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Customs not an excuse: provisions of Customs Act to know while travelling and importing gold jewellery in India

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; Customs Law and Procedures - Bhatt & Joshi Associates

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. 

  • Firearms
  • Cartridges of firearms exceeding 50.
  • Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms
  • Alcoholic liquor or wines in excess of two litres. 
  • Gold or silver in any form other than ornaments.
  • Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television. 

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?

 

  1. 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:

  1. Mandatory documents required for export of goods from India: 
    1. Bill of Lading/ Airway Bill/ Lorry Receipt/ Railway Receipt/Postal Receipt 
    2. Commercial Invoice cum Packing List*
    3. Shipping Bill/Bill of Export/ Postal Bill of Export.
  2. Mandatory documents required for import of goods into India.
    1. Bill of Lading/Airway Bill/Lorry Receipt/ Railway Receipt/Postal Receipt in form CN-22 or CN 23 as the case may be.
    2. Commercial Invoice cum Packing List*
    3. 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.]
  3. 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. 
  4. 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

EditorAdv. Aditya Bhatt & Adv. Chandni Joshi

Retraction Of statements and confessions

Retraction Of statements and confessions

Introduction

A Confession is an admission made by a person charged with a crime at any time stating or suggesting the inference that he committed that crime. Confession is received in criminal cases upon the principle that a person will not  make an untrue statement against his own interest. Confession may be divided into two categories; judicial confession and extra-judicial confession. 

  • Judicial confessions are those confessions which are made before a Magistrate or in Court in the due course of legal proceedings.
  • Extra-judicial confessions are those confessions which are made by the accused anywhere other than before a Magistrate or in Court and extrajudicial confession can be made to any particular person or to a group of persons.

The term confession has not been defined in the Indian Evidence Act, 1872 and it attains its first appearance in section 24 of the Indian Evidence Act.883 Police Confession Stock Photos, Pictures & Royalty-Free Images - iStock

Sections 24, 25, 26 and part of Section 27 of the Indian Evidence Act, 1872 deals with irrelevant confession. Apart from Section 27, relevant confessions have been dealt with under Sections 28, 29 and 30 of the Indian Evidence Act, 1872.

Evolving of the concept of retraction of statements and confession basically comes from the Article 20(3) of the constitution which states, No person accused of any offence shall be compelled to be a witness against himself’.

A retracted confession is a confession voluntarily made by a person and subsequently retracted. The credibility of such a confession is a matter to be decided by the court according to the facts and circumstances of each case and if the court is of the opinion that such confession is proved; the court is bound to act upon it so far as the person making the confession is concerned. The retracted confession may also form the basis of conviction and punishment if it is believed to be true and voluntary.

Retracted confession can also be used against the person making it if it is supported by independent and corroborative evidence. In the case of Pyare Lal v. State of Rajasthan. The Supreme Court held that a retracted form of confession can form the basis of a conviction if and only if the Court is satisfied that it was true and was made voluntarily.

Relevant and specific Provisions

Section 24 made all the confessions made by an accused under any form of inducement by the means of either threat or promise from any person as irrelevant in any criminal proceeding. It was held in the case State of Punjab v. Gurdeep Singh that if the circumstances are such that the Courts believe the witness and are satisfied that such a confession is made on a voluntary basis, an order of conviction can be found on the same.

 

The conditions of irrelevance under section 24 of Indian Evidence Act, 1872 are as follows:

  1. a) The confession must be a result of inducement or a threat or a promise;
  2. b) Inducement, etc. should proceed from a person in authority;
  3. c) It should be relating to the charge that is in question;
  4. d) It should obtain a worldly benefit or any form of disadvantage

 

The Confession must be a result of inducement or threat or a promise.

A confession will justly be admitted if and only if it is voluntary and any confession that is obtained by the means of a threat, promise or inducement cannot be admitted. An inducement to confess may be upon a promise of pardon. A promise or threat made to one accused will not render a confession made by another, who was present and heard the inducement, irrelevant.

 

Person in the authority

The particular inducement or threat caused must flow from a person who has authority. This refers to the government officials who are having a particular authority due to their position in the services. Every government official is the person who is capable of influencing the course of prosecution.

 

A confession is made relevant even it is obtained in the following circumstances:

  1. On promising the accused that the information obtained will be kept a secret or that it will not be used against him 

It may be recalled that an admission made in a civil case under promise that evidence of it shall not be given is not relevant, (Section 23) the policy being that litigants should be encouraged to compromise their differences. That policy has no relevance to criminal cases because here the public interest lies in prosecuting criminals and not compromising with them. Consequently, therefore, where an accused person is persuaded to confess by assuring him of the secrecy of his statements, the confession is nevertheless relevant.

  1. By practicing a deception on the accused for the purpose of obtaining his confession

When the confession is the outcome of a fraud being played with the accused, it stands relevant. Thus, where the two accused persons were left in a room where they thought they were all alone, but secret tape recorders were recording their conversation, the confessions thus recorded were held to be relevant. Similarly, where an accused was persuaded to submit for a medical examination for an innocent purpose which was in fact conducted for criminal purpose, his statements to the doctor and the doctors report were held to be relevant at the discretion of the Court. A confession secured by intercepting and opening a letter has also been held to be relevant.

