No Declaration Under Section 77 of Customs Act, 1962 = No Protection Under Section 80: Allahabad High Court Rules Against Passenger Carrying Undeclared Gold

Background and Context

A significant ruling from the Allahabad High Court has clarified the interplay between Section 77 and Section 80 of the Customs Act, 1962 in the matter of Commissioner Vs Deepak Bajaj. The Court unequivocally held that the benefit of temporary detention and subsequent return of baggage under Section 80 of the Customs Act, 1962 is strictly contingent upon a valid declaration having been made under Section 77 of the same Act. In the absence of such a declaration, no relief can be granted to a passenger carrying dutiable or prohibited goods.

The Customs Department filed this appeal under Section 130A of the Customs Act, 1962 challenging an order dated 22 February 2018 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Regional Branch, Allahabad, which had extended the benefit of Section 80 to the respondent and directed the Customs authorities to return his passport and permit him to carry the seized gold out of India.

Facts of the Case

Deepak Bajaj, a holder of a British passport, entered India from Nepal via the Sonauli land border on 2 April 2014. Sashastra Seema Bal (SSB) officers conducted a search and recovered 4,320 grams of foreign-origin gold of 999.9 purity, concealed in the pockets of his jeans, jacket, vest, and shoes. The value of the recovered gold was established at ₹1,09,12,590/-.

Following the seizure, Bajaj was produced before the Customs Officers at the Land Customs Station, Sonauli, along with the recovered gold. His statement was recorded under Section 107 of the Customs Act, 1962 on 3 April 2014 in the presence of two independent witnesses. A further statement was recorded on 4 April 2014 under Section 108 of the Act.

In both statements, Bajaj confirmed:

  • He was a resident of London.
  • The gold had been purchased by him in the United Kingdom, with payment made from his UK bank account.
  • He had brought the gold from London intending to have jewellery made for his family.
  • He had not declared the gold upon his arrival at Kathmandu Airport.
  • The gold was recovered from his clothing and shoes, consistent with the seizure memo prepared by the SSB officers.

At no stage during the recording of either statement did Bajaj make any declaration as contemplated under Section 77 of the Customs Act, 1962, nor did he request an opportunity to make such a declaration before the Customs Officers.

Adjudication and Appellate History

A show cause notice dated 27 August 2014 was issued to Bajaj, alleging that he was attempting to smuggle gold of third-country origin into India, the import of which was prohibited under Notification No. 9/1996-Customs dated 22 January 1996. The notice proposed confiscation of the gold under Section 111(d) of the Customs Act, 1962.

The adjudicating authority, vide Order-in-Original No. 23/2015 dated 12 March 2015, ordered confiscation of the gold and imposed a penalty of ₹25 lakhs on the respondent.

Bajaj's appeal before the Commissioner (Appeals) was dismissed on 13 January 2016.

However, upon further appeal, CESTAT allowed his appeal on 22 February 2018, extending the benefit of Section 80 of the Customs Act, 1962 and directing the Customs Department to return his passport and allow him to carry the seized gold out of India.

The Customs Department challenged this CESTAT order before the Allahabad High Court. The appeal was admitted on 21 May 2018 on the following substantial question of law: