By TIOL News Service

NEW DELHI, AUG 19, 2017: ON 19.11.2002, the officers of the Directorate of Revenue Intelligence (DRI) intercepted the respondent herein, who was passing through the Green Channel, on a tip off that the respondent is scheduled to arrive at IGI Airport from London and carrying gold and diamond jewellery along with other valuable items and she would not declare the same to Customs and pass through Green Channel without payment of customs duty. On being asked, the lady replied that she had nothing to declare. On examination of the handbags being carried by the respondent several gold and diamond jewellery items were found worth Rs. 1.27 crores. On being asked by the DRI officials, it was informed that the items are personal effects and no duty is leviable on the same. However, the DRI officials seized the items under the provisions of the Act with reasonable belief that the said items were smuggled into India in contravention of provisions of the Act and hence are liable to be confiscated. After following the due procedure, a show- cause notice dated 12.12.2002 was issued to the respondent herein. The respondent herein filed her reply to the show-cause notice denying each and every allegation leveled against her. On 14.08.2003, an order was passed by the Additional Commissioner of Customs, IGI Airport, New Delhi directing confiscation of the jewellery on certain terms and conditions contained in the order. The respondent preferred a writ petition challenging the show- cause notice dated 12.12.2002 and the order of the Additional Commissioner dated 14.08.2003 before the High Court. The Division Bench of the High Court, vide order dated 13.09.2006 allowed the writ petition and vide order dated 04.09.2009 dismissed the review petition filed by the Department against the order dated 13.09.2006.

Aggrieved by the orders dated 13.09.2006 and 04.09.2009, the Department is in appeal before the Supreme Court.

Issue:

The only point for consideration before the Supreme Court is whether in the facts and circumstances of the case, the show- cause notice dated 12.12.2002 and order dated 14.08.2003 are liable to be quashed or not?

Supreme Court Findings:

Insofar as the question of violation of the provisions of the Act is concerned, the respondent herein did not violate the provisions of Section 77 of the Act since the necessary declaration was made by the respondent while passing through the Green Channel. Such declarations are deemed to be implicit and devised with a view to facilitate expeditious and smooth clearance of the passenger. Further, as per the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto 18.05.1973), a passenger going through the green channel is itself a declaration that he has no dutiable or prohibited articles. Further, a harmonious reading of Rule 7 of the Baggage Rules, 1998 read with Appendix E (2), the respondent was not carrying any dutiable goods because the goods were the bona fide jewellery of the respondent for her personal use and was intended to be taken out of India. Also, with regard to the proximity of purchase of jewellery, all the jewellery was not purchased a few days before the departure of the respondent from UK, a large number of items had been in use for a long period. It did not make any difference whether the jewellery is new or used. There is also no relevance of the argument that since all the jewellery is to be taken out of India, it was, therefore, deliberately brought to India for taking it to Singapore. Foreign tourists are allowed to bring into India jewellery even of substantial value provided it is meant to be taken out of India with them and it is a pre-requisite at the time of making endorsements on the passport. Therefore, bringing jewellery into India for taking it out with the passenger is permissible and is not liable to any import duty.

With regard to the intention of the respondent to take back the jewellery to England is concerned, the air ticket sought to be relied upon by the DRI is not of much consequence. In the reply affidavit dated 20.10.2014 filed before this Court by the respondent herein, it has been submitted that the so called enquiry conducted by the appellant-DRI subsequent to the passing of the judgment by the High Court was admittedly done after the expiry of more than 1,185 days. The respondent herein left for London on 01.03.2007 on Jet Airways flight No. 9W-0122 and returned to Delhi on 06.03.2007 on Jet Airways flight No. 9W-0121. It has been further mentioned in the reply affidavit that the fact of return of the respondent herein to India has been deliberately concealed by the appellant-DRI. In fact, the respondent had travelled to London to attend a doctor's appointment with her daughter who was unwell at the relevant time. Further, there is no restriction in UK law which prohibits a person claiming VAT in London from re-importing the items on which VAT has been claimed at a later date. Also, from the present facts and circumstances of the case, it cannot be inferred that the jewellery was meant for import into India on the basis of return ticket which was found to be in the possession of the respondent. Moreover, the contention of the respondent that her parents at the relevant time were in Indonesia and she had plans of proceeding to Indonesia cannot be ignored. Some of the jewellery items purchased by the respondent were for her personal use and some were intended to be left with her parents in Indonesia. The High Court has rightly held that when she brought jewellery of a huge amount into the country, the respondent did not seem to have the intention to smuggle the jewellery into India and to sell it off. Even on the examination of the jewellery for costing purposes, it has come out to be of Rs. 25 lakhs and not Rs. 1.27 crores as per the DRI. The High Court was right in holding that it is not the intention of the Board to verify the newness of every product which a traveler brings with him as his personal effect. It is quite reasonable that a traveler may make purchases of his personal effects before embarking on a tour to India. It could be of any personal effect including jewellery. Therefore, its newness is of no consequence. The expression "new goods" in their original packing has to be understood in a pragmatic way.

Conclusion of the Supreme Court:-

In the absence of any facts on record about the nature and mode of concealment and also any finding of the lower authority that jewellery was kept in a way to evade detection on examination of the baggage, it has to be held that there was no concealment as such. It is seen that the respondent chose the Green Channel for clearance of her baggage. She committed no violation of law or infraction of any instruction for clearance of the baggage through the green channel as she being a tourist had no dutiable goods to declare under the Baggage Rules. The presumption that the jewellery found in her baggage cannot be considered as personal effects owing to its high monetary value is rebutted herewith and held that the respondent was entitled to import personal jewellery duty free.

The High Court was right in setting aside the show- cause notice dated 12.12.2002 and order dated 14.08.2003 passed by the competent authority. There is no scope to interfere in the orders passed by the Division Bench of the High Court. There is no merit in this appeal and the appeal is, therefore, dismissed with no order as to costs.

Not a precedent

The Supreme Court made it clear that the present conclusion is confined only to the disposal of this appeal.

(See 2017-TIOL-298-SC-CUS)