 

  1. Circumstances when the accused was drunk

A confession obtained by intoxicating the accused is equally relevant. The law is concerned to see that the confession is free and voluntary and if this is so it does not matter that the accused confessed under the influence of drink. According to the English practice the judge will have discretion in the matter.

 

Section 30 deals with the consideration of proven confession affecting the person making it and others jointly under for the same trial for the same offence. It provides that When more persons than one are being tried jointly for the same offence and a confession made by one of such persons affecting himself and some other of such person is proved, the court may take into consideration such confession as against such other persons as well as against person who make such confession.

 

 In Reference to the case of State of Maharashtra v. Mohd. Ajmal Mohd. Amir Kasab,

The courts held that it is safe to place reliance on retracted confessions if it can be established that the confession is true and has been made voluntarily. It is also important to keep in mind that the confession has been corroborated sufficiently. The courts have the power to discard the exculpatory facts and consider the inculpatory facts.

 

The courts laid down the following essential principles:

  1. A confession can be acted upon only if the court is satisfied that it is true and has been made voluntarily.
  2. The confession must stand true to the facts and should not counter it.
  3. It is a rule of judiciousness as to not base a conviction on the basis of a confession that has not been corroborated.

 

Retraction of Statement made under the Customs Act or Income tax act

Statement Under Section 108 of Customs Act, 1962 is an admissible piece of evidence before court of law. Section 108 is a machinery section to gather evidence in case of violations/offence under Customs Act. The power of recording of statements and calling for documents is vested in Officers not lower than the rank of Superintendent and Appraiser (AO in short) in rank. Whoever is found involved in violation of customs law, his/ her statement can be recorded to gather evidence in order to bring the guilty home. 

Section 108 of the customs Act states that, 

(1).Any gazetted officer of customs duly empowered by the Central Government on this behalf, shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry which such officer is making under this Act.]

(2).A summons to produce documents or other things may be for the production of certain specified documents or things or for the production of all documents or things of a certain description in the possession or under control of the person summoned.

 

     Retraction or rebuttal of earlier statements/admitted facts can, inter alia, be:

  • In the form of statement which is recorded later on ; or
  • In the form of a letter; or
  • In the form of an affidavit filed.

It is a settled situation of law that affirmation made by the assessee u/s 132(4) is a significant piece of proof however the equivalent isn’t convincing. It is available to the assessee who made the admission to show that it is erroneous and the equivalent is given under mixed up conviction of actuality or law. 

 

  • In the case of Jyotichand Bhaichand Saraf and Sons (P.) Ltd. v DCIT ,the Hon’ble ITAT Pune held that however It is a settled position that confession made by assessee under area 132(4) of the IT Act is a significant piece of proof yet the equivalent isn’t decisive. It is available to the assessee who made the admission to show that it is wrong and the equivalent is given under mixed up conviction of truth or law.

 

  • In the case of Union of India v. Kisan Ratan Singh,

K.R. Shriram, J. observed, “If I have to simply accept the statement recorded under Section 108 as gospel truth and without any corroboration, I ask myself another question, as to why should anyone then go through a trial. The moment the Customs authorities recorded the statement under section 108, in which the accused confessed about his involvement in carrying contraband gold, the accused could be straightaway sent to jail without the trial court having recorded any evidence or conducting a trial.”

The Court also reiterated that in absence of any corroboration by an independent and reliable witness, a statement recorded under Section 108 in isolation could not be relied upon. 

  • It was observed in Haroom Hazi Abdulla v. State of Maharashtra that a “retracted confession must be looked upon with greater concern unless the reasons given for having made it in the first instance are on the face of them false.” There was a further observation that; retracted confession is a weak link against the maker and more so against a co-accused.” 
  •  In the case of  K.I. Pavunny v. Asst. Collector (HQ) Central Excise Collectorate, Cochin the Supreme Court held:

 

“Even though the Customs officers have been invested with many of the powers which an officer in charge of a police station exercises while investigating a cognisable offence, they do not, thereby, become police officers within the meaning of Section 25 of the Evidence Act and so the confessional statements made by the accused persons to Customs officials would be admissible in evidence against them.

“Confessions can be acted upon if the court is satisfied that they are voluntary and that they are true. The voluntary nature of the confession depends upon whether there was any threat, inducement or promise and its truth is judged in the context of the entire prosecution case. The confession must fit into the proved facts and not run counter to them. When the voluntary character of the confession and its truth are accepted, it is safe to rely on it. Indeed a confession, if it is voluntary and true and not made under any inducement or threat or promise, is the most patent piece of evidence against the maker. Retracted confession, however, stands on a slightly different footing. As the Privy Council once stated, in India it is the rule to find a confession and to find it retracted later. A court may take into account the retracted confession, but it must look for the reasons for the making of the confession as well as for its retraction, and must weigh the two to determine whether the retraction affects the voluntary nature of the confession or not. If the court is satisfied that it was retracted because of an after-thought or advice, the retraction may not weigh with the court if the general facts proved in the case and the tenor of the confession as made and the circumstances of its making and withdrawal warrant its user. All the same, the courts do not act upon the retracted confession without finding assurance from some other sources as to the guilt of the accused. Therefore, it can be stated that a true confession made voluntarily may be acted upon with slight evidence to corroborate it, but a retracted confession requires the general assurance that the retraction was an after-thought and that the earlier statement was true. This was laid down by this Court in an earlier case reported in Subramania Gounden v. The State of Madras.”

