TaxTMI 
TaxTMI 
2026 (5) TMI 590
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....arch at the premises of the appellant and seized 10 gold biscuits of 100 grams each bearing foreign marking along with Indian currency of Rs. 33,56,000/-. 3. The seizure was made on the allegation that the gold biscuits were smuggled into India and that the cash represented sale proceeds of such smuggled gold. A statement of the appellant was recorded under Section 108 of the Customs Act, wherein, certain admissions were allegedly made. However, the appellant subsequently retracted the said statement. Based on the above, a Show Cause Notice was issued and the Adjudicating Authority passed the impugned order confirming confiscation and penalty. 4. Learned Counsel for the appellant submitted that the seizure itself is illegal, that there is no evidence to establish that the gold is of smuggled origin, that the burden under Section 123 has been wrongly invoked, and that absolute confiscation and penalty are not sustainable in law. 5. Learned Counsel for the appellant submitted that the Show Cause Notice was issued and confiscation was made vide impugned order under Section 111 of the Act without referring to which clause of the said section of applies to him is not sustainabl....
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....on the only ground that they carry foreign markings without even checking the purity of the gold is not correct. Appellant had clearly stated that he has purchased in an open market and clients brought it for making ornaments, absolute confiscation of gold is not warranted. It is not prohibited item, and it's absolute confiscation is illegal and improper. Learned Counsel for the appellant has relied in this regard following judgments: (a) Smt. Jhansi Rani Vs The Prinicipal commissioner of Customs, the Joint Commissioner of Customs (Adjudication-Air), [2025 (2) TMI 30 - Madras High Court] (b) N. Kaliyamoorthy Vs The Commissioner of Customs, The Joint Commissioner of Customs [2025 (1) TMI 1465 - Madras High Court] (c) Commissioner of Customs, Aliganj Lucknow Vs Rajesh Jhamatmal Bhat, [2022 (382) E.L.T 345 (All)] (d) Shaik Jamal Basha Vs Government of India [1997 (91) E.L.T. 277 (A.P.) 9. Learned Counsel for the appellant submitted that appellant is a manufacture of gold ornaments and also a trader of gold. There is no evidence that the cash was sale proceeds of any smuggled gold. Therefore, seizure of cash is not illegal and not within jurisdict....
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....he goods are liable to confiscation before effecting seizure. In the present case, we find that except a general statement in the panchanama, there is no material on record to indicate that any independent reasons were recorded prior to seizure. The formation of belief must be based on objective material and cannot be a mere formality. 15. Hon'ble Delhi High Court in the case of Worldline Tradex Pvt Ltd., supra, held that the power of seizure under Section 110 of the Act has to obviously be exercised for valid reasons. The proper officer has to record his reasons to believe that the goods that he proposes to seize are liable to confiscation. The said reasons for exercise of the power have to be recorded prior to the seizure. The relevant paras of the judgment as thus: "22. In Om Udyog v. Union of India (supra), in similar circumstances, the Court directed immediate release of the goods since "the Department had not shown prima facie case for exercise of powers of confiscation and has only relied upon existence of power". The Gujarat High Court in Baboo Ram Hari Chand v. Union of India (supra) negatived the plea of the Department that seizure and confiscation were one an....
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....struction is not applicable. 17. Although it is correct that the instructions are prospective in nature and intended to govern future cases, the findings of the court constitute a binding precedent carrying mandatory legal force, which the proper officer has failed to comply with. 18. In this regard, the principle laid down by courts is that where statute requires recordings of "reason to believe", such requirements are mandatory and not directory. If such reasons were not recorded, the entire proceedings become vitiated. 19. Therefore, we hold that the seizure in the present case suffers from a legal infirmity, thereby rendering subsequent proceedings unsustainable. 20. The revenue has invoked Section 123 of the Customs Act, which shifts the burden of proof upon the person from whose possession the goods are seized. However, it is well settled that the Section 123 of the Customs Act can be invoked only when the initial seizure itself is valid and based on reasonable belief. In the absence of valid seizure, the burden does not shift. Even otherwise the appellant has explained that the gold was purchased locally in the course of business. 21. The Hon'ble Supreme Court....
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....ribunal setting aside the imposition of penalty under Rule 173Q of the Central Excise Rules, 1944. The Tribunal has set aside the order of the Commissioner on the ground that neither the show cause notice nor the order of the Commissioner specified which particular clause of Rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of the 173Q. This not having been done the Tribunal's finding cannot be faulted. The appeal is, accordingly, dismissed with no order as to costs." 27. Similarly, in Al-Amin Exports, supra, affirmed by Bombay High Court, it was held that confiscation without specifying clause is not sustainable. 28. Following the above decisions, we hold that the confiscation in the present case is legally not sustainable. 29. The Adjudicating Authority has ordered the absolute confiscation of gold. It is a settled position that gold in not a prohibited item but a restricted ....
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....nd the money represents such sale proceeds. Tribunal Kolkata in the case of Bijoy Kumar, Agrawala, supra, where in, it was held that in the absence of clear nexus between cash and smuggled goods, confiscation of currency is not sustainable. The relevant paras are as thus: "13.1. We observe that this view has been taken by the Tribunal in the case of Ramachandra v. Collector of Customs [1992 (60) E.L.T. 277 (Tribunal)], wherein it has been held that the Indian currency cannot be held as sale proceeds of smuggled gold and the same is not liable for confiscation. The relevant part of the decision is reproduced below: - "4. At the outset it is pertinent to note that no gold was seized either from the appellant or Shri Satram Das or Shri Bhaghu Sindhi. Therefore, it is not understood as to how the currency seized from the appellant can be said to represent the sale proceeds of smuggled gold. The appellant was produced before the Chief Judicial Magistrate, Economic Affairs, Jaipur on 12-1-1987. On 10-1-1987 itself a telegram was sent to the Assistant Collector of Customs, Udaipur by the son of the appellant wherein he had stated that his father was forcibly taken to the....