CESTAT Kolkata Sets Aside Confiscation Of 1.75 Kg Gold, Holds Suspicion Insufficient To Prove Smuggling

On 2 July, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that Customs cannot treat gold as smuggled merely on suspicion and set aside the confiscation of 1.75 kg of gold along with penalties imposed by the department.

Judicial Member Ashok Jindal and Technical Member K. Anpazhakan allowed the appeal filed by Dinesh Prasad and Raj Kumar Soni and quashed the confiscation order passed by Customs. The Bench observed:

“...the Revenue has merely relied upon uncorroborated statements recorded during the course of investigation instead of leading independent and legally admissible evidence.”

Customs had seized two gold bars weighing 1,758.390 grams and alleged that the gold was of foreign origin. It relied mainly on statements recorded during investigation to support confiscation and penalties. The appellants produced purchase invoices, stock registers and melting records to establish a complete documentary chain for procurement and processing of the gold.

The Tribunal noted that the melting records matched the exact weight of the seized bars. It also observed that the gold bars did not bear any foreign markings and observed that Customs did not produce any scientific or forensic evidence linking the gold to a foreign source. It held that Customs could not disregard documentary evidence merely on the basis of untested statements recorded during investigation. It observed:

“In the absence of any foreign markings or corroborative scientific evidence connecting the seized gold with any foreign source, mere purity of the gold cannot by itself furnish the reasonable belief contemplated under Section 123 of the Act.”

Further, the Bench held that allegations of forged invoices were not supported by handwriting analysis, forensic reports or expert examination. It recorded that the Revenue's case rested predominantly on untested statements recorded during investigation without independent documentary or scientific corroboration.

Accordingly, the CESTAT concluded that Customs failed to establish smuggling and set aside the confiscation and consequential penalties.

For Appellant: Shri Amit Kumar, Advocate

For Respondent: Shri Sourabh Chakravorty, Authorized Representative