The CESTAT held that confiscation of gold and penalties imposed...

The CESTAT held that confiscation of gold and penalties imposed on the appellant were unjustified. The tribunal found that the Revenue's case relied primarily on statements that lacked evidentiary value due to non-compliance with the mandatory procedure under s.138B of the Customs Act. In this town seizure case, the Revenue failed to discharge its initial burden of proving foreign origin or smuggling of the gold. The tribunal emphasized that compliance with s.138B was not contingent upon whether cross-examination was sought, but was a mandatory procedural requirement. Conversely, the appellant produced legitimate purchase invoices which were confirmed by sellers. Without substantive evidence of smuggling, no penalty could be imposed under s.112(b). Appeal allowed.