Court affirms penalty under Section 112(i) of Customs Act on smuggled gold seized from unauthorized import, dismisses writ petitions challenging confiscation and penalty
In a landmark judgment delivered on September 10, 2026, the Division Bench of the Calcutta High Court comprising Justices Debangsu Basak and Aryak Dutt upheld the confiscation of gold worth over Rs. 10 crores and the imposition of penalty on the accused under the Customs Act, 1962. The judgment arose from appeals filed against the order of the Commissioner of Customs (Preventive), Kolkata, which had confiscated 36.856 kgs of gold smuggled into India through unauthorized routes and imposed a penalty equivalent to the value of the gold under Section 112(i) of the Customs Act.
The gold was seized by the Directorate of Revenue Intelligence (DRI) on April 8, 2013, following a targeted operation based on specific intelligence. Investigations revealed that the gold was smuggled through the Indo-Bangladesh border and was intended to be distributed among various persons, including the writ petitioners, Shri Gopal Saha and Shri Ajgar Seikh, who were identified as the mastermind and an accomplice respectively.
The writ petitioners challenged the confiscation and penalty imposed on the grounds that the adjudicating authority lacked jurisdiction and that gold was not a prohibited item under the Customs Act. They argued that no specific notification prohibited the import of gold under Section 11 or 11B of the Act, and thus Section 112(i) was inapplicable. They also contended that penalty imposition without specifying the exact clause of Section 112 was a jurisdictional error.
The Customs Department countered by asserting that gold import is subject to strict regulatory control by the Reserve Bank of India (RBI) and Foreign Trade Policy, rendering unauthorized importation a contravention of the law. They highlighted that Section 2(33) of the Customs Act defines "prohibited goods" to include any goods whose import or export is subject to prohibition under the Act or any other law in force, which includes RBI notifications regulating gold imports. Thus, the seized gold qualified as prohibited goods.
The High Court analyzed multiple provisions of the Customs Act, including Sections 2(33), 111, and 112, and various notifications and circulars issued by the RBI and Customs authorities. The Court noted that the Act’s definition of prohibited goods extends beyond prohibitions imposed under the Customs Act itself and includes prohibitions under other laws such as RBI regulations. Since the writ petitioners did not belong to authorized agencies permitted to import gold, and the gold was smuggled through unauthorized routes, the Court held that the gold was indeed prohibited goods.
The Court further clarified that the penalty under Section 112(i) must not exceed the value of the goods or Rs. 5,000, whichever is greater, and the adjudicating authority was justified in imposing the penalty equal to the value of the seized gold. The Court rejected the writ petitioners’ contention regarding jurisdiction, stating that an order passed by an authority vested with statutory power cannot be invalidated merely for not specifying the exact clause invoked, especially when the order clearly indicated the goods were prohibited and penalty was imposed accordingly.
The Court also emphasized that the writ petitioners had access to statutory remedies under Section 129A of the Customs Act and that the writ jurisdiction is not a substitute for appellate remedies unless there is a violation of fundamental rights or perverse orders, which was not established.
Consequently, the High Court dismissed the writ petitions and allowed the appeals filed by the Customs Department, thereby upholding the confiscation of the gold and the penalty imposed on the writ petitioners. This judgment reaffirms the stringent regulatory framework governing gold imports into India and underscores the legal consequences of smuggling prohibited goods under the Customs Act, 1962.
Bottom Line:
Customs Act, 1962 - Gold is considered a prohibited item under the Act when imported contrary to prohibitions imposed by the Reserve Bank of India or other regulatory frameworks. Penalty under Section 112(i) of the Act is applicable for improper importation of prohibited goods.
Statutory provision(s):
Customs Act, 1962 Sections 2(14), 2(25), 2(33), 2(39), 11, 11B, 111, 112, 114, 115, 119, 120, 121, 123, 124, 125, 126, 129A
Gopal Saha v. Union of India, (Calcutta)(DB) : Law Finder Doc Id # 2975755
