TMI Blog2023 (8) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions prescribed are clearly excluded from the ambit of prohibited goods by virtue of the usage of the phrase but does not include . The expression prohibited goods as used in Section 2(33) and the concept of prohibition must therefore and necessarily draw colour and meaning from the specific exclusion of goods which have come to be imported or exported upon due compliance with the conditions prescribed. If compliance with conditions for import or export were irrelevant and the expression prohibition were to be understood in absolute terms, there clearly does not appear to be any justification for the definition clause to also deal with those goods which enter the territory of India after complying with the various conditions for import that may have been prescribed. In our considered opinion, this is the first aspect which appears to indicate that the word prohibition is intended to also extend to a restriction or regulation under the Act. It is significant to note that Section 111 of the Act which deals with the confiscation of improperly imported goods. While dealing with the circumstances in which the imported goods may become liable for confiscation, the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the discretionary power of the Adjudging Officer - the Court finds no illegality in the individual orders passed by the Adjudging Officer and which were impugned in these writ petitions. The Court finds no merit in the challenge raised to the impugned orders in the present batch of writ petitions - Petition dismissed. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE DHARMESH SHARMA For the Petitioner Through: Mr. Nitin Ahlawat, Mr. Visesh Chaudhary, Mr. Sahil Dagar and Ms. Sonali Sardana, Advs. Mr. Chinmaya Seth, Mr. A.K. Seth, Advs. Through: Ms. Akanksha Mehra, Mr. Lakshay Saini and Mr. Himanshu Tyagi, Advs. For the Respondents Through: Mr. Tarun Gulati, Sr. Adv. Amicus Curie, Mr. Kishore Kunal, Mr. Kumar Sambhav, Advs. Mr. Satish Kumar, Sr. Standing Counsel and Ms. Sonu Bhatnagar, Sr. Standing Counsel on behalf of respondent no. 2 3 along with Mr. Dhruv, Mr. Mandal, Advs. Mr. Satish Kumar, Sr. Standing Counsel for respondent no. 2 3 with Mr. Dhruv, Mr. Atul Mandal, Advs. Mr. Sanjay Kumar, Ms. Easha Kadiyan, Ms. Hemlata Rawat, Advs. for R-4 Mr. Akshay Amritanshu, Sr. Standing Counsel, Mr. Ashutosh Jain, Mr. Samyak Jain, Advs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present writ petitions are more or less alike and relate to bringing in gold without a declaration on arrival at the Airport and making an attempt to pass through the Customs Green Channel thereby raising common questions of law and can thus be disposed of conveniently by this common Judgment. However, it would be expedient to refer to the factual narrative of each Writ Petition in order to understand the context that gives rise to the legal issues reflected hereinabove. FACTUAL BACKGROUND : W.P. (C) No. 8902/2021 (Nidhi Kapoor v. Principal Commissioner Additional Secretary to the Government of India Ors.) 3. The petitioner in this case arrived on 01 July 2015 from Dubai, UAE to India by Air Flight No. 9W 545, which landed at Indira Gandhi International Airport [IGI Airport], New Delhi, and while attempting to pass through the Customs Green Channel , she was found in possession of three gold metal bars and two gold cut pieces (hereinafter referred as the subject goods ), which as per the panchnama (P-1) was weighing 3100 grams with 995.0 purity valued at Rs. 76,44,011/-. She was detained and during investigation she in her statement recorded under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly revealed that she had purchased the jewelry from M/s. Motiwala Jewellers, Dubai on 13 May 2015 and produced the cash receipt (P-4) also stating that the subject goods were gifted to her by a family friend. A Show Cause Notice dated 03 November 2015 (P-6) was issued to her which ultimately culminated in an order dated 15 November 2017 passed by the Joint Commissioner/Adjudicating Officer thereby confiscating the subject goods under Section 111 of the Act and imposing penalty of Rs. 15,00,000/- under Section 112 and 114AA of the Act (P-7). Aggrieved thereby, the petitioner filed an appeal and on which the Commissioner of Appeals (Customs) allowed the appeal vide order dated 17 July 2018 thereby releasing the subject goods in terms of Section 125 of the Act on payment of penalty of Rs. 19,00,000/- whereas the penalty under Section 112 read with Section 114AA of the Act was reduced to Rs. 8,00,000/- (P-8). The department/respondent No. 2 preferred an appeal and the Revisional Authority/ Additional Secretary, Government of India passed the impugned order dated 09 July 2021 thereby sustaining the original order dated 15 November 2017 (P-7) upholding confiscation of the subject goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her statement and the documents from Customs and thereafter preferred an appeal before Commissioner of Customs (Appeals) on 02 March 2021. The same was dismissed by the Adjudicating Authority without considering her submissions and the subject goods were confiscated and redemption was rejected. W.P.(C) No. 531/2022 (Mr. Jasmeet Singh Chadha v. Commissioner of Customs, IGI Airport, New Delhi) 8. In the instant petition, it is the case of the petitioner that on 07 September 2014, he visited Dubai to meet his relatives and on account of an upcoming marriage in the family, on 08 September 2014, he bought approximately 2000 grams of gold ( the subject goods ) from his savings and also from the money borrowed from his relatives, the proof of which was provided vide Annexure P-2, but when he arrived at T-3 IGI Airport, New Delhi on 09 September 2014 by Flight No. 6E-024 from Dubai, he was detained despite the fact that he had duly declared the said gold at Dubai Airport before boarding the flight and while he was at the Aerobridge, Custom Officers approached him and made enquires, to which he truthfully replied acknowledging that he was carrying 2000 grams of gold and wanted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act 2 , she was afforded personal hearings held on 18 May 2016 and 30 August 2016, and ultimately an order dated 30 December 2016 was passed by the Additional Commissioners of Customs, IG Airport T3, New Delhi (P-4) vide which the goods were not only confiscated but also no option of payment of Customs Duty or redemption fine was afforded to her. Furthermore, penalties were imposed on Mr. Vikram Devbrat, and two others from AI SATS namely Mr. Mithilesh Kumar Verma and Mr. Navin Kumar Abhimanyu, amounting to Rs. 10,00,000/-, Rs. 2,50,000/- and Rs. 1,50,000/- respectively, under Section 112 and 114AA of the Customs Act. A personal penalty of Rs. 75,000/- was also imposed on the petitioner. Aggrieved thereby, she filed an appeal before the Commissioner of Customs (Appeals) on 16 February 2017, which was rejected vide Order dated 24 August 2018 (P-5). Aggrieved thereof, the petitioner filed a Revision Application before the Central Government against the order dated 24 August 2018, which by the impugned order dated 14 July 2021 was dismissed (P-1), as per which the request for release of goods on payment of redemption fine under Section 125 of the Act was also rejected. The fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rupees and in all probability payments had been made in the foreign currency of the country of origin or through hawala (money laundering); and that the subject goods were not meant for personal use but obviously for commercial gain; and that the bringing of subject goods into India or smuggling the same without declaration and passing through the Green Channel was in violation of Section 7 of the Foreign Trade (Development and Regulation) Act [FTD R Act] as it amounted to import of gold without authorization; and lastly that there was no violation of principles of natural justice and the petitioners were guilty of their own follies since they failed to appear despite notice for hearing and not satisfying the authorities about their actions in bringing the subject goods into India. Sh. Satish Kumar, learned Standing Counsel for the respondent No. 2/Customs relied on decisions in Sheikh Mohd. Omar v. Customs 1970(2) SCC 728; Om Prakash Bhatia v. Commissioner of Customs (2003) 6 SCC 161; Garg Woolen Mills v. Customs (1999) 9 SC 175; and Union of India v. Raj Grow Impex 2021 SCC Online SC 429. ARGUMENTS ADVANCED ON BEHALF OF THE PETITIONERS: 13. Mr. Sholab Arora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 80:20 policy by the RBI. It was pointed out that the 80:20 policy was introduced by the RBI on 14 August 2013 (P-11) which was modified on 21 May 2014 (P-12) but subsequently withdrawn much prior to the incident on 28 November 2014 (P-13). 15. Learned Counsel took us through the relevant chapters under the Customs Manual 2015, Foreign Trade Policy 2015-20 and ITC (HS), 2022-Import Policy. It was vehemently urged that the importation of the subject goods i.e., the gold, is not even prohibited under the FTDR Act. It was additionally canvassed that Section 125 of the Act deals with both prohibited and non prohibited items and that the importation of the gold is not prohibited as such and that being the case the Adjudicating Authority had no discretion but to allow or afford an option for the release/redemption of the subject goods under Section 125 of the Act to the importer/owners. In his submissions, reliance was placed on the decisions in the case of Sunshine International v. Collector of Customs 1993 (42) ECC 282; Mohini Bhatia v. Commissioner of Customs 1999 (106) ELT 485 Tri.-Mumbai; Suresh Kumar Raisoni v. Commissioner of Customs 2004 SCC OnLine CESTAT 1116; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng subjected to confiscation, levy of fine/penalties etc. The attention of the Court was invited to provisions of Section 3 (2), (3) and (4) the FTDR and it was canvassed that a conjoint reading of such provisions would show that unless and until an order is passed by the Central Government prohibiting or restricting import or export of any goods, mere import or export of goods without any permit or license, would not result in shall not make such goods fall under the prohibited category. Reference was invited to the decisions in Becker Gray and Co. Ltd. v. Union of India 1970 (1) SCC 352; Sheikh Mohd. Omer v. CC, Calcutta 1983 (12) ELT 1439; Prayag Exporters Pvt. Ltd. v. Commissioner 2000 (121) ELT 819 (Tribunal); and Commissioner v. Prayag Exporters Pvt. Ltd. 2003 (155) E.L.T. 4 (S.C.). 18. It was additionally canvassed that the decision in Om Prakash Bhatia v. Commissioner of Customs (supra), was distinguishable since there was a specific Notification under Section 18 of the Foreign Exchange Regulations Act, 1972 [FERA] and such distinction was brought out in the decisions of Commissioner v. Suresh Jhunjhunwala 2006 (203) E.L.T. 353 (S.C.); CC, New Customs House M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FTDR Act, the smuggled goods cannot be treated as prohibited . 20. Further, on the issue of redemption of confiscation of gold under Section 125 of the Act, reference was invited to the decision in the case of CCE (Delhi) v. Achiever International 2012 (286) ELT 180 (Del.) , wherein it was held as under: 14. Section 125 of the Act states that an officer adjudging may impose redemption fine in case importation or exportation has been prohibited under the Act or under any other law for the time being in force. It is clear from the language that Section 125 applies to the goods, importation and exportation of which is prohibited under the Act or under any other law for the time being in force. It applies to prohibited goods. The contention of the Revenue that Section 125 does not apply to the prohibited goods is, therefore, misconceived and wrong. 17. The term prohibited goods under Section 2(33) of the Act, is much wider than Section 11(1) of the Act which gives power to the Central Government to issue notification prohibiting import or export of goods absolutely or subject to such conditions as may be specified Section 2(33) applies to the goods prohibited a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustody the goods had been seized, an option to pay in lieu of confiscation a fine as the officer thinks fit. However, such an exercise of option is not mandatory in the case of goods, the importation of which is prohibited under the Act or any other law for the time being in force. If there is no such prohibition, the exercise of option is mandatory. 