Heading back to India with gold? Court ruling can save you from hefty fine

In a landmark judgment, the Delhi High Court ruled that customs authorities cannot seize personal jewellery solely because it is of very high purity, such as 24-carat gold.

In a recent High Court judgement, Ashiya, an Indian citizen returning from Saudi Arabia, succeeded in her legal battle to reclaim four 24-carat gold bangles (998 purity, total weight 250 grams) that had been seized by Indian Customs when she landed at New Delhi. Customs had detained the bangles, alleging they were unusually pure and hence possibly connected to smuggling, and sought to impose fines and penalties under the Customs Act. The court, however, allowed her to get the jewelry back (after she pays warehousing charges) on the grounds that she was not a habitual offender, the quantity was not commercial, and that purity alone does not reclassify ornaments as bullion under the law.

 

Legal & Financial Details You Should Know

Date & Travel November 2023: Ashiya flew from Saudi Arabia to Delhi wearing the bangles. Customs intercepted her at the green channel.

Customs Claim: Bangles were 998 purity (24-carat), which customs argued is excessively pure for typical jewellery, making them vulnerable to misuse. They sought to treat them akin to primary gold. Ashiya was offered redemption options only by paying a fine ( ₹2.15 lakh), penalty (₹1.45 lakh), and customs duty.

Delhi HC held that “high purity alone” cannot convert jewellery to bullion. Key factors: owner was the one travelling (i.e. wore it personally), no evidence of commercial quantity or smuggling, no habitual violation. Court underlined fairness and reasonableness.

How the Court read the rules

The judgement is important because it clarifies how the Baggage Rules, 2016 apply to “personal jewellery”:

No restriction on purity: The Court said there is nothing in the Customs Act or Baggage Rules that ties purity (22K, 24K, etc.) to whether something is “jewellery” or not. Jewellery is judged by its form and use.

Personal effects allowance: The Rules permit passengers to bring jewellery as part of their bona fide baggage allowance. In Ashiya’s case, the ornaments were worn, not packaged or concealed, which suggested personal use.

Precedents applied: Earlier cases such as Pushpa Lekhumal Tolani and Saba Simran had already established that purity alone cannot justify treating ornaments as bullion. The Delhi HC reaffirmed that line.

Why proof of “personal use” matters

Aditya Bhattacharya, Partner, King Stubb & Kasiva, Advocates and Attorneys, notes that the line between personal jewellery and commercial gold depends on context:

Signs of regular use—scratches, engraving, old photographs showing the person wearing the items—help establish personal ownership.

Red flags—brand new, tagged, or packaged ornaments—raise suspicion of commercial import.

"Proving jewellery is “personal use” rather than a new import largely depends on showing wear, age, and context—signs of regular use such as scratches, engraving, or photographs of the individual wearing the item earlier are persuasive. In contrast, brand-new, tagged, or packaged items raise suspicion of commercial intent. Under Sections 112(a) and 112(b) of the Customs Act, penalties are pegged to the “value of goods” and the role of the passenger (whether knowingly mis-declaring or negligently failing to declare). They can range from a few thousand rupees to several lakhs, often up to the duty sought to be evaded, though adjudication practice varies. For travellers returning from overseas, especially with high-purity jewellery, the safest route is to make a baggage declaration on arrival, carry purchase receipts where possible, and if the jewellery is old, keep photos or records showing prior use. This is especially advisable when carrying large quantities or unusual purity levels," explained Aditya BhattaStubb & Kasiva, Advocates and Attorneys.

Under Sections 112(a) and 112(b) of the Customs Act, penalties are pegged to the value of goods and whether mis-declaration was intentional or negligent. These can range from a few thousand rupees up to the duty sought to be evaded.

For travellers carrying high-purity jewellery, he advises:

Make a baggage declaration on arrival.

Carry purchase receipts or photos showing prior use.

Be especially cautious when carrying large quantities or unusual purity levels.

Could carrying undeclared gold jewellery trigger income tax scrutiny or disclosure requirements back home?

Yes, carrying undeclared gold jewellery can lead to scrutiny from the Income Tax Department. Customs authorities can share information about seized or dutiable goods with other government agencies, including the tax department.

