LUCKNOW PREV vs DHARMENDRA KUMAR @ PAPPU SONI
- Court
- Customs, Excise and Service Tax Appellate Tribunal
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Customs Cross Application No.70043 of 2026
In
Customs Appeal No.70566 of 2025
(Arising out of Order-in-Appeal No.658 & 659-CUS/APPL/LKO/2024 dated
07.10.2024 passed by Commissioner (Appeals) Customs & Central Excise,
Lucknow)
Commissioner of Customs (Preventive)
Lucknow, …..Appellant
(Commissionerate, Lucknow)
VERSUS
Shri Balbir Singh, ….Respondent
(S/o Ram Bali Singh, Village-Mahadev, Post-Jamuhar
District-Rohtas Bihar-821305,
Present Address N-9/36-1, MKH Kedarnagar,
Sundarpur, Varanasi)
WITH
Customs Cross Application No.70042 of 2026
In
Customs Appeal No.70567 of 2025
(Arising out of Order-in-Appeal No.658 & 659-CUS/APPL/LKO/2024 dated
07.10.2024 passed by Commissioner (Appeals) Customs & Central Excise,
Lucknow)
Commissioner of Customs (Preventive)
Lucknow, …..Appellant
(Commissionerate, Lucknow)
VERSUS
Shri Dharmendra Kumar @ Pappu Soni, ….Respondent
(Proprietor M/s R.P. Ornaments, R/o K-35/14, Chaukhamba,
Thatheri Bazar, Dis-Varanasi, U.P.-221001)
A PPEARANCE :
Shri Prashant Kumar, Authorized Representative for the Revenue
Ms. Shivangi Nanda, Advocate for the Respondent
CORAM:
HON’BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON’BLE MR. K. ANPAZHAKAN, MEMBER (TECHNICAL)
MISCELLANEOUS ORDER NOs.-70374-70375/2026
FINAL ORDER NOs.-70576-70577/2026
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
2
DATE OF HEARING : 12.08.2026
DATE OF PRONOUNCEMENT : 04.11.2026
K. ANPAZHAKAN:
These appeals and Cross Applications have been filed by
Revenue against the impugned Orders-in-Appeal No.658 & 659-
CUS/APPL/LKO/2024 dated 07.10.2024 passed by Commissioner
(Appeals) Customs & Central Excise, Lucknow, wherein the Ld.
Commissioner (Appeals) has held that the confiscation of the
gold pieces recovered in this case, as held by the adjudicating
authority, is not sustainable. Consequently, he has set aside the
penalties imposed upon the Respondents herein under Section
112(b) of the Customs Act, 1962.
2. The facts of the case Shri Balbir Singh (herein after referred
to as ‘Respondent 1’) was apprehended by the officials of DRI,
Varanasi along with 07 pieces of gold totally weighing 1791.030
gms valued at Rs.93,13,356/-, on 09.11.2022 at Varanasi. In his
statement dated 09/10.11.2022, Shri Balbir Singh stated that
the seized gold is of foreign origin and smuggled into the country
from Bangladesh; further, it was allegedly stated that the said
gold had been moulded to conceal its identity; that he had
received the recovered gold from two persons namely Shri Mister
and Shri Galaiwala in Kolkata on the instructions of his
employer, Shri Dharmendra Kumar @ Pappu Soni (herein after
referred as Respondent 2), who is the owner of the seized gold.
He could not produce any document with respect to the
recovered gold.
2.1. In his statement dated 02.12.2022, Respondent 2 stated
that he owns a shop in the name of M/s R.P. Ornament, Varanasi
and Shri Aman Kumar is his accountant; that Shri Balbir Singh
works for him. He claimed the ownership of the recovered gold.
He admitted that the seized gold is of foreign origin & smuggled
in nature and it has been defaced to conceal its identity. He
further had allegedly stated that he has no document with
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
3
respect to the recovered gold and Shri Balbir Singh is engaged
by him in carrying the smuggled gold and also that he used to
purchase the smuggled gold from a person namely, Shri Saiful,
the owner of M/s Middya Gold; that he often received the
smuggled gold from a person namely, Shri Mister, living in his
shop, who procured the foreign gold from a person namely, Shri
Mohsin, Shri Saiful and Shri Mohsin work together in the
smuggling of foreign gold.
2.2. Respondent 2, vide his letter dated 02.12.2022 had
submitted the following documents:
(a) Stock details of 'Gold Bar' of their firm i.e. M/s R.P.
