REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

     CIVIL APPEAL NO. 4403 OF 2010

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

Versus

Pushpa Lekhumal Tolani            .... Respondent(s)

                  J U D G M E N T 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

Tolani-the respondent herein, who was scheduled to arrive at

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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

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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.,

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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

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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

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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

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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

origin  other  than those  of  Nepalese origin coming from Nepal  or  of Bhutanese  origin coming  from Bhutan  or Pakistani  origin coming  from Pakistan

i Used  personal effects  and  travel souvenirs, if-

a These  goods,  are for  personal  use of the tourist and-

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

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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

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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

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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

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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

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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

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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.   

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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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