The court reviewed the case of a petitioner whose gold chain with pendant was seized by Customs on allegations of smuggling. The petitioner argued that the chain was a personal effect purchased in 1989 and provided an invoice. Customs rejected the invoice due to lack of a signature and misapplied Baggage Rules to justify the seizure and penalty. The court found the actions of Customs unjustified, quashed the impugned orders, and directed the refund of fines and penalties paid by the petitioner.

1. Background

The petitioner, arriving from the USA, had a gold chain with a pendant seized by Customs, who alleged it was being smuggled into India. The petitioner provided an invoice from 1989, but Customs rejected it for lack of a seller’s signature.

2. Customs' Misapplication of Rules

Customs cited Rule 6 of the Baggage Rules, 1998, which limits jewelry for male passengers to Rs. 10,000/-. However, Rule 7, applicable to tourists, allows clearance of personal effects and travel souvenirs free of duty.

3. Tribunal and Commissioner's Actions

The Tribunal ruled that Rule 7 applied, but the Commissioner of Customs still relied on Rule 6 to confirm the confiscation and penalty.

4. Definition and Application of Personal Effects

The court referred to Circular No. 72 of 1998, which states that personal jewelry falls under personal effects and should not be scrutinized for newness. The petitioner’s jewelry, purchased in 1989, fits this category.

5. Re-export and Evidence of Personal Effects

The petitioner re-exported the chain with pendant after paying a fine, supporting the claim it was a personal effect, not intended for smuggling.

6. Judicial Precedents

The petitioner cited similar cases, including Directorate of Revenue Intelligence vs. Pushpa Lekhumal Tolani and Vigneswaran Sethuraman vs. Union of India, where courts quashed Customs actions under comparable circumstances.

7. Court's Decision

The court found the actions of the Customs Authorities erroneous and arbitrary, quashing the confiscation and penalty orders. The respondents were directed to refund the petitioner Rs. 35,00,000/- within four weeks.

8. Conclusion

The petition was allowed, quashing the impugned orders and confirming that the gold chain with pendant was a personal effect eligible for duty-free clearance under Rule 7 of the Baggage Rules, 1998.