Ornaments for the period from 01.04.2022 to 30.11.2022,
showing procurement of 295.560 gms of 'Gold bullion'
from gold ornaments through 'Gold refine voucher' and
purchase of 1497.000 grams of 'Gold bullion' from M/s
Middya Gold through bills dated 03.11.2022, 05.11.2022 &
07.11.2022. Copies of these bills were also submitted.
(b) Bank Account details of their firm i.e. M/s R.P.
Ornaments.
2.3. On completion of the investigation, a Show Cause Notice
dated 02.05.2023 was issued proposing therein confiscation of
the said seized foreign origin gold pieces along with the seized
packing materials/waist belt under Section 111(b), (d), (h) & (p)
and Section 118 of the Customs Act, 1962 respectively. Penalties
were proposed to be imposed upon the Respondents herein,
under Section 112(a) & (b) of the Customs Act, 1962.
2.4. On adjudication, the Ld. Additional Commissioner, Customs
(Preventive) Commissionerate, Lucknow, vide Order-in-Original
No.144/ADC/2023-24 dated 12.02.2024, ordered for absolute
confiscation of the seized gold pieces totally weighing 1791.030
gms valued at Rs.93,13,356/- under Section 111(b), (d), (h) &
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
4
(p) of the Customs Act, 1962 along with absolute confiscation of
the seized packing materials/waist under Section 118 of the
Customs Act, 1962. He also, inter alia , imposed penalties of
Rs.5,00,000/- each upon the Respondents herein Shri Balbir
Singh & Shri Dharmendra Kumar @ Pappu Soni, Proprietor M/s
R.P. Ornaments under Section 112(b) of the Customs Act, 1962.
2.5. On appeal, the Ld. Commissioner (Appeals) has set aside
the confiscation of the gold pieces and also set aside the
penalties imposed upon the Respondents herein, under Section
112(b) of the Customs Act, 1962.
2.6. Revenue in appeal against the impugned Order-in-Appeal
dated 07.10.2024.
3. The submissions made by the Revenue, in their Grounds of
Appeal are summarized as under:
(i) The Commissioner (Appeals) has erred in appreciating the
findings of the adjudicating authority and details of facts
mentioned in the SCN.
(ii) As regard to the argument of the Commissioner (Appeals)
that chemical examination of seized gold was not done, it is
maintained that the Commissioner (Appeals) failed to consider
the fact that the Government approved valuer vide his report
dated 09.11.2022 submitted that the purity of the seized gold is
99.5% and the purity of the seized gold is not disputed. Further,
the Respondent 1 himself had admitted that the gold bars were
of foreign origin and to conceal its identity, the specific marks
were tampered with & erased and the purity of gold is tinkered
with. This clearly belies the claim of the purported owner of the
impugned gold bars and vindicates that the impugned gold bars
were of foreign origin.
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
5
(iii) With regard to the argument that the said seizure is a town
seizure and no foreign markings were found on the gold seized,
it is submitted that it is an established modus to melt foreign
origin gold at the time of its entry into the country so that its
foreign markings are removed and the said gold cannot be
identified as foreign with visual inspection. Such gold is supplied
throughout the country through various routes and is seized by
enforcement agencies upon specific information. The Order-in-
Appeal has completely ignored the fact that the instant seizure
was effected upon such specific information of transportation of
smuggled gold. Further, subsequent to seizure the Respondent
himself admitted that the seized gold is of foreign origin and to
conceal its identity, the specific serial numbers & marks were
tampered with & erased and the purity of gold is tinkered with.
Thus, there exists sufficient grounds and circumstances to
establish that the said gold is foreign origin in nature.
(iv) In his voluntary statement recorded on 02.12.2022 under
section 108 of the Customs Act, 1962, Respondent 2,
Shri.Dharmendra Kumar@ Pappu Soni admitted that Balbir Singh
brings smuggled gold on his instructions which has been defaced
to conceal its identity and he is the owner of the same and he
has no documents in relation to that and also he did not have
any records for the gold procured from Kolkata on earlier
occasions. However, he submitted three invoices dated
03.11.2022, 05.11.2022, 07.11.2022 issued by Middya Gold,
almost a month old, to justify his ownership contradicting his
own statement dated 02.12.2022 that he did not have any licit
documents in respect of the recovered gold. Further, the CDR
location of mob, number of Balbir Singh was found to be in
Kolkata on 04.11.2022, 06.11.2022 & 08.11.2022 which
corroborates the three invoices produced by him which signifies
that he had already collected the gold purchased vide these
three said invoices. Furthermore, the weights mentioned in the
above invoices are not matching with the any of the gold pieces
seized by the DRI.
