Gold seizure illegal due to improper seizure memo lacking reasonable belief statement under Section 110(1) Customs Act

CESTAT Kolkata held that gold seizure at railway station was illegal. The gold lacked foreign markings, had purity below 99.9%, and seizure memo failed to mention officer's reasonable belief that goods were liable for confiscation as required under Section 110(1) of Customs Act, 1962. Following Board Circular 1/2017, proper seizure orders must clearly state reasons for believing goods are confiscable. Since appellants produced genuine procurement documents and revenue provided no evidence of illegal import, benefit of doubt favored appellants. Gold ordered released without penalties.

---

---

Issues Involved:

1. Legality of the seizure of gold by the customs authorities.
2. Whether the seized gold is of foreign origin and liable to confiscation under the Customs Act, 1962.
3. Validity of the penalties imposed on the appellants under Sections 112 and 114AA of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Legality of the Seizure of Gold:

The primary issue revolves around the legality of the seizure of 1299.850 grams of gold from an individual at Gaya Railway Station. The customs authorities seized the gold based on the suspicion that it was of foreign origin and illegally imported. However, the Tribunal found that the seizure was not conducted in accordance with the provisions of Section 110 of the Customs Act, 1962, which requires a "reasonable belief" that the goods are liable for confiscation. The seizure memo did not mention any reasonable belief, nor did it comply with the Board's Circular No.1/2017-Cus, which mandates that reasons for belief must be clearly stated. Consequently, the Tribunal held that the seizure was not legal.

2. Whether the Seized Gold is of Foreign Origin and Liable to Confiscation:

The Tribunal examined whether the seized gold was of foreign origin and thus liable for confiscation under Section 123 of the Customs Act, 1962. The gold in question had no foreign inscription or embossment, and its purity was less than 99.9%, which are typical indicators of foreign origin. Furthermore, the appellants provided documentation, including purchase invoices and melting invoices, which were verified and found genuine. The Tribunal noted that the burden of proof under Section 123, which shifts to the department in the absence of reasonable belief, was not met by the Revenue. The Tribunal concluded that there was no evidence to substantiate the claim that the gold was smuggled, and thus, it could not be held liable for confiscation.

3. Validity of the Penalties Imposed:

The penalties imposed on the appellants under Sections 112(a), 112(b), and 114AA of the Customs Act, 1962, were also scrutinized. The Tribunal found that the penalties were based on the presumption of smuggling, which was not supported by evidence. The Tribunal emphasized that the involvement and knowledge of the appellants in any act of smuggling were not established, and the mere possession of gold without evidence of smuggling does not warrant penalties. Consequently, the penalties were deemed unwarranted and were set aside.

Conclusion:

In conclusion, the Tribunal set aside the impugned order, holding that the seizure was illegal, the gold was not liable for confiscation, and the penalties were not justified. The appeals were allowed with consequential relief, and the gold was ordered to be released.

---