File Copyright Online - File mutual Divorce in Delhi - Online Legal Advice - Lawyers in India

Golden Norma

Aurum or gold is so ancient and so exorbitant that it is mentioned in the Greek mythology as the shinning dawn. In some cultures like that of India, this humble shinning metal has secured a permanent place and Indians look forward to Gold that can be wrapped around their deities. Though the usage of gold has changed over the period of time but has never been out of demand.

Keeping into account the collapsing economy, wars, foreign accession, epidemics and pandemics gold has always made a comeback as a rock solid player in the market and where there is predominance there is evil, violation of law, immorality and scams. This study has been made to bring to light the importance of gold as not just a precious metal and also the evil practices associated with it and protection given by the all legal provisions, acts, rules and regulations of India to promote free and lawful cross border movement of gold.

Introduction
Gold has been a hallmark of one’s social status and security. Hallmark not only denotes its purity but adds value to it. Indian’s love for gold has surpassed all bans and prohibitions that even his own national reserve couldn’t suffice. India has become the largest importer of gold in the whole world. The use of gold mostly in jewellery making is most prevalent in India. Gold is seen as security and also an element of beautification.

The demand and supple curve has seemed to be not at all fluctuating when it comes to this precious metal. Indian’s love affair with gold has crossed all boundaries and has turned into more of a mark of security and element of raising capital behind the mirage of beautification. This overgrowing demand has influenced the demand curved to show and upward trend despite of the collapsing economy of the nation at times. While during the times of emergency other goods and commodities movement in the supply chain has seriously put strain in the business domain and pushed the economists and business magnets to the limits to draw a new business policy to find out ways for their survival, there a simple piece of metal has stand out to be the big fish.[1]

India was the most admired place for all thing export as emphasized by historian Strabo and ambassador Megasthenes and anonymous Periplus of the Erythraean Sea. The gold and silver coins dating 2000-1500 year old from the reigns of Augustus, Tiberius and Nero found place along the Malabar and the Coromandel Coast. From ivory, beads, copper, tin, gold blocks, spices, fine fabric to weapons the trading was a lucrative business in ancient Indian subcontinent. Movements of gold in the world is centuries old. In medieval times mobility of gold was a part of the barter system which previously started with stones or grains or animals etc. but later with the era of Kushan gold was introduced to be used as currency[2].

Since then it has modified itself into different forms for various purposes and thereby concentration of wealth arose a people mainly among the rich and noble families who understood the preciousness of this humble metal. In recent times over 800-900 tonnes of gold is imported to India every year where 1000 tonnes of gold is consumed annually by the Indian nationals.

Gold has never seen the darkness of the day[3]. RBI workings have found out that gold has over performed stocks and bank deposits on the last five years more than 3 times over Nifty and 6 times over bank deposits and 10 years government bonds. It is jaw dropping that the economists has come to the juncture to believe that Gold is price inelastic as despite of India banning gold imports since early 1990s import of gold has never stopped be it legally or as a covert.

Notifications issued by the Director General of Foreign Trade (DGFT), import of gold in any form has been placed in ‘restricted’ category from ‘free’ category due to rising import of gold which rose by 6.59% 2.99 Billion $ in November 2019 from 2.76 Billion $ in 2018 . India imports 800-900 tonnes of gold annually. Gems and jewellery exports declined 82.46 % to $ 1.1 Billion in April – May 2020.[4]

Smuggling: A menace
Gold has proved itself over the decade as a winner in economy but at the same time it has brought about bane of inflation and prejudices leading expectations among low income groups to become financially opulent also it is great competition of the stocks and bonds. Illegal trade, uncontrolled demand and growing dependence on gold is the only evil. In the words of the Roman writer Pliny, gold is drained as a commodity of exchange in lieu of fabrics and spices trading in the first century AD and also gold items – jewellery, coins, idols etc. formed the centre piece of all king’s treasuries and kingdom.

The world eyed on the Indian gold reserves most importantly the reserves of the kings of India who were able to wrap a whole temple or their kingdom with gold. India is still the primary devotee of gold not having much reserves and ores of its own. It has been calculated and observed that one-third of the gold movements happen in India. What the gold movements and reserves in the ancient times called as prestige and wealthiness of the kings of India today it called smuggling.

Smuggling is the evil of the economy as it has the capacity of concentrate wealth, impact in the overall economy, can cause inflation, result into depletion in supply and increase demand in the economy, tax-deficit and movement of black money. Smuggling is the illegal transportation of objects, documents or substances internationally or nationally violating the law of the land. In the 21st century era smuggling in gold in terms of Indian statistics accounts for 200 tonnes.

It has been assessed that one-fourth of the total volume of the gold comes through illicit trade in India.[5] In a situation where illicit gold trading was rampant the economic reforms of 1990s led to the repeal of the Gold Control Act 1960 that fixed charges on stipulated grams of gold imported to the country, also prohibiting import of gold in all except in terms of jewellery leading to cap of Rs 450 per ten grams of gold causing grinding halt in the wheel of gold smuggling.

Over the years the rate of customs duty rose to four folds to four percent nowadays its 12.5 percent that is more than 10 percent last year with an additional GST of 3 percent of gold imports and also GST charges of 5 percent in gold ornaments making. Illicit trade incentivizes smuggling and brings more profit to the smugglers as customs duty rate is lower as compared to price of gold in a day in India for 10 Grams.

The smugglers achieve profit as well as incentives at the same time. The IMPACT report states that prime partner of all gold trade in India is UAE that account for 75 percent of all entries of gold in India. The neighboring countries like Nepal, Bhutan, Bangladesh, Myanmar facilitates the smuggling of Gold with India and other nations.[6] The Directorate of Revenue Intelligence (DRI) reported that gold is now being hidden in white goods for smuggling by some E-Commerce platforms.

Legal enforcements
Any unethical mishandling of such trading items attracted penalty- while in ancient Greek and Roman societies it was heinous forms of corporal punishments like public hanging, mutilation, imprisonment, banishment in India head of the clan would pronounce any punishment which in the vedic period was termed as Danda which means Prayaschitta or Atonement[7].

Since gold has emerged as a strong player in the world economy in 21st century[8], gold trading has been brought under surveillance through the applicability of several precious metals Acts, rules and regulations:-
Gold Contract Act 1965, The Gold (Control) Act, 1968, The Gold (Control) Amendment Act, 1971,Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare Cess Act 1976 of 55, National Security Act 1980 67, Standards of Weights and Measures (Enforcement) Act 1985 54, Gold (Control) Repeal Act, 1990, Gold Control Act, 2019, Gold Control Act, 2020 The Foreign Exchange Management Act (FEMA) 1999 which deals with the regulations of cross border trade, foreign capital and reserves lays down guidelines for trade of gold and imports subject to conditions along with Foreign Trade (Development & Regulation) Act, 1992 safeguards the same sought of transactions.

The Customs Act, 1962 under Chapter IV sections 11 subsection (2) clause (c), (f) prevent and prohibit smuggling and injury to the economy through uncontrolled trade of gold and silver. Provided under Chapter IVB sections 11H, I, J, M has been implemented to prevent illegal export and import beyond the permissible limit and Chapter XIII also applies in case of possession of illegal items the search and seizure of the same.

The Government has made it clear that it is firm in its resolve to fight socio-economic evils like smuggling, tax evasion and black money, etc. On 17th September, 1974, a Presidential Order was issued for detention of smugglers under the Maintenance of Internal Security Act (MISA). In 1976, the Smugglers and Foreign Exchange Manipulators (Forfeiture of property) Act was passed. The object of this Act was to combat the menace of mugging and foreign exchange racketeering in the country. It empowered the government to forfeit the illegally acquired properties by the smugglers and foreign exchange manipulators and their relatives and associates.

The sudden effects of collapsing economy and shook the business to such an extent that it is the only boat of saviour in the shipwreck , the rising investment in gold bonds , allotment of securities in gold as the trend of the gold loving nations has proved that Indian’s love affair with gold would never diminish.

Though the Corona virus pandemic has hit hard on all sectors of the economy and has subsequently led to the closing borders the total gold imports of India has reduced to over 25 tonnes per year. This has limited the worldwide stocks of gold to reach to the hands of commons and this doubled the price of 24k and 22k gold which is beyond the dreams of working class citizens[9]. This unhealthy economic condition owing to gold paves a real challenge as to how a practical and workable policy for gold to be framed so as to ensure gold imports do not make whole in the pocket.[10]

Conclusion & Recommendation
Gold as seen rabbit out of the hat in this collapsing economy if worked in a positive way can rise the economy to the esteemed heights. Investments in Sovereign Gold Bonds (SGBs) is the crucial game now, wherein investments are higher this should be drawn to a certain limit by the enforcement of Companies Act, 2013 and also Foreign Exchange Management Act (FEMA) 1999 in terms shares, bonds and charges so that gold stocks do not pile up or concentrate and flow of gold to the hands of commons is again stipulated and hence the price of the gold would diminish a little and reduce inflation.

The private moneylenders and finance institutions need to be registered where gold is held as collateral for loans. In a developing nation’s economic struggle where the current liabilities are higher than the assets, the gold reserves the only card to play in terms of foreign investment, transaction in gold to bring about foreign capital and would seemingly bring about flow of capital in the nation. Taking into account the Kerala gold smuggling case India should not be made a safe haven for illicit gold smugglers.

