AI Drafter 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2026 (5) TMI 1685
X X X X Extracts X X X X
X X X X Extracts X X X X
....courier named 'M/s. Sequel Logistics Pvt. Ltd.' [SLPL], the officers of DRI intercepted some consignments of 'gold jewellery' kept for transport through NSCBI Airport to Chennai by Indigo Airlines on 01.08.2020. Such consignments were allegedly booked by one Shri Vijay Kumar alias Pintu allegedly a key member of the smuggling syndicate in the name of M/s. Olympia Impex Pvt. Ltd. [subsequently found to be nonexistent]. (ii) The DRI officers examined the said jewellery kept in two containers at the office premises of SLPL at ECC terminal NSCBI Airport. During the course of examination, the said Shri Vijay Kumar was present. On questioning, Shri Vijay Kumar admitted that the gold had been smuggled into India from Bangladesh and subsequently was melted into the present form but no document could be produced by him against such claim. During such examination a Govt. approved valuer was also present. (iii) Detailed examination revealed a total of 271 number of yellow coloured metal strips/bangles allegedly to be of 24 Carat purity weighing 15000 grams in total and as per the valuer those gold in strip form could not be classified as 'jewellery'. Vijay Kumar also made co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er granules having total weight of 1754.29 grams valued at Rs. 99,994/- u/s 111(b) and 111(d) of the CA, 1962, (c) Imposition of penalty on each of the 10 Noticees as below:- (1) Vijay Kumar alias Pintu, (2) Ashish Mundhra, (3) Abhishek Mundra, (4) Prashant Kumar Jha of Olympia Impex Pvt. Ltd., (5) Mukhesh Kumar Sharma of Olympia Impex Pvt. Ltd., (6) Shri Ankit Gosalia, Director, Olympia Impex Pvt. Ltd., (7) M/s. Mundhra Jewellers Pvt. Ltd, (8) Mundhra Bullion Pvt Ltd., (9) M/s. Olympia Impex Pvt. Ltd., (10) Jitendra Kisan Jadhav. 2.2. The above Show Cause Notice was adjudicated by the Additional Commissioner of Customs (Prev), CC(P), W.B, Kolkata vide Order-in-Original No.34/ADC/CC(P)/WB/2025-26 dated 27.08.2025 passing order to the following effect:- (a) Absolute Confiscation of seized gold valued at Rs. 8,19,00,000/-. (b) Absolute Confiscation of 1754.290 grams of Silver Granules valued at Rs.99994/- (c) Absolute Confiscation of wrapping material, concealing material, transparent plastics, plastic box having no commercial value used for concealment sei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts (Respondents in this appeal). (ii) The seizure had been effected on the basis of specific intelligence to the effect that the impugned goods had been smuggled from Bangladesh into India and would be transported to Chennai in the guise of 'gold jewellery'. The seized goods were found to be gold strips deliberately worked upon to give the shape of bangles and had the purity of 24 Carat. Furthermore, the consignee address was found to be vague and non-existent. In view of the above, the seizing officer had enough reason to believe that the gold from which strips were drawn to give shape of bangles was of foreign origin smuggled from Bangladesh. (iii) Gold bars having 99.9% purity of 1 Kg was smuggled from Bangladesh and at the time of melting the purity was deliberately marginally reduced to the range of 99.5% to 99.7% at the time of melting and drawing into round strips with the ulterior motive to extinguish the features signifying foreign origin of gold. The primary gold after being smuggled from Bangladesh was consciously worked upon and transformed into a form that resembled indigenous, processed gold. (iv) The appellate authority turned a blind eye i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ating Authority. 4. The Respondents' contention is that the departmental appeal is overwhelmingly based upon the concepts of assumptions and presumptions. The submissions of the Respondents are summarized as under: (i) The appellate authority had made order for the release of the seized gold and silver to the Respondents on the basis of documentary evidences submitted by them supporting their claim. The Ld. Commissioner (Appeals) has not specifically ordered for release of the gold jewellery and silver granules to Shri Vijay Kumar alia Pintu. Though Shri Vijay Kumar is one of the Respondent, he is actually an employee of M/s. Mundra Jewellers Pvt. Ltd. /Mundhra Bullion Pvt. Ltd. and the ownership actually rests upon Ashish Mundhra and Abhishek Mundra, owners of M/s. Mundhra Jewellers Pvt. Ltd/ Mundhra Bullion Pvt Ltd. (ii) The appellate authority has extensively discussed and elaborated the implication of the terms 'reason to believe' at Page 296 to 298 of the paper book. The crux of his observation has been to the effect that the Department has failed to adduce any cogent and irrefutable evidence that the goods were smuggled goods. There is no other independen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and other affected persons were able to give satisfactory explanation about the source of the gold seized. In this regard, the Respondents submits that it is an admitted fact that the present case was a case of 'town seizure' and the gold in question did not have any foreign marking. In this perspective Hon'ble Supreme Court in the case of Shanti Lal Mehta v UOI [1983 (14) ELT 1715 (SC)] has settled the legal position of burden of proof holding that "The burden of proving that the goods are smuggled goods is on the Department....merely because the accused failed to account for the goods in his possession, the inference that the goods are smuggled goods cannot be drawn". (vi) The Respondent Shri Vijay Kumar alias Pintu, at the earliest stage of the investigation has produced specific documents namely, Manufacturing Receipt Vouchers issued by M/s. Mundra Bullion Private Limited accounting for the specific quantity of gold namely 10028.550 grams and 5020.150 grams being sent for job work. Furthermore, GST invoices also clearly evidenced the licit nature of the transaction. 4.1. In view of the aforementioned submissions, the Respondents submit that the Departmental....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... penalties under Section 112(b) of the Customs Act, 1962, is legally warranted. 