Confiscation and penalty quashed as Department fails to prove smuggling under Section 123 of Customs Act

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....The CESTAT set aside the confiscation of seized gold and penalty imposed on appellants for smuggling, holding that the Department failed to establish reasonable belief under Section 123 of the Customs Act, 1962. The appellants demonstrated a preponderance of probability that the gold was lawfully procured, supported by income evidence and CA certification. The Department's reliance on statements without producing seized gold or allowing cross-examination of punch witnesses violated principles of natural justice. The Tribunal found the appellants' denial of knowledge about the gold's foreign origin credible, as the gold was received in sealed packets and the Department failed to produce material evidence of foreign markings. Consequently, the confiscation and penalties were quashed, and the appeals were allowed.....