Passenger Carrying Undeclared Gold Has No Entitlement to Seek Its Re-Export: Delhi High Court

The Delhi High Court has held that passengers who cross the Green Channel without declaring dutiable or prohibited goods cannot later seek re-export of the confiscated goods under Section 125 of the Customs Act.

For context, Section 125 empowers the adjudicating authority to grant an option to redeem confiscated goods upon payment of a redemption fine.

The Division Bench of Justices Anil Kshetarpal and Shail Jain observed that the provision is not an “entitlement” to re-export the goods.

After examining the language of the provision, the Court held that while redemption of non-prohibited goods is ordinarily mandatory, redemption of prohibited goods has been left entirely to the judicial discretion of the adjudicating authority.

“In respect of goods whose import or export is prohibited under the Customs Act or under any other law for the time being in force, the adjudicating authority “may” grant an option to redeem the confiscated goods…redemption of prohibited goods has been left entirely to the judicial discretion of the adjudicating authority.”

Such discretion however, the Court added, is neither absolute nor unstructured. “Like every statutory discretion, it must be exercised in conformity with the object, purpose and overall scheme of the enactment,” it held.

The court thus dismissed the petition filed by a Turkmenistan national challenging a Central Government order which had denied her permission to re-export over 2.4 kg of gold seized at Delhi airport.

While doing so, the Court also referred to Section 80 of the Customs Act, which enables the proper officer, upon the request of the passenger, to detain dutiable or prohibited articles for the purpose of their subsequent return or reexport.

This statutory benefit, however, the Court said, is not available universally. “The Legislature has consciously made its availability conditional upon the passenger having made a true declaration under Section 77,” it said.

The Court also made it clear that the discretion under Section 125 cannot override Section 80. It held,

“The statutory incentive contained in Section 80 is intended to encourage truthful disclosure at the point of entry into India. It is not designed to confer the same benefit upon a passenger who suppresses the existence of dutiable or prohibited goods, crosses the Green Channel and is thereafter intercepted upon detection by the Customs authorities.”

The Court said that if the benefit of Section 80 could be claimed merely by invoking Section 125 after confiscation, every passenger carrying undeclared goods would have little incentive to comply with the mandatory declaration requirement under Section 77 in the first place.

“Such an interpretation would seriously undermine the efficacy of the statutory declaration mechanism and place an honest passenger, who complies with the law, on the same footing as one who consciously conceals goods until detection,” it said.

Briefly put, Petitioner had arrived in India from Turkmenistan on May 1, 2019. After crossing the Green Channel, she was intercepted by Customs officials, who recovered six gold bars weighing 600 grams and gold ornaments weighing 1,825 grams, aggregating 2,425 grams of gold valued at ₹48.52 lakh. The gold was seized on the allegation that it had not been declared under the Customs Act.

The adjudicating authority had ordered confiscation of the gold but permitted its re-export on payment of a redemption fine under Section 125 of the Customs Act. The Commissioner (Appeals) affirmed this decision.

However, in revision under Section 129DD, the Central Government set aside the direction permitting re-export, holding that re-export of passenger baggage is governed by Section 80 of the Customs Act, which applies only where the passenger has made a truthful declaration under Section 77.

Petitioner argued that Section 125 independently empowered the adjudicating authority to permit redemption by way of re-export. She also contended that she had brought the gold to India to raise funds for her medical treatment.

The High Court noted that apart from a medical invitation letter issued by Jaypee Hospital, no medical records were produced to substantiate the claimed necessity. It further held,

“Financial necessity or personal hardship, howsoever genuine, cannot authorise an individual to disregard the mandatory requirements governing import of valuable goods into the country…If the object was merely to meet the expenses of medical treatment in India, there existed several lawful modes of arranging funds, including carrying permissible foreign currency through authorised channels or transferring funds through recognised banking mechanisms.”

Lastly, emphasising that the case involved large quantities of gold valued at more than ₹48 lakh at the time, the Court said,

“The law does not contemplate that goods of such magnitude may be brought into India without declaration and thereafter permitted to be re-exported merely because the importer subsequently furnishes an explanation regarding their intended utilisation. The larger the quantity and value of the goods sought to be imported, the greater is the necessity for strict adherence to the declaration requirements contemplated by the Customs Act.”

As such, the Court held that the revisional authority had committed no error in setting aside the re-export, and dismissed the writ petition.

For Petitioner: Advocates Ashutosh, S.S. Arora, Abhijeet Sagar, and Fatima

For Respondent: Devvrat Yadav, SPC with Kartik Sharma, GP for UOI. Advocates Anushree Narain, Maman Chola, Apurv Yadav