Customs not an excuse: provisions of Customs Act to know while travelling and importing gold jewellery in India
Introduction
Many Indian residents live abroad and earn their living. On entering India, they have to go through a customs check. The passenger has to declare the contents of his baggage within the prescribed Indian Customs Declaration Form. At airports, the passenger has the choice of seeking clearance through the Green Channel or the Red Channel subject to the character of products being carried. This becomes very important to know especially while travelling and importing gold jewellery in India;
Provision of Red channel and Green channel
In many countries, customs procedures for arriving passengers at many international airports and a few road crossings are separated into red and green channels.
Red Channel
Passengers with goods to declare (carrying goods above the permitted customs limits and/or carrying prohibited items) undergo the red channel.
Green Channel
Passengers with nothing declared (carrying goods within the permitted customs limits and not carrying prohibited items) undergo the green channel.
However, entry to a specific channel constitutes a legal declaration, if a passenger browsing the green channel is found to be carrying dutiable goods above the customs limits or prohibited items, he or she could also be prosecuted for creating a false declaration to customs (also amounting to smuggling), by virtue of choosing green channel despite carrying dutiable goods, especially more important in case of Gold Jewellery. It may be noted that wearing gold is permissible only upto ___; and rest will be considered as baggage and baggage rules will be applicable;
Each channel may be a point of no return, once a passenger has entered a specific channel, they can’t return or revisit the other channel. Passengers walking through the Green Channel with dutiable/prohibited goods are susceptible to prosecution/ penalty and also for confiscation of products.
Filling customs declaration form
Fill a Customs Declaration Form(at the airport) or use ATITHI mobile app to file declaration of dutiable items as well as currency with Indian Customs even before boarding the flight to India.
Baggage rules in India differ for various categories of individuals. Tourists have one set of rules while people transferring residence to India or returning to India after an extended stint of employment abroad are subject to a different.
The Baggage Rules 2016
Passengers arriving from countries other than Nepal, Bhutan or Myanmar.
An Indian resident or a foreigner residing in India or a tourist of Indian origin, not being an infant arriving from any country other than Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say,
- used personal effects and travel souvenirs; and
- articles other than those mentioned in Annexure-I, up to the value of fifty thousand rupees if these are carried on the person or in the accompanied baggage of the passenger: Provided that a tourist of foreign origin, not being an infant, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say,
- used personal effects and travel souvenirs; and
- articles other than those mentioned in Annexure- I, up to the value of fifteen thousand rupees if these are carried on the person or in the accompanied baggage of the passenger: Provided further that where the passenger is an infant, only used personal effects shall be allowed duty-free.
Explanation.- The free allowance of a passenger under this rule shall not be allowed to pool with the free allowance of any other passenger.
Passengers arriving from Nepal, Bhutan or Myanmar.
An Indian resident or a foreigner residing in India or a tourist, not being an infant arriving from Nepal, Bhutan or Myanmar, shall be allowed clearance free of duty articles in his bona fide baggage, that is to say,
- used personal effects and travel souvenirs; and
- articles other than those mentioned in Annexure -I up to the value of fifteen thousand rupees if these are carried on the person or in the accompanied baggage of the passenger: Provided that where the passenger is an infant, only used personal effects shall be allowed duty-free: Provided further that where the passenger is arriving by land, only used personal effects shall be allowed duty-free.
Explanation.- The free allowance of a passenger under this rule shall not be allowed to pool with the free allowance of any other passenger.
Here, Annexure 1 includes the following things.
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Provision related to the import of gold
An Indian passenger who has been residing abroad for over one year is allowed to bring jewellery, free of duty in his bonafide baggage up to 20 grams with a value cap of Rs.50,000/- (in case of a gentleman passenger) or up to 40 grams with a value cap of Rs.1,00,000/- (in the case of a lady passenger).
- Can a person send jewellery to any manufacturer in India as a sample?
- Gold jewellery or studded jewellery including samples thereof is not allowed to be imported by or sent to ordinary persons in India through courier route. However, the units in export processing zones or Export Oriented Units are allowed to import gems and jewellery, including samples thereof, through an authorised courier. However, the jewellery and its samples can be exported by all units through the courier.
NEED FOR ABSOLUTE CONFISCATION ?
The issue of absolute confiscation of goods and option of redemption thereof has been subjected to judicial interpretation in the past with rulings of the High Court and Tribunal on the same.
In case of Commissioner Of Customs … vs Uma Shankar Verma Calcutta High Court:
Para 10
“…..
has held that if the goods are prohibited then the option is with the Customs Authority to confiscate without giving any option to pay fine in lieu thereof but when the goods are not prohibited then the Customs Authority has no other option but to allow the grant of an option to the party to pay a fine instead of confiscation.
….”
In the case of Kuber Casting Private Limited v. Commissioner of Customs, Amritsar-( Tribunal-Chandigarh):
Para 5
“….
As the goods impugned are not restricted goods, therefore, they can be released on payment of redemption fine and penalty, the Tribunal held that the redemption fine and penalty imposed on the appellant is highly excessive and the goods cannot be held for confiscation on the charge of misdeclaration of Description.
….”
Mandatory documents for export/import of goods from/into India:
- Mandatory documents required for export of goods from India:
- Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt
- Commercial Invoice cum Packing List*
- Shipping Bill/Bill of Export/ Postal Bill of Export.
