Private import of gold unadvisable, but is it illegal?

The CESTAT order of November 2018 was with respect to 1,000 grams of gold granules (non-monetary) imported by Sri Exports in September 2017.
For representational purposes
For representational purposes

HYDERABAD: Officials are of the view that if gold imports are left unregulated, letting anyone import gold into the country, it would lead to an increase in the current accounts deficit and thereby, a decline of value of the Rupee. Also, if everyone starts buying gold as investment, there would not be any takers for government securities or bonds and this may result in the government finding it difficult to raise funds.

Supporting his argument that he was free to import gold, Rajesh Kolawar told Express that “it is only the assumption of Customs officials that only notified agencies, nominated banks and status holders can import gold. That has been a practice since 1992.  These criteria were mentioned in RBI guidelines only regarding payment facilitation and do not talk about eligibility to import gold.” He said if the government treats gold as restricted good, then it should issue a gazette or public notice under Section 3 (2) Foreign Trade (development and regulation) Act 1992. “There is no such notification available in the public domain in India,” he added.

When contacted, K Lakshman, assistant solicitor general of India, who filed the affidavit before the Telangana High Court, said that RK Digitals Solutions wanted to “import gold and sell it like any other goods in the country. (And that) This will disturb gold regulations in the country and would (adversely) impact the economy.”

“We have said that no one other than nominated banks or notified agencies is allowed to import gold. We have pointed out section 11 of FEMA and section 5 of DGFT stating that the government has power to issue directions to control anything and the court has granted a stay on CESTAT order,” he said.  

The petitioner, RK Digital Solutions of Malakpet, had argued for release of the shipments citing a Customs, Excise and Service Tax Appellate Tribunal (CESTAT) order dated November 27, 2018 where it stated that its sister concern Sri Exports was allowed the import of gold in the said manner.

The CESTAT order of November 2018 was with respect to 1,000 grams of gold granules (non-monetary) imported by Sri Exports in September 2017. The assessable value and duty of the goods were worked out to be Rs 29.5 lakh and Rs 4 lakh, respectively. Customs  authorities at RGI Airport seized the shipment citing RBI regulations and directed him to pay a penalty of Rs 2.5 lakh in November 2017. This was challenged by Rajesh Kolawar with an appeal before the Customs Commissioner. The appellate authority modified the order in May 2018 allowing Sri Exports to redeem the gold by paying Rs 1 lakh fine and Rs 50,000 penalty. This order was set aside by CESTAT in November 2018.

“We did not appeal against the order then since the duty on a kilo of gold was less than Rs 20 lakh. But citing the CESTAT order the businessman started importing large quantities of gold. Now, citing the same CESTAT order, RK Digital Solutions have imported over 200 kg of gold and silver granules in eight air shipments between April 1, 2019 and May 3, 2019,” said a customs official, on condition of anonymity.

It was following this revelation that the customs officials seized 155 kg imported in two air shipments on May 28, 2019. Kolawar had thus filed a writ petition, citing CESTAT order, before the High Court to allow clearance of his two shipments seized by the Customs authorities. On the other hand, the Customs Authorities too approached the High Court seeking a stay on the CESTAT order.

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