11. Therefore, the only question to be considered is whether the contravention of Baggage Rules, 2016 and breach of the prohibition imposed by the Foreign Trade (Development and Regulation) Act, 1992 amounts to a prohibition under any other law for the time being in force. It is true that various authorities had exercised the discretion to permit release of confiscated goods on payment of redemption fine. But such exercise of discretion is not mandatory if the import is prohibited under the Act or any other law in force. Even in such cases, discretion can be exercised which will depend upon the manner in which the authority approves the transaction. Section 7 of the Foreign Trade (Development and Regulation) Act clearly indicates that no person shall make any import or export except under an importer-exporter code number granted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... baggage cannot contain gold in any form other than jewelry and that too within the prescribed limit. It was vehemently urged that goods which are imported contrary to any prohibition under the Custom Act or any other law would also be considered as prohibited goods within the scope and ambit of Section 2(33) of the Act, and therefore, liable to absolute confiscation in terms of Section 111 (d) of the Act. It was very strongly canvassed that for the purpose of invoking the discretionary part of Section 125 of the Act, absolute or per se prohibition is not the sole criteria and prohibition arising from illegal importation contrary to or in breach of conditions or restrictions, of any law for the time being in force shall be sufficient. Reference has been invited to Commissioner of Customs (Prev) v. M. Ambalal Co. (2011) 2 SCC 74, apart from referring to decisions in the cases of Sheikh Mohd. Omar v. Collector of Customs (supra); Om Prakash Bhatia v. Commissioner of Customs (supra);, Garg Woolen Mills v. Customs (supra) and Union of India v. Raj Grow Impex (supra) and lastly to the decision in Abdul Rajak v. UOI 2012 (275)ELT 300 (Ker.). 24. Mr. Satish Kumar, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for promulgation of the Act, it attempts to fill the lacuna of the previous customs legislations viz. the Sea Customs and the Land Customs Act. Admittedly, the object of the Act is to regulate the import and export of goods, into and from the shores of India or otherwise by land, air or sea, and further provides for a detailed mechanism to determine the customs duty payable on import and export of goods. The Act defines expression dutiable goods , duty , import , imported goods , importer and smuggling in the following manner: 2.(14) dutiable goods means any goods which are chargeable to duty and on which duty has not been paid; (15) duty means a duty of customs and leviable under this Act; *** (23) import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India; *** (25) imported goods means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (26) importer , in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters. 30. On such a bird s eye view of the provisions of the Act albeit partially up to the relevant chapters that come for consideration in the instant matters, it is also relevant to allude to certain specific provisions that must be borne in our mind for a decision in these matters. Section 12 of the Act is the charging section and dutiable goods are goods whose import is permitted by the Act or any other law in force. Needless to point out that the term Duty is the tax leviable on the goods occasioned by their import into India or their export out of India. Under this section, all goods imported into or exported from India are liable to customs duty unless the Customs Act itself or any other law for the time being in force provides otherwise. The rate of duty is fixed by the Customs Tariff Act, 1975. 31. The valuation of the imported goods is done as provided under Section 14 of the Act. Section 25 of the Act empowers the Central Government to issue notifications exempting either absolutely or subject to such conditions as specified in a notification, goods of any specified description from the whole or any part of the duty under the Customs Act leviable thereon import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evention of shortage of goods of any description; (e) the conservation of foreign exchange and the safeguarding or balance of payments; (f) the prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver; (g) the prevention of surplus of any agricultural product or the product of fisheries; (h) the maintenance of standards for the classification, grading or marketing of goods in international trade; (i) the establishment of any industry; (j) the prevention of serious injury to domestic production of goods of any description; (k) the protection of human, animal or plant life or health; (l) the protection of national treasures of artistic, historic or archaeological value; (m) the conservation of exhaustible natural resources; (n) the protection of patents, trade marks and copyrights; (o) the prevention of deceptive practices; (p) the carrying on of foreign trade in any goods by the State, or by a Corporation owned or controlled by the State to the exclusion, complete or partial, or citizens of India; (q) the fulfilment of obligations under the Charter of the United Nations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Section 2 (39) of the Act which defines smuggling as under: 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; 36. Again, a careful perusal of the definition would show that smuggling means any act or omission which would render any goods liable to confiscation under Section 111 or 113 of the Act. The words act or omission are not defined under the Act. However, such words are reflected upon under Section 33 of the Indian Penal Code to denote acts meaning a series of acts or as also omissions denoting series of omissions. This brings us to Section 111 of the Act which reads as under: - 111. Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confiscation: (a) 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; (b) any goods imported by land or inland water through any route other than a route specified in a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansited in contravention of the provisions of Chapter VIII; (o) 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; 3[(p) 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.] Note: section 113 of the Act is omitted as it is applicable in case of exportation of goods and not relevant for decision in the present matter. 37. Section 2 (39) of the Act read in conjunction with sub clauses (e) (f) (i) (j) (m) to Section 111 of the Act clearly bring out that import of any dutiable ; or prohibited goods which are not declared at the customs when imported, would be an act or omission amounting to smuggling, and would therefore subject the goods to confiscation. As much is canvassed as to whether smuggling of goods can be read or not into the definition of prohibited goods, and further that its conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act. 40. It would be relevant to point out special provisions regarding baggage, goods imported or exported have been provided under Chapter-XI of the Act. Section 77 of the Act 4 , which clearly stipulates that owner of any baggage shall make a declaration of its contents to the proper officer which is then made amenable for determination of rate of duty. Section 79 of the Act 5 then provides for rules enabling baggage of any passenger being exempted from duty or tariff. 41. For the purpose of a decision in the instant matters, suffice it to point out that by virtue of Section 81 (a) of the Act, the Central Board of Excise and Customs [CBIC] framed the Baggage Rules, 1998 (as amended up to date) that initially allowed an individual passenger coming from abroad to be free from levy of custom duty if carrying jewelry upto an aggregate value of Rs. 10,000/- in case of a gentleman and Rs. 20,000/- in case of a lady passenger. However, in a later Notification: 12/2012-Cus. dated 17 March 2012 the Government relaxed the conditions as to enable eligible passengers to carry gold not exceeding 10 kgs provided declaration is filed in the prescribed form before the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there is no gainsaying that neither any of the petitioners in the instant matters was an eligible passenger nor had any one filed the requisite declaration as per the prescribed proforma and each one attempted to pass through the Customs Green Channel to avoid payment of customs duty. That being the legal position broad factual position, at this juncture we need to delve further into Section 2(33), 11 and 125 of the Act to examine how importation of gold is dealt with in other enactments, and thus embark on a short detour to the relevant provision of the FTD R Act. THE FTDR ACT 46. Section 2 (e) of the FTDR Act defines import and export - meaning in relation to goods, bringing into, or taking out of, India any goods by land, sea or air . Chapter-II enables Central Government to make orders and announce Foreign Trade Policy and the relevant provisions go as under:- 3. Powers to make provisions relating to imports and exports. ( 1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified classes of cases and subject to just exception, any orders for the import or export of goods, services or technology. Section 3(3) of the FTDR Act stipulates that any order of prohibition made under the Act shall apply mutatis mutandis as deemed to have been made under Section 11 of the Customs Act. Sub-Section (4) to Section 3 starts with a non obstante clause thereby putting provisions for import or export under the FTDR Act as enforceable notwithstanding anything contained in any other law, rules, regulations, notifications or order. Section 18-A of the FTDR Act states that the provisions of the Act are in addition to and not in derogation of other laws. It is also pertinent to mention that Sections 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules, 1993 provide for confiscation of goods in the event of contravention of the Act, Rules or Orders but which may be released on payment of redemption charges equivalent to the market value of the goods. However, it again begs the question as to whether such relaxation would apply to importation of gold in the nature of smuggling? NOTIFICATIONS AND CIRCULARS BY THE GOVERNMENT DEPARTMENTS 48. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy Conditions Revised Policy Condition 7108 12 00 Other unwrought forms Free Subject to RBI Regulations. Subject to RBI Regulations. However, import policy of Gold Dore is Restricted (v) DGFT Notification No. 36/ 2015-2020 Dated: December, 2019, brought out amendment in import policy conditions of gold and silver under Chapter 71 of ITC (HS), 2017, Schedule-1 (Import Policy) in exercise of powers conferred by Section 3 of FT (D R) Act 1992, read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, thereby providing necessary conditions for the importation of gold any form, other than monetary gold and silver in any form revising the policy from free to restricted in terms Chapter 71 of ITC (HS), 2017, Schedule-1 (Import Policy), which conditions are extracted as under: Exim Code Item Description Present Policy Revised Policy Existing Policy Condition Revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banks) and DGFT (for other agencies). Silver dore can be imported by refineries against a licence with AU condition. No change in existing Policy Condition 71069190 Unwrought Grains 71069210 Sheets, plates, strips, tubes and pipes Restricted Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies). No change in existing Policy Condition 71081100 Powder Restricted Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies). Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies) No change in existing Policy Condition Import is allowed only through nominated agencies as notified by RBI (in case of banks), DGFT (for other agencies) and IFSCA (for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (iii). Circular No. 7 by the Exchange Control Department, RBI dated March 6, 1998 whereby certain nominated agencies had been permitted to import gold viz. MMTC, HHEC, STC, SBI and other agencies authorized by the Reserve Bank for sale of jewellery manufacturers, exporters, NRIs, holders of Special Import Licences and domestic users. There were detailed guidelines for import of gold on loan / credit basis providing for period of loan, rate of interest and quantity besides consignment basis as also outright purchase basis which were issued in terms of Section 73 (3) of the Foreign Exchange Regulations Act, 1973. (iv). Circular No. 15 RBI/2013-14/148 dated July 22, 2013 issued under Section 10 (4) r/w Section 11 (1) of the FEMA, provided for import of gold for the purposes of exports or to import of gold by units in SEZ exclusively for the purposes of exports providing inter alia also providing that the nominated banks / nominated agencies shall ensure that at least one fifth of every lot of import of gold (in any form/ purity including import of gold coins / dore) is exclusively made available for the purposes of export. (v). Circular No. 25 issued by RBI 2013-14/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o hesitation in holding that smuggling of gold is per se restricted by virtue of Section 111 as also in terms of various notifications issued under the FTDR Act and under the RBI Act discussed herein above. The aforesaid discussion raises a strong disposition to the effect that the importation of gold into India is highly regulated and bulk importation of gold item could only be affected by the nominated banks, agencies or business houses in the manner laid down by various DGFT regulations as well as the RBI circulars or by the eligible passengers in the manner provided by the relevant Regulations discussed hereinabove. There is no gainsaying that one of the main objects of the Customs Act is to prohibit smuggling of goods and sternly deal with the same, as could be plainly gathered on a conjoint reading of Sections 2(25), 11(2)(c), 111 and 112 of the Act. In the cited case of Commissioner of Customs (Preventive) v. M. Ambalal Co. (supra), it was categorically observed that the Customs Act aims to counter the difficulties that have emerged over the years due to the changing economic and financial conditions; amongst them it proposes to tackle the increasing problems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t trade represented over $1 billion in value and at least $20 million in lost tax revenue to governments. The World Gold Council (WGC) estimates 65-75% of smuggled gold comes by air, 20-25% by sea, and 5-10% by land. One important factor that encourages the smuggler is the customs duty levied on the gold import. History shows that there is a considerable percent increase in the customs duty. PR Somasundaram, Managing Director for the region at the WGC said that the propensity to smuggle now is very high because every time you increase the tax rate, you give that much more incentive to smugglers. As per the present market value of gold in India, 1 kg of the smuggled yellow metal would fetch more than a profit of Rs 5 lakh on import duty alone. (Pg. 3 of the Report) 54. The aforesaid report also provides information given in the Lok Sabha, in response to a question put to the Ministry of Finance (Pg. 4 of the Report), which was answered to by the Minister of State in the Ministry of Finance and has been reproduced below: 8 Table 1 Gold Smuggling in India. Year Number of Cases of gold at various airports Quantum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1992. The crux of the matter is that the exporter failed to fully disclose the true sale consideration. Examining the scope and ambit of section 2(33) read with section 11 113 of the Act, it was observed as under: 10. From the aforesaid definition, it can be stated that: (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance, as may he specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Atul Automation (P) Ltd. (supra). Atul Automation was a case where the appellant in October November, 2016 imported MFDs without requisite permission viz., Multi-Function Device, Digital Photocopiers and Printers, which incidentally were also classified as other wastes under Rule 3 (1) (23) of the Hazardous Waste Management Rules, and the goods were confiscated with penalty imposed, declining relief of release/redemption. The challenge was upheld observing that: - 8. Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The High Court dealing with the same has aptly noticed that Sections 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules, 1993 provide for confiscation of goods in the event of contravention of the Act, Rules or Orders but which may be released on payment of redemption charges equivalent to the market value of the goods. Section 3(3) of the Foreign Trade Act provides that any order of prohibition made under the Act shall apply mutatis mutandis as deemed to have been made under Section 11 of the Customs Act also. Section 18-A of the Foreign Trade Act reads that it is in additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts of these commodities on the agricultural market economy in the case of Agricas (supra) whereas, it had not been the case in Atul Automations (supra) that the import was otherwise likely to affect the domestic market economy. In contrast to the case of Atul Automations, where the goods were permitted to be imported (albeit with authorisation) for the reason that they were not manufactured in the country, in the present case, the underlying feature for restricting the imports by quantum has been the availability of excessive stocks and adverse impact on the price obtainable by the farmers of the country. The decision in Atul Automations (supra), by no stretch of imagination, could be considered having any application to the present case. 155. Thus, we have no hesitation in holding that the goods in question, having been imported in contravention of the notifications dated 29.03.2019 and trade notice dated 16.04.2019; and being of import beyond the permissible quantity and without licence, are prohibited goods for the purpose of the Customs Act. 156. The unnecessary and baseless arguments raised on behalf of the importers that the goods in question are of restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the reasons behind issuance of the notifications in question and the findings of this Court in Agricas (supra) 9 , the question is as to whether the exercise of discretion by the Adjudicating Authority in these matters, giving option of payment of fine in lieu of confiscation, could be approved? It is true that, ordinarily, when a statutory authority is invested with discretion, the same deserves to be left for exercise by that authority but the significant factors in the present case are that the Adjudicating Authority had exercised the discretion in a particular manner without regard to the other alternative available; and the Appellate Authority has found such exercise of discretion by the Adjudicating Authority wholly unjustified. In the given circumstances, even the course adopted in the case of Hargovind Das K. Joshi 10 (of remitting the matter for consideration of omitted part of discretion) cannot be adopted in the present appeals; and it becomes inevitable that a final decision is taken herein as to how the subject goods are to be dealt with under Section 125 of the Customs Act. 176. As noticed, the exercise of discretion is a critical and solemn exercise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afford any satisfactory explanation nor produced any documents in relation to import of diamonds. The said goods were seized, later confiscated and application for redemption/release was declined under Section 125 of the Act. On being challenged, the High Court allowed the redemption/release but on challenge by the department, the decision of the High Court was set aside. It was held that the goods which had been seized in the matter could not have been imported into India without a license under Import Control Act and same did not amount to imported goods within the meaning of Section 2(25) of the Act, and therefore, importation of such goods i.e., rough diamonds were prohibited by law and the respondent firm was not entitled to its redemption/release. 61. The case of Abdul Razak v. Union of India (supra) was one where an attempt was made to smuggle gold by concealing the same in emergency lights, mixie-grinders and car horns weighing about 8 kg. It was held that although gold as such is not a prohibited item and can be imported, such import is subject to a lot of restrictions including necessity to declare the goods on arrival at the customs station and make payment of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CEGAT Mumbai (1999), the petitioner arrived from Singapore and when she attempted to pass through the Customs Green Channel , was asked if she was carrying any gold, to which she replied in the negative. However, on searching her, 40 gold bars, each weighing 10 tolas were found stitched with her undergarments. The long and short of the story is that later on when the petitioner applied for release/redemption of gold items, same were ordered to be confiscated instead with heavy penalty. It was held that import policy in force at the relevant time made a distinction between prohibited goods and restricted goods and the gold was not a prohibited item, and thus, the Adjudicating Authority was bound to offer an option to the importer to redeem the items on payment of fine, which was not to exceed the market price of the goods less duty payable thereupon. 64. The case of Suresh Kumar Raisoni v. Commissioner of Customs (supra) CSTA Mumbai 2004, was one where on personal search of one Jabbar Singh Thakur at the premises of a party at Jhaveri Bazar, Mumbai on 19.08.1997, led to recovery of 42 foreign marked gold biscuits valued at Rs. 22,26,000/-, which were seized under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes restricted goods in respect of which the conditions have not been fulfilled, a distinction was drawn by the Government of India in the case of Ashok Kumar Verma (supra) and redemption was allowed of the gold which was smuggled by the appellant passenger ingeniously concealing it in the stroller of the bag. It has also been indicated in this order that Government of India has consistently held the view in many cases that gold is not prohibited but restricted and allowed redemption of confiscated gold. (f) The Apex Court has also drawn a distinction between goods whose import is absolutely prohibited and those whose import is restricted under the Foreign Trade (D R) Act and redemption was allowed in the case of restricted goods. (g) Thus, while Section 125 allows the adjudicating authority the discretion to allow or not to allow redemption of prohibited goods. As far as gold, which is smuggled, is concerned, there appears to have been a gradual change in the approach of the Government. In the case of Ashok Kumar, Government of India allowed redemption of gold that was not only NOT Declared but ingeniously concealed in strolley bags. It has also been declared in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a breach of restrictions imposed by Section 12(1) of the Sea Customs Act and a mere incorrect declaration was not in contravention of Section 19 of the Sea Customs Act 11 , and therefore, imposition of penalty under Section 167(8) was totally unjustified. We do not see as to how referred provision, namely, Section 19 of the Sea Customs Act is in any way analogous to Section 111 of the Act and in any case, the cited case was not about smuggling of goods but a case of mis-declaration of its value so as to seek levy of lesser customs duty. 67. The cited case of Commissioner v. Prayag Exporters Ltd. 2003 (155) ELT 4 (SC) also has no application since it was a case where the goods in question were not prohibited for export and at the same time there was no provision for levy of export duty on the consignment. The decision in the case of Commissioner v. Suresh Jhunjhunwala (supra) was also one where the export consignment was held to be a case of over invoicing and the issue regarding redemption of goods was not considered with regard to violation of FERA. 68. The plea by the learned counsel for the appellants that RBI has never issued any circular under Section 58 of RBI Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing into generation of black money and other unlawful activities including financing terrorism. 