2026-VIL-1885-CESTAT-ALH-CU
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CUSTOMS CESTAT Cases

Customs - Confiscation of Gold under Section 111(b) and Section 111(d) of the Customs Act, 1962 - Reasonable belief under Section 110 and burden under Section 123 - Respondents were intercepted in a town seizure with gold pieces which did not bear any foreign markings, and the Department alleged that the gold was of foreign origin and smuggled. The Commissioner (Appeals) set aside the confiscation and penalties, and Revenue is in appeal - Whether the gold recovered in a town seizure without foreign markings is liable to confiscation when its foreign origin is not established - HELD - The seizure was neither made at an international border nor within a notified customs area, and the gold did not bear any foreign markings. The expression reasonable belief under Section 110 cannot be equated with mere suspicion or conjecture, and it must be founded upon tangible material and objective circumstances available at the time of seizure. The purity of the gold cannot by itself be a determinative circumstance, as gold of comparable purity is also available in the domestic market - In the absence of reasonable belief, the burden under Section 123 cannot be shifted to the person from whose possession the goods were recovered. The initial burden to establish the foreign origin and smuggled character of the gold continues to rest on the Department - The Department failed to discharge this burden, and the order setting aside the confiscation is upheld - Evidentiary value of retracted statements recorded under Section 108 of the Customs Act, 1962 - The Department relied on the statements of the Respondents stating that the gold was of foreign origin and smuggled. The Respondents contended that the statements were recorded under duress and coercion, and that one statement was retracted at the earliest opportunity - Whether the confiscation of gold can be sustained on the basis of the retracted statements - HELD - A retracted statement has no evidentiary value unless it is corroborated by independent evidence. Apart from the statements, no independent material was brought on record, and the follow-up searches yielded no incriminating material - The alleged confession was very general in nature. The officers did not ask how the gold was smuggled, the place of crossing or the mode of transport. As the gold had no foreign markings, the onus was on the Department to prove its smuggled nature, which was not discharged. Section 138B was not complied with and the sanctity of the statements recorded under Section 108 was lost - The statements cannot be the sole basis to hold that the gold is smuggled, and the finding of the Commissioner (Appeals) on their non-reliability is upheld - Legal procurement of gold supported by invoices - Allegation of fabricated documents - The Respondents maintained that the gold was purchased from domestic sources, and produced tax invoices and bank account details. The Department alleged that the invoices were fabricated as the copy recovered from the supplier's office differed in printed layout from the copy produced by the Respondents - Whether the documentary evidence of legal procurement can be rejected on the basis of the alleged discrepancies - HELD - The allegation of fabrication of invoices is baseless and unsubstantiated. The statement of the third party relied upon by the Department is self-serving and lacks independent corroboration. Every material particular of the two copies of the invoice was identical, and the difference was confined to the printed layout, which is attributable to the internal billing practice and software configuration of the supplier. The absence of stock registers at a particular point of time cannot constitute evidence of illicit activity - The Respondent was in legal possession of the gold, and the finding of the Commissioner (Appeals) is upheld - Penalty under Section 112(b) of the Customs Act, 1962 - Commissioner (Appeals) set aside the penalties imposed on the Respondents - Whether penalty is imposable when the confiscation of gold is not sustained - HELD - There is no evidence on record to implicate the Respondents in the alleged offence of smuggling of gold. As the confiscation has not been sustained, no penalty is imposable on the Respondents - The setting aside of the penalties is upheld and the appeals filed by Revenue are rejected.
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