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Dated: 03.03.2025

CESTAT Kolkata overturns 24 years old Gold seizure by customs

CESTAT Kolkata has set aside a 24-year-old customs order in a gold seizure case, citing excessive delays and failure to prove smuggling. The tribunal ruled in favor of the appellant, Shri Biplab Karmakar, highlighting procedural lapses and lack of evidence by the Customs Department. The verdict reinforces the importance of timely adjudication and fair legal proceedings.

Background of the Case

• The case originated from a seizure on 23.11.2001, when gold bars and jewelry were confiscated from the appellant, Shri Biplab Karmakar, while he was traveling in a mini-bus.
• The local police seized 7 gold bars (weighing 816.480 grams, valued at ₹3,64,000) and gold jewelry (86.290 grams, valued at ₹28,724) and later handed over the case to the Customs Department.
• The appellant claimed he had purchased the gold legally from three individuals in India and that the jewelry belonged to customers for polishing.

Legal Proceedings Timeline

1. 2003 – The Adjudicating Authority ordered absolute confiscation of the gold and imposed a penalty of ₹1,00,000.
2. 2004 – The Commissioner (Appeals) remanded the case back to the adjudicating authority, stating that the burden of proof was on the Revenue (Customs Department).
3. 2004 – Both appellant and Revenue filed appeals before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which again remanded the case for de novo (fresh) adjudication.
4. 2018 – After 14 years, the de novo adjudication resulted in:
   • The release of the gold ornaments.
   • Confiscation of the gold bars.
   • Reduction of penalty from ₹1,00,000 to ₹75,000.
5. 2020 – The Commissioner (Appeals) upheld the confiscation of gold bars and penalty.
6. 2025 – The appellant challenged the decision before CESTAT, Kolkata.

Key Grounds for Appeal

1. Excessive Delay in Proceedings
   • The first adjudication took place in 2003, but the de novo adjudication was completed only in 2018 (after 14 years).
   • The Commissioner (Appeals) took 2 years to issue the order instead of the prescribed 6 months (as per Section 128A(4A) of the Customs Act, 1962).
   • Citing multiple precedents, the appellant argued that such long delays render the order invalid.
2. Failure of the Customs Department to Prove Smuggling

• The appellant provided names and addresses of individuals from whom he purchased the gold.
• The authorities did not record statements or verify documents supporting the legal purchase.
• The seizure was made far from any international border, and there was no evidence proving foreign origin under Section 123 of the Customs Act.

3. Errors in Seizure and Adjudication

• Gold jewelry was wrongfully confiscated and only released after 17 years.
• No chemical examination was conducted on the gold to establish its foreign origin.

CESTAT’s Final Decision

• Set aside the order of the Commissioner (Appeals), citing:
  • Unjustified delay in adjudication and appeal orders.
  • Failure of the Revenue to prove the gold was smuggled.
  • Lack of proper verification of the appellant’s claims.
• Appeal allowed with consequential relief to the appellant.

Conclusion

This case highlights procedural delays, failure to meet statutory timeframes, and the burden of proof in smuggling cases. The tribunal ruled in favor of the appellant, emphasizing that the Customs Department did not follow due process and failed to justify the prolonged litigation.

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Source: CESTAT Kolkata

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