Directorate Of Revenue Intelligence vs Ms. Pushpa Lekhumal Tolani

Directorate of Revenue Intelligence .... Appellant(s)

Versus

Pushpa Lekhumal Tolani .... Respondent(s)

JUDGMENT

R.K. Agrawal, J.

1) The present appeal has been filed against the final

judgments and orders dated 13.09.2006 and 04.09.2009

passed by the Division Bench of the High Court of Delhi in

W.P. (C) No. 6633 of 2003 and Review Petition No. 335 of 2009

respectively whereby the High Court allowed the writ petition

filed by the respondent herein while dismissing the review

petition.

2) Brief facts:

(a) On 19.11.2002, on the basis of specific intelligence tip off

to the effect that one lady named Ms. Pushpa Lekhumal Signature Not Verified Digitally signed by ANITA MALHOTRA Date: 2017.08.18 17:42:26 IST Reason: Tolani-the respondent herein, who was scheduled to arrive at

1 IGI Airport from London, would be carrying gold and diamond

jewellery and other valuable goods concealed in her bags and

would pass through the Green Channel without the payment

of the customs duty, the officers of the Directorate of Revenue

Intelligence (DRI), Hqrs. Office, New Delhi, kept a watch on her

and as soon as she was about to cross the exit gate after

passing through the Green Channel, she was intercepted and

was asked whether she has any dutiable item to declare to

which she replied in negative. A search was conducted under

Section 102 of the Customs Act, 1962 (hereinafter referred to

as ‘the Act’) and 28 packages containing 44 items of jewellery

worth Rs. 1.27 crores were recovered from two hand bags. On

the very same day, the respondent was produced before the

Additional Chief Judicial Magistrate and was remanded to

judicial custody and she remained there till 26.11.2002.

(b) On 12.12.2002, a show-cause notice was issued to the

respondent by the then Assistant Director, Directorate of

Revenue Intelligence, asking her to show-cause as to why the

seized goods should not be confiscated under the Act. On

14.08.2003, the competent authority, passed a detailed order

2 confiscating absolutely the new articles valued at Rs.

86,52,765/-, confiscation of seized jewellery worth Rs.

40,47,235/- with redemption clause on payment of fine of Rs.

3,00,000/- and penalty to the tune of Rs. 15,00,000/-. Vide

order dated 27.09.2004, Additional Chief Metropolitan

Magistrate, New Delhi, found the respondent guilty under

Sections 132 and 135(1)(a) of the Act and sentenced to

undergo imprisonment for the period already undergone and

imposed a fine of Rs. 6 lakhs.

(c) Being aggrieved by the show-cause notice dated

12.12.2002 and order dated 14.08.2003, the respondent

herein filed Writ Petition (C) No. 6633 of 2003 before the High

Court of Delhi. The Division Bench of the High Court, vide

order dated 13.09.2006 allowed the writ petition and quashed

the show-cause notice and order dated 14.08.2003 and

directed for release of the goods. In view of the aforesaid

judgment, the appeal filed by the respondent herein against

the conviction passed by the Additional Chief Metropolitan

Magistrate was allowed by the Additional Sessions Judge vide

order dated 11.04.2007.

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(d) Aggrieved by the decision of the High Court, the appellant

filed a review petition being No. 335 of 2009. The Division

Bench of the High Court, vide order dated 04.09.2009,

dismissed the said review petition.

(e) Aggrieved by the orders dated 13.09.2006 and

04.09.2009, the appellant has preferred this appeal by way of

special leave.

3) Heard the arguments advanced by Mr. Ranjit Kumar,

learned Solicitor General for the appellant and Mr. Sidharth

Luthra, learned senior counsel for the respondent and perused

the records.

Point(s) for consideration:

4) The only point for consideration before this Court is

whether in the present facts and circumstances of the case,

the show-cause notice dated 12.12.2002 and order dated

14.08.2003 are liable to be quashed or not?

Rival contentions:

5) Learned Solicitor General, appearing on behalf of the

appellant-DRI, contended that many of the items seized like

gold and diamond studded tie pins, tie clips, metal collar etc.,

4 which cannot be used by a lady, cannot be termed as personal

effects under the Baggage Rules, 1998. Similarly, the articles

which are newly purchased as evidenced by the invoices and

are of extremely high value as well as the articles belonging to

other persons besides the passenger cannot be termed as

personal effects. Learned Solicitor General further contended

that the High Court failed to appreciate that in the scheme of

law, there is exemption from duty on goods upto a specified

value in the case of passenger baggage but there is no

exemption from making a true and correct declaration by a

passenger. Further, the respondent had filed a form before

she left England wherein she claimed refund of VAT which

clearly indicates that she had the intention of not taking the

goods back to England from where she had purchased them.

Learned Solicitor General further contended that the jewellery

was brought to India and attempted to be passed through the

Green Channel and the respondent was responsible for

smuggling the same. In fact, on return of the seized jewellery,

the respondent herein directly went back to London instead of

Indonesia, contrary to the assertion made before the High

5 Court in the Writ Petition, which was held to be a ground in

her favour for ascertaining her ‘intention’ before the High

Court. Learned Solicitor General finally contended that the

conduct of the respondent after release of the goods had

misled the court and the judgment of the High Court on the

pretext of personal effects is liable to be set aside.

6) Per contra, learned senior counsel for the respondent

submitted that as per Rule 7 of the Baggage Rules 1998, a

tourist arriving in India shall be allowed clearance free of duty,

articles in his bona fide baggage to the extent mentioned in

Column (2) Appendix-E which indicates “used personal effects”

for personal use of the tourist in India which, if not consumed,

could be re-exported when the tourist leaves India for a foreign

destination. Hence, the charge that the respondent did not

make any declaration under Section 77 of the Act is not

correct as the respondent was not carrying any

dutiable/prohibited items and the jewellery she was carrying

was bona fide jewellery. Further, with regard to the contention

of VAT refund, learned senior counsel submitted that the same

has been refuted by the customs authorities in the United

6 Kingdom stating that claimant of VAT is neither prohibited nor

debarred from taking the jewellery, on which VAT has been

reclaimed, back to United Kingdom, if she so chooses and in

view of the same her return to London cannot be doubted.

Learned senior counsel finally contended that the High Court

was right in arriving at the conclusion that the goods were

personal effects and for the personal use of the respondent

and no interference is sought for by this Court.

Discussion:-

7) On 19.11.2002, the officers of the Directorate of Revenue

Intelligence intercepted the respondent herein, who was

passing through the Green Channel, on a tip off that the

respondent herein is scheduled to arrive at IGI Airport from

London and carrying gold and diamond jewellery along with

other valuable items and she would not declare the same to

Customs and pass through Green Channel without payment of

customs duty. On being asked, the lady replied that she had

nothing to declare. On examination of the handbags being

carried by the respondent herein several gold and diamond

jewellery items were found worth Rs. 1.27 crores. On being

7 asked by the DRI officials, it was informed that the items are

personal effects and no duty is leviable on the same. However,

the DRI officials seized the items under the provisions of the

Act with reasonable belief that the said items were smuggled

into India in contravention of provisions of the Act and hence

are liable to be confiscated. After following the due procedure,

a show-cause notice dated 12.12.2002 was issued to the

respondent herein. The respondent herein filed her reply to

the show-cause notice denying each and every allegation

leveled against her. On 14.08.2003, an order was passed by

the Additional Commissioner of Customs, IGI Airport, New

Delhi directing confiscation of the jewellery on certain terms

and conditions contained in the order. The respondent herein

preferred a writ petition being No. 6633 of 2003 challenging

the show-cause notice dated 12.12.2002 and the order of the

Additional Commissioner dated 14.08.2003 before the High

Court. The Division Bench of the High Court, vide order dated

13.09.2006 allowed the writ petition and vide order dated

04.09.2009 dismissed the review petition filed by the appellant

against the order dated 13.09.2006.

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8) In the above backdrop, it is relevant to quote certain

provisions of the Baggage Rules, 1998 as well as the Circulars

dated 24.09.1998 and 18.02.2000 issued by the Ministry of

Finance which are as under:-

Definitions.— “2. (iii) “tourist” means a person not normally resident in India, who enters India for a stay of not more than six months in the course of any twelve months period for legitimate non-immigrant purposes, such as touring, recreation, sports, health, family reasons, study, religious pilgrimage or business;

7. Tourists.—A tourist arriving in India shall be allowed clearance free of duty articles in his bona fide baggage to the extent mentioned in column (2) of Appendix E. Appendix E

1 2 Articles allowed free of duty a xxxx xxxxx b Tourists of foreign i Used personal origin other than effects and travel those of Nepalese souvenirs, if-

origin coming from Nepal or of Bhutanese origin coming from Bhutan or Pakistani origin coming from Pakistan a These goods, are for personal use of the tourist and-

b These goods, other than those consumed during the stay in India,

9 are re-exported when the tourist leaves India for a foreign destination. ii Articles upto a value of Rs. 8,000/- for making gifts c xxxx xxxxx d xxxx xxxxx

Circular No. 72/98-Customs Dated 24/09/1998 F.No. 520/136/92-CUS-VI Government of India Ministry of Finance Department of Revenue, New Delhi 1. xxxxx 2. xxxxx

3. The Baggage Rules, 1998 issued vide Notn. No. 30/98-Cus(NT) dated 2/6/98 has provided for import of duty free goods by tourists in Regulation 7 as contained in Appendix E of the said rules. There is no definition for personal effects in the present Baggage Rules. However, for the sake of uniformity it is considered necessary to reiterate that the personal effects would include the following goods:-

(i) Personal jewellery

(ii) One camera with filmrolls not exceeding twenty

(iii) One video camera/camcorder with accessories and with video cassettes not exceeding twelve

(iv) One pair of binoculars

(v) One portable colour television (not exceeding 15 cms in size)

(vi) One music system including compact disc player

(vii) One portable typewriter

(viii) One permabulator

(ix) One tent and other camping equipment

(x) One computer (laptop/note book)

(xi) One electronic diary

(xii) One portable wireless receiving set (transistor radio)

(xiii) Professional equipments, instruments and Apparatus of appliances including professional audio/video equipments.

(xiv) Sports equipments such as one fishing outfit, one sporting fire arm with fifty cartridges, one non-powdered bicycles, one canoe or

10 ranges less than 51 metres long, one pair of skids, two tennis rackets, one golf set (14 pcs. With a dozen of gold balls.)

(xv) One cell phone

4. It may kindly be noted that while Notn. No. 45/92 defined personal effects as articles both new or used and Rule 11 of Baggage Rules 1994 allowed personal effects of tourists for duty free import, the Baggage Rules 1998 allows only used personal effects of the tourists. It is not the intention of the Board to verify the newness of every product which a traveler brings so long as it is not prima facie new goods in their original packagings which can be disposed of off hand. (emphasis supplied by us) Sd/-

(Vijay Kumar) Under Secretary to the Govt. of India

F.No. 495/29/99-Cus-VI Government of India Ministry of Finance Department of Revenue, New Delhi Central Board of Excise & Customs New Delhi, the 18th Feb, 2000

Subject: Baggage Rules—Tourist baggage—no endorsement of imports of personal effects on tourists’ passports

1. xxxxx

2. xxxxx

3. It may kindly be ensured that all genuine tourists are allowed to bring in their personal effects without endorsement on the passports and without payment of duty, subject to the terms and conditions prescribed in the Baggage rules, 1998.” (emphasis supplied by us)

9) Insofar as the question of violation of the provisions of

the Act is concerned, we are of the opinion that the respondent

herein did not violate the provisions of Section 77 of the Act

11 since the necessary declaration was made by the respondent

while passing through the Green Channel. Such declarations

are deemed to be implicit and devised with a view to facilitate

expeditious and smooth clearance of the passenger. Further,

as per the International Convention on the Simplification and

Harmonization of Customs Procedures (Kyoto 18.05.1973), a

passenger going through the green channel is itself a

declaration that he has no dutiable or prohibited articles.

Further, a harmonious reading of Rule 7 of the Baggage Rules,

1998 read with Appendix E (2) (quoted above), the respondent

was not carrying any dutiable goods because the goods were

the bona fide jewellery of the respondent for her personal use

and was intended to be taken out of India. Also, with regard

to the proximity of purchase of jewellery, all the jewellery was

not purchased a few days before the departure of the

respondent from UK, a large number of items had been in use

for a long period. It did not make any difference whether the

jewellery is new or used. There is also no relevance of the

argument that since all the jewellery is to be taken out of

India, it was, therefore, deliberately brought to India for taking

12 it to Singapore. Foreign tourists are allowed to bring into India

jewellery even of substantial value provided it is meant to be

taken out of India with them and it is a pre-requisite at the

time of making endorsements on the passport. Therefore,

bringing jewellery into India for taking it out with the

passenger is permissible and is not liable to any import duty.

