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Gold Imported In Violation Of Is '':
In a significant ruling on , a Division Bench of the comprising Justices Debangsu Basak and Aryak Dutt held that gold imported into India in violation of applicable qualifies as "" under . The court allowed the appeals filed by the and dismissed the cross-appeals by Gopal Saha and Ajgar Seikh, thereby restoring the original penalty of Rs. 10.07 crore each imposed on them.
Gold Smuggled Via Unauthorised Route: A Rs 10.07 Crore Case
The case arose from an seizure of 36.856 kg of gold valued at approximately Rs. 10.07 crore by the . Acting on specific intelligence, the DRI intercepted nine individuals near the Indo-Bangladesh border who were found in possession of gold that had been smuggled into India through an unauthorised land route. Investigations revealed that the gold was destined for Gopal Saha, who was identified as the mastermind, with Ajgar Seikh acting as his principal accomplice.
The Commissioner of Customs (Preventive), Kolkata, passed an on , confiscating the gold under and imposing penalties of Rs. 10.07 crore on both Saha and Seikh under Section 112. The writ petitioners challenged this order before a single judge, who held that gold was not "" and reduced the penalty, remanding the matter for reconsideration. Both sides appealed against this decision.
The Core Legal Question: What Are ''?
The central issue before the division bench was whether gold falls within the definition of "
" under Section 2(33) of the Customs Act. The provision defines
as
"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."
The writ petitioners argued that since no notification under
specifically prohibits the import of gold, it cannot be treated as
. They further contended that the penalty under Section 112(i), which applies to
, was wrongly imposed without specifying the relevant clause.
Arguments: Writ Petitioners vs
Learned counsel for the writ petitioners, , contended that the adjudicating authority lacked jurisdiction and failed to specify which clause of Section 112 was invoked, rendering the penalty unsustainable. He relied on the 's decision in to argue that imposing penalty without specifying the clause is a . On merits, he argued that the gold had never reached Gopal Saha, the intended recipient, and therefore he could not have dealt with it. He also asserted that gold is not a prohibited item, citing several judgments including those of the in and , as well as the in .
In response, , senior advocate for the , argued that Section 2(33) encompasses not only prohibitions under the Customs Act but also those under any other law, including regulations issued by the and the Foreign Trade Policy. He contended that the import of gold is heavily regulated—bulk imports can only be made by nominated banks and agencies, while passenger imports are governed by . Neither Saha nor Seikh fell within any authorised category. He relied on decisions in and , which held that gold imported contrary to restrictions is .
Court's Reasoning: Under Any Law Matter
The division bench meticulously examined the definition of "" and held that it extends beyond goods banned under . The court observed:
"In order to assess whether, the seized goods were within the meaning of the Act of 1962 or not, not only prohibition issued under the Act of 1962 is required to be considered but also any prohibition that have been issued under any other law for the time being in force."
Applying this principle, the court noted that the RBI has, through various circulars and notifications, imposed significant restrictions on the import of gold. Bulk importation is permitted only through authorised agencies, and passenger imports are limited by . Since the seized gold was smuggled through an unauthorised border route and the petitioners were not among the authorised importers, the import was clearly in violation of these restrictions, bringing the gold within the definition of under Section 2(33).
The court further rejected the argument that the penalty order was invalid due to non-specification of the clause under Section 112. It held that as long as the adjudicating authority had the power to impose the penalty, quoting an incorrect or incomplete provision does not vitiate the order. The adjudicating order was a that clearly treated the gold as and imposed penalty under Section 112(i).
Key Observations
The court made several pivotal observations during its analysis:
" within the meaning of Section 2(33) of the Act of 1962 is not limited to goods which have been so prohibited by virtue of exercise of powers under Section 11 of the Act of 1962."
"Once, the seized goods fall within the definition of Section 2(33) of the Act of 1962 then, a proceeding initiated after issuance of a under Section 124 of the Act of 1962 would attract the provisions of Section 112(i) of the Act of 1962."
"Quoting of wrong section in the order impugned will not vitiate the order impugned in the event, the Adjudicating Authority has the power to pass the order impugned."
The court also distinguished between and , noting that Section 112 provides for higher penalties in the case of —up to the value of the goods or Rs. 5,000, whichever is greater—as opposed to a maximum of 10% of duty evaded for .
Final Decision: Penalty Upheld, Single Judge Order Set Aside
The division bench answered the two issues in favour of the . It held that gold is a prohibited item within the meaning of the Customs Act, and that the adjudicating authority was correct in imposing penalty under Section 112(i). Consequently, the appeals filed by the writ petitioners (APO 139/2018 and APO 140/2018) were dismissed, and the appeals filed by the (APO 143/2018 and APO 144/2018) were allowed. The impugned judgment of the single judge was set aside, and the original was restored.
This ruling clarifies that goods subject to under any law—including RBI regulations and foreign trade policies—can be treated as "" for the purposes of the Customs Act. It reinforces the stringent penalties applicable to smuggling and unauthorised importation, and sends a strong message that circumventing regulatory frameworks will attract severe consequences.
