CESTAT Kolkata Holds Control Of Premises Suffices For Liability In Gold Seizure Case, Cuts Penalty

On 2 July 2026, the Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that an individual who controlled premises from which authorities recovered a substantial quantity of gold cannot avoid penalty under the Customs Act merely on the ground that he lacked physical possession, as surrounding circumstances established his involvement in handling goods liable for confiscation.

Judicial Member Ashok Jindal and Technical Member K. Anpazhakan partly allowed the appeal and reduced the penalty imposed on Md. Faiyaz Alam from Rs. 8 lakh to Rs. 2 lakh. The Bench held:

"The recovery of a substantial quantity of gold from premises under his control, coupled with the complete absence of licit documents and the attendant circumstances brought out during investigation, justify the conclusion that the appellant was concerned with the keeping, harbouring and dealing with goods liable to confiscation under the Act. The imposition of penalty upon the appellant is, therefore, legally sustainable.”

The case arose after Customs officers, acting on specific intelligence, searched the godown of Raja Textiles in Kolkata in May 2022 and recovered 41 gold bars weighing over 8 kg, valued at approximately Rs. 4.19 crore.

The Department alleged that the gold had been smuggled and that Alam, who remained present at the premises along with another individual, handled its storage and safekeeping. Alam, however, contended that he worked merely as a staff member under instructions of the proprietor and that authorities did not recover the gold from his personal possession. He also disputed reliance on statements recorded under Section 108 of the Customs Act, which he said were later retracted.

The Tribunal noted that although authorities did not recover the gold from Alam's person, they found him and another individual in control of the premises where the seizure occurred, and it recorded that he failed to produce any evidence of lawful acquisition or import of the gold.

It further held that since gold is a notified item under Customs law, the burden shifted to the person in possession or control of the premises to establish lawful possession, which Alam failed to discharge. At the same time, the Bench observed that the seized gold did not bear foreign markings and considered certain evidentiary aspects in favour of the appellant. It noted:

“the seized gold admittedly did not bear any foreign markings or inscriptions on record, which, though not sufficient to exonerate the appellant, does introduce an element of doubt that must be weighed while determining the quantum of penalty.”

Ultimately, the CESTAT took a lenient view of the circumstances and reduced the penalty to Rs. 2 lakh while upholding the finding of liability against Alam.

For Appellant: Ms. Atika Sumran Ahmed, Advocate

For Respondent: Shri Sourabh Chakravorty, Authorized Representative