Prasanta Sarkar Vs Commissioner of Customs (Preventive) (CESTAT Kolkata)
Order for confiscation of gold was quashed as there was absence of recorded reasonable belief for Smuggling Case
Conclusion: Confiscation of gold and the imposition of penalties was quashed due to the absence of a recorded reasonable belief that the gold was smuggled as mere suspicion or the presence of foreign markings on gold did not establish illegal importation, especially when assessee had provided documents to support their claim of legitimate possession.
Held: Customs Preventive Branch had received specific information that smuggled gold of foreign origin was being transacted at M/s. Gouri Gold House. Acting on this tip, a team of Customs officers, accompanied by two independent witnesses, conducted a search of the premises. During the search, they recovered 12 pieces of yellow metal, believed to be gold of foreign origin, along with purchase bills, sales records, and a mobile phone. Assessee was unable to produce list of documents for the gold, leading to its seizure under Section 110 of the Customs Act, 1962. The gold was later inventoried and seized at the Customs House, and assessee recorded a voluntary statement. In his statement, assessee admitted that he had purchased some of the gold without proper documents, while other pieces were acquired through legitimate channels. He also claimed that the gold was purchased from local suppliers. Adjudicating Authority ordered the absolute confiscation of the gold and imposed penalties on both assessee and his brother who was also involved in the business. Assessee challenged the order before the Commissioner of Customs (Appeals), who dismissed the appeal as time-barred. Assessee contended that the seizure was invalid due to the absence of a recorded “reasonable belief” by the Customs officers that the gold was smuggled. submitted that such a belief was a crucial safeguard against arbitrary seizures and must be explicitly documented, as per Circular No. 01/2017.Assessee further contended that they had produced documents to support their claim of legitimate possession of the gold, thereby discharging their burden of proof under Section 123 of the Customs Act. Revenue argued that the gold was notified goods under Section 123 of the Customs Act, and the burden of proving licit procurement lay with assessee. CESTAT observed that the seizure memo did not record any “reasonable belief” that the gold was smuggled, as required under Section 110 of the Customs Act. Tribunal noted that the absence of such a belief rendered the seizure proceedings invalid. It was held that assessee had produced documents to support their claim of legitimate possession, and there was no evidence to prove that the gold was smuggled. Tribunal also found that the provisions of Section 111(b) and 111(d) of the Customs Act, which deal with the confiscation of goods imported in violation of specified routes or prohibitions, were not applicable in this case. Penalty as well as the confiscation of gold and the imposition of penalty was quashed and the CESTAT held that the impugned order was unsustainable in law. Tribunal noted that mere suspicion or the presence of foreign markings on gold did not establish illegal importation, especially when assessee had provided documents to support their claim of legitimate possession.