70. In view of the foregoing discussion, we answer the issues framed to the effect that Section 2(33) of the Act shall also include importation of such goods within the scope of prohibited category with regard to which the mandatory condition under the Act as also in other relevant notifications/circulars issued by the DGFT, the RBI or the any other authority have not been complied with, or in other words the restrictions imposed by the concerned authorities have not been adhered to. We further have no hesitation in holding that the importation of the gold is a prohibited item within the meaning of Section 2(33) of the Act; and that redemption in case of importation of gold which is brought into India illegally in the form of smuggling does not entitle the owner or importer for automatic release/redemption of such item, and therefore, as a necessary corollary a decision to allow release/redemption of the goods confiscated with or without imposition of fine in addition to payment of requisite duty is vested in the discretion of the Adjudicating Officer, who needless to state is dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner, the Revisional Authority after hearing the parties vide the impugned order dated 08 January 2020 came to the conclusion that the burden to prove ownership of the subject goods was not discharged under Section 123 of the Act by the petitioner. The Revisional Authority also relied on certain judicial pronouncements in the case of Commissioner of Customs (AIR) Chennai-1 v. Samynathan Murugesan [2009 (247) E.L.T. (Mad.)] which was upheld by the Apex Court, as well as the decision of the High Court of Bombay in the case of Union of India v. Aijaj Ahmad 2009 (244) ELT 49 (Bom.). The decision of the Adjudicating Authority to deny the redemption of the goods and order of absolute confiscation were ultimately upheld. Lastly, the plea that another passenger on the same day was apprehended with huge commercial quantity of gold, namely, Ridhima Bajaj but let off by the Custom Authorities in as much as release/redemption was allowed, is hardly of any legal consequence. By all means it is manifest that such decision was contrary to the law but then one bad precedent does not legally entitle the petitioner to claim similar benefit. 74. Therefore, without further ado, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h findings, the learned Adjudicating Authority inter alia relied on the decision in Sheikh Mohd. Omer v. Collector of Customs (supra) as also in the case of Om Prakash Bhatia v. Commissioner of Customs, Delhi (supra) and some other judicial pronouncements and accordingly decided to confiscate the gold items absolutely as also imposing penalty without option of its release/redemption. Although, the said order was set aside in appeal by the Appellate Authority vide order dated 18 July 2018, the Revisional Authority vide the impugned order dated 09 July 2021, upheld the order-in-original and held as under:- 7.3 The original authority has correctly brought out that, in this case, the conditions subject to which gold could have been legally imported have not been fulfilled. Thus, following the ratio of the aforesaid judgments, there is no doubt that the subject goods are prohibited goods . As such, the Commissioner (Appeals) has erred in holding that the impugned gold is not a prohibited item. 9. In view of the findings above, the Government holds that the Commissioner (Appeals) has proceed to allow redemption on the erroneous finding that the impugned gold bars are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-bonafide baggage as the same were being attempted to be removed from the customs area without declaration and the pax would have been successful in evading applicable customs duty if the Customs Officer had not intercepted the pax. As the free allowance is allowed only on the bonafide baggage as per Rule 3 of the Baggage Rules, 2016, I find that the benefit of free allowance is not available to the pax. 79. In arriving at such findings, the learned Adjudicating Authority took note of Section 7 of the FTDR Act as well as Rule 3 (1) (h) of the Foreign Trade (Exemption from application of rules in certain cases) Amendment Order, 2017. It was concluded that the petitioner was not an eligible passenger and her intention was to evade payment of customs duty and it was a clear case of mis-declaration under Section 77 of the Act. It was further held as under:- 8.3 I observe that gold once confiscated can be redeemed under Section 125 of the Customs Act, 1962. In the instant case, I am not inclined to give an option to the pax for redemption of the said goods as the passenger not only violated the Green Channel but also attempted an act of theft of goods detained by the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght the gold into the country. The manner of concealment, in this case clearly shows that the applicant had attempted to smuggle the seized gold to avoid detection by the Customs Authorities. Further, no evidence has been produced to prove licit import of the seized gold bars. The applicant has thus, failed to discharge the burden placed on him in terms of Section 123. 7.3 The original authority has correctly brought out that in this case, the conditions subject to which gold could have been legally imported, have not been fulfilled. Thus following the law laid down as above, there is no doubt that the subject goods are prohibited goods. 83. While denying the release/redemption of the goods, reliance was placed by the Ld. Adjudicating Authority on the decisions in Sheikh Mohd. Omer (supra), Om Prakash Bhatia (supra), M/s Raj Grow Impex (supra), Malabar Diamonds (supra), Garg Woollen Mills (supra), P. Sinnaswamy (supra), Raju Sharma (supra) and Mangalam Organics (supra). Hence, in the instant Writ Petition, we find that the decision of the learned Revisional Authority vide order dated 22 September 2021 whereby the goods weighing about 2000 grams were absolutely confisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d earlier. Hence, the confiscation as proposed under Section 111 (l) and (m) is warranted and liable to be upheld in view of facts and sequences of events in para 3.2. 6. I fixed that the Noticee had intention to evade payment of Customs Duty leviable on the goods, which she tried to import and clear clandestinely. The Noticee was intercepted with dutiable goods at the exit gate of the arrival hall after crossing the Green Channel and the value of dutiable goods carried by her was not deliberately filled up in Indian Customs Declaration Slip and knowingly and intentionally did not make true and proper declaration before Customs officer as required under Section 77 of the Customs Act, 1962 . Hence find she is liable for penal action under Section 112 and Section 114AA of the Customs Act, 1962. 85. The above referred determination was made in keeping with various judicial pronouncements, which were held to have a bearing on the present case, viz., Sheikh Mohd. Omer (supra), Om Prakash Bhatia (supra), Jasvir Kaur [2009 (241) ELT 0521 (Tri.)], Alfred Menezes (supra) and Nine Star Exports (supra). The petitioner in the revision application assailed the aforesaid order-in-or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h postulates that such an officer may in the case of prohibited goods release the same by providing an option to pay redemption fine in lieu of confiscation as opposed to the statutory obligation placed by that provision and which mandates that the Adjudicating Authority shall release all other categories of goods. The answer to the question which stands posited would have to be examined in the context of the definition of prohibited goods and the various other provisions contained in the Act as well as the Foreign Trade (Development and Regulation) Act, 1992 [FTDR] . 89. Learned counsels appearing for the petitioners as well as Mr. Tarun Gulati, learned senior counsel and amicus, would urge that in the absence of gold having been placed in the negative list, either in terms of a notification issued under Section 11 of the Act or Section 3(2) of the FTDR, it cannot be treated as falling in the category of prohibited goods. Mr. Gulati, the learned amicus, has laid stress upon the language employed in Section 11 which speaks of a prohibition, absolute or otherwise, being recognized to exist only if a notification indicative of the said intent had been duly published in the Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner .. 92. As would be evident from a perusal of Section 18, the Union Government stood empowered to prohibit the export of all or any goods including a class of goods specified in a notification issued in that respect, unless the exporter had furnished to the prescribed authority a declaration in terms as contemplated in that provision. Section 18 is thus structurally clearly distinct and distinguishable from the regime of prohibited goods which stands embodied in Section 2(33) of the Act. In fact, FERA did not even incorporate a defining provision for prohibited goods. 93. Reverting then to the submissions addressed by the learned amicus, we note that Sheikh Mohd. Omar was principally dealing with the provisions of Section 3 of the Import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed by Section 19 of the Sea Customs Act. An incorrect declaration in contravention of the Rules made under Section 27 of the Act is not to be deemed a contravention of any restriction imposed by Section 19 of the Sea Customs Act. It is therefore, quite clear that, in these cases, the imposition of the penalties under Section 167(8) of the Sea Customs Act was totally unjustified. Consequently, these appeals are allowed with costs, and the orders of the Adjudicating Officer, and the Board imposing the penalties under Section 167(8) of the Sea Customs Act are set aside. Penalties, if recovered, shall be refunded. 95. It must, however, be observed that Becker Gray was rendered in the context of Section 19 of the Sea Customs Act, 1878, and which was framed in the following words: - 19. Power to prohibit or restrict importation or exportation of goods. The Central Government may from time to time, by notification in the Official Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of [India] [across any customs frontier as defined by the Central Government]. 96. Significantly, Section 19 of the Sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 113(d) of the Act, we would refer to the same. It reads as under: 113. Confiscation of goods attempted to be improperly exported etc. The following export goods shall be liable to confiscation *** (d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; 8. The aforesaid section empowers the authority to confiscate any goods attempted to be exported contrary to any prohibition imposed by or under the Act or any other law for the time being in force. Hence, for application of the said provision, it is required to be established that attempt to export the goods was contrary to any prohibition imposed under any law for the time being in force. 9. Further, Section 2(33) of the Act defines prohibited goods as under: 2. (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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o confiscate, thus, would arise under both the situations. 