8. Issue No. (i): Whether the seizure of the gold jewellery and silver granules were based on a 'reasonable belief' that the said goods were smuggled in nature, as required under Section 110(1) of the Customs Act, 1962 8.1. We observe that seizure in this case centers around the exercise of authority by the Custom Officials under section 110 (1) of the Customs Act, which reads as under: - "Section 110 (1) : Seizure of goods, documents and things: If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods." 8.2. In the present case, we observe that 271 gold bangles weighing 15,000 grams in total were seized from the office of the courier named 'M/s. Sequel Logistics Pvt. Ltd.'. We find that Mr. Vijay Kumar, an employee of Mundhra Jewellers Pvt. Ltd, who booked the goods with the courier for onward transport to Chennai was available at the Courier office at the time of examination of the goods by officers of DRI, Kolkata. It is also on record that Shri Vijay Kumar submitted two challans named as "Manufacturing Receipt Vou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Customs, which the Department has failed to discharge in this case. Thus, we hold that there was no 'reasonable belief' that existed prior to seizure of the gold, as mandated under Section 110 of the Customs Act, 1962. In view of the above findings, we answer the question raised at paragraph 7(i) supra in the negative. 9. Issue No. (ii): Whether the burden of proof under Section 123 of the Customs Act, 1962, can be shifted to the Respondents in the absence of any conclusive evidence proving the foreign origin of the gold 9.1. Section 123 of Customs Act, 1962, prescribes that the burden of proving that goods which have been seized under the Act are not smuggled in nature is on the person who claims the ownership of the goods. For the sake of ready reference, the said Section is extracted below: - "SECTION 123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the possession of any person, - (i) on the person from whose posses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thout foreign markings are seized from city. 9.5. In this regard, a similar view has been expressed in the case of Sarvendra Kumar Mishra & Anr. v. Commissioner of Customs [2021 (9) TMI 405 - CESTAT, Allahabad]. The relevant observations of the Tribunal, Allahabad in the said order are as under:- "14. Having considered the facts and circumstances, we find that admittedly this is a case of town seizure wherein, the impugned gold was intercepted, initially taken possession of by the officer of GRP and then handed over to the Customs. Admittedly, the gold did not have any tell-tale foreign markings and it was merely accused that the markings were removed to hoodwink investigation. The place where seizure took place is not Customs Area. Hon'ble Supreme Court in the case of Gian Chand & Ors( Supra), wherein in case of seizure by the Police and thereafter the possession was shifted to the Customs Officer held that the pre-requisite of seizure is not satisfied. Accordingly, it is held that the circumstances as required under the Customs Act are not satisfied and consequentially the whole burden or onus to establish the smuggled nature of gold is on the Revenue." 9.6. In the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ersons were able to give satisfactory explanation about the source of the gold seized. In this regard, we observe that the present case is a case of 'town seizure' and the gold in question did not have any foreign marking. In this perspective, the Hon'ble Supreme Court in the case of Shanti Lal Mehta v UOI [1983 (14) ELT 1715 (SC)] has settled the legal position of burden of proof holding that "The burden of proving that the goods are smuggled goods is on the Department....merely because the accused failed to account for the goods in his possession, the inference that the goods are smuggled goods cannot be drawn". 9.10. Thus, by relying on the decision of the Hon'ble Supreme Court cited supra, we hold that the burden of proof under Section 123 of the Customs Act does not shift to the Respondents, who has claimed the ownership of the gold in this case. Accordingly, we answer the issue framed at paragraph 7 (ii) supra, in the negative. 10. Issue No. (iii): Whether the documents produced by the Respondents evidence licit purchase of the gold/silver from domestic sources 10.1. We observe that Shri Vijay Kumar alias Pintu, at the earliest stage of the investigation has....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any foreign markings, it is observed that, for forming a "reasonable belief that the goods were smuggled into India, there must exist cogent and irrefutable evidence to substantiate such an allegation. In the present case, no such evidence is available to establish that the goods were of foreign origin or had been smuggled into India. Thus, there ought to have been some other independent and corroborative evidence available to justify the formation of a reasonable belief that the gold was of a smuggled nature. The Revenue has failed to establish a reasonable belief that the gold was of smuggled origin or of third-country origin. Consequently, the provisions of Sections 111(b) and 111(d) of the Customs Act, 1962 were held to be inapplicable, the initial onus cast upon the Revenue was not discharged, and the confiscation was, therefore, held to be unsustainable in law. Conclusion on Issue A: In view of the foregoing discussion, I find that: The intelligence relied upon was vague and nonspecific. No material evidence existed at the time of seizure to establish foreign origin or smuggling. Purity of gold alone cannot form the basis of reaso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Respondents in this case. In this case, the burden lies upon the Department to prove that the seized silver is of foreign origin and smuggled, which they failed to discharge. Thus, we hold that there is no ground available for confiscation of the silver granules in this case. 11.5. We find that the Ld. Commissioner (Appeals) has followed the ratios of various decisions of the Hon'ble Supreme Court, High Courts and Tribunals and concluded that the goods in question in this case are not liable for confiscation. We do not find any infirmity in the impugned order setting aside the confiscation of the gold bangles and silver jewellery. Accordingly, our answer to the question raised in paragraph 7 (iv) supra is in the negative. 12. Issue(v): Whether the imposition of penalties on the Respondents under the Section 112(a) and 112(b) of the Customs Act, 1962, are legally sustainable. 12.1. Regarding the imposition of penalties on the Respondents under Section 112(a) and (b) of the Customs Act, we take note of the fact that the gold bangles and silver granules in question are not liable for confiscation and the Respondents were having valid documents to establish legal purchase o....