In case of Satinder Kumar , their lordships held that it is true that an admission made by an assessee constitutes a relevant piece of evidence but if the assessee contends that in making the admission he had proceeded on a mistaken understanding or on misconception of facts or on untrue facts such an admission cannot be relied upon without first considering the aforesaid contention.

Conclusion

Retraction of statements and confession is a result of Article 20(3) and thus, if the         accused is retracting the statements or any confession within the stipulated time period according to the  set provisions then it should be validated and considered. A retracted statement under Section 132(4) of the Act would require some corroborative material for the AO(Officers not lower than rank of Superintendent and Appraiser) to proceed to make additions on the basis of such statement.

From the standards of law set down as references thus above, it could be derived that admission is one significant piece of proof however it can’t be said that it is definitive. It is rebuttable. It is available to an assessee who made an admission to set up that the admission was involuntary and the equivalent was extricated under pressure and coercion.

Of course, where the retraction is not for any convincing reason, or where it is not shown by the Assessee that he was under some coercion to make the statement in the first place, or where the retraction is not followed by the Assessee producing material to substantiate his defense, the AO(Officers not lower than rank of Superintendent and Appraiser ) might be justified in make additions on the basis of the retracted statement. And thus, confessions and statements, whether retracted or not; should always result in the justice for all because justice is a Right and not a privilege. 

Author: Pooja Shukla

EditorAdv. Aditya Bhatt & Adv. Chandni Joshi

Everything you need to know while travelling with gold.

Everything you need to know while travelling with gold.

CUSTOM GUIDELINES

Every passenger entering India has to pass through Customs check. The passenger has to declare the contents of his baggage in the prescribed Indian Customs Declaration Form At airports the passenger has the option  of seeking clearance through the Green Channel or through the Red Channel subject to the nature of goods being  carried.

Everything you need to know while travelling with gold & customs - Bhatt & Joshi Associates

GREEN AND RED CHANNELS

For the purpose of Customs clearance of arriving passengers, a two channel system has been adopted:-

  1. Green Channel for passengers not having any dutiable goods.
  2. Red Channel for passengers having dutiable goods. However, Green channel passengers must deposit the Customs portion of the disembarkation card to the Customs official at the exit gate before leaving the terminal.

Passengers walking through the Green Channel with dutiable/prohibited goods are liable to prosecution/ penalty and confiscation of goods.

Baggage rules 2016

The question is whether the Baggage Rules, 2016 have any application to the gold bangles worn by the Applicants also arises for consideration?

Rule 3:Passenger 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, upto 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, upto 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.”

Rule 5  Jewellery:

A passenger residing abroad for more than one year, on  return to India, shall be allowed clearance free of duty in   his bona fide baggage of jewellery upto a weight, of twenty grams with a value cap of fifty thousand rupees if brought by a gentleman passenger, or forty grams with a value cap of one lakh rupees if brought by a lady passenger.

ANNEXURE–I

(See rule 3, 4 and 6)

 

  • Fire arms.
  • Cartridges of fire arms exceeding 50.
  • Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms.
  • Alcoholic liquor or wines in excess of two litres.
  • Gold or silver in any form other than ornaments.
  • Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television.”

 

PROVISIONS UNDER WHICH PASSENGERS MADE LIABLE.

Section 111. Confiscation of improperly imported goods, etc.—

The following goods brought from a place outside India shall be liable to confiscation:—

 

  • any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods.
  • any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods.
  • any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port.
  • any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force.
  • any dutiable or prohibited goods found concealed in any manner in any conveyance.
  • any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned.
  • any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of section 45.
  • any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34.
  • any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof.
  • any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission.
  • any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein.
  • any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77.
  • any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54.
  • any dutiable or prohibited goods transisted with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII.
  • any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer 
  • any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.”

 

 

Section 77  Declaration by owner of baggage.—The owner of any baggage shall, for the purpose of clearing it,  make a declaration of its contents to the proper officer.”

Section 112 Penalty for improper importation of goods, etc. —Any person—

 

  • who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
  • who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable.
  • in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty ,not exceeding the value of the goods or five thousand rupees, whichever is the greater.
  • in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;
  • in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater.
  • in the case of goods falling both under clauses (i) and (iii), to a penalty 220 not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.
  • in the case of goods falling both under clauses (ii) and (iii), to a penalty 221 not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees,whichever is the highest.

 

 

NOW QUESTION ARISES WHETHER THERE IS NEED FOR ABSOLUTE CONFISCATION OR NOT?

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 grant of an option to the party to pay a fine in lieu of confiscation.

  ….”

In the case of :Kuber Casting Private Limited v. Commissioner of 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 highly excessive and the goods cannot be held for confiscation on the charge of misdeclaration of Description.

….”

 

CONFISCATION OF GOLD NOT DECLARED

Central board of indirect tax and customs, vide their Letter No.  495/5/92-CUS-VI dated 10.5.93 have instructed that in case of non-declaration of gold even in respect of passengers otherwise eligible to bring gold should be absolutely confiscated.

In Shri Kamlesh Kumar In re 1993(67) ELT 1000, 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.