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
6
(v) During adjudication, as noted by the adjudicating authority,
Shri Shofikul Middya & Md. Mohsin submitted the invoice
Nos.MG/22-23/122 dated 03.11.2022, MG/22.23/123 dated
05.11.2022 and MG/22-23/124 dated 07.11.2022 along with
their defense replies both dated 24.05.2023 which are not the
exact replica of the above-mentioned invoices submitted by Shri
Dharmendra Kumar @ Pappu Soni vide his letter dated
02.12.2022. Thus, these three invoices are an afterthought
arrangement and cannot be claimed against gold recovered from
Balbir Singh on 09.11.2022 which he has received from Kolkata
on 08.11.2022.
(vi) On perusal of bank account statement of M/s RP ornaments
(A/c No. 98180500000210), it appears that only Rs.19,00,000/-
has been transferred to Middya Gold through RTGS on
03.11.2022 and payment which they are claiming to be paid
against invoices submitted by him, appears to be made on
29.11.2022 (Rs. 25,50,000/-) i.e. after 20 days from the date of
seizure which indicates that these payments and invoices
submitted by him bear no relation with the seized gold. It is
evident from the narration that he had indulged in fabricating
post-dated documents post-seizure in order to make the
smuggled foreign origin gold appear genuine in connivance with
Md. Mohsin & Shafikul Middya. Thus, the Respondents have
failed to produce licit documents in support of ownership of the
said foreign origin gold and also deliberately avoided joining
enquiry till advanced stage which appears to establish that he
has no licit/legal documents in respect foreign origin gold
recovered from the possession of Sri Balbir Singh though the
ownership of the same is being claimed by him.
(vi)Shri Aman Kumar in his statement recorded on 10.11.2022
under Section 108 of the Customs Act, 1962 stated that Balbir
Singh has been working for Dharmendra Kumar @ Pappu Soni
for last many years and used to bring foreign gold at his
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
7
direction. Further, for last two years Dharmendra Kumar @
Pappu Soni has been engaged in procuring foreign gold from
Kolkata and used to sell the same in Varanasi through various
'dalals'.
(vii) Md. Mohsin vide his voluntary statement recorded on
17.01.2023 under Section 108 of the Customs Act, 1962 had
categorically stated that he was a part time accountant at M/s
Middya Gold and Balbir Singh used to collect gold from Kolkata
for Dharmendra Soni @ Pappu Soni. Dharmendra Kumar @
Pappu Soni used to send payment for the same in cash. The
recovered gold from Balbir Singh was never purchased from M/s
Middya Gold under legal bills. Further, after seizure of said gold,
Dharmendra Kumar @ Pappu Soni visited the office of Middya
Gold along with his friend Dheeraj Tiwari and they were talking
about fabricating bills to claim ownership of the seized gold.
Thus, the said three invoices dated 03.11.2022, 05.11.2022,
07.11.2022 cannot be claimed against gold recovered from
Balbir Singh on 09.11.2022 which he has received from Kolkata
on 08.11.2022.
(viii) On analysis of CDR of the mobile
number 9198734785 used by Shri Balbir Singh and also from his
own statements, it is revealed that he has made total 11 trips
from Varanasi to Kolkata in September 2022, 07 trips from
Varanasi to Kolkata in October 2022, 03 trips from Varanasi to
Kolkata during 01.11.2022 to 09.11.2022 including few trips
from Kolkata to Delhi and during relevant time he was found in
regular contact with Dharmendra Kumar @ Pappu Soni, Md.
Mohsin, 'Galaiwala' via the concerned mobile numbers.
Dharmendra Kumar @ PappuSoni has submitted copy of Tax
invoices dated 03.11.2022, 05.11.2022, 07.11.2022 issued by
Middya Gold stating purchase of 1497.000 gram gold from
Middya Gold (in three parts) and location of Balbir Singh was in
Kolkata on 04.11,2022, 06.11.2022 & 08.11.2022. Balbir Singh
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
8
was again in East UP east on 09.11.2022 when he was
intercepted with the recovered gold. Thus, these three invoices
dated 03.11.2022, 05.11.2022, 07.11.2022 cannot be claimed
against gold recovered from Balbir Singh on 09.11.2022 which
he has received from Kolkata on 08.11.2022.
