Gold confiscation overturned after jewellers prove legitimate ownership with purchase records and banking evidence under Section 123

CESTAT Hyderabad set aside absolute confiscation of 211.07 gms gold and penalty under Section 112(a) and (b) of Customs Act. Appellants, operating jewellery business, successfully discharged onus under Section 123 by providing cogent evidence including stock registers, purchase records from reputed dealers, banking transactions, and GST invoices for 2020-21. Court found lower authority's rejection of explanation was arbitrary and based on assumptions without proper foundation. Appellants entitled to return of seized gold or refund of auction proceeds with interest if disposed of.

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Issues Involved:
1. Confiscation of gold u/s 111(d), 111(i), and 111(j) of the Customs Act.
2. Imposition of penalty u/s 112(a) and (b) of the Customs Act.

Summary:

Issue 1: Confiscation of Gold u/s 111(d), 111(i), and 111(j) of the Customs Act

The appellant, a jeweller and proprietor of M/s Padmavati Jewellers, faced absolute confiscation of 211.07 grams of gold valued at Rs. 10,70,547/- u/s 111(d), 111(i), and 111(j) of the Customs Act. The Air Intelligence Unit intercepted a consignment containing foreign marked gold bars without proper documents. Upon verification, the officers found foreign marked gold bars and other items in packages sent by M/s VBS Parcel, Hyderabad. The gold was certified as 24-carat foreign origin by a government-approved assayer. The appellant failed to produce satisfactory documents regarding the procurement of the foreign marked gold, leading to the issuance of a show cause notice and subsequent confiscation order.

Issue 2: Imposition of Penalty u/s 112(a) and (b) of the Customs Act

A penalty of Rs. 2,14,000/- was imposed on the appellant u/s 112(a) and (b) of the Customs Act. The appellant contended that the seized gold was purchased under proper invoices and was not of foreign origin. The appellant provided evidence of purchasing gold from reputed dealers and sending it for job work. However, the respondent rejected the appellant's explanation, leading to the imposition of the penalty.

Appellant's Arguments and Tribunal's Findings

The appellant argued that they regularly purchase gold from authorized dealers and provided invoices and job work challans as evidence. The appellant also presented stock registers, ledger accounts, and GSTN portal summaries to support their claim. The Tribunal found that the appellant had led cogent evidence and discharged the onus u/s 123 of the Customs Act. The Tribunal noted that the lower authorities had arbitrarily rejected the appellant's explanation based on assumptions and presumptions.

Conclusion

The Tribunal allowed the appeal, setting aside the impugned order. The appellant was entitled to the return of the seized gold or refund of the auction proceeds along with interest as per rules.

Order Pronounced

Appeal allowed on 27.03.2024.

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