GENERAL DEFENSE AVAILABLE

Section 2(3):“Section 2(3):includes unaccompanied baggage but does not include motor vehicles.”
Section 2(39):“Section 2(39): “smuggling”, in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113.
Section (33):“Section (33):“prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with.

[While prohibited and restricted items may sound the same, there is an actual difference – prohibited items must never be sent in the post, while restricted items may be sent in the post, but restrictions will apply.]”

 

Section 125. Option to pay fine in lieu 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 under 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 lieu 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 therein.

 

 

  • Where any fine in lieu 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 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 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 lieu of confiscation is in addition to levy of penalty impossible under Section 112.”

CONCLUSION

in our respectful opinion the body of the passenger is not ‘baggage’, gold ornament worn by passengers need not be declared “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 (I) 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.”. 

 

The Customs Act, 1962 or the Baggage Rules, 2016 do not stipulate that a foreign tourist or Indian Resident entering India cannot wear gold ornaments on his body. The Customs Act, 1962 and the Baggage Rules, 2016 do not provide sufficient warning to foreign tourists or Indian residents entering India that wearing a gold chain is prohibited. 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.

 

Customs Law and Procedures

Customs Law and Procedures

Introduction

Customs duty is a tax which the State collects on goods imported into or exported out of the boundaries of a country. Customs duties now form a significant source of revenue for all countries, more so in the case of developing countries like India. loopchain technology to be applied to Import Customs Clearance Procedure for the Korea Customs Service | by ICON Foundation | Hello ICON World | MediumIn India, customs duties are levied on the goods and at the rates specified in the Schedules to the Customs Tariff Act, 1975. The taxable event is import into export from India. Export duties are practically non-existent at present. They are levied occasionally to mop up excess profitability in international price of goods in respect of which domestic prices may be low at given time. But sweep of import duties is very wide, almost universal, barring a few goods like food grains, fertilizer, life saving drugs and equipment etc. Import duties generally consist of the following: 

  1. Basic duty. It may be at the standard rate or, in the case of import from some countries, at the preferential rate.
  2. Additional customs duty equal to central excise duty leviable on like goods produced or manufactured in India. It is commonly referred to as countervailing duty or C.V.D.
  3. Special additional duty of Customs at the rate of 4% in order to provide a level playing field to indigenous goods which have to bear sales tax. This duty is to computed on the aggregate of–
  1. assessable value; 
  2. basic duty of Customs;
  3. surcharge; and
  4. additional duty of Customs leviable under section 3 of the Customs Tariff Act, 1975 (c.v.d.)
  1. Additional duty of Customs at the rate of Re. 1/- per liter on imported motor spirit (petrol) and high speed diesel oil.

Anti-dumping duty/Safeguard duty for import to specified goods with a view to protecting domestic industry from unfair injury.

Import & Export through Courier

In order to regulate the import and export, of light weight goods into and out of the country the Government of India had framed Courier Imports (Clearance) Regulation in 1995 which were revised by framing an up to date Courier Imports and Exports (Clearance) Regulations in 1998. Private companies have been registered as authorised couriers in the International Airports at Mumbai, Delhi, Chennai, Calcutta, Bangalore, Hyderabad, Ahmedabad and Jaipur by the Customs Commissioner of the respective places.

TYPE OF GOODS THAT CAN BE SENT

 All types of goods can be sent through the courier mode into India and out of India except few articles. The goods which are prohibited for import through courier are:

  1. Animals & parts thereof or plants & parts thereof, 
  2. Perishable goods, 
  3. Publications containing maps showing incorrect boundaries of India,
  4. Gold or silver in any form,
  5. Precious and semi precious stones & Studded jewellery,
  6. Chemicals of chapter 28, 29 & 38 of the first schedule to Customs Tariff Act which need testing

Similarly, the export of the following goods are also restricted:

  1. Goods which are subject to levy of any duty on their export,
  2. Goods proposed to be exported with claim for Draw of Customs duty,
  3. Goods exported under Duty Entitlement Pass Book Schemes or Duty Exemption Scheme or Export Promotion Capital Goods Scheme, and
  4. Goods where the value of consignment is above Rs. 25,000/- and Waiver from the RBI not to bring in Foreign Exchange is not available, 

SAMPLES, GIFTS AND TRADE GOODS 

  1. Document of any form including messages, information or data recorded on papers, cards, photographs which are not subjected to any prohibition or restrictions can be imported and exported. 
  2. Bonafide commercial samples can be imported through courier provided the said samples are being received free of cost (see Import of Samples). Similarly, gifts from persons abroad up to the value of Rs. 5,000/- and all the life saving drugs and equipment which are not chargeable to any duty at present (see Notification 20/99-Cus) can also be sent to India through the courier mode. 
  3. Commercial goods which are dutiable can also be imported through the courier without any restriction of quantity subject to payment of duty by the courier company at the time of clearance of the said goods from the Customs. 

IMPORTANT CLARIFICATIONS

Whether the value of Rs. 5,000/- for the gift or the commercial samples means the value of the goods in India or the country of sender?