(ix) Shri Balbir Singh categorically admitted in his voluntary
statement dated 09/10.11.2022 that the recovered gold was
foreign origin which was smuggled into India through
Bangladesh and moulded to erase its markings and he is having
no documents related to goods in transit. Dharmendra Kumar @
Pappu Soni Proprietor of M/s R. P. Ornaments in his statements
dated 02.12.2022 and Md. Mohsin in his statement dated
17.01.2023 have affirmed that the said recovered gold was
smuggled gold and that there are no documents related to gold
seized. Further, the whatsapp chat between mobile
number 9198734785 of Balbir Singh with mobile Number
8100359656 used by Dharmendra Kumar @ PappuSoni (CAF
issued in the name of Lalita Devi W/o Sudhir Ram R/o 42
Brojodulal Street, Rama Bhawan, Beadon Street Kolkata West
Bengal, 700006) for the period from 14.03.2022 to 09.11.2022
shows that they have made regular whatsapp calls and Balbir
Singh during his trip to Kolkata / West Bengal had regularly sent
text messages/voice message to Pappu Soni regarding delivery
of goods and location after taking the delivery of gold.
Furthermore, the whatsapp chat between mobile
number 9198734785 of Balbir Singh with mobile Number
9874231741of Md Mohsin which was saved as ‘Mosammibize’ in
mobile of Balbir Singh for the period from 26.05.2022 to
08.11.2022 shows that they have made regular whatsapp calls
on relevant dates only and it appears that Balbir was in contact
with Md. Mohsin for delivery smuggled gold since 26.05.2022.
From the above, it is very evident that all were well known to
each other and they all are part and parcel of their illicit business
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
9
of carrying foreign origin Gold from Kolkata. The CDR/WhatsApp
chat/call records of his mobile number corroborate the statement
of Shri Balbir Singh that he had travelled Kolkata for taking
delivery of such smuggled gold.
(x) Shri Dharmendra Kumar @ Pappu Soni has made false
submission vide his letter dated 02.12.2022 & 26.12.2022 and
requested for release of seized gold in his favour and made false
allegations against officers of DRI for their conduct during follow
up on 09.11.2022 & during his statement on 02.12.2022 which
clearly appears to be an afterthought as he has not made any
retraction within reasonable time. As such it is evident that he
has written said letter only to create undue pressure on the
officers and to deviate the enquiry.
(xi) The Commissioner (Appeals) has failed to consider the facts
of SCN and OIO issued in the instant case. Here relevant portion
of para 5.2.26 of OIO No. 144/ADC/2023-24 dated 12.02.2024 is
worth mentioning as it is very exhaustive and well observed by
the order issuing authority.
"…Shri Balbir Singh is that he was just an employee of Shri
Dharmendra Kumar alias Pappu Soni, Proprietor of M/s. R.P.
Ornaments and his act was within the scope of his employment.
In this regard, I find that Sri Balbir Singh was found carrying,
transporting and dealing in the said gold valued at
Rs.93,13,356/- at one go which is a huge amount by any
yardstick, which he knew are liable to confiscation and hence for
the said act of commission made himself liable to penalty under
Section 112 of the Customs Act, 1962 and the same was also
accepted by him vide his statement dated 09/10.11.2022
recorded under section 108 of the Act and his act of commission
cannot be substantiate with the scope of employment that too
on a monthly salary of Rs 15000/-.
“…….Shri Dharmendra Kumar alias Pappu Soni, Proprietor of M/s.
