Smuggled gold qualifies as prohibited goods; notice detailing contravention satisfies Section 112 penalty requirements.

The Petitioner, a businessman dealing in embroidery machines, was implicated in a gold smuggling syndicate following the interception of 7158 grams of gold paste by the Surat Police and Directorate of Revenue Intelligence (DRI) on 28/29.04.2023.

Investigation revealed the Petitioner arranged approximately 2,75,000 Dirhams in the UAE to facilitate the purchase of gold for the syndicate.

A show-cause notice (SCN) was issued on 22.05.2024 under Section 124 of the Customs Act, 1962, alleging violations of Sections 111(d), (i), and (j), and proposing penalties under Section 112(a) and (b).

On 06.11.2025, the Respondent passed an Order-in-Original imposing a penalty of ₹4,46,47,485/- (equivalent to the market value of the goods).

The Petitioner challenged this order via a writ petition, contending the SCN was vague and that gold should be treated as "dutiable" rather than "prohibited" goods.

1. Whether the writ petition is maintainable despite the availability of an alternative statutory remedy.

2. Whether the show-cause notice and subsequent order were invalid for failing to specify the exact sub-clause of Section 112 and for invoking both Clauses (a) and (b) simultaneously.

3. Whether smuggled gold paste falls under the category of "prohibited goods" under Section 112(i) or "dutiable goods" under Section 112(ii) for the purpose of quantifying penalty.

Section 112 of the Customs Act, 1962, which provides penalties for improper importation, distinguishing between "prohibited goods" (sub-clause i) and "dutiable goods" (sub-clause ii).

Definition of "prohibited goods" under Section 2(33), interpreting it in light of Om Prakash Bhatia v. Commissioner of Customs and Abdul Hussain Saifuddin Hamid v. State of Gujarat, which establish that goods imported clandestinely in violation of statutory restrictions or without declaration constitute "prohibited goods".

Regarding notice requirements, the court distinguished Amrit Foods v. Commissioner of Central Excise, holding that an SCN is valid if the exact nature of the contravention is clearly disclosed, even if specific sub-clauses are not cited.

The court rejected the Petitioner’s technical objection regarding the simultaneous invocation of Section 112(a) and (b). It reasoned that Clause (a) penalizes acts/omissions rendering goods liable to confiscation (active/abetment role), while Clause (b) penalizes possession or dealing with such goods (passive role); given the Petitioner's role in funding and coordinating the syndicate, both clauses were applicable.

On the distinction between "dutiable" and "prohibited" goods, the court followed the Abdul Hussain precedent, concluding that because the gold was smuggled clandestinely in paste form to evade Customs, it was an "illegal import" and thus "prohibited" under Section 2(33).

Addressing the SCN's validity, the court found that since the Petitioner was informed of the specific allegations (financing the purchase in UAE), there was no violation of natural justice, and the failure to pinpoint a precise sub-clause did not invalidate the proceedings.

An SCN and penalty order are valid so long as the contemnor is informed of the factual nature of the contravention, regardless of the overlapping invocation of Clauses (a) and (b) or the omission of specific sub-clauses.

Mere requirement of a statutory pre-deposit is not a valid ground to bypass the alternative remedy of appeal.

The High Court dismissed the writ petition, upholding the Order-in-Original.