- Mandatory documents required for import of goods into India.
- Bill of Lading/Airway Bill/Lorry Receipt/ Railway Receipt/Postal Receipt in form CN-22 or CN 23 as the case may be.
- Commercial Invoice cum Packing List*
- Bill of Entry [Note: *(i) As per CBEC Circulars issued under the Customs Act, 1962 (ii) Separate Commercial Invoice and Packing List would also be accepted.]
- For export or import of specific goods or categories of goods, which are subject to any restrictions/policy conditions or require NOC or product-specific compliances under any statute, the regulatory authority concerned may notify additional documents for purposes of export or import.
- In specific cases of export or import, the regulatory authority concerned may electronically or in writing seek additional documents or information, as deemed necessary to ensure legal compliance.
CONFISCATION OF GOLD NOT DECLARED
Since gold, figured at S. No. 4 of the Negative List it was considered to be a prohibited item liable for action under Section 124. However, by subsequent instructions later on, considering the import liberalization policies, directions were issued, not to order absolute confiscations of Gold, in cases where the passengers had even cleared the “Green Channel”, but were otherwise eligible for the import and had enough foreign exchange to cover the duty. The approach in the two Act viz, “Imports and Exports (Control) Act, 1947” and Foreign Trade (Development & Regulation) Act, 1992 have vastly changed objects and reasons.
In Shri Kamlesh Kumar In re, The Government of India in revision, it was held that such an option cannot be claimed as a right. This is because the condition regarding payment of duty in forign exchange is not satisfied (as goods were not declared) and hence these become ‘prohibited goods’. However, if a passenger is otherwise eligible to import gold, the option to pay redemption fine may be given considering all aspects.
CONFISCATION EVEN IF DECLARATION MADE
In R Karuppan v. R Namachivayam 1998 ElT 214
Hon’ble Madras High Court (Divisional Bench) , it was held that goods can be confiscated and penalty imposed even if the passenger had voluntarily declared the goods in his baggage.
Section 125. Option to pay fine in place of confiscation
- Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods an option to pay in place of confiscation such fine as the said officer thinks fit:
Provided that, without prejudice to the provisions of the proviso to subsection (2) of Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
- Where any fine instead of confiscation of goods is imposed under subsection (1), the owner of such goods or the person referred to in Sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.”
In Collector of Customs, Bombay vs M/s Elephanata Oil and Industries Ltd.
“Hon’ble Supreme Court held that from the perusal of Section 112 and 125 of Customs Act 1962 it is apparent that both operate in different fields, namely, one requires the imposition of penalty and other provides for confiscation of improperly imported goods section 111 provides that goods brought from the place outside India are liable to confiscation, discretion is given to the authority to impose the penalty. Further Section 125 empowers confiscation of such goods and thereafter, confiscated goods vest in the Central Government. The Section further empowers the authority to give an option to the owner or the person from which goods are seized to pay a fine lieu of such confiscation for return of goods and the fine is also limited up to the market price of the goods. Therefore, levy of fine in place of confiscation is in addition to levy of penalty impossible under Section 112.”
CONCLUSION
According to our respectful opinion, we think that the human body is not ‘baggage’, a gold ornament worn by a human body isn’t their luggage. Then, do we need to declare the ornaments worn by a person?
“Section 2(3): “baggage” includes unaccompanied baggage but does not include motor vehicles.”
In Vigneswaran Sethuraman v. Union Of India WP(C). No. 6281 of 2014 Hon’ble High Court Of Kerala At Ernakulam stated that:
that the body of a passenger is not ‘baggage’ Hence, gold ornaments worn by passengers need not to be declared. Baggage rules do not prohibit a foreign tourist entering into India from wearing a gold chain or other gold jewellery.
In Kartar Singh V. State of Punjab The Hon’ble Supreme Court of India has stated and held that: :”It is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values. It is insisted or emphasised that laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application. More so uncertain and undefined words deployed inevitably lead citizens to “steer far wider of the unlawful zone….than if the boundaries of the forbidden areas were clearly marked.” (emphasis supplied).
In Uma Balasaraswathi v. cc-1988 106 (CEGAT)
It has been held that if ornaments are worn by ladies and are not concealed anywhere, there cannot be any ‘misdeclaration’.
In Shaik Jamal Basha v. Government of India
It was held that since gold is otherwise eligible for import, it is mandatory to give the option to pay a fine. Absolute confiscation cannot be ordered even if gold was found to be concealed.
[Same view in sheikh shahabuddin v. CC2001 (137) ELT 127 (CEGAT)]
The customs act,1962 or the baggage rules,2016 does not stipulate that a foreign tourist or Indian Resident entering India cannot wear gold ornaments on his body. Gold is not a prohibited good; it is a restricted good and thus should be treated at par with the other dutiable goods. The Act and the Rules do not even remotely indicate that a foreign tourist or indian resident entering India cannot wear a gold chain on his person. In other words, foreign tourists entering India are in a boundless sea of uncertainty as to whether it is prohibited or not. As the Customs Act, 1962 and the rules framed thereunder contemplate confiscation and levy of penalty as also prosecution, the State has a duty to specify with a degree of certainty as to what is prohibited and what is not, without leaving it to the foreign tourist to guess what is prohibited and what is not.
Author: Pooja Shukla
Editor: Adv. Aditya Bhatt & Adv. Chandni Joshi
