ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 29.01.2026
CESTAT Kolkata Dismisses Revenue Appeal and Orders Release of Confiscated Gold Bar
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.ย โ ย โ โโ โ
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, recently delivered a significant judgment in Customs Appeal No. โ 75045 of 2024. โ The case revolved around the confiscation of two gold bars weighing 999.900 grams each, valued at Rs. โ 61,79,382, and the imposition of penalties under the Customs Act, 1962. โ The final order, pronounced on January 27, 2026, upheld the decision of the Commissioner of Customs (Appeals) to release one of the gold bars unconditionally to the respondent, and drop the penalties imposed on him.
Background of the Case
The case originated from the seizure of two gold bars on September 18, 2018, from an employee of respondent, outside his shop, M/s. โ Gems & Jarwa House. โ The seized gold bars were identified as:
- AS-1 (Serial No. 156469) weighing 999.900 grams โ
- AS-2 (Serial No. โ 151551) weighing 999.900 grams โ
During the investigation, the respondent admitted ownership of the gold bars. โ He stated that one bar was purchased from M/s. โ Dutta Bullion Mart, Kolkata, while the other was handed over to him by his late cousin, as repayment for a loan. โ The shop premises were searched, and statements from various parties involved in the gold’s transaction chain were recorded. โ
The investigation revealed that both gold bars were originally purchased from M/s. โ Kundan Care Products Ltd., Kolkata, under valid tax invoices. โ However, the Revenue alleged that the respondent failed to provide valid documentation for the gold bar bearing serial number 151551, claiming it was smuggled. โ A Show Cause Notice was issued on September 6, 2019, proposing the confiscation of the gold and the imposition of penalties under Sections 111(b), 111(d), 112(a), 112(b), and 14AA of the Customs Act, 1962. โ
Adjudication and Appeal โ
The adjudicating authority, in its Order-in-Original dated March 5, 2020, ordered the release of the gold bar bearing serial number 156469 but confiscated the gold bar bearing serial number 151551. A penalty of Rs. โ 6,00,000 was also imposed on the respondent under Sections 112(a) and 112(b) of the Customs Act. โ
The respondent challenged the adjudication order before the Commissioner of Customs (Appeals), who set aside the confiscation order and directed the unconditional release of the gold bar bearing serial number 151551. The Commissioner (Appeals) relied on the judgment in Commissioner of Central Excise, Meerut-I Vs. Parmarth Iron Pvt Ltd [2010 (260) E.L.T. โ 514 (All.)], which held that the Revenue cannot rely on statements from prosecution witnesses if cross-examination is not allowed. โ The Commissioner (Appeals) also observed that the Department failed to provide sufficient evidence to establish the smuggled nature of the gold bar. โ
CESTAT’s Final Order
The Revenue filed an appeal against the Commissioner (Appeals)’ decision, arguing that the respondent had not discharged the burden of proof under Section 123 of the Customs Act, 1962, which requires the person from whom goods are seized to prove that they are not smuggled. โ The Revenue contended that the respondent failed to provide valid documentation for the gold bar bearing serial number 151551 and relied heavily on the statement of proprietor of M/s. โ Dutta Bullion Mart, who claimed that the gold bar in question was sold in cut pieces to different customers. โ
After hearing both sides and reviewing the case records, the CESTAT upheld the decision of the Commissioner (Appeals). โ The Tribunal noted the following key points:
- Burden of Proof Under Section 123: The Tribunal clarified that the burden of proof under Section 123 of the Customs Act shifts to the respondent only when there is a reasonable belief that the goods are smuggled. โ In this case, the Revenue failed to establish the smuggled nature of the gold bar, as it was originally purchased from M/s. โ Kundan Care Products Ltd. under valid tax invoices. โ
- Lack of Evidence: The Revenue relied solely on the statement of Shri Aniruddha Dutta, which claimed that the gold bar was sold in cut pieces to different customers. โ However, the Department did not provide any documentary evidence or conduct further investigations to substantiate this claim. โ The Tribunal emphasized that the absence of evidence to prove the smuggled nature of the gold bar invalidated the Revenue’s allegations. โ
- Cross-Examination: The Tribunal highlighted that the Department did not allow the respondent to cross-examine Shri Aniruddha Dutta, which violated the principles of natural justice. โ Citing the Parmarth Iron Pvt Ltd case, the Tribunal held that the Revenue cannot rely on statements from witnesses who were not cross-examined. โ
- Legal Chain of Transactions: The Tribunal observed that the gold bar in question had a clear legal chain of transactions, starting from M/s. โ Kundan Care Products Ltd. to M/s. โ J.J. House Pvt. โ Ltd., and then to M/s. Dutta Bullion Mart. This established that the gold was legally imported and was circulating in the domestic market. โ
- No Evidence of Smuggling: The Tribunal concluded that the Department failed to provide any evidence, documentary or otherwise, to prove that the gold bar was smuggled. โ It noted that gold is freely imported and widely available in the Indian market, and mere suspicion cannot justify penal action. โ
Conclusion
In its final order, the CESTAT upheld the decision of the Commissioner (Appeals) and rejected the Revenue’s appeal. The Tribunal emphasized the importance of adhering to the principles of natural justice and the need for concrete evidence to substantiate allegations of smuggling. This judgment serves as a reminder that the burden of proof lies with the Department to establish the smuggled nature of goods, and mere suspicion or unsubstantiated statements cannot form the basis for confiscation or penalties.
Source: CESTAT Kolkata
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