Kishore Kumar Gilda Vs Commissioner of Customs (CESTAT Hyderabad)
CESTAT Sets Aside Gold Confiscation Due to Failure to Record “Reason to Believe”; Confiscation Order Invalid as Customs Failed to Specify Clause Under Section 111; Retracted Confession Without Independent Evidence Cannot Justify Customs Action; Absolute Confiscation of Gold Not Justified as Gold Is Not Prohibited Item: CESTAT.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad, allowed an appeal challenging the confiscation of gold, Indian currency, and imposition of penalty under the Customs Act, 1962. Customs officers had seized 10 foreign-marked gold biscuits weighing 100 grams each and Indian currency of Rs. 33.56 lakh from the appellant’s premises on allegations that the gold was smuggled and the cash represented sale proceeds of smuggled goods. The adjudicating authority ordered absolute confiscation of the gold under Section 111, confiscation of currency under Section 121, and imposed penalties under Sections 112 and 117.
The Tribunal examined whether the seizure satisfied the “reason to believe” requirement under Section 110, whether the burden under Section 123 was correctly invoked, and whether foreign markings alone were sufficient to establish smuggling. It found that apart from a general statement in the panchanama, there was no material showing that Customs officers had separately recorded reasons before seizure. Relying on the Delhi High Court decision in Worldline Tradex Pvt. Ltd., the Tribunal held that recording reasons prior to seizure is mandatory and failure to do so vitiated the proceedings. Though CBIC Instruction No. 01/2017-Cus was prospective, the Tribunal held that the legal principles laid down by courts were binding.
