Gold Seizure by Customs: CESTAT says Dept failed to prove Seized Gold is Foreign and Smuggled, Orders Release [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) Bench at Kolkata held that the Department failed to establish the foreign origin or smuggled nature of the gold, in a case involving seizure of gold and cash from a city location, ultimately setting aside penalties imposed under the Customs Act, 1962.

The Tribunal also ordered the return of seized Indian currency along with applicable interest, observing that mere absence of purchase documents cannot render gold as smuggled in a town seizure case.

The appeals were filed by Birendra Nath Ghosh and others against orders passed by the Commissioner of Customs (Appeals), Kolkata, which had upheld penalties imposed by the adjudicating authority under Section 112(b) of the Customs Act, 1962.

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The case arose from a seizure conducted in November 2017 in Kolkata, where customs officials recovered two kilograms of gold and ₹2 lakh in cash, alleging that the gold was smuggled.

The appellants contended that the seizure was within city limits and not at any airport, seaport, or notified customs area. It was argued that the gold did not bear any foreign markings and its purity was below 99.5 percent. In the absence of evidence proving foreign origin or illegal import, the Department could not invoke the presumption under Section 123 of the Customs Act to shift the burden of proof onto the appellants.

It was further submitted that the cash seized was lawfully owned, supported by income tax records, and could not be treated as proceeds.

Regarding the penalties imposed on the other appellants, it was contended that the entire case against them was based only on assertions made by third party and no gold was actually found.

After examining the records, a Division Bench comprising Judicial Member R. Muralidhar and Technical Member K. Anpazhakan held that the Department failed to prove that the seized gold was of foreign origin or that it was smuggled into India in violation of customs law.

The Tribunal also observed that placing reliance on statements, in the absence of any corroborative evidence, cannot attract penalties under Section 112(b).

Regarding the confiscation of ₹2 lakh in Indian currency, the Tribunal concluded that there was no connection between the cash and the smuggled gold. The Tribunal ordered the authorities to return the seized money, along with any relevant interest from the time of the seizure until it was returned.

Accordingly, CESTAT allowed all the appeals, setting aside the penalties imposed on the appellants.

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