This illicit trading is mostly prevalent due to lack of documentation at the entry and exit points and many a times due to negligence of duties or supremacy of power turned into corruption and mishandling .The customs duty on import of per ten grams of gold is to be increased almost equal to the amount of the gold price on all items of gold imported which will have the capacity to make a hole in the pocket of the smugglers.

The jewellery merchants should be give a price cap inclusive of customs duty and rates in the overall gold items in any forms imports for running their business .The export of gold from India is to be given focus so that the craftsmanship of Indian jewellery makers hailing from all different states having different cultural and varied art backgrounds can show their artisanship and skill that may have high demand outside India.

The impartiality of bureaucracy is of utmost importance and vigilance should be strict in their duties and close observation has to be made in their property both movable and immovable valuation. The security checking in the airports, sea ports, railways and road transport is to be made more exclusive to inflict fear in the mind of the smugglers and the penal provisions has to be stringent enough to ensure free and legal trade of gold without any felony.

While the Indian Penal Code 1860 imposes penal provisions under Chapter XVII which is Offences against Property and under Chapter XVIII which is Offences Relating To Documents And Property Marks on criminal misappropriating and unlawful handling of any precious items but it lacks particular penal provision for the same. The Indian Penal Code 1860 contains almost all penal provision for any evil or menace but it lacks imposing penal provisions for smuggling and transfers the burden on other trade acts stating them as economic menace.

It is not just economic menace smuggling is a social menace, just like any other criminal activity is violation in rem similarly smuggling also as it effects the overall picture of the economy affecting thousands. The gold as an asset should not be clogged as this would darken the whole economy there should be a flow of gold in the economy and this precious metal is not an underrated shinning block of luxury and wealth but is much than that.

End-Notes:

  1. https://www.thehindubusinessline.com/opinion/columns/s-gurumurthy/gold-villain-or-saviour/article22995779.ece (last visited on 2 November 2020
  2. https://www.mygoldguide.in/first-gold-coins-ancient-india(last visited on 12 November 2020)
  3. Nikhil Wavalkar , Ritesh Presswal “Gold: The lone saviour amid gloomy markets”,2020 March 12, 05:37 https://www,moneycontrol.com/news/business/personal-finance/gold-the-saviour-amid-gloomy-markets-5027041.html (last visited on 12 December 2020)
  4. Sanjay Notani, “International trade in goods and services in India: overview, EconomicLawsPracticehttps://uk.practicallaw.thomsonreuters.com/w-0092204?transitionType=Default&contextData=(sc.Default)&firstPage=true (last visited on 22 December 2020)
  5. https://www.indiatoday.in/news-analysis/story/what-makes-india-a-gold-smuggling-destination-1700066-2020-07-13 (last visited on 2 January 2021)
  6. https://www.thehindubusinessline.com/opinion/gold-control-raj-a-dull-idea/article20665336.ece1#(last visited on 2 January 2021
  7. https://www.google.com/search?q=ancient+methods+of+punishmnet&rlz=1C1RLNS_enIN884IN885&oq=ancient+methods+of+punishmnet&aqs=chrome..69i57j0i8i13i30.13373j1j15&sourceid=chrome&ie=UTF-8
    (last visited on 15 January 2021)
  8. https://www.cbic.gov.in/htdocs-cbec/customs/cs-act/formatted-htmls/cs-regulationv (last visited on 15 January 2021)
  9. https://economictimes.indiatimes.com/topic/gold-import (last visited on 219 January 2021)
  10. https://economictimes.indiatimes.com/news/economy/policy/as-gold-imports-take-a-hit-industry-looks-for-ways-to-make-deposit-schemes-attractive/articleshow/77323854.cms (last visited on 19 January 2021)

Law Article in India

Ask A Lawyers

You May Like

Legal Question & Answers



Lawyers in India - Search By City

Copyright Filing
Online Copyright Registration


LawArticles

Section 482 CrPc - Quashing Of FIR: Guid...

Titile

The Inherent power under Section 482 in The Code Of Criminal Procedure, 1973 (37th Chapter of th...

Whether Caveat Application is legally pe...

Titile

Whether in a criminal proceeding a Caveat Application is legally permissible to be filed as pro...

How To File For Mutual Divorce In Delhi

Titile

How To File For Mutual Divorce In Delhi Mutual Consent Divorce is the Simplest Way to Obtain a D...

Copyright: An important element of Intel...

Titile

The Intellectual Property Rights (IPR) has its own economic value when it puts into any market ...

The Factories Act,1948

Titile

There has been rise of large scale factory/ industry in India in the later half of nineteenth ce...

Law of Writs In Indian Constitution

Titile

Origin of Writ In common law, Writ is a formal written order issued by a body with administrati...

Lawyers Registration
Lawyers Membership - Get Clients Online


File caveat In Supreme Court Instantly