2026-VIL-795-CESTAT-HYD-CU
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CUSTOMS CESTAT Cases

Customs - Seizure of gold and currency - The seizure was made on the allegation that the gold biscuits were smuggled into India and that the cash represented sale proceeds of such smuggled gold - Whether the seizure was valid and the subsequent confiscation and penalty sustainable – HELD - The seizure of the gold and currency is not valid as the proper officer did not record separate reasons for belief that the goods were liable for confiscation prior to the seizure, as required under Section 110 of the Customs Act. The power of seizure has to be exercised for valid reasons recorded prior to seizure. The CBIC instruction issued later requiring separate seizure orders does not change this legal position, as the court rulings constitute binding precedent - Further, since the seizure was not valid, the burden of proof under Section 123 of the Customs Act could not be invoked. Mere foreign markings on the gold do not by themselves establish that the gold was smuggled, in the absence of any corroborative evidence. The confessional statement relied upon was retracted and not corroborated by independent evidence, hence could not be the sole basis for the confiscation - The confiscation order did not specify the relevant clause of Section 111 under which the goods were liable to confiscation, which is a serious defect and even if confiscation was justified, absolute confiscation was not warranted as gold is not a prohibited item, and the option of redemption under Section 125 should have been provided - The confiscation of the Indian currency is also set aside as there is no clear nexus established between the currency and any smuggled gold. Lastly, the imposition of penalty under Section 112 without specifying the relevant clause is also not sustainable - The impugned order is set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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