Vinay Agrawal Vs Commissioner of Customs (Prev.) (CESTAT Kolkata)
The appeals challenged an Order-in-Original directing absolute confiscation of ten gold bars under Sections 111(b) and 111(d) of the Customs Act, 1962, and imposing penalties under Section 112(b)(i). The principal dispute before the Tribunal concerned six gold bars weighing 996.020 grams recovered from one appellant and the consequential penalties imposed on all three appellants.
The Tribunal first considered the appellants’ challenge to the Panchanama and observed that the circumstances relating to the identity of the panch witnesses and the manner in which the proceedings were recorded raised doubts about whether it constituted a wholly independent and contemporaneous record. As the Revenue failed to produce cogent material to dispel these objections, the Tribunal held that the Panchanama could not be accepted mechanically and had to be assessed cautiously along with other independent evidence.
Examining the legality of the seizure under Section 110, the Tribunal held that the Department was required to establish the existence of a “reasonable belief” that the gold was of foreign origin and had been smuggled. It found that the seized gold bars bore no foreign markings, inscriptions or serial numbers. Although the seizure inventory referred to a diamond-shaped marking with allegedly defaced foreign inscriptions, no actual foreign markings were produced. The laboratory test merely showed purity between 995.9 and 996.5, which the Tribunal held was insufficient to establish foreign origin, particularly when gold of comparable purity was available in the domestic market. Mere absence of an explanation for possession and the purity of the gold could not substitute the statutory requirement of reasonable belief founded on objective material.
