Pranav B Prem

The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the mere presence of foreign markings on gold biscuits is insufficient to establish that the gold is of smuggled origin, setting aside the confiscation of twenty gold biscuits seized from an assessee travelling by train. Judicial Member R. Muralidhar and Technical Member K. Anpazhakan concluded that the Department failed to demonstrate either that the gold was of foreign origin or that it was imported in contravention of the Customs Act, 1962. Consequently, the seized gold was found not liable to confiscation under Section 111(b) or 111(d) of the Act.

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The case arose when officers intercepted the appellant at a railway station in Kolkata and recovered twenty gold biscuits bearing foreign inscriptions. Since the appellant could not produce purchase documents, the officers formed a “reasonable belief” that the gold was smuggled and seized it under Section 110(1) of the Act. The Department proceeded on the assumption that the presence of foreign markings itself rendered the gold contraband, warranting confiscation and penalty.

The appellant disputed the Department’s position and argued that the seizure took place in the heart of Kolkata city, far from any international border or port. It was submitted that gold with foreign markings is commonly and legally available in local markets and that the Department had not shown that the appellant had arrived from abroad or was in any way connected with cross-border smuggling from Bangladesh. It was further contended that no evidence had been placed on record to suggest that the gold had been imported in violation of the conditions governing lawful import.

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The Tribunal examined whether the seizure was founded on a “reasonable belief” as mandated under Section 110(1) and whether the foreign markings were sufficient to establish the gold’s smuggled character. After reviewing the record, the Bench held that no circumstances existed that could constitute a reasonable belief that the gold was smuggled. It noted that the seizure was effected within Kolkata city, not at any airport, seaport or border check-post, and that no materials connected the appellant to any illegal import. The Bench emphasised that the Department had not discharged its burden of proving that the gold originated from a foreign source or had entered India unlawfully.

CESTAT observed that foreign markings on gold biscuits do not, by themselves, prove smuggling. In the absence of any corroborative evidence indicating illicit importation, the smuggled character of the gold could not be established. The Tribunal reiterated that when goods are available in the domestic market and the Department does not show how they crossed the border illegally, confiscation cannot be sustained merely on suspicion.

Holding that the Department failed to produce cogent or corroborative evidence, the Bench ruled that the confiscation under Section 111(b) and 111(d) was unsustainable. The Tribunal further held that, since the allegation of smuggling failed, the appellant could not be held liable for abetting any offence under the Customs Act. The penalties imposed under the impugned order were accordingly set aside.

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As regards the disposal of the seized gold, the Tribunal directed that if the gold had already been auctioned or disposed of, the appellant must be refunded the value at the average market price prevailing on the date of disposal, as approved by the Joint Pricing Committee, together with applicable interest from the date of disposal until actual refund. Allowing the appeal in full, the CESTAT concluded that, in the absence of any legal or factual basis to infer smuggling, the confiscation and penalties imposed on the appellant could not be sustained.

Appearance

Counsel for Appellant/ Assessee: P.S. Sastry, Consultant

Counsel for Respondent/ Department: Ashwini Kr. Choudhary

Cause Title: M/s. Narru Guru Shantha Siva Kamal v. Commissioner of Customs (Appeals)

Case Title: Customs Appeal No. 76453 of 2025

Coram: Judicial Member R. Muralidhar, Technical Member K. Anpazhakan