2026-VIL-1301-CESTAT-HYD-CU
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  2. 2026-VIL-1301-CESTAT-HYD-CU

CUSTOMS CESTAT Cases

Customs - Applicability of Monetary Limits Circular to confiscation matters - Seizure of gold and foreign currency from Respondent and proceedings before Adjudicating Authority resulting in absolute confiscation - Whether Departmental appeal is barred by Monetary Limits Circular issued under Section 131BA of the Customs Act, 1962 when the value involved is below prescribed threshold limit of Rs.50 lakhs - HELD - Monetary Limits Circular does not apply mechanically to confiscation cases as the Circular is essentially a litigation management policy to reduce avoidable appeals in low revenue matters and is designed for disputes involving realization of duty, tax, interest or penalty. In cases of confiscation, particularly absolute confiscation, the dispute is not merely monetary but involves enforcement of Customs restrictions, anti-smuggling measures and national economic interests as Customs Act is not enacted solely for collection of revenue but also protects economic security and monetary stability - The issue transcends beyond mere revenue implications as where smuggled gold and foreign currency is ordered to be absolutely confiscated, allowing release of restricted goods by applying monetary threshold mechanically would defeat the very object of Customs enforcement. Even otherwise, the total value involved is above the prescribed threshold. The preliminary objection raised by Respondent regarding maintainability of the appeal on the ground of Monetary Limit is rejected and the Departmental appeal is held to be maintainable - Confiscation of Gold without Foreign Markings - Confiscation of gold without foreign markings, serial number or refinery identification and liability to seizure - Seizure and confiscation of melted gold bar with nil markings and nil serial number from Respondent - Whether such gold lacking foreign markings and corroborative evidence can be presumed to be of smuggled or foreign origin warranting absolute confiscation. HELD - Purity of gold alone cannot establish foreign origin or smuggled nature as domestic gold of high purity is also available through legal channels and the assayer's report merely certifies purity and not origin. In absence of any foreign markings, brand identification, serial number, import document, route of smuggling or corroborative evidence linking the said gold to any act of illicit import, the mere fact of possession cannot lead to the presumption that the gold is of smuggled origin. Section 123 of the Customs Act is not automatically attracted merely for possessing gold without markings as the Department must first establish a foundational fact giving rise to reasonable belief and mere suspicion cannot replace legal proof - The burden lies upon the Department to establish reasonable belief regarding smuggled nature and the same cannot be discharged merely on suspicion or purity of gold. Therefore, gold without foreign markings is not liable for confiscation and the finding of Commissioner (Appeals) granting unconditional release is legally correct and requires no interference – The Revenue appeal is dismissed - Confiscation of Gold with Foreign Markings - Absolute confiscation of gold bearing foreign markings like VALCAMBI SUSSE and RAND refinery with serial numbers - Seizure of gold biscuits with foreign markings from Respondent's jewellery shop and claim that they represent smuggled goods - Whether absolute confiscation without right of redemption is justified for gold bearing foreign markings - HELD - Foreign markings by themselves do not establish that goods are smuggled as gold is a commodity which circulates widely in domestic market and may bear foreign inscriptions even when legally acquired - Gold is not a prohibited item but a restricted item and therefore even where confiscation is justified, the option of redemption under Section 125 of the Customs Act must ordinarily be given as absolute confiscation of gold is not justified in routine cases and should be reserved for serious cases involving clear evidence of prohibited or smuggled goods. Where Respondent produced invoices, banking transactions and purchase details to explain licit acquisition, though discrepancies were noted it cannot be said that explanation is wholly false or there is conclusive proof of smuggling. Therefore, absolute confiscation is not warranted and Commissioner (Appeals) rightly exercised discretion under Section 125 of the Customs Act for allowing release of goods on payment of redemption fine - Violation of principles of natural justice by denying cross-examination of witnesses - Adjudicating Authority relied upon statements of co-accused, panch witnesses and officers but denied Respondent the opportunity to cross-examine these witnesses - HELD - Denial of cross-examination when statements are relied upon constitutes serious flaw which makes the order void as it violates principles of natural justice. When Department relies upon statement of a person to establish allegations against respondent, the respondent must ordinarily be afforded an opportunity to cross-examine that person. Statement recorded under Section 108 of Customs Act cannot automatically be treated as substantive evidence and before relying upon such statements in adjudication, Adjudicating Authority must comply with requirements of Section 138B of Customs Act. Therefore, proceedings suffer from violation of principles of natural justice - Confiscation of Foreign Currency - Nexus with Smuggled Goods - Confiscation of foreign currency seized from Respondent and another person - Claim that currency represents sale proceeds of smuggled gold - Whether confiscation of currency is sustainable without establishing nexus between seized currency and smuggled goods - HELD - The burden is entirely upon the Department to prove that there was a sale and the sale was of smuggled gold and the money represents such sale proceeds. In absence of direct evidence establishing nexus between currency and alleged smuggled gold and in absence of conclusive evidence showing that confiscation was outcome of unlawful transaction, mere possession of foreign currency without proper documentation does not automatically imply illegal acquisition or circulation. Where circumstances do not conclusively establish nexus between seized cash and alleged smuggled gold and there is no corroborative evidence that seized currency is related to sale proceeds of any smuggled goods, confiscation of currency is not sustainable. Therefore, confiscation of foreign currency is set aside - Imposition of penalty under Section 112 of Customs Act - Penalty imposed on Respondent for possession of seized gold and currency - Whether penalty is justified in absence of conclusive proof of knowledge, intent and active involvement - HELD - Penalty under Section 112 of Customs Act requires knowledge, intent and active involvement and is not automatic. In absence of conclusive proof of these requisites, penalty must be proportionate and reduction of penalty is therefore justified. Commissioner (Appeals) has properly exercised discretion in reducing the penalty.
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