16. In Prayag Exporters (P) Ltd. v. Commr. of Customs [(2000) 121 ELT 819 (cegat)] the Tribunal proceeded on the basis that Clause (d) of Section 113 of the Customs Act would not apply to cases where the export of goods is (sic not) prohibited. The Tribunal in arriving at the said conclusion referred to two of its earlier decisions in Badri Prasad Sons (P) Ltd. v. Collector of Customs [(1995) 80 ELT 624 (CEGAT)] and Shilpi Exports v. Collector of Customs [(1996) 83 ELT 302 (CEGAT)] . **** **** **** 18. However, it appears, the same Bench considered the matter at some length in Om Prakash Bhatia [(2003) 6 SCC 161 : (2003) 155 ELT 423] and opined that the exporters were obliged to declare the value of the goods. In a detailed judgment, this Court not only took into consideration the provisions of the Customs Act, but also the provisions of Section 15 of the Foreign Exchange Regulation Act and the rules framed thereunder, as also the notifications issued by the Central Government from time to time. The Court opined that for determining the export value of the goods, it is necessary to refer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Regulation) Rules, 1993, holding: (SCC p. 170, para 20) 20. Hence, in cases where the export value is not correctly stated, but there is an intentional over-invoicing for some other purpose, that is to say, not mentioning the true sale consideration of the goods, then it would amount to violation of the conditions for import/export of the goods. The purpose may be money-laundering or some other purpose, but it would certainly amount to illegal/unauthorised money transaction. In any case, over-invoicing of the export goods would result in illegal/irregular transactions in foreign currency. **** **** **** 21. It may be true that the said decision related to a matter concerning a drawback scheme, but a decision of this Court interpreting a different section by itself cannot, in our opinion, be brushed aside, only on the ground that the decision of the same Bench in Prayag Exporters [(2007) 12 SCC 401 : (2003) 155 ELT 4 (SC)] is applicable being related to the DEPB Scheme. The question, in our opinion, has to be considered having regard to the provisions of the definition of the prohibited goods , entry of goods together with the provisions of the Foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trade Act and the Waste Management Rules. 7. Clause 2.01 of the Foreign Trade Policy provides for prohibition and restriction of imports and exports. The export or import of restricted goods can be made under Clause 2.08 only in accordance with an authorisation/permission to be obtained under Clause 2.11. Photocopier machines/Digital multi-function print and copying machines are restricted items importable against authorisation under Clause 2.31. Indisputably, the respondents did not possess the necessary authorisation for their import. The Customs Authorities therefore prima facie cannot be said to be unjustified in detaining the consignment. Merely because earlier on more than one occasion, similar consignments of the respondent or others may have been cleared by the Customs Authorities at the Calcutta, Chennai or Cochin Ports on payment of redemption fine cannot be a justification simpliciter to demand parity of treatment for the present consignment also. The defence that DGFT had declined to issue such authorisation does not appeal to the Court. 8. Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned amicus submitted that Atul Automations correctly enunciates the legal position on a cumulative consideration of the provisions contained in the aforementioned two statutes and thus correctly recognizes and propounds the distinction between a restriction and a prohibition. 103. Learned amicus then referred to the decision of the Madras High Court in City Office Equipments v. Commissioner of Customs (Seaport-Import), Chennai 2014 SCC Online Mad 13005 where the following pertinent observations were made: - 13. Unfortunately, the Act does not define the expression Restricted Goods . But the definition of the expression Prohibited Goods itself contains an indication as to how the expression Restricted Goods has to be understood. 14. A careful look at Section 2(33) would show that even prohibited goods could be permitted to be imported or exported subject to some terms and conditions. The moment those conditions are complied with, those goods would cease to be prohibited goods. This is why the exclusion clause contained in the second part of Section 2(33) uses the expression any such goods . Therefore, it appears that the Customs Act recognizes only two ty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found to be not a pet animal and, therefore, its import was found to be violative of the Imports Control Order. It was, however, an admitted position that the import of horses or mares was not prohibited as such. The question was as to whether by making such import, the appellant contravened Section 111(d) read with Section 125 of the Customs Act. While answering the question, this Court held that any restriction on import or export is to an extent a prohibition; and the expression any prohibition in Section 111(d) of the Customs Act includes restrictions. This Court further underscored that any prohibition means every prohibition; and restriction is also a type of prohibition. **** **** **** 155. Thus, we have no hesitation in holding that the goods in question, having been imported in contravention of the notifications dated 29.03.2019 and trade notice dated 16.04.2019; and being of import beyond the permissible quantity and without licence, are prohibited goods for the purpose of the Customs Act. ***** **** **** 158. A bare reading of the provision aforesaid makes it evident that a clear distinction is made between prohibited goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports in the previous year under the cover of interim orders was amply noticed by this Court in Agricas (supra). This Court also held that the imports were not bona fide and were made by the importers only for their personal gains. **** **** **** 184. In regard to the submissions invoking equity, noticeable it is that various such features of equity were taken into consideration by the Adjudicating Authority, in the orders-in-original dated 28.08.2020 and by the High Court, in the impugned order dated 15.10.2020 while directing release of goods. We have already disapproved the orders so passed by the Adjudicating Authority and the High Court. Therefore, no leniency in the name of equity can be claimed by these importers. In fact, any invocation of equity in these matters is even otherwise ruled out in view of specific rejection of the claim of bona fide imports by this Court in Agricas (supra). Once this Court has reached to the conclusion that a particular action is wanting in bona fide, the perpetrator cannot claim any relief in equity in relation to the same action. Absence of bona fide in a claimant and his claim of equity remain incompatible and cannot stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant parts of the FTP, 2015-20 are extracted hereinbelow: - 2.01 Exports and Imports Free , unless regulated (a) Exports and Imports shall be Free except when regulated by way of prohibition , restriction or exclusive trading through State Trading Enterprises (STEs) as laid down in Indian Trade Classification (Harmonised System) [ITC (HS)] of Exports and Imports ... 109. It was the submission of Mr. Gulati that the various circulars and notifications which have been alluded to by the respondents cannot be equated with the requirements placed by Section 11 of the Act or Section 3(2) of the FTDR, since those circulars cannot be recognized to be notifications issued in accordance with the procedure as contemplated in those provisions. Mr. Gulati submitted that for a restriction to legally apply, it would have been imperative for the RBI to introduce the same by way of a statutory regulation made in exercise of powers conferred by Section 58 of the Reserve Bank of India Act, 1934 [The 1934 Act] . According to the learned amicus, a circular cannot be countenanced to be a valid substitute for a notification or a regulation. 110. It was then submitted that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises has laid down in Indian Trade Classification (harmonized system) of exports and imports. Para 2.01 empowers the DGFT to impose restrictions on export and import through a notification for the purposes mentioned in the said para. Para 4.41 of the scheme deals with nominated agencies. Thus, from perusal of the provisions of Foreign Trade (Development and Regulation) Act, 1992 and the Foreign Trade Policy, it is evident that amendments to the Foreign Trade Policy can be made by the Central Government under Section 5 of the Act or by DGFT by issuing a Notification under Para 2.07 of the Foreign Trade Policy. The change in categorization from free to restricted can be made in respect of import of goods, only by an amendment and the same cannot be done by DGFT by issuing a Circular. **** **** **** 9. Thus on the date, the gold medallions were imported i.e. 3-72017 there was no restriction and the restriction was imposed by the Central Government vide Notification dated 25-8-2017 subsequently, which has been quoted supra. In other words, there was no restriction with regard to import of gold medallion on the date the same was imported by the respondent. 10. Simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y/Foreign Trade Policy as prevalent at the relevant point of time. 111. The learned amicus had also placed for our consideration a detailed note indicating the divergent views which have been expressed by different High Court on the question which stands posited. In Bhargavraj Rameshkumar Mehta v. Union of India Neutral Citation No. 2018:GUJHC:2473-DB, the Gujarat High Court while dealing with the question of smuggled goods and whether the same would fall within the definition of prohibited goods answered the same in the following terms:- 15. We may recall, the contention of the Counsel for the petitioner in this respect was that the gold at the relevant time was freely importable. Import of gold was not prohibited. Case of the petitioner would therefore, fall under clause (ii) of Section 112 and penalty not exceeding 10% of the duty sought to be evaded would be the maximum penalty imposable. Such contention shall have to be examined in the light of the statutory provisions noted above. As noted, Section 111 of the Act provides for various eventualities in which the goods brought from a place outside India would be liable for confiscation. As per clause (d) of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it shall necessarily have the reference to the goods, import of which is not prohibited or of which import is permissible subject to fulfilment of conditions and such conditions have been complied with. Condition of declaration of dutiable goods, their assessment and payment of customs duties and other charges is a fundamental and essential condition for import of dutiable goods within the country. Attempt to smuggle the goods would breach all these conditions. When clearly the goods are sought to be brought within the territory of India concealed in some other goods which may be carrying no duty or lesser duty, there is clear breach of conditions of import of goods though per se import of goods may not be prohibited................... 112. In Mohd. Haroon v. Additional Director General, DRI Judgment dt. 26.04.2021 in WP(MD) Nos. 3917 3918 of 2020 WMP(MD) No. 5459 of 2021 (Mad. HC), the Madras High Court (Madurai Bench) significantly observed that while gold would not be a prohibited item of import it would fall in the category of a regulated or restricted article. Md. Haroon while following an identical view which was expressed by the Madras High Court in Malabar Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be designated by the Ministry of Finance (Deptt. of Economic Affairs). In exercise of the powers conferred under paragraph 4.11 of the Export and Import Policy 1997-2002 read with Col. 4 of the ITC (HS) Classification in Chapter 71, the Director General of Foreign Trade hereby notifies that these designated agencies as mentioned in the Notification 80/97 referred above may import gold and silver for sale in the domestic market also without a licence or without surrender of SIL in respect of following entries of ITC (HS): Classifications of Export and Import Items 19972002:- Gold : 710812 00 Other unwrought forms. 