Delhi High Court Intervenes Against CESTAT Release Order On 53 Kgs Of Imported Gold

The Delhi High Court on 16 January 2026 issued an ad-interim order, effectively intervening against a CESTAT order which had granted the provisional release of gold to Shree Gold Art Pvt. Ltd.

Justice Nitin Wasudeo Sambre and Justice Ajay Digpaul noted that prima facie, the Tribunal order dated 17 March 2025,  had failed to consider the fact and legal effect of 53 kilograms of imported gold being kept in unauthorised custody for four days, from 13 August 2020 to 17 August 2020

The Bench said:

“we are of the view that not only does the impugned order go primarily contrary to the very principle of Section 110A of the Customs Act, 1962, but also there is failure on the part of the CESTAT Tribunal in considering the fact and the effect thereof about the gold being kept in unauthorized custody from 13th August 2020 till 17th August 2020”

The case arose from a search conducted by the Directorate of Revenue Intelligence (DRI) during the COVID-19 period, which found that the gold imported by Shree Gold Art, a trading and exporting company operating under the export incentive scheme, was not stored at the declared premises. The company was permitted to import 1000 kilograms of gold bars. 

Following the search, a seizure memo and a show cause notice were issued, proposing confiscation on grounds of diversion and the absence of a mechanised jewellery facility.

In the first round of litigation, the Delhi High Court had granted provisional release of the gold under Section 110A of the Customs Act, 1962, noting the 'peculiar circumstances' that it was temporarily kept at the company director's office during late hours of the DRI search. The Court had allowed the release.

However, the Commissioner of Customs rejected the application, contending that the gold had been kept at an unauthorised location to avoid import duty. On appeal, CESTAT Delhi overturned the rejection and directed a provisional release, prompting the Department to appeal to the High Court again.

The Bench was informed of the respondent-company's alleged involvement in a large-scale gold smuggling syndicate. According to them, while the import licence authorised 1000 kilograms, only 649 kilograms were imported and jewellery exports accounted for 228.830 kilograms, leaving 367.160 kilograms unaccounted for, according to Customs.

The Department also highlighted unlawful movement of gold, discrepancies in stock, non-existent business premises and job workers, and violation of the actual use condition under the Advance Authorisation scheme.

The Delhi High Court noted that the impugned order failed to consider the effect of keeping gold in unauthorised custody and emphasised that orders under Section 110A must weigh such facts carefully.

The Court clarified that these were only its prima facie observations and directed both the respondent-company and the Customs Department to file affidavits. The case is now listed for 26 February 2026.

For Appellant: Senior Standing Counsel Anurag Ojha with Advocate Deepak Raj

For Respondent: Advocates R. K Handoo, Tanisha Samanta