Learned senior counsel brought to our notice that even as per

EXIM Code Numbers 7113 19 20 and 7113 19 30 of ITC (HS)

Classification of Export and Import items as on 01.04.2002,

the import of gold jewellery studded with diamonds or with

other precious stones, is freely allowed. Similarly, learned

senior counsel rightly submitted that the invocation of Section

80 of the Act is of no use as this Section applies only to

dutiable and prohibited goods. The accusation of not declaring

the goods to the customs authority and evading duty alleged to

be due thereupon has no legal basis.

10) With regard to the intention of the respondent to take

back the jewellery to England is concerned, we do not think

that the air ticket sought to be relied upon by the DRI is of

much consequence. In the reply affidavit dated 20.10.2014

13 filed before this Court by the respondent herein, it has been

submitted that the so called enquiry conducted by the

appellant-DRI subsequent to the passing of the judgment by

the High Court was admittedly done after the expiry of more

than 1,185 days. The respondent herein left for London on

01.03.2007 on Jet Airways flight No. 9W-0122 and returned to

Delhi on 06.03.2007 on Jet Airways flight No. 9W-0121. It

has been further mentioned in the reply affidavit that the fact

of return of the respondent herein to India has been

deliberately concealed by the appellant-DRI. In fact, the

respondent had travelled to London to attend a doctor’s

appointment with her daughter who was unwell at the relevant

time. Further, there is no restriction in UK law which

prohibits a person claiming VAT in London from re-importing

the items on which VAT has been claimed at a later date.

Also, from the present facts and circumstances of the case, it

cannot be inferred that the jewellery was meant for import into

India on the basis of return ticket which was found to be in

the possession of the respondent. Moreover, we cannot ignore

the contention of the respondent that her parents at the

14 relevant time were in Indonesia and she had plans of

proceeding to Indonesia. Some of the jewellery items

purchased by the respondent were for her personal use and

some were intended to be left with her parents in Indonesia.

The High Court has rightly held that when she brought

jewellery of a huge amount into the country, the respondent

did not seem to have the intention to smuggle the jewellery

into India and to sell it off. Even on the examination of the

jewellery for costing purposes, it has come out to be of Rs. 25

lakhs and not Rs. 1.27 crores as per the DRI. The High Court

was right in holding that it is not the intention of the Board to

verify the newness of every product which a traveler brings

with him as his personal effect. It is quite reasonable that a

traveler may make purchases of his personal effects before

embarking on a tour to India. It could be of any personal

effect including jewellery. Therefore, its newness is of no

consequence. The expression “new goods” in their original

packing has to be understood in a pragmatic way.

15 Conclusion:-

11) We are of the considered opinion that in the absence of

any facts on record about the nature and mode of concealment

and also any finding of the lower authority that jewellery was

kept in a way to evade detection on examination of the

baggage, it has to be held that there was no concealment as

such. It is seen that the respondent chose the Green Channel

for clearance of her baggage. She committed no violation of

law or infraction of any instruction for clearance of the

baggage through the green channel as she being a tourist had

no dutiable goods to declare under the Baggage Rules. The

presumption that the jewellery found in her baggage cannot be

considered as personal effects owing to its high monetary

value is rebutted herewith and we hold that the respondent

was entitled to import personal jewellery duty free.

12) In the facts and circumstances of this case, it will be just

and proper to expunge the remarks against the appellant from

the judgment passed by the High Court. Therefore, the

strictures passed against the appellant are expunged.

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13) In view of the foregoing discussion, we are of the

considered opinion that the High Court was right in setting

aside the show-cause notice dated 12.12.2002 and order dated

14.08.2003 passed by the competent authority. There is no

scope to interfere in the orders passed by the Division Bench

of the High Court. There is no merit in this appeal and the

appeal is, therefore, dismissed with no order as to costs.

However, it is made clear that the present conclusion is

confined only to the disposal of this appeal.

...…………….………………………J. (R.K. AGRAWAL)

…....…………………………………J. .

(PRAFULLA C. PANT)

NEW DELHI;

AUGUST 18, 2017.

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