12. The same was further amended by a Public Notice No. 54 dated 4th November, 1997 which is to the following effect :- Attention is invited to Public Notice No. 51/(PN)/9702 dated 27th October, 1997 on the above subject. In partial modification of the above Public Notice, it is hereby notified that the imprt of gold and silver shall be permitted to the nominated and authorised agencies by the Reserve Bank of India (RBI)/Ministry of Finance. It is further notified that payment of Customs duty for import of gold and silver by such agencies without surrender of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where (at ITR p. 93) it was observed as under: (SCC p. 654, para 7) It is true that by a legal fiction created under Section 41(2) a balancing charge arising from sale of old machinery or building is treated as deemed income and the same is brought to tax; in other words, the legal fiction enables the Revenue to take back what it had given by way of depreciation allowance in the preceding years since what was given in the preceding years was in excess of that which ought to have been given. This shows that the fiction has been created for the purpose of computation of the assessable income of the assessee under the head Business Income . It was rightly pointed out by the learned Solicitor General that legal fictions are created only for a definite purpose and they should be limited to the purpose for which they are created and should not be extended beyond their legitimate field. But, as indicated earlier, the fiction under Section 41(2) is created for the purpose of computation of assessable income of the assessee under the head Business Income and under Section 80-E(1), in order to compute and allow the permissible special deduction, computation of total income in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein while considering the clause (d) of Section 111 of the Customs Act it was clearly held that prohibition may be complete or partial and any restriction on import or export is to an extent lead to prohibition. 114. The Madras High Court in Commissioner of Customs, Chennai vs. Samynathan Murugesan 2009 SCC Online Mad 819 following the line propounded in Om Prakash Bhatia held that once the conditions for import had not been complied with and gold was being carried by a person who was not an eligible passenger, it would clearly fall in the category of prohibited goods. The said High Court has held as follows:-. 7. Section 11 empowers the Central Government to prohibit either absolutely or subject to such conditions to be fulfilled before or after clearance the import or export of the goods of any specified direction by issuing a notification in this behalf. **** **** **** 8. Relevant portion of The Exemption Notification 31/2003 under Section 25 of the Customs Act reads thus : G.S.R. (E).- In exercise of the powers conferred by subsection (1) of Section 25 of the Customs Act, 1962 (52 of 1962) and in supersession of the notification of the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs stay in Singapore and short visits made by the eligible passenger during the aforesaid period of six months shall be ignored if the total duration of stay on such visits does not exceed thirty days. He had gone to Singapore on 19-4-2005 was coming to India on 12-7-2005 i.e., after a period of less than six months. So he was not an eligible passenger . The previous periods where he had stayed for longer duration are not relevant now. The liberalisation policy and the repeal of the Gold control order had weighed with the Tribunal. The Tribunal ought to have considered whether he could have carried the gold as part of his baggage as an eligible passenger. 9. In view of meaning of the word prohibition as construed laid down by the Supreme Court in Om Prakash Bhatia case we have to hold that the imported gold was prohibited goods since the respondent is not an eligible passenger who did not satisfy the conditions. The impugned order deserves to be set aside. 115. In Malabar Diamond Gallery, the Division Bench of the Madras High Court dealt with the issue which arises in some detail. The High Court was dealing with an appeal directed against the judgment of a learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves life to that Order, and, therefore, the acts authorised under that Order can be done subsequent to the coming into force of the Ordinance. The second part appears to have been enacted for the purpose of avoiding this difficulty or, at any rate, to dispel the ambiguity. (iv) In State of W.B. v. Union of India reported in AIR 1963 SC 1241, the Apex Court held that in considering the expression used by the Legislature, the Court should have regard to the aim, object and scope of the statute to be read in its entirety. (v) In State of Uttar Pradesh v. Dr. Vijay Anand Maharaj reported in AIR 1963 SC 946 , the Hon'ble Supreme Court held as follows: The fundamental and elementary rule of construction is that the words and phrases used by the Legislature shall be given their ordinary meaning and shall be constructed according to the rules of grammar. When the language is plain and unambiguous and admits of only one meaning, no question of construction of a statute arises, for the Act speaks for itself. It is a well recognized rule of construction that the meaning must be collected from the expressed intention of the Legislature. (vi) In Namamal v. Radhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is not permissible to omit any part of it. For, the principle that the statute must be read as a whole is equally applicable to different parts of the same section. .It also provides for the manner of the exercise of such power. . Sub-section (1) of Section 36 is made subject to the fulfilment of the conditions prerequisite (x) In the case of Reserve Bank of India v. Peerless G.F., Co., Ltd., (1987) 1 SCC 424 : AIR 1987 SC 1023, the Hon'ble Apex Court held: Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be interpreted without any violence to its language. It is also trite that when an expression is capable of more than one meaning, the Court would attempt to resolve the ambiguity in a manner consistent with the purpose of the provision, having regard to the great consequences of the alternative constructions. (xiv) In Visitor Amu v. K.S. Misra reported in (2007) 8 SCC 593, the Supreme Court held that, It is well settled principle of interpretation of the statute that it is incumbent upon the Court to avoid a construction, if reasonably permissible on the language, which will render a part of the statute devoid of any meaning or application. The Courts always presume that the legislature inserted every part thereof for a purpose and the legislative intent is that every of the statute should have effect. The legislature is deemed not to waste its words or to say anything in vain and a construction which attributes redundancy to the legislature will not be accepted except for compelling reasons. It is not a sound principle of construction to brush aside words in a statute as being in apposite surplusage, if they can have appropriate application in circumstances conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it clear that importation of goods, defined as illegal or prohibited or without complying with the conditions, or in violation of statutory provisions in the Customs Act, 1962 or any other law for the time being in force and in all cases, whether there is either total prohibition or restriction, in the light of the judgmnet of the Apex Court in Om Prakash Bhatia's case, such goods should fall within the definition of Prohibited goods. When import is in contravention of statutory provisions, in terms of Sections 11 or 11A of the Customs Act, 1962 or any other law, for the time being in force and when such goods squarely fall within the definition illegal import , or the other provisions in the statute, dealing with prohibition/restriction, the same are to held as, prohibited goods and liable for confiscation. 81. As rightly contended by Mr. A.P. Srinivas, learned counsel for the respondents that under Section 123 of the Customs Act, 1962, if the importer fails to discharge the burden that the goods seized from him, were not smuggled, then there is a strong reason for the proper officer to seize such goods. Smuggling is nothing but importing goods clandestinely, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, is made, in the light of the decision in Lexus Exports Pvt. Ltd's case (cited supra), exercise of such right under Section 110A is only provisional and not absolute. On the culmination of adjudication proceedings, the authority may grant an option to pay fine in lieu of confiscation under Section 125 of the Customs Act, 1962 and such expected or anticipated right, cannot give rise to a cause for issuance of any mandamus sought for, under Section 110A of the Act and on the facts and circumstances of the case, when provisional release, sought for, is denied by the authorities, by filling a counter affidavit, contending that there is a prima facie case of smuggling. 95. If Courts have to consider the prayer sought for, under Section 110A of the Act, on the presumption that such rights are likely to be granted in future, under Section 125 of the Act, by the competent authority, then we would be exceeding in our jurisdiction. At the stage, when provisional release is either ordered or denied, discretion exercised by the authority, is administrative in nature. 96. Objective satisfaction, at the stage of provisional release, casts a duty on the authority, to consider, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns any goods which are chargeable to duty and on which duty has not been paid; (15) duty means a duty of customs and leviable under this Act; *** (23) import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India; *** (25) imported goods means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (26) importer , in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer; *** (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; 12. Dutiable goods are goods whose import is permitted by the Act or any other law in force. Duty is the tax leviable on the goods occasioned by their import into India or their export out of India. The dutiability of the goods is covered by Section 12 of the Act which is the charging section. Under this section, all goods imported into or expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent definitions. 22. In order to understand the true meaning of the term imported goods in the exemption notification, the entire scheme of the Act requires to be taken note of. As noted above, imported goods for the purpose of this Act is explained by a conjoint reading of Sections 2(25), 11, 111 and 112. Reading these sections together, it can be found that one of the primary purposes for prohibition of import referred to the latter is the prevention of smuggling [See Section 11(2)(c)]. Further, in the light of the objects of the Act and the basic skeletal framework that has been enumerated above, it is clear that one of the principal functions of the Act is to curb the ills of smuggling on the economy. In the light of these findings, it would be antithetical to consider that smuggled goods could be read within the definition of imported goods for the purpose of the Act. In the same light, it would be contrary to the purpose of exemption notifications to accord the benefit meant for imported goods on smuggled goods. 118. In Amba Lal, the Supreme Court significantly observed that goods which have been smuggled would not fall within the definition of imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant against the Order in Original has recorded a finding that the contraband gold seized from the possession of the writ-applicant as such is not a prohibited item and can be imported but such import is subject to the restrictions including the RBI regulations. However, at the same time, the view taken by the appellate authority is that the writ-applicant returned to India within 37 days from the date of his departure to Sharjah and he could not be said to be qualified as an eligible person to import gold and, therefore, the gold is liable for absolute confiscation. In other words, the view taken is that when an attempt is made to conceal the contraband clandestinely, the same is liable for absolute confiscation and there is no question of giving an option to pay the fine in lieu of the confiscation. In this regard, the appellate authority seems to have relied on a decision of the Madras High Court in the case of Commissioner of Customs (Air) v/s. Samynathan Murugesan. In the said case, it was the Commissioner of Customs (Air), Customs House, Chennai, who was the petitioner before the High Court. The question before the High Court was, whether in the facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restriction, in the light of the judgment of the Supreme Court in Om Prakash Bhatia's case, such goods should fall within the definition of Prohibited goods. When import is in contravention of statutory provisions, in terms of Sections 11 or 11A of the Customs Act, 1962 or any other law, for the time being in force and when such goods squarely fall within the definition illegal import , or the other provisions in the statute, dealing with prohibition/restriction, the same are to held as, prohibited goods and liable for confiscation. **** **** **** 55. The expression 'subject to the prohibition under the Customs Act, 1962 or any other law for the time being in force, in Section 2(33) of the Customs Act, has to be read and understood, in the light of what is stated in the entirety of the Act and other laws. Production of legal and valid documents for import, along with payment of duty, determined on the goods imported, are certainly conditions to be satisfied by an importer. If the conditions for import are not complied with, then such goods, cannot be permitted to be imported and thus, to be treated as prohibited from being imported. 