The value of Rs. 5,000/- is the export value of the goods excluding locally refundable taxes like VAT in the country from where the goods have been dispatched. In case of gifts and samples up to Rs. 5000/- it does not include freight or courier charges and insurance. However, in case of goods valued above Rs. 5000/- it freight and insurance would be added to calculate the duty payable. The sender may not necessarily be residing in the country from where the goods have been dispatched. A sender in the U.K. can send goods from South Korea to India. The value in South Korea would be taken into consideration.

What types of goods cannot be sent as gift or commercial samples through courier?

 All types of goods which are banned for import under the Foreign Trade (Development and Regulation) Act, 1992 are banned for import into India even as gifts or as commercial samples. The example of such goods are wild animals, wild birds or parts of wild animals and birds, narcotic drugs like opium, marijuana, ivory, arms like revolvers or pistols or other hand guns and ammunitions

 Can a person send jewellery to any manufacturer in India as 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.

 Why is there a prohibition for import of chemicals and perishable goods even of low value?

 It is not convenient to handle perishable goods through normal courier mode. The system of import or export of goods through courier is designed for very fast movement through the Customs. The chemicals imported may require testing of the same to ascertain its identity which would need some time and would also delay the processing of other consignments through courier. Therefore, the import of chemicals have been prohibited through courier route.

Chemicals can be sent through the same courier company who would submit it separately at the Air Cargo Complex for clearance. The Air Cargo Complex is invariably situated beside the Courier Terminal. However, the clearance is likely to take more time.

 Is there any limit of weight and size of the package that can be sent through the courier?

Packages up to 70 Kgs. of weight can be imported to India through courier mode. However, there is no such weight limit for export of goods through courier from India.

Why there is a restriction on goods to be exported with claim for Draw or any duty entitlement pass-book scheme of Export Promotion Capital Goods Scheme?

Under these schemes additional paper work is involved and, therefore, it delays clearance of this packet and in addition clearance of other packages is also delayed. However, these consignments can be cleared through the air-cargo complex by the same courier company. Invariably the air cargo complex and the courier terminal are situated side by side and, therefore, there is no inconvenience to the exporters.

HOW DUTY IS PAID, IF LEVIABLE?

 If the duty is small, the Courier Company makes the payment and collects it from the receiver at the time of delivery of the goods. If the duty assessed is high, they advise the party of the arrival of the goods and the party clears the goods directly from the Customs. The courier can get the goods detained, inform the client and with his consent make the payment of duty.

Machinery parts are sent abroad through couriers for repairs and reconditioning etc. what procedure is to be adopted during export of the said goods.

While sending the goods abroad, proper documents should accompany the package. The invoice may be attested by the Customs and a copy retained to enable Customs to identify the goods at the time of re-import of the said goods. The repairer may be advised to enclose a copy of sender invoice along with their own invoice. The repairer may be advised to clearly mention their repair charges for similar goods in the invoice, even if they have done it free. Along with invoice or on its body list of jobs carried out (fault list) may be given.

If part of the machinery cannot be repaired or replaced then during re-import such machinery has to bear duty as if it is being imported. The invoice should show separately cost of such parts/raw materials to enable proper valuation.

Refer to Notification No. 87/98-Cus (NT) dt. 9.11.98

Import of Gifts

All goods imported into India from abroad is liable to duties of Customs under

Section 12 of the Customs Act and also is liable to all the restrictions under the Foreign Trade (Development & Regulations) Act 1992. However, the Government has exempted gifts received from abroad by persons residing in India from the whole of duties of Customs and from restriction under FT (D&R) Act. At present, import of goods upto the value of Rs. 5,000/- is allowed as gift, duty free. This exemption is allowed only for bona fide gifts imported by air or post. For the purpose of calculation of this value of Rs. 5,000/- the air freight or postal charges paid are not added.

IMPORTANT CLARIFICATIONS

1. The value of Rs. 5,000/- is the value of the goods in the country from where the goods have been dispatched. The sender may not necessarily be residing in the country from where the goods have been dispatched.

2. The import has to be only through Air or through Post Parcel. 3. Any person abroad can send gifts. There is no specific restriction that only relatives can send the goods. Business associated, friends, relatives, companies or acquaintances can also send the gifts to residents in India.

ELEMENTS NECESSARY FOR DRAW UNDER SECTION 74 

The elements necessary to claim drawback are:

  1. The goods on which drawback is claimed must have been previously imported;
  2. Import duty must have been paid on these goods when they were imported;
  3. The goods should be entered for export within two years from the date of payment of duty on their importation (whether provisional or final duty). The period can be further extended to three years by the Commissioner of Customs on sufficient cause being shown.
  4. The goods are identified as the goods imported.
  5. The goods must be capable of being identified as imported goods.
  6. The goods must actually be re-exported to any place outside India.
  7. The market price of such goods must not be less than the amount of drawback claimed.
  8. The amount of drawback should not be less than Rs. 50/- as per Section 76-(1) (c) of the Customs Act. 

PROCEDURE TO CLAIM DRAW UNDER SECTION 74.

Drawback claims under Section 74 of the Customs Act are now being processed manually. To claim drawback under Section 74, the exporter should file the shipping bill under claim for drawback in the prescribed form and after assessment the goods are to be examined by the Customs officers for purposes of physical identification. After shipment, the claim is filed in the department, for sanction of drawback. The pre-receipted drawback payment order has to be forwarded to the drawback department upon which cheque is issued. If the information submitted by the exporter is insufficient to process the claim, a deficiency memo will be issued to the exporter seeking further information or documents to process the claim. On compliance the claims will be processed in the usual manner.

SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING DRAW CLAIM UNDER SECTION 74 

  1. Triplicate copy of the Shipping Bill bearing examination report recorded by the proper officer of the customs at the time of export.
  2. Copy of the Bill of entry or any other prescribed documents against which goods were cleared for importation.
  3. Import invoice.
  4. Evidence of payment of duty paid at the time of importation of goods.
  5. Permission from the Reserve Bank of India for re-exports of goods, wherever necessary.
  6. Export invoice and packing list.
  7. Copy of the Bill of Lading or Airway bill. 
  8. Any other documents as may be specified in the deficiency Memo.

TIME LIMIT UNDER SECTION 74

In order to claim drawback under Section 74 the goods should be entered for export within two years from the date of payment of duty on the importation thereof. Provided that in any particular case the period of two years may on sufficient cause shown be extended by the by the Central Board of Customs and Central Excise by such period as it may deem fit.

The time limit have to be computed from the date of payment of duty up to the date of entry of goods for export under Sec 50 of the Customs Act for export by air or sea, under Section 77 for baggage items and Under Section 83 of the Customs Act for export by post

The claims should be filed in the manner prescribed under Rule 5 of Re-export of Imported Goods(Drawback of Customs Duties) Rules,1995, read with Public Notices issued by the Custom Houses. The time limit for filing the claim is three months from the date of let export order. If the exporter was prevented by sufficient cause from filing the claims within three months, the Asst. Commissioner of Customs can relax the time limit by three months.

The claim for drawback is processed under the following systems:

  1. Manual System
  2. EDI System
  3. By Post

PROCEDURE FOR CLAIMING DRAW UNDER SECTION 75 OF THE CUSTOMS ACT UNDER THE MANUAL SYSTEM: 

For the purpose of claiming drawback, the exporter is required to file a drawback-shipping bill in the prescribed Format as required under Rule 13 along with the necessary declaration. The goods after assessment are examined by the officers posted in the Examination Shed as required for each individual case. The examination report will indicate the nature of goods in terms of drawback schedule for classification and application of correct rate. Samples may have to be drawn for testing by lab in respect of chemicals, synthetic fabrics’ etc as specified from time to time to confirm the declarations in the export documents. The triplicate Copy if the drawback shipping bill which contain the examination report is the claim copy

SUPPORTING DOCUMENTS REQUIRED FOR PROCESSING THE CLAIM. 

  1. Triplicate of the Shipping Bill
  2. Copy of the Bank Certified Invoices.
  3. Copy of the Bill Lading/Airway Bill
  4. Sixtuplicate Copy of AR-4 wherever applicable
  5. Freight and Insurance certificate wherever the contract is CIF / C&F
  6. Copy of the Test report where the goods are required to be tested
  7. Copy of the Brand rate letters where the drawback claim is against the Brand rate
  8. Mate receipt
  9. Copy of the Contract or Letter of credit as the case may be
  10. Modvat Declaration wherever applicable
  11. Any declaration required as per foot note of the Drawback schedule
  12. Worksheet showing the drawback amount claimed
  13. DEEC Book and license copy where applicable.
  14. Transshipment certificate where applicable
  15. Proof of foreign agency commission paid if any
  16. Blank acknowledgement card in duplicate
  17. Pre–receipt for drawback amount on the reverse of Shipping Bill duly signed on the Rs1/- revenue stamp 

The claims are settled and passed by the appraiser if the amount sanctioned is below Rs 1,00,000/- and by the Assistant Commissioner, if the amount of drawback exceeds Rs1.00.000/-. After pre-audit, the cheques are issued to the designated banks for credit to the exporters account or handed over to the authorized representative of the exporter. For further details refer to the Public Notices issued by the concerned Custom Houses/ Central Excise Commissionerate. 

