Appellant successfully challenges gold confiscation after proving legitimate purchase under Section 123 of Customs Act

CESTAT Hyderabad allowed the appeal and set aside the confiscation order for 697 gms of gold seized from appellant's employee at Renigunta Railway Station. The tribunal held that customs officers lacked basis to determine the gold was smuggled, as it bore no foreign markings and was irregularly shaped. The appellant successfully discharged the burden under Section 123 of Customs Act by providing purchase details from Chennai, including seller's address. Revenue's rejection based on inability to locate the seller was deemed insufficient, as the verification report was not a proper RUD. The tribunal found revenue's allegations were based on assumptions without substantive evidence.

---

---

Issues involved:
The issues in this appeal involve the justification of absolute confiscation of gold bits under Section 111 (a), (b) and (d) of the Customs Act and the imposition of penalty under Section 112 (b)(i) of the Customs Act.

Confiscation of Gold and Penalty Imposition:
The appeal questioned the order of absolute confiscation of 2 gold bits weighing 697 gms valued at Rs. 30,01,979 under Section 111 (a), (b) and (d) of the Customs Act and the imposition of a penalty of Rs. 5 lakhs on the Appellant under Section 112 (b)(i) of the Customs Act. The employee of the Appellant was intercepted by Customs Officers while carrying the gold bits and failed to produce any legal documents regarding possession. The Customs Officer verified the gold's purity and value, leading to the confiscation order and penalty imposition.

Appellant's Defense and Revenue's Allegations:
The Appellant, engaged in a jewellery business, claimed to have purchased the gold bits from a specific seller in Chennai, Mr. Hari Gopal, against cash payment. The Appellant's employee, who was carrying the gold, also confirmed the purchase details. However, the Revenue alleged that the lack of valid documents supported the assumption that the gold was smuggled. The Appellant provided evidence of the seller's existence and location, disputing the Revenue's claim of fictitiousness. The Revenue's allegations were deemed vague and based on assumptions by the Appellant's legal counsel.

Tribunal's Decision and Findings:
The Tribunal found that the seizure of the gold bits lacked a basis for assuming foreign origin or smuggling. Both the Appellant and the employee provided consistent statements regarding the purchase of gold from Mr. Hari Gopal in Chennai. The Tribunal held that the Revenue's allegations were unfounded assumptions and the Appellant had sufficiently discharged the burden of proof under Section 123 of the Customs Act. Consequently, the appeal was allowed, the impugned order was set aside, and the Appellant was entitled to the return of confiscated gold or its sale proceeds with interest.

Conclusion:
The Tribunal's decision favored the Appellant, emphasizing the lack of evidence supporting the Revenue's allegations of smuggling and highlighting the Appellant's successful defense regarding the legitimate purchase of the gold bits from a known seller. The Appellant's appeal was upheld, leading to the reversal of the confiscation order and penalty imposition.

---