R.P. Ornaments is that he had retracted his earlier statement
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
10
and fully co-operated in investigation. In this regard, I find that
the said notice vide his voluntary statement dated 02.12.2022
recorded under section 108 of the Act had admitted that on his
direction, the notice no. 1 i.e. Shri Balbir Singh had indulged in
carrying transporting and dealing in the said impugned smuggled
foreign origin gold and he does not have any licit documents for
the said seized gold. I also find that the Shri Dharmendra Kumar
@ PappuSoni has claimed ownership of the said foreign origin
gold yet failed to provide licit documents whatsoever for its legal
possession on the date of seizure but deliberately avoided
joining enquiry at further stage which appears to reveal that he
had no licit/legal documents in respect foreign origin gold
recovered from the possession of Sri Balbir Singh. Rather than
submitting his mobile phones for further enquiry & making
statement under Section 108 of the Customs Act 1962 in further
enquiry for which he was summoned, and also he was requested
vide letter dated 06.01.2023 and it would appear from the
narration that he had indulged in fabricating documents post
seizure in order to make the smuggled foreign origin gold appear
genuine connivance with Md. Mohsin & Shofikul Middya & he has
funded the smuggling and trafficking of foreign origin gold in
connivance with Aman Agrawal through hawala channel & thus
he appears to be the mastermind of the said, smuggling/carrying
of the foreign origin gold which he knew are liable to confiscation
and hence for the said act of in commission made himself liable
to penalty under Section 112 of the Customs Act, 1962. Further,
I find that vide letter dated 26.12.2022, Shri Dharmendra Kumar
@PappuSoni requested for release of seized gold in his favour
and made false allegations against officers of DRI for their
conduct during follow up on 09.11.2022 & during his statement
on 02.12.2022 which clearly appears to be an afterthought as he
has not made any retraction in reasonable time as such it
appears that he has written said letter only to create undue
pressure on the officers and to deviate the enquiry. Further, in
order to verify the contents extracted from mobile of Balbir
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
11
Singh, Summons dated 02.01.2023 was issued to Shri
Dharmendra Kumar @ PappuSoni and he was asked to appear
on 06.01.2023 in the office of DRI Varanasi along with his mobile
phones VIVO V210 SG (IMEI 866088056890575,
866088056890567) & (Phone 13 (IMΕΙ 350852695301150) and
mobile phone used by his accountant 'Aman' But he did not
appear and vide letter dated 04.01.2023, submitted that 'instant
act of seizure is itself without jurisdiction, any enquiry on such a
seizure under Customs Act, 1962 is also without jurisdiction',
which indicates that he resorted to irrelevant submission and not
complied the summons issued to him. Again a Summons dated
06.01.2023 was issued to him for appearance on 17.01.2023
along with devices mentioned therein and said summons was
forwarded vide letter dated 06.01.2023. He again did neither
appear nor submitted his mobile phones for further enquiry and
vide letter dated 16.01.2023 again levelled false allegation that
data has been extracted from his phones and hence question of
further production of such electronic devices cannot appear
again. From the facts stated herein above it appears that
Dharmendra Kumar @PappuSoni is deliberately avoiding to
present his mobile phones as the same were used for trading of
smuggled gold by him and as he has stated in his statement that
he had deleted all the chats after seizure of the gold from Balbir
Singh and he is trying escape from legal actions. Shri
Dharmendra Kumar @ Pappu Soni himself confessed to his part
in this case of Gold smuggling in his voluntary statement dated
02.12.2022 given to the DRI Officers under Section 108 of
Customs Act, 1962 and later retraction of this statement is
merely an afterthought and not to be given any credence.
Therefore, the contention of the notice No.2 in this regard is not
sustainable. I also find that Shri Dharmendra Kumar @ Pappu
Soni is itself located in the Kolkata/ West Bengal as evident from
the CDR of the mobile no.8100359656 stated to be used by Shri
Dharmendra Kumar @ PappuSoni. I also find that Shri
Dharmendra Kumar @ Pappu Sonihad submitted his letter dated
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
12
02.12.2022 after a lapse of considerable time after managing
the documents / Invoices. I also find that the invoice
Nos.MG/22-23/122 dated 03.11.2022, MG/22.23/123 dated
05.11.2022 and MG/22-23/124 dated 07.11.2022 submitted by
Shofikul Middya & Md. Mohsin alongwith their defence replies
both dated 24.05.2023 is not the exact replica of the above
mentioned invoices submitted by Shri Dharmendra Kumar @
PappuSonivide his letter dated 02.12.2022,
"I also find that Md. Mohsin vide his voluntary statement
dated 17.01.2023 had categorically informed that after seizure
of said gold, Dharmendra Kumar @PappuSoni visited the office
of Middya Gold along with his friend Dheeraj Tiwari and they
were talking for managing bills and also they told that DRI would
enquire them also (Middya Gold) in this regard. Therefore, the
said three invoices cannot be claimed against gold recovered
from Balbir Singh on 09.11.2022 which he has received from
Kolkata on 08.11.2022. Also, the weight mentioned in above
invoices are not in match with the any of the gold pieces seized
by DRI”.
(xii) The finding of Commissioner (Appeals) that the appellants
had a total stock of 1,792.560 gm 'Gold bullion' prior to the date
of interception i.e. 09.11.2022 and also that they have requisite
documents for the legal purchase/procurement of the recovered
gold is a pure matter of assumption on part of the Commissioner
(Appeals). In fact, the shop of Shri Dharmendra Kumar @ Pappu
Soni was searched by DRI Varanasi on the same day of seizure
i.e. 09.11.2022 during which no stock register or stock related
documents were recovered which implies that there was no gold
bullion or jewellery in the stock of the shop. Therefore, the
Commissioner (Appeals) has failed to consider the fact of
absence of any stock of gold at the shop which supports the
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
13
claim that he is engaged in trading of smuggled gold without any
legal documents.
