Foreign Markings on Gold Biscuit alone cannot Prove Gold Smuggling: CESTAT Quashes absolute Confiscation [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Hyderabad Bench of held that mere foreign markings on gold biscuits cannot by themselves establish that the gold was smuggled into India without corroborative evidence.

After the search conducted in the premises of a jewellery trader, Kishore Kumar Gilda in Vijayawada in February 2015, customs seized 10 gold biscuits weighing 100 grams each bearing foreign markings, along with Indian currency amounting to ₹33.56 lakh.

The department alleged that the gold biscuits were smuggled goods and the cash was the sale proceeds of smuggled gold. Based on these allegations, the adjudicating authority ordered absolute confiscation of the gold under Section 111 of the Customs Act, 1962 confiscation of currency under Section 121, and also imposed penalties on the appellant.

According to the appellant, the gold had been purchased from the local market in the ordinary course of jewellery business. It was also claimed that no investigation had been conducted to establish any foreign origin or smuggling link.

The Tribunal noted that gold is a widely traded commodity in India and may circulate in the domestic market even with foreign inscriptions or markings. Therefore, foreign markings alone cannot automatically lead to the conclusion that the gold is smuggled.

The bench of A.K. Jyotishi (Technical member) and Angad Prasad (Judicial member) referred to earlier decisions holding that without corroborative evidence such as illegal import, cross-border movement, or links to smuggling operations, confiscation cannot be sustained merely because the gold carries foreign marks.

Another factor considered by the Tribunal was the legality of the seizure itself. The Bench found that Customs officers had failed to properly record independent “reasons to believe” before seizing the goods under Section 110 of the Customs Act.

Except for a general statement in the panchnama, no separate material or recorded reasons existed to justify the drastic action of seizure. The Tribunal held that this procedural lapse invalidates entire proceedings.

Accordingly, appellate tribunal set aside the entire confiscation order as well as the penalties imposed on the appellant and allowed the appeal.

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