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Dated: 18.03.2025

CESTAT Bangalore overturns the confiscation of ₹1.29 crores as Customs department failed to establish the evidence

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Bangalore, ruled in favor of K.V. Kunhimohammed and others, overturning the confiscation of ₹1.29 crores, which was alleged to be the proceeds from smuggled gold. The ruling emphasized insufficient evidence and procedural violations in the customs department’s case.

Case Overview

• Incident Date: September 5, 2013
• Location: Ottapalam, Kerala
• Seized Amount: ₹1.29 crores
• Accused Individuals: Jamsheer P.T., Abdu Samad P., Khairudheen V., and Mohammed Asharaf

The four individuals were intercepted on a train from Chennai to Kerala and found carrying ₹1.29 crores in cash, hidden inside knee caps and waistbands. Handwritten Tamil slips were also seized. Customs officials alleged that the money was proceeds from smuggled gold transported via Chennai Airport and issued a show-cause notice under Section 121 of the Customs Act, 1962.

Customs Department’s Allegations

• The seized cash belonged to an illegal gold smuggling network.
• Paper slips in Tamil indicated gold transactions, allegedly proving illegal activity.
• The accused were acting as cash couriers for K.V. Kunhimohammed, who was suspected of gold smuggling.
• Penalties imposed:
  • ₹2 lakhs each on the accused.
  • ₹20 lakhs on K.V. Kunhimohammed.

Key Tribunal Findings & Ruling

• No direct proof of smuggling or illegal gold transactions was found.
• The Tamil slips were not conclusive evidence of illegal activity.
• Failure to establish the smuggling chain—the source of the cash was not traced.
• Denial of Cross-Examination violated the accused’s legal rights.
• The burden of proof was not met by Customs under Section 121 of the Customs Act.

Final Verdict

• The ₹1.29 crore seizure was overturned.
• The confiscated money was ordered to be returned to K.V. Kunhimohammed.
• All penalties were dismissed.

Implications of the Judgment

• Prevents wrongful confiscation of money in trade-related transactions.
• Strengthens due process and fair investigation in smuggling-related cases.
• Ensures Customs must prove allegations with strong evidence.

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Source: CESTAT Bangalore

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