The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has determined that gold cannot be confiscated without concrete proof of foreign marking or smuggling.
The case involved Shri Ravindra Soni, proprietor of M/s M.M. Jewels, and his employee, Shri Laxman Soni. M/s M.M. Jewels, a Kolkata-based business dealing in gold and diamond jewellery, had been accused of possessing and melting gold of foreign origin without valid documentation.
The customs officers of the Barasat Customs Division raided a workshop operated by Shri Badal Das Khan in Kolkata. They found gold, amounting to two kilograms, being melted there and apprehended Shri Laxman Soni and Shri Binoy Das.
Both individuals failed to produce valid documents for the gold in their possession. Consequently, the gold was seized on suspicion of being of foreign origin and smuggled.
The gold was tested and found to be 24 Carat with a purity of 99.95% to 99.96%. Despite this, the appellants contended that the gold was sourced through licit means, as they dealt with old gold jewellery, which was refined at M/s G.N.H. & R [P] Ltd., Kolkata.
The appellants, represented by Arijit Chakraborty, argued that the seized gold was procured through legitimate means. They provided evidence of purchasing old gold jewelry, refining it, and maintaining records, including “Hall Marking” certificates. They asserted that the gold’s purity and lack of foreign markings negated the presumption of smuggling.
The two-member bench of Ashok Jindal (Judicial Member) and K. Anpazhakan, (Technical Member), found that the revenue failed to discharge their onus of how they formed an opinion that they had a reasonable belief that the gold was of foreign origin and smuggled.
Moreover, the appellants had been able to prove this by producing various documentary evidence, like their Books of Accounts and certification from M/s G.N.H. & R [P] Ltd. Kolkata, and the appellants had also produced certain “Hall Marking” issued by them from time to time.
The tribunal held that the gold in question could not be deemed liable for confiscation. Consequently, the order for absolute confiscation was set aside, and the penalties imposed were annulled. The appeals were allowed with consequential relief.
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