By Neelanjit Das

Copyright indiatimes

As soon as Mahesh, an Indian citizen and a current resident of Dubai, United Arab Emirates (UAE), landed at the Delhi Airport on March 7, 2024, wearing his Rolex watch, he was intercepted by Indian Customs officers. His Rolex watch was seized by the Customs department, and he was issued a detention receipt. Income Tax GuideIncome Tax Slabs FY 2025-26Income Tax Calculator 2025New Income Tax Bill 2025Subsequently, an Order-in-Original was passed in the matter, permitting redemption of the said ‘Rolex’ watch, vide order dated January 30, 2025. The reason why his Rolex watch was seized is that the Customs department determined he used a wrong channel for importing goods as passenger baggage, in violation of the relevant provisions. Moreover, the Customs department concluded that the seized Rolex watch (quantity: 1) is clearly in commercial quantity and cannot possibly be for personal use.As per the order dated January 30, 2025, he was permitted to redeem the detained article (Rolex watch) by paying a fine of Rs 1.8 lakh for re-export purposes. However, the redemption was to be completed by him within 120 days of receiving the order, a period that has lapsed by the time he filed the case in court.He filed an appeal against this order in the Delhi High Court, and on September 17, 2025, partly won the case.Customs department’s order-in-original said thisORDER● “I deny the ‘Free Allowance’ if any, admissible to the Pax Mr. Mahesh for not declaring the detained goods to the Proper Officer at Red Channel as well to the Customs Officer at Green Channel who intercepted him and recovered the detained goods from him. ● I order confiscation of “Rolex Watch Model No. 126610LV valued at Rs 13,48,500/-” detained vide “DR/INDEL4/07.03.2024/003944 dt. 07.03.2024” under Section 111(d), 111(j), 111(l) & 111(m) of the Customs Act, 1962. ● I give an option to redeem the goods confiscated, above, for re-export, on payment of fine of Rs 1,80,000 being holder of “Resident Identity Card ID bearing issuing date 30.11.2024 & Expiry date 29.11.2026 issued by United Arab Emirates”.● I allow redemption of the detained goods within 120 days of issue of this order under Section 125(3) of the Customs Act, 1962). The redemption is allowed after the completion of legal formalities in this regard and also on fulfillment of any regulatory clearances/ approvals/ payments, as required. The offer of redemption, if accepted, shall be subject to condition that the Passenger shall not dispute the identity and valuation of the goods. ● The offer of redemption shall cease after 120 days of the receipt of this order. iv)I also impose a penalty of Rs 1,50,000 on the Pax Mr. Mahesh under section 112 (a) & 112(b) of the Customs Act, 1962.”Also read: Teacher got Rs 3.5 lakh cash gift from daughter; Tax dept sent notice, she fought back and won case in ITAT DelhiDelhi High Court said thisJustice Prathiba M. Singh of Delhi High Court said in the order (W.P.(C) 14402/2025) dated September 17, 2025 that there appears to be some error in paragraph 8.4 of the impugned order (January 30, 2025), as pointed out by the Counsel for Petitioner (Mahesh). The said paragraph is set out below:“8.4 Further, provision of section 125 of the Customs Act, 1962 reproduced at Para 8.1(xviii) above is referred. The Pax had adopted the wrong channel for import of goods as passenger baggage, in violation of provisions laid down in this regard. Goods are clearly in commercial quantity and cannot possibly be for personal use. However, since the Pax is an Indian National working in Dubai and has valid “Resident Identity Card ID bearing issuing date 30.11.2024 & Expiry date 29.11.2026 issued by United Arab Emirates”. It is felt that the same could be allowed for re-export on payment of redemption fine and penalty. Thus, though I have proposed for confiscation of the detained goods, I have a considered view that the goods may be allowed to be redeemed for re-export purpose only, to the Pax, being holder an “Resident Identity Card ID …. issuing date 30.11.2024 & Expiry date 29.11.2026 issued by United Arab Emirates”, on payment of redemption fine under the provisions of Section 125 of the Customs Act, 1962.”Also read: Income Tax dept loses seized jewellery worth over Rs 90 lakh kept in bank custody: Allahabad High Court orders dept to compensate the taxpayerDelhi High Court said: “Clearly, this Court is of the view that one Rolex watch cannot be held to be a commercial quantity and there is no reason as to why the same cannot be kept for personal use. However, considering the fact that the option of redemption was given to the Petitioner, the Petitioner (Mahesh) shall now pay the redemption fine by October 31, 2025, and redeem the detained article in accordance with the impugned order.”Also read: Wife’s four gold bangles of 