(xiii) In view of the above submissions, the Revenue submits
that the Order Nos. 658 & 659-CUS/APPL/LKO/2024 dated
07.10.2024 passed by the Commissioner (Appeals) is not legal &
proper and the same is liable to be set aside.
4. The submissions made by the Respondents are summarized
as under:
(i) The present appeal filed by the appellant-department is a
mere re-hash of the allegation contain in the show cause notice
and the order in original, which have been thoroughly examined
and rightly rejected by the learned Commissioner(Appeals). The
department has failed to bring forth any new material or legal
arguments that would warrant interference with the impugned
order.
(ii) The primary burden to proof that the seized gold was of
foreign origin and was smuggled into India, rests squarely upon
the appellant-department. While Section 123 of the Customs
Act, 1962, shift the burden of proving that goods have not
smuggled to the person from whose possession they are seized,
this shift only occurs if the goods are seized upon a reasonable
believe that they are smuggled goods. The initial onus to
establish such a reasonable believes based on concrete evidence
of foreign origin and illicit import lies with the Department.
(iii) In the instant case, the appellant-department has failed to
adduce any independent, credible evidence to establish that the
seized gold was smuggled. There is no evidence of foreign
marking, and no material to suggest cross border movement.
The entire case is built on conjectures and assumptions which
cannot form the basis for confiscation of penalty.
(iv) The respondent consistently maintains the licit nature of the
gold and has provided documentary evidence including invoices
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
14
and stock details to substantiate his claim of legal procurement
and possession. The respondent have produced copies of Tax
Invoices dated 03.11.2022, 05.11.2022 and 07.11.2022 issued
by M/s Middya Gold, Kolkata in their favour, in support of their
claim that the respondents’ firm i.e. M/s R.P. Ornaments had
purchased 1497.000 gms of “Gold bullion” (99.50%) from M/s
Middya Gold, Kolkata. The respondents have also submitted the
Bank account details of their firm i.e. M/s R.P. Ornaments. On
examining the said Bank Account details, the respondents had
made payment of Rs.19,00,000/- to M/s Middya Gold on
03.11.2022, which is the bill amount of purchase bill dated
03.11.2022. Further, the respondents have produced a copy of
Gold refine voucher dated 01.11.2022 showing the recovery of
295.560 gms of “Gold bullion” from gold ornaments. Copies of
tax invoices dated 03.11.2022, 05.11.2022 and 07.11.2022 are
collectively marked as ANNEXURE NO.1 to the written
argument.
(v) The appellant-department’s case heavily relies on the alleged
statement of Shri Balbir Singh and the respondent Shri
Dharmendra Kumar. It is submitted that both statements were
recorded under duress and coercion and the respondent
statement dated 2.12.2022 was retracted at the earliest
available opportunity, through letters dated 26.12.2022,
4.1.2023 and 16.1.2023 . Copies of the letters dated 26.12.2022,
4.1.2023 and 16.1.2023 are collectively marked as ANNEXURE
NO.2 to the written argument.
(vi) It is a settled provision of law, that retracted statement
especially one obtain under pressure have no evidentiary value
unless, it is corroborated by independent and cogent evidence
and if uncorroborated, the statement cannot form the sole basis
for conviction or penalty. The appellant-department have failed
to provide any such corroborative evidence.
(vii) The respondent vide their letter dated 2.12.2022 submitted
comprehensive invoices to establish his ownership and legal
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
15
procurement of the seized gold, the learned
Commissioner(Appeals) have meticulously examined this
documentary evidence and correctly concluded that the
respondent is on legal possession of the seized gold.
(viii) The appellant-department’s allegation of fabrication of
invoices are baseless and unsubstantiated. The statement of
Mohd. Mohsin is third-party relied upon by the department is
self-serving and lacks independent corroboration. Minor
discrepancies, if any, in the invoices are common in day to day
in business transaction and cannot negate the fundamental fact
of licit procurement when the overall documentary evidence
supports the respondent’s claim.
