power of the Adjudging Officer.

Cause Title: Nidhi Kapoor and Ors. v. Principal Commissioner and Ors. [Neutral Citation: 2023: DHC: 5933-DB]

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Delhi High CourtJustice Yashwant VarmaJustice Dharmesh Sharma

Pankaj Bajpai