998 purity seized by customs dept; she wins the case in Delhi High Court due to this reasonJudgement: “The adjudicating authority is cautioned to ensure that in future, such errors do not occur in the orders which are passed by the adjudicating authority. In the facts of this case, warehousing charges shall be liable to be paid. by the Petitioner, as applicable on the date of detention. The petition is disposed of in these terms. Pending applications, if any, are also disposed of.”Also read: Mother continued PPF deposits after children turned 18; Kerala High Court orders her to pay back extra interestAyush Mehrotra, Partner, Khaitan & Co, says that this case involved the detention and confiscation of a Rolex watch valued at Rs 13,48,500, worn by the Petitioner, a Dubai resident at the relevant time. The watch was seized by airport customs for non-declaration of a high-value item. The customs authorities treated the single watch as a commercial quantity, denying the Petitioner the benefit of duty-free allowance available under the Baggage Rules, 2016. The watch was intercepted in the Green Channel, where no declaration had been made.Mehrotra says that under the Baggage Rules, 2016, duty-free allowance includes used personal effects, travel souvenirs, and articles valued up to Rs 50,000. “Personal effects” are defined as items required for daily necessities, but specifically exclude jewellery. While watches can generally be argued as personal effects, high-value watches often attract scrutiny and are sometimes classified as jewellery. Notably, the Supreme Court in DRI vs Pushpa Lekhumal Tolani – 2017 (353) ELT 129 – held that high-value jewellery, though typically not considered a personal effect, may be treated as such depending on unique facts and rebuttable presumptions.Mehrotra says that the Delhi High Court upheld the confiscation of the Petitioner’s Rolex watch for non-declaration at the time of arrival in India. The Court allowed redemption on payment of a fine of Rs 1,80,000 by October 31, 2025, granting permission for re-export of the watch. He says: “While the Court reprimanded the Commissioner of Customs for treating a single watch as “commercial quantity” and questioned why such a watch could not be considered for personal use, it did not grant significant relief to the Petitioner.”Advocate Deeksha Prakash, Litigation Associate, ASL Partners, says that under Section 77 of the Customs Act, 1962, the owner of the baggage is conferred with the responsibility to declare the contents of the baggage for the purpose of clearing it. Therefore, it logically follows that, as a consequence of non-declaration of baggage, the baggage may not be cleared. Prakash says that an exemption to this has been carved out under Section 79 of the Customs Act, 1962 whereby bonafide baggage has been exempted from duty. In this respect, the Central Government has also been empowered to make rules under Section 79(2). Such rules are the Baggage Rules, 2016.Prakash says that Rule 3 of Baggage Rules, 2016 specifically deals with the bonafide baggage of passengers arriving from countries other than Nepal, Bhutan or Myanmar such as in this case and it clearly states that such passenger shall be allowed clearance free of duty. Pertinently, Rule 3 has created a bifurcation between (a) bonafide baggage that is used personal effects and travel souvenirs; and (b) articles other than those mentioned in Annexure-I, up to the value of Rs 50,000 carried on the person or in the accompanied baggage of the passenger. It is clear that high-value items, i.e., with value greater than Rs. 50,000 such as the Rolex watch in this case would be considered under the (b) category and, since the value of the watch is Rs 13,48,500, it would not be exempted from clearance. While the Hon’ble Delhi High Court clearly observed that the reasoning of the Customs authorities for confiscation of the single Rolex watch being that it was in commercial quantity was clearly flawed, the Hon’ble High Court still directed the Petitioner (Mahesh) to pay the redemption fine despite the expiry of the stipulated 120 days (under Section 125, Customs Act) and the warehousing charges, as applicable on the date of the detention, while warning the adjudicating customs authorities to ensure that such mistakes do not take place in the future. In doing so, the Hon’ble High Court upheld the decision of confiscation of the watch due to the Petitioner’s failure to declare it to the proper/customs officer who intercepted him and recovered the watch from him but the Hon’ble High Court set aside the reasoning of the customs authorities to the effect that the single watch was in commercial quantity. Therefore, for high-value articles worth more than Rs 50,000, declaration and payment of clearance duty is required to be done despite the same being for personal use.