(ix) In the course present proceedings, the department has
placed reliance on purported copy of tax invoice dated 3.11.2022
issued by the supplier M/s Middya Gold 3/3 Atta Para Lane
Syithimore, Kolkata, West Bengal, stated to have been
recovered from the office record of the said issuer, and has
sought to draw an adverse inference solely on the ground that
the printed format/ layout of this office copy differs from the
copy of the same invoice earlier submitted by the respondent. In
this regard, the respondent submits that the 2 documents are, in
substance and in law, one and the same tax invoice relating to a
single transaction, and that the difference complaint off by the
department is confined entirely to printed layout and does not
extend to any particular that determines tax liability.
(x)It is evident from the above comparison, every material
particular relevant to the transaction and to the determination of
the tax liability- namely the identity of the supplier and buyer,
date and description and HSN classification of the goods, the
quantity, the rate, the taxable value, the rate and amount of
integrated tax (IGST), and the total invoice value- is identical in
both copies without any variance. The Respondent being the
recipient / buyer in the transaction had no role whatsoever in the
generation, formatting or printing of the invoice, which was
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
16
solely within the domain of the supplier, M/s Middya Gold,
Kolkata. Any variance in the copy handed over to the respondent
at the time of purchase and the copy independently retained or
reprinted by the supplier in its own office records is attributable
exclusively to the suppliers internal billing practice and software
configuration, and for which the respondent exercises no control
and therefore cannot be held responsible or be visited with any
adverse consequences. Further, the minor formatting
differences can be attributed to innocuous technological factors,
such as M/s Middya Gold using one software version to generate
the customer’s PDF and another system or print to PDF driver for
their internal office copy. These variables are a normal by
product of digital document management and are not indicators
of manipulation. Both documents are merely two different
outputs of the same electronic line data entry.
(xi) The observation regarding the absence of stock registers or
physical stock of the respondent shop during search on
9.12.2022 is an extraneous observations. Business stocks
fluctuate daily and the absence of stock at a particular point of
time cannot be constitute evidence of illicit activity.
(xii) The purported voluntary statement was recorded under
circumstances that are a flagrant violation of the fundamental
rights of the Balbir Singh guaranteed under Article 21 of the
Constitution of India. The statement recording commenced at
8:00 PM on 09.11.2022 and concluded only at 6:30 AM on
10.11.2022, spanning a continuous period of over ten and a half
hours through the entire night. It is submitted that subjecting an
individual to an all-night interrogation, depriving him of sleep
and rest, is a classic instrument of coercion designed to break an
individual's will and extract a confession. Such a procedure is
inherently oppressive and cannot, by any stretch of the
imagination result in a "voluntary" statement. The assertion in
the statement that the Balbir Singh was "provided rest and food
intermittently" is a self-serving and perfunctory claim, wholly
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
17
unbelievable in the context of a continuous overnight recording
session. This practice amounts to mental torture and is contrary
to the principles of a fair and just investigation. The statement
itself records that the Balbir Singh is educated up to B.A. level
and can read and write both Hindi and English well. Despite this,
the entire ten-page statement was typed by the intelligence
officer on a computer, under the flimsy pretext that the Balbir
Singh was feeling "nervous" or could not "write neatly". This is a
highly suspicious and untenable explanation. It is a settled
principle that a statement recorded under Section 108 of the
Customs Act, 1962, derives its evidentiary value from its
voluntariness. When a literate person is prevented from writing
his own statement, it raises a strong presumption that the
narrative has been orchestrated, drafted, and framed by the
investigating officer in a manner that suits the prosecution's
narrative. The words, legal jargon, and structured flow of the
statement are not that of a person in distress but of a trained
officer building a case. This procedure effectively puts words into
the mouth of the deponent, rendering the statement a dictated
confession rather than a voluntary disclosure.
(xiii) In view of the above submissions, the Respondents prayed
for upholding the order passed by the Ld. Commissioner
(Appeals) and reject the appeal filed by the Revenue.
5. Heard both sides and perused the appeal records.
6. We find that on 09.11.2022, Shri Balbir Singh was intercepted
by the officers of DRI, Varanasi. The officers recovered 07 pieces
of gold totally weighing 1791.030 gms valued at Rs.93,13,356/-
from Shri. Balbir Singh. Thus, we observe that there is no
dispute in this case that it is case of town seizure. Further, it is
also an admitted fact that no foreign marking was found
engraved on the recovered gold pieces.
6.1. We find that the case of the Department, insofar as the
seizure effected from the Respondent No.1 is concerned,
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
18
proceeds on the premise that the said gold pieces in question
were of foreign origin and had been illicitly imported into India.
However, from the records available before us, it is noticed that
the gold pieces recovered from Respondent No.1 admittedly did
not bear any foreign markings, inscriptions or serial numbers.