PROCESSING OF DRAW CLAIMS UNDER SECTION 75 OF THE CUSTOMS ACT UNDER THE EDI SYSTEM 

  1. Computerized processing of shipping bills is in vogue at over 19 ports in India. The shipping bills are processed under the Indian Customs EDI systems (ICES).
  2. Under the system, there would be no processing of paper documents except statutory declarations and endorsements until ‘let export’ order stage. Till such time exporters / CHAs are given access to file documents through the Service centre set up in the Custom Houses / Air Cargo complexes.
  3. Processing of drawback claims under the system will be applicable for all exports except in respect of the claims under Section 74 of the Customs Act and those relating to EPZ/100% EOU.
  4. For the excluded categories the export Shipping Bills will be filed manually and processed by AC Drawback, as hitherto. Under the EDI system there is no need for filing separate drawback claims. The shipping bill itself treated as drawback claim.
  5. In the EDI system the exporters are required to open their accounts with the Bank nominated by the Custom Houses/ ACC. This has to be done to enable direct credit of drawback amount to their accounts, obviating the need for issue of cheques.
  6. For export of goods under claim for drawback, the exporters will file S.D.F declaration in Annexure B in lieu of GR –1 FORM. The declaration in Annexure C would also be filed when the export goods are presented at the Export shed for examination and Let export. In addition they should file a declaration if any in the appendices applicable to the goods mentioned in the Public Notices issued by the Customs Houses / ACC for processing Shipping Bills under the EDI system.
  7. The rates of drawback under S.S Nos. are dependent upon conditions mentioned against them in the Drawback Schedule. To enable the EDI system to process the claims correctly exporters are advised to give the correct Sl.No. of relevant appendix applicable to their case. If the relevant declarations are not filed along with the Shipping Bill the system will not process the drawback claims. The exporters are therefore advised to file the declaration along with the Shipping Bills.
  8. After actual export of the goods, the drawback claims will be processed through the system on first come first served basis. The status of Shipping Bills and sanction of drawback claim can be ascertained from the query counter set up at the Service centre. If any query has been raised or deficiency noticed, the same will be shown on the terminal provided there. The exporter or his authorised representative may obtain a printout of the query/deficiency form the Service Centre if he so desires. The claim will come in Que. of the system as soon the reply is entered.
  9. Shipping Bills in respect of goods under claim for drawback against brand rates would also be processed in the same manner, except that drawback would be sanctioned only after the original brand letter is produced to AC Export and is entered in the system. The exporter should specify the S.S No 98.01 for such provisional claim
  10. All the claims sanctioned on a particular day will be enumerated in a scroll and transferred to the Nominated Bank through the system. The Bank will credit the drawback amount in their respective accounts of the exporters on the next day. Bank will send a fortnightly statement to the exporters of such credits made in their accounts.
  11. The steamer agents / Airlines will transfer the EGM electronically to the system so that the physical Export of goods is confirmed. The system will process the claims only on receipt of the EGM. 
  1. PROCEDURE FOR CLAIMING DRAW ON EXPORT BY POST- SECTION 75 OF THE CUSTOMS ACT 

For claiming drawback on goods exported by post, exporter is required to file his claim at the time of booking parcel with the postal authorities in the form prescribed in the Rules. The date of receipt of this form from the postal authorities by the Customs Authorities shall be treated as date of filing claim by the exporter for the purpose of Section 75 A of the Customs Act. Thus drawback is paid to the exporter within three months from the date of receipt of claim from the postal authorities. On receipt of the claim form, intimation is to be given to he exporter. Where claim form is incomplete a deficiency memo is issued within fifteen days of its receipt form the postal authorities. The exporter can resubmit this form after compliance with deficiencies within a period of 30 days. If such a claim is found to be in order, the same is acknowledged and the period of three months for payment of drawback in terms of Section 75 in such cases shall commence form the date of such acknowledgement.

TIME LIMIT UNDER SECTION 75

The claims should be filed in the manner prescribed under Rule 13, read with Public Notices issued by the Custom Houses. The time limit for filing the claim is three months from the date of let export order. If the exporter was prevented by sufficient cause FORM filing the claims within three months, the Asst. Commissioner of Customs can relax the time limit by three months and the Commissioner of Customs can relax the time limit for a period of nine months. Duties Rebated Under Drawback Scheme

Under the drawback scheme, the relief is given from the burden of duty incidence of Customs & Central Excise on basic inputs like raw materials. Components, Intermediates and packing materials used at various stages of production/manufacture. No relief of drawback is extended to duties suffered on capital goods, fuels and consumables used in relation to the manufacture of the export goods. It may also be noted that no relief of Sales Tax or Octroi or any other indirect tax is given by way of drawback. The finished stage of excise duties on the export product is also not reimbursed under this scheme and there are separate provisions for rebate of such finished stage duties under the Central Excises and Salt Act 1944 and the Rules framed thereunder.

Interest Payment

A new Section 75 A has been incorporated in the Customs Act to provide for payment of interest on delayed payment of drawback. Interest at the rate of 15% P.A. is payable to the exporters if the claim is not settled within three months from the date of issue of acknowledgement by the department. Acknowledgement under Rule 13(I) is issued only if the claim is complete in all respect. If the claim is deficient, the department within 15 days from the date of filing the claim will issue a deficiency memo. The exporter is required to comply with the deficiency memo within 30 days from the date of receipt of deficiency memo. The time limit in these cases will be completed after receipt of compliance and issue of acknowledgement card. Similarly, where an exporter has been paid erroneous or excess drawback and fails to repay the same within three months from the date of demand, he is liable to pay interest at the rate of 20% P.A.

Supplementary Chain

If the exporter finds that the amount of drawback paid is less than what he is entitled to, there is a provision for claiming supplementary drawback claims in the prescribed Format Under Rule 15 of the Drawback Rules, 1995. The time limit filing supplementary claim is three months from the date of original settlement.

CONCLUSION

Customs Duty is a tariff or tax imposed on goods when transported across international borders. The purpose of Customs Duty is to protect each country’s economy, residents, jobs, environment, etc., by controlling the flow of goods, especially restrictive and prohibited goods, into and out of the country.

Travelling-with-Gold-Customs-Bhatt-Joshi-Associates-High-Court-Advocates-High-Court-Lawyers.jpg

Everything you need to know while travelling with gold & customs

Travelling with gold? Here’s what you should know!

 

CUSTOM GUIDELINES

Every passenger entering India has to pass through Customs check. The passenger has to declare the contents of his baggage in the prescribed Indian Customs Declaration Form At airports the passenger has the option  of seeking clearance through the Green Channel or through the Red Channel subject to the nature of goods being  carried.

