CESTAT Kolkata- The burden of proof under Section 123 was wrongly shifted to the appellants

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench, Kolkata, vide Final Order Nos. 75912-75913 / 2025, allowed the appeals of Appellants, setting aside the confiscation of 474.250 grams of gold and associated penalties.

Case Background:

On 15.09.2019, customs officials intercepted Appellant at Shalimar Railway Station, seizing 7 cut pieces of gold valued at ₹18,01,676, citing lack of valid procurement documents.
Appellant, in his statement under Section 108 of the Customs Act, revealed that he was an employee of M/s Kanishk Jewellers & Bullion Pvt. Ltd., and was transporting the gold on behalf of its director, Shri Kotal (Appellant No. 2).
A show cause notice was issued for alleged illegal import of gold, followed by an Order-in-Original (30.03.2022) ordering:
- Absolute confiscation of gold under Sections 111(b) & 111(d).
- Penalties: ₹5,00,000 on Shri Kotal and ₹50,000 on Shri Mallick under Section 112.

Appellants’ Arguments:

Gold was indigenously procured, not of foreign origin.
Invoice and job work records were submitted proving domestic purchase from M/s Kartikey Jewellers Pvt. Ltd.
The purity level (99.6–99.7%) and absence of foreign markings further disproved smuggling allegations.
No “reasonable belief” was recorded by officers at the time of seizure, a mandatory requirement under Section 123.
Cited multiple precedents including Ajit Bhosle, Ram Naresh Chaurasiya, Sanjeeb Kumar, and Balanagu Raghavendra emphasizing the importance of procedural compliance and burden of proof.

Tribunal’s Key Observations:

No foreign markings or 99.9% purity (common in smuggled gold) were found.
The seizure memo did not record reasonable belief, violating CBIC Circular 01/2017.
The burden of proof under Section 123 was wrongly shifted to the appellants; no evidence of foreign origin was provided by the department.
The documents submitted by the appellants were genuine and unrefuted.
Mere absence of documents at time of interception does not automatically imply smuggling.

CESTAT Ruling:

Held that provisions of Section 123 were not applicable.
Set aside confiscation under Sections 111(b) and 111(d).
Penalties under Section 112 were also revoked.
Found no offence committed warranting such punitive action.

Significance:

Establishes robust jurisprudence requiring the customs department to prove smuggling allegations with evidence, not assumptions.
Highlights the importance of procedural propriety in seizure and adjudication under the Customs Act.
Offers relief and clarity to legitimate domestic gold traders facing arbitrary penal action.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!

Source: CESTAT Kolkata

Download CESTAT Kolkata Order Below

CESTAT Kolkata OrderDownload

Connect with us for more-

@ Team S J EXIM SERVICES, New Delhi, IN

CP: Ms. Shubhra Jha, Founder

Tel: +91-11-4999 2707 I +91-9999005693

Web: www.sjexim.services

EMAIL: operations@sjexim.services I shubhra@sjexim.services

Facebook: www.facebook.com/sjeximservices

LinkedIn: https://www.linkedin.com/company/90794255/admin/feed/posts/

YouTube: https://www.youtube.com/@sjeximIndia

Subscribe our WhatsApp Channel: https://whatsapp.com/channel/0029VaTxDT8JZg4CHEOSoK47

Subscribe our Telegram Channel: https://t.me/sjeximindia

Disclaimer:

1. The views expressed are based on the interpretation of the relevant information/documents, applicable law, and government policy and there is no assurance that a court or tribunal or regulatory body or other governmental authority may not interpret it differently.

2. We are not responsible for updating or revising this article on account of any change in law or interpretation thereof or a change in events or circumstances informed or occurring after the date of this article unless specifically requested for it.

3. Our advice should not be taken or used out of context or reproduced for any other purpose or transaction. Views expressed in this update are strictly personal, based on our understanding of the underlying law.

4. We are not responsible for any injury, loss or cost arising to any person who refers to this update and acts or refrains from any act accordingly. We would suggest that detailed legal advice must be sought before relying on this update.

NOTE: All Inquiries/Consulting/Advisory/Assignments are solicited via email only & it is a PAID Service only!

#LawFirm #Lawyers #Arbitration #ArbitrationLaw #ADR #India #Law #LegalUpdates #NewDelhi #IndirectTax #IndirectTaxLaw #CBIC #FTP #CommercialLaw #CorporateLaw #ConstitutionalLaw #BarandBench #InternationalArbitration #InternationalCommercialArbitration #WTO #TBT #QCO #BIS #UnitedNations #UNO #DutyDrawback #CustomsAct #Advisory #ProBonoConsulting #IndiaCustomsAtWork #Facebook #Twitter #Instagram #LinkedIn #Tumblr #WhatsAppChannel #WhatsApp #YouTubeChannel #YouTube #KPMG #Deloitte #ErnstandYoung #GrantThornton #EY #PWC #BDO #Consulting #SettlementCase #DGFT #CII #FICCI #IndianChamberofCommerce #InternationalChamberofCommerce #PHDChamberofCommerce #FTP #FTP2023 #Compliance #CDSCO #HighCourts #SupremeCourt #DPIIT #CESTAT #CAAR #AdvanceRuling #CEX #Appeal #Refunds #IGSTRefund #Google #GoogleSearch #GoogleSEO #AIFTA #FTA #ASEAN #CustomsAdvanceRuling #JICA #JETROIndia #KITAIndia #KOTRAIndia #Multinationalcompanies #JapaninIndia #KoreainIndia #GovtofIndia #MinistryofcommerceIndia #TradeDeals #FTA #RulesofOrigin #SJEXIMServices #NewDelhi #India #Ministryofsteel #SteelQCO

S J EXIM Services