The Bombay High Court has directed the Customs department to refund Rs35 lakh to an Indian-origin US businessman for a seized gold chain and diamond-embedded gold pendant, which he claimed to have purchased in 1989 in the US. The court held that the pendant is “eligible to duty-free clearance” under the Baggage Rules, 1988 and quashed the confiscation proceedings initiated by the commissioner of Customs.
A bench of Justices KR Shriram and Jitendra Jain was hearing a petition filed by Rajendra Bajaj, challenging the order passed by the revisional authority on February 21, 2012, which did not give him full relief and merely reduced the redemption fine to Rs20 lakh and personal penalty to Rs15 lakh.
According to Bajaj, he arrived in Mumbai from New York on May 6, 2007. He was found wearing a gold chain with a gold pendant embedded with 12 diamonds. He claimed it was for personal use and was purchased in the US in 1989 for USD 25,000, which was around Rs10 lakh as per the prevailing exchange rate then.
The Customs department, however, claimed that the diamonds were imported in India and meant for resale. It seized the jewellery and valued it at Rs1.20 crore and demanded duty on it. Further, it imposed a fine for not declaring the item
.png)
As per the Rules then, an Indian male was permitted to bring jewellery worth Rs10,000.
Bajaj’s advocate Marmik Kamdar contended that the chain was “used personal effect”, hence exempt from duty under the Baggage Rules, 1998. He further argued that he was exempted under Rule 7, which was applicable to tourists, as he had shifted to the US 25 years ago. Alternatively, exemption would be applicable under Rule 3, which is for returning residents. He also produced a purchase invoice dated 1989.
Advocate Siddharth Chandrashekhar, appearing for the customs department submitted that the petitioner was engaged in the jewellery business and intended to sell the chain. It maintained that the diamond pendant couldn’t be considered a “personal effect” under the Rules and hence, he should have declared it and paid duty.
Agreeing with Bajaj’s arguments, the HC said that the orders passed by the commissioner, appellate Authority and the Revisional Authority are “erroneous and bad in law”.
The court highlighted the inconsistencies in the investigation and rapped the customs for calling “trade experts” for valuing the jewellery, instead of relying on Government Approved Valuer.
