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2017 (8) TMI 684 - SC - CustomsImport of gold and diamond jewellery items - Baggage Rules - passing through the Green Channel - Smuggling - Whether the items are personal effects and no duty is leviable on the same - whether in the present facts and circumstances of the case the show-cause notice dated 12.12.2002 and order dated 14.08.2003 are liable to be quashed or not? - Held that - the respondent herein did not violate the provisions of Section 77 of the Act since the necessary declaration was made by the respondent while passing through the Green Channel. Such declarations are deemed to be implicit and devised with a view to facilitate expeditious and smooth clearance of the passenger. Further as per the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto 18.05.1973) a passenger going through the green channel is itself a declaration that he has no dutiable or prohibited articles. A harmonious reading of Rule 7 of the Baggage Rules 1998 read with Appendix E (2) the respondent was not carrying any dutiable goods because the goods were the bona fide jewellery of the respondent for her personal use and was intended to be taken out of India. Also with regard to the proximity of purchase of jewellery all the jewellery was not purchased a few days before the departure of the respondent from UK a large number of items had been in use for a long period. It did not make any difference whether the jewellery is new or used. There is also no relevance of the argument that since all the jewellery is to be taken out of India it was therefore deliberately brought to India for taking it to Singapore. Foreign tourists are allowed to bring into India jewellery even of substantial value provided it is meant to be taken out of India with them and it is a pre-requisite at the time of making endorsements on the passport. Therefore bringing jewellery into India for taking it out with the passenger is permissible and is not liable to any import duty. Also from the present facts and circumstances of the case it cannot be inferred that the jewellery was meant for import into India on the basis of return ticket which was found to be in the possession of the respondent. Moreover we cannot ignore the contention of the respondent that her parents at the relevant time were in Indonesia and she had plans of proceeding to Indonesia. Some of the jewellery items purchased by the respondent were for her personal use and some were intended to be left with her parents in Indonesia. In the absence of any facts on record about the nature and mode of concealment and also any finding of the lower authority that jewellery was kept in a way to evade detection on examination of the baggage it has to be held that there was no concealment as such. It is seen that the respondent chose the Green Channel for clearance of her baggage. She committed no violation of law or infraction of any instruction for clearance of the baggage through the green channel as she being a tourist had no dutiable goods to declare under the Baggage Rules - appeal dismissed - decided against appellant-Revenue.
1. ISSUES PRESENTED and CONSIDERED
The core legal question considered by the Court was whether the show-cause notice dated 12.12.2002 and the confiscation order dated 14.08.2003 issued under the Customs Act, 1962, against the respondent for allegedly carrying undeclared gold and diamond jewellery through the Green Channel at the airport, were liable to be quashed. The issue involved determining if the jewellery seized constituted dutiable goods or whether they were exempted as personal effects under the Baggage Rules, 1998, and whether the respondent violated any provisions of the Customs Act by failing to declare the goods. 2. ISSUE-WISE DETAILED ANALYSIS Issue: Whether the seized jewellery was liable to customs duty or exempt as personal effects under the Baggage Rules, 1998 The relevant legal framework comprised the Customs Act, 1962, particularly Sections 77, 80, 102, 132, and 135(1)(a), the Baggage Rules, 1998, and Circulars issued by the Ministry of Finance dated 24.09.1998 and 18.02.2000. Rule 7 of the Baggage Rules, 1998, allowed tourists to bring used personal effects free of duty, as detailed in Appendix E, which includes jewellery for personal use that is intended to be re-exported upon leaving India. The Court noted that the term "personal effects" was not explicitly defined in the Baggage Rules, but the Circular No. 72/98-Customs clarified that personal effects include personal jewellery among other items. The Circular emphasized that the Board did not intend to verify the newness of every product unless it was prima facie new goods in original packaging, which could be disposed of immediately. The Court examined the nature of the jewellery seized, which was valued at approximately Rs. 1.27 crores according to the DRI but found to be worth Rs. 25 lakhs on examination by the respondent. It was held that the value or newness of jewellery does not preclude it from being personal effects. The Court emphasized that tourists are permitted to bring jewellery into India duty-free if it is bona fide, for personal use, and intended