Failure to Prove Defacement: CESTAT sets aside Confiscation of 3 out of 10 alleged Foreign-Origin Gold Bars [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal, New Delhi ( CESTAT ) recently set aside the confiscation of 3 out of 10 gold bars seized at Indira Gandhi International Airport upon the Department’s inability to prove their alleged foregin origin. The present Customs Appeal was filed against the Order-in-Appeal passed by the Commissioner of Customs ( Appeals ), New Delhi confiscating a total of 10 kg of gold, made into 10 gold bars of one kg each, along with Rs.50,000/- in cash, all concealed in a blue suitcase. Boost Your GST Skills: Master Notice Responses & Drafting – Enroll Now Brief facts follow intelligence received by the Zonal Unit Delhi of Directorate of Revenue Intelligence ( DRI ) that a passenger by the name of Shri Dharmender Kumar, an employee of ND Diamonds, Karol Bagh to be carrying 10 gold bars of 1 kg each bearing foreign markings, while passing through the domestic terminal of Indira Gandhi International ( IGI ) Airport, Delhi. Numerous articles were seized from Dharmender Kumar upon search conducted by the Airport authorities and two independent Punchas, including 10 bars of yellow coloured metal, later proven to be concealed gold bars of .995 purity by the Airport’s Jewellery Appraiser. Boost Your GST Skills: Master Notice Responses & Drafting – Enroll Now Seven out of the ten gold bars retrieved from Dharmender carried engravings of ‘VALCAMBI SUISSE’ and logo of ‘PAMPESSAVUER FONDEUR’, but with tampered serial numbers; rest of the three gold bars were plain and lacked any engravings or markings. Upon Dharmender’s admission that the gold was smuggled into India and failure to produce any evidence rebutting the same, the gold was seized under Section 119 of the Customs Act, 1962 and liability was placed on the owners of M/s. ND Diamonds who have failed to prove the licit possession of 10 bars of gold with them. The Revenue proceeded to absolutely confiscate the seized goods under Section 112 and 114A of the Customs Act, 1962 which was contested by the Appellant but to no avail, following which the present appeal has been lodged. Boost Your GST Skills: Master Notice Responses & Drafting – Enroll Now Navneet Panwar, Counsel appearing for the Appellant alleged foul play by the Authorities in collusion with each other, and that they had no documentary proof confirming that the seized gold was indeed of foreign origin and smuggled into India illicitly; the gold was claimed to have been purchased locally with the purchase reflected in the books of accounts of the Appellant. The AAAR was faced with ascertaining whether the department has rightly invoked Section 123 of the Customs Act, 1962. The two-member Bench of the CESTAT comprising Dr. Rachna Gupta, Judicial Member and P.V. Subba Rao, Technical Member observed that the The Directorate of Revenue Intelligence ( DRI ) had adduced sufficient evidence to prove that the impugned gold was smuggled. However, CESTAT held that since no foreign markings were present on three out of the ten seized gold bars, which were also claimed by the Appellant to have been melted out of old gold jewellery, the same may be vindicated from the suspicion of having been smuggled under ‘reasonable belief’. Boost Your GST Skills: Master Notice Responses & Drafting – Enroll Now In light of such observation, CESTAT held that there was no infirmity on the behalf of the investigation agencies in invoking Section 123 of the Customs Act, 1962 in respect of seven gold bars bearing foreign markings out of the ten bars seized. Resultantly, in light of the Department’s inability to prove the alleged foreign origin of the remaining three gold bars, the same were exonerated from such suspicion, CESTAT proceeded to award a reduced penalty to the Appellant while directing the Department to release the three gold bars within 15 days of the current order. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates