The Single Judge Cut The Penalty. The Division Bench Put It Back.
Customs seized nearly 37 kg of gold smuggled across the Bangladesh border in 2013 and fined the two men behind it Rs 10.07 crore each. A Division Bench has restored those penalties in full.
The Court held that gold is a prohibited item within the Customs Act where its import breaches Reserve Bank of India restrictions — prohibition under any law in force counts. The two men were neither authorised importers nor passengers under the Baggage Rules, so Section 112(i) applied, allowing penalty up to the goods' value. Not naming the clause did not vitiate a speaking order. The Rs 10.07 crore penalties were restored.
- Prohibited includes restricted. A ban under RBI rules or other law is enough, not only a Customs notification.
- The higher penalty follows. For prohibited goods it can equal the goods' full value.
- Quoting the wrong clause is not fatal where the authority had the power and gave reasons.
- The writ route was a gamble; a statutory appeal was available and was bypassed.
- Court
- High Court at Calcutta
- Bench
- Justice HON'BLE JUSTICE DEBANGSU BASAK, Justice HON'BLE JUSTICE ARYAK DUTT
- Citation
- APO Nos. 139, 140, 143 and 144 of 2018
- Case
- APO Nos. 139, 140, 143 and 144 of 2018
- Decided
- 10 September 2026
- Outcome
- Customs' appeals allowed; smugglers' appeals dismissed; adjudication order restored
The seizure
Acting on specific intelligence, the Directorate of Revenue Intelligence intercepted and seized 36.856 kg of gold in April 2013. Nine carriers were examined; they named one man as the intended recipient, and several said they had received the gold from a second.
From their statements and phone records, the Directorate concluded that the gold had been smuggled into India through an unauthorised land route across the Indo-Bangladesh border, with the first man as the mastermind and the second as his accomplice.
In November 2015 the Commissioner of Customs (Preventive), Kolkata confiscated 272 pieces of gold valued at Rs 10.07 crore and imposed a penalty of Rs 10.07 crore on each of the two men.
What the Single Judge had done
Rather than appeal under the Customs Act, the two men filed writ petitions. A Single Judge held in 2016 that gold was not prohibited goods, set aside the penalty under Section 112(i), and sent the matter back for a lesser penalty.
Both sides appealed: the two men to escape the penalty altogether, Customs to restore it.
Why the penalty was restored
Goods are prohibited under Section 2(33) if their import is prohibited under the Customs Act or under any other law for the time being in force. Bulk import of gold is governed by Reserve Bank of India circulars, and import by a passenger by the Baggage Rules. Neither man was an agency authorised to import in bulk, and neither was a passenger intercepted at a port.
Section 112 distinguishes prohibited goods from dutiable goods. For prohibited goods, the penalty may go up to the value of the goods or Rs 5,000, whichever is greater. The adjudicating authority had rightly imposed it at that rate.
Quoting a wrong provision does not vitiate an order if the authority has the power to make it. The adjudication order was a speaking order that identified the gold as prohibited. The two men's appeals were dismissed, Customs' appeals allowed, and the adjudication order upheld.
Who argued it
Appearances as recorded in the judgment of the Court.
Frequently asked
Is gold prohibited goods under the Customs Act?
Where it is imported in breach of RBI restrictions or the Baggage Rules, yes — the Court held so.
How large can the penalty be?
For prohibited goods, up to their full value. Here each man was penalised Rs 10.07 crore.
Contesting a customs penalty on gold
- Check whether the gold came through an authorised importer or as declared baggage — that decides whether it is prohibited.
- Challenge the evidence of your role, not the label; the prohibited status is now hard to dispute.
- Use the statutory appeal rather than a writ petition, unless there is a genuine jurisdictional defect.
- Do not rely on the order's failure to name the clause; that alone will not set it aside.
Source. High Court at Calcutta, APO Nos. 139, 140, 143 and 144 of 2018, decided 10 September 2026 by Justice HON'BLE JUSTICE DEBANGSU BASAK, Justice HON'BLE JUSTICE ARYAK DUTT. This explainer is written from the judgment text as reported.
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