to be taken out of India. The Court rejected the appellant's contention that some items, such as gold and diamond studded tie pins and metal collars, which cannot be used by a lady, were not personal effects. It was held that the respondent's jewellery was for personal use and some items were intended to be left with her parents in Indonesia, negating the inference of smuggling or intent to evade duty. Issue: Whether the respondent violated the declaration requirements under Section 77 of the Customs Act by passing through the Green Channel without declaring the goods The Court referred to the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention, 18.05.1973), which considers a passenger passing through the Green Channel as implicitly declaring that they have no dutiable or prohibited goods. The respondent was intercepted while passing through the Green Channel and denied carrying any dutiable items. The Court held that the respondent did not violate Section 77 since the declaration was implicit in her choice of the Green Channel and no positive duty to declare arose when the goods were exempt as personal effects under the Baggage Rules. The Court further held that Section 80 of the Act, which deals with confiscation of dutiable or prohibited goods, was inapplicable as the jewellery was not dutiable or prohibited. Issue: Whether the respondent's intention to take the jewellery back to England was relevant and whether the subsequent travel history affected the case The appellant contended that the respondent's claim for VAT refund in the UK and her return flight to London indicated an intention to evade customs duty in India. The Court analyzed the respondent's travel records and found that she had returned to India after visiting London, which was concealed by the appellant-DRI. The Court also noted that UK law does not prohibit a person who claimed VAT from re-importing the goods later. The Court held that the intention to take the jewellery out of India was consistent with the Baggage Rules and that the respondent's travel plans, including intended travel to Indonesia where her parents resided, were plausible and did not indicate smuggling or evasion. The Court rejected the argument that the presence of a return ticket to London implied importation of goods into India for sale or smuggling. Issue: Whether there was concealment or smuggling of goods in violation of the Customs Act The Court emphasized that there were no findings or evidence on record regarding concealment of goods or any attempt to evade detection. The jewellery was found in the respondent's handbags, and the respondent had chosen the Green Channel, indicating no attempt to conceal. The Court held that mere possession of high-value jewellery did not amount to smuggling or concealment. The Court also noted that the seizure was based on a specific intelligence tip-off but the procedural safeguards under the Act were followed, and the respondent was given opportunity to respond to the show-cause notice. Issue: The correctness of the High Court's quashing of the show-cause notice and confiscation order The High Court had allowed the writ petition filed by the respondent, quashing the show-cause notice and confiscation order on the basis that the jewellery was personal effects exempt from duty. The High Court also dismissed the review petition filed by the appellant. The Supreme Court upheld the High Court's decision, agreeing that the jewellery was exempt as personal effects and that the respondent had not violated any customs laws. The Court found no merit in the appeal and dismissed it, confirming the correctness of the High Court's findings. 3. SIGNIFICANT HOLDINGS The Court held: "The presumption that the jewellery found in her baggage cannot be considered as personal effects owing to its high monetary value is rebutted herewith and we hold that the respondent was entitled to import personal jewellery duty free." It was further observed: "It is quite reasonable that a traveler may make purchases of his personal effects before embarking on a tour to India. It could be of any personal effect including jewellery. Therefore, its newness is of no consequence. The expression 'new goods' in their original packing has to be understood in a pragmatic way." The Court clarified that "the respondent did not violate the provisions of Section 77 of the Act since the necessary declaration was made by the respondent while passing through the Green Channel. Such declarations are deemed to be implicit and devised with a view to facilitate expeditious and smooth clearance of the passenger." Finally, the Court concluded: "In the absence of any facts on record about the nature and mode of concealment and also any finding of the lower authority that jewellery was kept in a way to evade detection on examination of the baggage, it has to be held that there was no concealment as such." The Court dismissed the appeal and upheld the High Court's quashing of the show-cause notice and confiscation order, confirming that the respondent was entitled to bring the jewellery as personal effects duty free under the Baggage Rules, 1998.
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