Gold bars Weighing More than 1kg is Prohibited u/s 2(33) of Customs Act: Madras HC rules No Redemption allowed [Read Order]

The Madras High Court has ruled that gold bars weighing more than 1 kilogram are prohibited goods under Section 2(33) of the Customs Act, 1962, denying the petitioners' request for redemption of confiscated gold under Section 125 of the Act.

The customs officials at Chennai airport seized 3052 grams of gold concealed in betel nut flakes from two passengers, who failed to declare it on arrival. The passengers, Ravinder Kumar Rishabchand and Chandrakala, challenged the confiscation orders and sought permission to redeem the gold on payment of a fine.

The petitioners contended that the confiscated gold was not a prohibited item under the Act and that they were entitled to the benefit of redemption under Section 125. They cited earlier decisions of the High Court, including N. Kaliyamoorthy and Smt. Jhansi Rani, to argue that the option of redemption must be extended unless the goods fall squarely within the definition of "prohibited goods."

However, the Court distinguished these precedents, observing that they did not deal with gold bars exceeding the permissible import limit, and hence could not apply to the present case.

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The counsel for the department submitted that the petitioners had clearly intended to smuggle the gold bars into India, as evidenced by their concealment of the same. It was also asserted that the ratio laid down by the Supreme Court and this Court in P. Sinnasamy’s case squarely applies to the present matter.

In that decision, Section 125 of the Customs Act was interpreted, and the Division Bench held that the use of the term “may” by the legislature signifies that the option to allow redemption by payment of fine is not mandatory. Instead, it is a discretionary power vested in the customs authorities, to be exercised based on the specific facts and circumstances of each case, submitted by the counsel.

It also observed that the CBEC Notification dated 6 March 2014, which remains in force, clearly stipulates that eligible passengers may import gold only up to a limit of 1 kilogram, upon payment of 10% customs duty in foreign currency. Since the seized gold in the present case weighed above 1 kg, the import was in violation of the prescribed limit.

The court noted that “The judgment in P.Sinnasamy also makes it clear that in case of gold, discretion is vested with the authorities concerned to give an option to pay fine in lieu of confiscation under Section 125 of the Act depending upon facts and circumstances of each case. In case the gold imported is found to be illegal as per the Notification dated 06.03.2014 issued by CBEC, the respondents are permitted to exercise their discretion by not granting the option to pay fine under Section 125 of the Act.”

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Justice Abdul Quddhose noted that, in the present case, all the authorities below had consistently held that the petitioners were not entitled to the option of paying a fine in lieu of confiscation.

It was held that when gold is imported in excess of the legally permissible limit specifically, more than 1 kilogram it must be treated as “prohibited goods” within the meaning of Section 2(33) of the Customs Act.

The petitioner’s argument that the option to pay fine should be available regardless of the quantity was rejected by the bench, as accepting such a claim would effectively legitimize smuggling and undermine the core objective of the Customs Act, which is to prevent illegal importation and ensure compliance with trade regulations.

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