GREEN AND RED CHANNELS

For the purpose of Customs clearance of arriving passengers, a two channel system has been adopted:-

  1. Green Channel for passengers not having any dutiable goods.
  2. Red Channel for passengers having dutiable goods.However, Green channel passengers must deposit the Customs portion of the disembarkation card to the Customs official at the exit gate before leaving the terminal.

Passengers walking through the Green Channel with dutiable/prohibited goods are liable to prosecution/ penalty and confiscation of goods.

 

Baggage rules 2016

The question is whether the Baggage Rules, 2016 have any application to the gold bangles worn by the Applicants also arises for consideration?

Rule 3:Passenger 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, upto 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, upto 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.”

 

Rule 5  Jewellery:

A passenger residing abroad for more than one year, on  return to India, shall be allowed clearance free of duty in   his bona fide baggage of jewellery upto a weight, of twenty grams with a value cap of fifty thousand rupees if brought by a gentleman passenger, or forty grams with a value cap of one lakh rupees if brought by a lady passenger.

 

ANNEXURE–I

(See rule 3, 4 and 6)

 

 

  • Fire arms.
  • Cartridges of fire arms exceeding 50.
  • Cigarettes exceeding 100 sticks or cigars exceeding 25 or tobacco exceeding 125 gms.
  • Alcoholic liquor or wines in excess of two litres.
  • Gold or silver in any form other than ornaments.
  • Flat Panel (Liquid Crystal Display/Light-Emitting Diode/ Plasma) television.”

 

 

PROVISIONS UNDER WHICH PASSENGERS MADE LIABLE.

 

Section 111. Confiscation of improperly imported goods, etc.—

The following goods brought from a place outside India shall be liable to confiscation:—

 

  • any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods.
  • any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods.
  • any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port.
  • any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force.
  • any dutiable or prohibited goods found concealed in any manner in any conveyance.
  • any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned.
  • any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of section 32, other than goods inadvertently unloaded but included in the record kept under sub-section (2) of section 45.
  • any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of section 33 or section 34.
  • any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof.
  • any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission.
  • any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under section 109 is not produced or which do not correspond in any material particular with the specification contained therein.
  • any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77.
  • any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54.
  • any dutiable or prohibited goods transisted with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII.
  • any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer 
  • any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.”

 

 

Section 77  Declaration by owner of baggage.—The owner of any baggage shall, for the purpose of clearing it,  make a declaration of its contents to the proper officer.”

Section 112 Penalty for improper importation of goods, etc. —Any person—

 

 

  • who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
  • who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable.
  • in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty ,not exceeding the value of the goods or five thousand rupees, whichever is the greater.
  • in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is the greater;
  • in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater.
  • in the case of goods falling both under clauses (i) and (iii), to a penalty 220 not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.
  • in the case of goods falling both under clauses (ii) and (iii), to a penalty 221 not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees,whichever is the highest.

 

 

NOW QUESTION ARISES WHETHER THERE IS NEED FOR ABSOLUTE CONFISCATION OR NOT? 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 grant of an option to the party to pay a fine in lieu of confiscation.

  ….”

 

In the case of :Kuber Casting Private Limited v. Commissioner of 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 highly excessive and the goods cannot be held for confiscation on the charge of misdeclaration of Description.

….”

 

CONFISCATION OF GOLD NOT DECLARED

Central board of indirect tax and customs, vide their Letter No.  495/5/92-CUS-VI dated 10.5.93 have instructed that in case of non-declaration of gold even in respect of passengers otherwise eligible to bring gold should be absolutely confiscated.

In Shri Kamlesh Kumar In re 1993(67) ELT 1000, 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.

 

GENERAL DEFENSE AVAILABLE

 

Section 2(3):“Section 2(3):includes unaccompanied baggage but does not include motor vehicles.”
Section 2(39):“Section 2(39): “smuggling”, in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113.
Section (33):“Section (33):“prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with.

[While prohibited and restricted items may sound the same, there is an actual difference – prohibited items must never be sent in the post, while restricted items may be sent in the post, but restrictions will apply.]”

 

Section 125. Option to pay fine in lieu 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 under 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 lieu 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 therein.

 

 

  • Where any fine in lieu 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 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 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 lieu of confiscation is in addition to levy of penalty impossible under Section 112.”

 

CONCLUSION

 

in our respectful opinion the body of the passenger is not ‘baggage’, gold ornament worn by passengers need not be declared?

“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 (I) Hon’ble High Court Of Kerala At Ernakulam stated that:

Para 15

“…             

 

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: 

Para 130.

“…

 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 ‘mis-declaration’. 

 

In Shaik Jamal Basha v. Government of India

It was held that since gold is otherwise eligible for import, it is mandatory to give option to pay fine Absolute confiscation cannot be ordered even if gold was found to be concealed. 

 

[Same view in shaik shahabuddin v. CC2001 (137) ELT 127 (CEGAT)]

 

The Customs Act, 1962 or the Baggage Rules, 2016 do not stipulate that a foreign tourist or Indian Resident entering India cannot wear gold ornaments on his body. The Customs Act, 1962 and the Baggage Rules, 2016 do not provide sufficient warning to foreign tourists or Indian residents entering India that wearing a gold chain is prohibited. 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.