CESTAT upholds Confiscation of 2.95 Kg Foreign-Marked Gold as Invoice Mismatched and No Proof of Duty Payment [Read Order]

Kailash Chander Varshney, the appellant, is a trader dealing in gold and silver. Customs officers, acting on specific intelligence, searched his premises and seized six pieces of gold weighing 2,946.80 grams with foreign markings. The appellant admitted during statements recorded on multiple occasions that he did not have any documents or invoices for the gold, stating that he had purchased it without a bill from traders visiting his shop.

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A show cause notice was issued proposing confiscation under Section 111(d) of the Customs Act and imposition of a penalty under Section 112(b)(i). The appellant’s counsel argued that there was no reasonable belief that the gold was smuggled and that Section 123, which shifts the burden of proof to the person from whom gold is seized, was not applicable. The counsel also argued that an invoice for 3,080 grams of gold produced later should have been considered by the authorities to establish lawful possession.

The revenue counsel argued that the gold with foreign markings was seized based on specific intelligence and the appellant’s own admission that he had no documentation for the gold. They argued that the invoice produced later did not match the seized gold in terms of weight and description, and there was no indication of import duty payment or bill of entry references on the invoice, making it irrelevant to the seized gold.

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The two-member bench comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that gold is a notified item under Section 123 of the Customs Act, and once it is seized under reasonable belief of being smuggled, the burden shifts to the person from whom it is seized to prove it is not smuggled.

The tribunal found that the appellant repeatedly admitted to having no documents for the gold, and the invoice produced later did not match the seized gold and appeared to be an afterthought. The tribunal explained that the appellant failed to discharge the burden of proving lawful import and duty payment, and therefore, the confiscation and penalty were justified.

The tribunal upheld the confiscation of the 2,946.80 grams of gold under Section 111(d) of the Customs Act and confirmed the penalty of Rs. 10 lakh imposed under Section 112(b)(i). The appellant’s appeal was dismissed.

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