"If you are found with a significant amount of undeclared gold, the Income Tax Department may question the source of the funds used to purchase it. If you cannot provide a satisfactory explanation, the value of the undeclared gold could be treated as undisclosed income and taxed with penalty," said Rohit Jain, Managing Partner, Singhania & Co.

"The Delhi High Court has made it clear that customs cannot seize jewellery just because it is of very high purity, like 24-carat bangles. Purity has no link with whether jewellery is personal or not. For example, a bride’s wedding bangles of 24-carat gold are still her personal ornaments, not smuggled bullion. What really matters is whether the jewellery is genuinely for personal use. To avoid disputes, travellers should carry some proof – old photos, wedding photos, invoices or hallmark certificates. It’s like showing your driving license if stopped by traffic police: not mandatory, but it helps. The baggage rules still apply. As per Rule 5 of the Baggage Rules, 2016, men can carry up to 20 grams of gold jewellery valued at ₹50,000 duty-free, and women can carry up to 40 grams valued at ₹1,00,000 duty-free. Anything above that may attract duty, but paying duty is very different from facing confiscation. The larger message is that personal jewellery, even of the highest purity, is your right to carry, and the safest approach is to keep proof handy and declare if in doubt," explained Smriti Jaswal, Advocate, Accord Juris LLP.

Procedural safeguards: SCN and hearings

The Court also pointed out that customs cannot bypass procedure. Under Section 124 of the Customs Act, confiscation or penalties require:

A show-cause notice (SCN) explaining grounds for action.

An opportunity to make written submissions.

A personal hearing.

Skipping these steps violates principles of natural justice and makes seizure orders vulnerable in court.

"If the jewellery, which is not “personal jewellery” and/or exceeds the prescribed values, is seized then the same would be charged with the customs duty as per the prevailing rates. In so far as penalties, the same would depend upon declaration or non-declaration of such goods," said Shashank Agarwal, Founder, Legum Solis.

Undeclared jewellery would mean the traveller would have no proof of such jewellery having been bought out of moneys earned by the traveller. This would, in turn, mean that the traveller has earned undeclared income which is liable to tax under the Income Tax laws.

Practical costs of a seizure

Even if you win, there are real costs:

Legal fees: High Court litigation can run into several lakhs.

Time lost: Proceedings can take years.

Warehousing charges: Payable for the period jewellery is held.

Loss of use: The ornaments remain unusable during the dispute.

That’s why Bhattacharya stresses prevention through awareness: understanding baggage rules, declaring jewellery upfront, and carrying proof of ownership.

"In customs proceedings, the SCN and personal hearing are not mere formalities but statutory requirements designed to give the affected party a fair chance to contest the allegations, establish lawful possession, and prevent arbitrary or disproportionate confiscation orders. They ensure compliance with the principles of natural justice, particularly the right to be heard (audi alteram partem). The requirement flows from Section 124, which expressly provides that no order of confiscation of goods or imposition of penalty shall be made unless: (a) the person concerned is given a written notice informing him of the grounds for such proposed action, (b) he is given an opportunity to make a representation in writing, and (c) he is given a reasonable opportunity of being heard," said Aditya Bhattacharya, Partner, King Stubb & Kasiva, Advocates and Attorneys.

Personal Finance Takeaways

Know the Rules, Not Just the Purity: Customs rules (Baggage Rules, 2016) do allow jewellery, even very high-purity, if it is personal and worn. The law doesn’t strictly bar 24-carat gold jewellery from duty-free treatment.

Avoid Presumptions of Wrongdoing: Being a traveller, casual usage, lack of commercial quantity, and lack of history of offenses matter. Customs can’t just assume smuggling. These are points you can use if contesting a seizure.

Weigh the Costs If You Go Legal: Choosing to challenge customs decisions can involve legal fees, time, etc. In Ashiya’s case, she declined the redemption with fine and penalty, opting for court instead – a risk, but one that paid off.

Keep Documentation Handy: Ownership, travel history, usage of jewellery etc. – these can help support your case.

Be Prepared to Bear Interim Costs: Even when seizure is overturned, warehousing charges, valuation/valuation date issues etc. are usually to be borne by the owner. Ashiya was ordered to pay warehousing charges