56. In Om Prakash Bha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggage for the purpose of clearing the goods, to make a declaration of the contents of the baggage to the proper office and also the customs Notification No.3/2012, dated 16.01.2012, that only passengers of Indian origin or a passenger in possession of a valid passport, issued under the Passport Act, 1967, who have stayed abroad for six months and above alone are eligible to import gold of foreign origin and clear the same on payment of customs duty, at the rate prescribed. 121. Having noticed the different views which have been expressed by various High Courts, this may be an appropriate juncture to briefly take note of some of the incidental rules, circulars and notifications which are asserted to govern the subject. However, the said discussion must necessarily be prefaced with the observation that undisputedly there is no specific notification issued either under Section 11 of the Act or Section 3(2) of the FTDR relating to the import of gold. 122. To enable us to have a broad overview of the statutory scheme which prevails, our attention was invited firstly to the Baggage Rules 2016. It may however be noted that Rules 3, 4 and 5 essentially deal with the permissible lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Free Subject to RBI Regulations. 5 71069290 Other Free Subject to RBI Regulations. 6 71081100 Non-monetary: Powder Free Subject to RBI Powder Regulations. 7 71081200 Other unwrought forms Free Subject to RBI forms Regulations. 8 71081300 Other semi-manufactured Forms Monetary Free Subject to RBI Regulations. 9 71189000 Other Free Subject to RBI Regulations. 10 85269300 Global Positioning System (GPS) Receiver; Differential Global Positioning System (DGPS) Receiver Free 11 93040000 Other Arms(for example, Spring, Air or Gas Guns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Limited (DIL); (8) Gems Jewellery Export Promotion Council (G J EPC); (9) A Star Trading House (only for Gems Jewellery sector) or a Premier Trading House under paragraph 3.10.2 of Foreign Trade Policy; and (10) Any other agency authorised by Reserve Bank of India (RBI) ; 3. DGFT has specified minimum supply criteria of 15% by nominated agencies (other than the designated banks nominated by RBI and Gems jewellery units operating under EOU and SEZ scheme) and laid down procedure and condition to be followed by these nominated agencies (other than the designated banks nominated by RBI and Gems jewelry units operating under EOU and SEZ scheme) vide Policy circular No. 77 (RE-2008)/2004-09 dated 31.03.2009 as amended from time to time. Relevant notifications No57/2000-Cus dated 08.05.2000 and 52/2003-Cus dated 31.03.2003 have been suitably amended vide notification No. 106/2009-Customs dated 14.09.2009 allowing aforesaid nominated agencies duty free import of precious metals for supply to exporters for manufacture of jewellery and export thereof subject to the procedure and conditions specified by DGFT. 4. In order to avoid divergent practices and to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Customs may allow more than one Nominated Agencies to keep their imported goods in the same vault provided the quantities are kept segregated and separate accounts are maintained; (vi) the Nominated Agencies will be required to keep the imported duty free goods for supply to the exporters segregated from the quantities imported for domestic consumption on payment of duty; (vii) the Nominated Agencies shall be exempt from following the double lock system. Physical presence of the Bond Officer will not be required for bonding or ex-bonding the goods. No cost recovery charges would be payable by the Nominated Agencies; (viii) the Nominated Agencies can be visited by Custom officers for surprise audit or checks. The Commissioner should devise a system of random audit at least once in 6 months initially and once in a year subsequently; (ix) the exporters intending to receive precious metal from the Nominated Agencies will register themselves with their jurisdictional Asstt. Commissioners who will issue them a onetime Certificate specifying therein the details of their units such as name and address of the unit and the head/owner of the organization. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nominated Agencies on submission of EP copy of the shipping bill Nominated agencies shall also monitor the export proceeds realization of such shipments against which they have replenished precious metal, on the basis of Bank certificate of realization in Appendix 22A to be submitted by exporters to the nominated agencies, as a proof of having exported the jewellery. 127. We also take note of the Customs Notification dated 17 March 2012 and which amended the relevant provisions of the Customs Tariff Act, 1975. The said Notification while dealing with gold dore bars, gold bars and coins provided as under:- S.No. Chapter or Heading or subheading or tariff item Description of goods Standard rate Additional duty rate Condition No. 318. 71 Gold dore bar, having gold content not exceeding 95% Nil 400[8.75%] 5 and 34 4 [321] 71 or 98 (i) Gold bars, other than tola bars, bearing manufacturer s or refi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) imported by him within fifteen days of his arrival in India, or (c) is taken delivery of from a customs bonded warehouse of the State Bank of India or the Minerals and Metals Trading Corporation Ltd., subject to the conditions 1; provided such eligible passenger files a declaration in the prescribed form before the proper officer of customs at the time of his arrival in India declaring his intention to take delivery of the gold or silver from such a customs bonded warehouse and pays the duty leviable thereon before his clearance from customs. Explanation .- For the purposes of this notification, eligible passenger means a passenger of Indian origin or a passenger holding a valid passport, issued under the Passports Act, 1967 (15 of 1967), who is coming to India after a period of not less than six months of stay abroad; and short visits, if any, made by the eligible passenger during the aforesaid period of six months shall be ignored if the total duration of stay on such visits does not exceed thirty days and such passenger has not availed of the exemption under this notification or under the notification being superseded at any time of such short visits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the nominated banks/ agencies/ EOUS/ SEZs in Gem Jewellery sector, mode of payment-wise, as per Annex-'3'; b) Statement on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUS/ SEZS in Gem Jewellery sector during the month under report as well as the cumulative position as at the end of the said month beginning from the 1st month of the Financial Year, as per Annex '4'. Both the statements shall be submitted, even if there is 'Nil' position and they should reach the aforesaid office of RBI by the 10th of the following month / half year to which it relates. The statements may also be submitted by e-mail. 129. RBI thereafter issued another Circular on 04 June 2013 regulating the import of gold by nominated banks and agencies. The relevant extracts of that Circular are extracted hereunder:- Attention of Authorised Persons is drawn to our AP. (DIR Series) Circular No. 103 dated May 13, 2013 on the captioned subject in terms of which, it was decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of the exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circular no. 28/2009-Cus., dated 14-10-2009 insofar as the import of gold is concerned. The import of silver and platinum shall continue to be governed by the customs circular dated 14-10-2009. 2. Henceforth, gold shall be permitted to be imported only by the agencies notified by DGFT, which as of now are as follows: i. Metals and Minerals Trading Corporation limited (MMTC); ii. Handicraft and Handloom Export Corporation (HHEC); iii. State Trading Corporation (STC); iv. Project and Equipment Corporation of India Ltd. (PEC); v. STCL Ltd; vi. MSTC Ltd; vii. Diamond India Limited (DIL); viii. Gems Jewellery Export Promotion Council (G J EPC); ix. A Star Trading House (only for Gems Jewellery sector) or a Premier Trading House under paragraph 3.10.2 of Foreign Trade Policy; and x. Any other agency authorized by Reserve Bank of India (RBI). 3. Import of gold by the banks/agencies/entities specified in para 2 above, henceforth referred to as Nominated Agencies for the purpose of this Circular, shall be subject to the following: a. Import of gold in the form of coins and medallions is prohibited. b. It shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 25% of the estimated amount of duty involved on import of gold in a month or the bonds executed by them. The exemption from bank guarantee to the designated banks nominated by RBI and public sector undertakings shall be permissible subject to the following conditions: a. the said entity has not defaulted in following the procedure and condition specified by Customs and/or DGFT; b. in case of default in export of jewellery manufactured out of precious metal supplied by nominated agency within the prescribed period, the said entity has not defaulted in payment of duty within the specified period; c. the said entity has not been served with a show cause notice or no demand confirmed against it, during the preceding 3 years, for violations involving fraud or collusion or any willful misstatement or suppression of facts under relevant provisions of the Customs Act, 1962, the Central Excise Act 1944, the Finance Act, 1994 covering Service Tax, the Prevention of Money Laundering Act, 2002, the Foreign Trade (Development Regulation) Act, 1992, the Foreign Exchange Management Act, 1999 and the Rules made thereunder, vii. the Commissioner of Customs may allow more t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -I. This register shall be maintained by the customs officer separately for each of the nominated agency importing gold under his/her jurisdiction; xiii. the Nominated Agencies shall also maintain an account of the goods released to the exporters (exporter-wise) on day-to-day basis. This account shall be liable for inspection by any Customs authority as the account of a bonded warehouse; xiv. proof of export by the exporter shall be furnished in accordance with para 4A.8(a) of HBP V.1, to the nominated agencies as a proof of having exported the jewellery made from the duty free gold released to them within the period prescribed in the Foreign Trade Policy. The Nominated Agency shall furnish a self-certified copy of the same to the customs officer where the gold was bonded; xv. wherever such proof of export is not produced within the period prescribed in the Foreign Trade Policy, the Nominated Agency shall (without waiting for its recovery from the exporter) deposit the amount of duty calculated at the effective rate leviable on the quantity of precious metal not exported within 7 days of expiry of the period within which the jewellery manufactured out of the said qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered, shall be submitted to the customs officer by the license holder. v. the license holder shall ensure that at least 20% of the gold manufactured out of each consignment of gold dore bars is supplied to the exporters and the remaining is supplied for domestic use in accordance with the RBI circular dated 14-8-2013, as revised; vi. entities/units in the SEZ and EOUS, Premier and Star Trading Houses shall be permitted to procure gold from the refinery of the license holder exclusively for the purpose of exports only and these entities shall not be permitted to clear such gold for any purpose other than for exports (irrespective of whether they are nominated agencies or not). Further, gold made available by such refineries to units in the SEZ and EoUs, Premier and Star trading houses shall not qualify as supply of gold to the exporters, for the purpose of the 20/80 Scheme; vii. the central excise officer, in whose jurisdiction the refinery is registered, shall monitor that at least 20% quantity of refined gold shall be for the supply to the exporters only and remaining can be cleared in accordance with the RBI circular dated 14-8-2013, as revised; viii. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to time, the Central Government hereby amends the import policy with conditions of gold in any form, other than monetary gold and silver in any form under Chapter 71 of ITC(HS), 2017, Schedule -I (Import Policy). Exim Code Item Description Present Policy Revised Policy Existing Policy Condition Revised Policy Condition 71081100 Powder Free Restricted Subject to RBI Regulations Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies). 71081200 Other unwrought forms Free Restricted Subject to RBI Regulations. However, import policy of Gold Dore is Restricted . Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other import agencies). Gold Dore can be imported by refineries against a licence with AU condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld dore can be imported by refineries against a license with AU conditions. Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies) and IFSCA (for qualified jewelers through India International Bullion Exchange). Gold dore can be imported by refineries against a license with AU conditions. 71081300 Other semi-manufactured forms Restricted Import is allowed only through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies). No change in existing Policy Condition. **** **** **** Effect of the Notification: In addition to nominated agencies as notified by RBI (in case of banks) and nominated agencies notified by DGFT, qualified jewellers as notified by International Financial Services Centres Authority (IFSCA) will be permitted to import gold under specific ITC(HS) Codes through India International Bullion Exchange IFSC Ltd. (IIBX). However, Import of gold/silver under Advance Authorisation and supply of gold/silver directly by foreign buyers t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be prescribed. 136. We also take note of the significance of Section 111 of the Act which deals with the confiscation of improperly imported goods. While dealing with the circumstances in which the imported goods may become liable for confiscation, the provision firstly speaks of dutiable or prohibited goods. Section 111, apart from speaking of dutiable or prohibited goods also brings within its net goods which have come to be imported either in violation of conditions prescribed or goods which have been concealed as well as imported articles which may have otherwise not complied with the conditions prescribed under the Act. 137. What thus clearly appears to flow from Section 111 is of the power of confiscation being extendable not just in the case of dutiable or prohibited goods but also to goods whose import may have been effected in violation of the conditions prescribed by the Act. This is clearly evident from a reading of Clauses (e), (f), (g), (h), (i), (j), (m), (n), (o) and (p) of Section 111. 138. Section 3 of the FTDR empowers the Union Government to publish an order encapsulating provisions for the development and regulation of foreign trade. In terms of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDR or the rules and orders made thereunder. It was emphasised that the overarching effect of sub-section (4) which is clearly evident from the Legislature having employed the phrase without prejudice to anything contained in any other law must be given its full effect. It was the submission of the learned amicus that the principles enunciated in Sheikh Md. Omar and Om Prakash Bhatia must be understood and appreciated bearing in mind the indubitable fact that they came to be rendered prior to the introduction of sub-section (4) in Section 3 of the FTDR. According to the learned amicus, the various decisions and precedents which have proceeded to adopt the line of reasoning which weighed upon the Supreme Court while deciding Sheikh Md. Omar and Om Prakash Bhatia have clearly failed to notice or appreciate the impact of Section 3(4). 141. We however find ourselves unable to countenance the said submission since it fails to take into consideration the prescriptions in relation to gold as embodied in the FTP as well as the ITC(HS). Undisputedly, both the FTP as well as the ITC(HS) while declaring that the import of gold would be free parallelly also stipulate that it would be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of doubt by the mere introduction of sub-section (4) in Section 3 of the FTDR. 145. In summation, we note that Section 2(33) of the Act while defining prohibited goods firstly brings within its dragnet all goods in respect of which a prohibitory notification or order may have been issued. That order could be one promulgated either under Section 11 of the Act, Section 3(2) of the FTDR or any other law for the time being in force. However, a reading of the latter part of Section 2(33) clearly leads us to conclude that goods which have been imported in violation of a condition for import would also fall within its ambit. If Section 2(33) were envisaged to extend only to goods the import of which were explicitly proscribed alone, there would have been no occasion for the authors of the statute to have spoken of goods imported in compliance with import conditions falling outside the scope of prohibited goods . 146. Our conclusion is further fortified when we move on to Section 11 and which while principally dealing with the power to prohibit again speaks of an absolute prohibition or import being subject to conditions that may be prescribed. It is thus manifest that a prohibitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has clearly expounded upon the correct meaning to be assigned to the expression prohibited goods . We find ourselves unconvinced to doubt the correctness of the view so expressed even when tested against the statutory regime which currently prevails. The decision of the Tribunal in Prayag Exporters as well as Atul Automations of the Supreme Court fail to either notice or consider the judgment in Sheikh Mohd. Umer. Though Atul Automations is a judgment rendered by a Bench of a larger coram, the same has been duly noticed in Raj Grow Impex which had reaffirmed the view expressed in Sheikh Mohd. Umer. The discordant line which came to be drawn in the decision of the Supreme Court in Prayag Exporters was ultimately explained away in Suresh Jhunjunwala. 149. Turning then to the decisions rendered by some of the other High Courts, we find ourselves unable to countenance the line of reasoning as adopted by the Madras High Court in City Office Equipment when it held that if prohibited goods are imported in compliance with applicable conditions, they become non-prohibited goods. The view expressed in that decision to the effect that the Act contemplates a regime where either an absolu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SBI s, Central Office was whether RBI could regulate the import/export of goods in general . While responding to that query, the Central Office of SBI is stated to have observed that the regulation of import or export of any item would fall within the domain of the Ministry of Commerce/DGFT and additionally, governed by the Export Import Policy/Foreign Trade Policy. 153. In our considered opinion, the response of the SBI can by no stretch of imagination be construed as diluting the rigour of a regulatory measure operated by RBI in relation to the import of gold. Quite apart from the fact that the response was not of the RBI itself, we find that SBI correctly responded to the query which stood posed by asserting that the regulation of imports or exports is principally a subject which falls within the remit of the Ministry of Commerce/DGFT. It had further while replying to the query stated that the regulation of imports/exports would be governed by the EXIM Policy and the FTP as prevalent at the relevant time. 154. The submission addressed by the learned amicus does not commend acceptance when one bears in mind the admitted position that the stipulation with respect to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, (i) 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 216 [not exceeding the value of the goods or five thousand rupees], whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty 217 [not exceeding the duty sought to be evaded on such goods or five thousand rupees], whichever is the greater; (iii) 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 219 [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater;] (iv) 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 val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unication of the order by which such increase in the duty or interest takes effect: Provided also that where any penalty has been levied under this section, no penalty shall be levied under section 112 or section 114. Explanation . For the removal of doubts, it is hereby declared that (i) the provisions of this section shall also apply to cases in which the order determining the duty or interest under sub-section (2) of section 28 relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President*; (ii) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person.] 3. 81. Regulations in respect of baggage. The Board may make regulations, (a) providing for the manner of declaring the contents of any baggage; (b) providing for the custody, examination, assessment to duty and clearance of baggage; (c) providing for the transit or transhipment of baggage from one customs station to another or to a place outside India. 4. 77. Declaration by owner of ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation issued by the Central Government under Section 3 of the FTD R Act was assailed for imposing quantitative restrictions on import of Peas and Pulses. 10. The case of Hargovind Dass K. Joshi v. Collector of Customs was one where the appellants had imported a consignment of Zip Fastners , which goods were confiscated imposing penalty and no option was given to the appellants for redeeming the goods on payment of such fine as may be determined by the Collector of Customs in lieu of confiscation. It is not clear from the reading of the Judgment as to what the alleged violation was. However, the matter was remanded back to the Collector of Customs for a limited purpose to decide whether to give an option to the appellants to redeem the confiscated goods on payment of fine. 11. The President of the Union may from time to time, by notification in the Gazette, prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of the Union of Burma or any specified part thereof, either generally or from or to any specified country, region, port or place beyond the limits of the Union of Burma. 12. 58. Power of the Central Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funded; and (r) generally, for the efficient conduct of the business of the Bank. 7[(3) Any regulation made under this section shall have effect from such earlier or later date as may be specified in the regulation. (4) Every regulation shall, as soon as may be after it is made by the Central Board, be, forwarded to the Central Government and that Government shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the regulation, or both Houses agree that the regulation should not be made, the regulation shall, thereafter, have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that regulation.] 8[(5)] Copies of all regulations made under this section shall be available to the public on payment. 13. 123. B ..... 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