On the contrary, the Inventory-cum-Seizure List itself records
that the alleged foreign inscriptions stood defaced. We also note
that the Report dated 09.11.2022 submitted that the Govt
approved Valuer indicates that the purity of gold as 99.5%. Gold
of foreign origin normally bears a purity of 999.9, which is not
the case on hand.
6.2. At this stage, it is relevant to bear in mind that the
expression "reasonable belief" occurring under Section 110 of
the Customs Act, 1962 cannot be equated with mere suspicion
or conjecture. Such belief must be founded upon some tangible
material and objective circumstances available with the proper
officer at the time of seizure. The existence of reasonable belief
is a condition precedent for exercise of powers under Section
110 and cannot be founded on surmises or assumptions alone.
6.3. In the facts of the present case, apart from the statement
of Shri. Balbir Singh recorded during investigation, we do not
find any contemporaneous material indicating that the said gold
pieces recovered from Respondent No.1 bore identifiable foreign
markings or possessed any distinctive characteristics so as to
prima facie establish their foreign origin. We further find that the
purity indicated in the Test Report is 99.5%, which by itself
cannot constitute a determinative circumstance for entertaining
a belief regarding the foreign character of the gold, particularly
when gold of comparable purity is also available in the domestic
market.
6.4. Therefore, we are of the considered view that the mere
absence of explanation regarding possession, coupled with the
purity of the metal, cannot, ipso facto, furnish the basis for
formation of a ‘reasonable belief’ that the gold in question
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
19
represented smuggled goods. The expression "reasonable
belief" postulates the existence of some objective material
capable of leading a prudent person to such conclusion and not
a mere suspicion, however strong it may be.
6.5. We find that the seized gold bars admittedly did not bear
any discernible foreign markings or serial numbers and the
purity reflected in the Government valuer’s report by itself,
cannot be regarded as sufficient to infer foreign origin.
6.6. In these circumstances, we find that the requisite
"reasonable belief" contemplated under Section 110 of the
Customs Act, 1962 did not exist at the time of seizure. Mere
suspicion, however grave, cannot substitute the statutory
requirement of reasonable belief founded upon objective
material. Once the very foundation for seizure under Section 110
is found to be lacking, the burden contemplated under Section
123 of the Customs Act, 1962 cannot be shifted upon the person
from whose possession the goods were recovered. In other
words, in the absence of a valid and reasonable belief regarding
the smuggled character of the goods, the provisions of Section
123 would have no application to the facts of the present case.
6.7. In this regard, we find that a similar view has been
expressed by the Tribunal, Kolkata in Customs Commissioner of
Cus (Prev.), Patna v. Lalit Krishna Agarwal [Final Order No.
77506 of 2023 dated 08.11.2023 in Customs Appeal No. 75499
of 2022 – CESTAT, Kolkata], wherein it was observed as under:-
“6. In fact, during the course of investigation, it is a fact
on record that boondi silver and silver jewellary were
recovered from the shop of the respondent. So, the
question arises that in the absence of any seizure of Port
or Airport or not having any foreign markings on the goods
seized from the respondent, how the officers came to the
conclusion that the goods are third country origin goods.
Therefore, first, onus on the Revenue is to make a
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
20
reasonable belief that the goods are of third country.
Admittedly, no such evidence has been produced by the
Revenue to allege that to make a reasonable belief, the
goods are of third country origin. In the absence of that,
the goods in question cannot be confiscated.”
6.8. We find that the department has not established that there
was a ‘reasonable belief’ that the goods were of foreign origin
and smuggled in nature. Consequently, we observe that the
initial burden to establish the foreign origin and smuggled
character of the impugned gold continues to rest upon the
Department. However, except for the statements recorded
during investigation, we do not find any cogent or independent
evidence having been adduced by the Revenue to discharge such
burden.
6.9. It is also a settled position of law that presumption cannot
be a substitute to evidence. In the absence of foreign markings,
there should be cogent evidence to establish that the gold is of
foreign origin. Moreover, the issue of town seizure of unmarked
gold is no longer res integra as there have been numerous laid
down ratio squarely applicable to the case in hand. We find that
a similar issue came up for consideration before this Tribunal in
the case of Balwant Raj Soni & ors. v. Commissioner of Cus.
(Prev.), Patna [Final Order Nos. 75455-75457 of 2023 dated
18.05.2023 in Customs Appeal No. 75414 of 2022 – CESTAT,
Kolkata], wherein it was held as under: -
“31. We find that the Impugned Order mainly relied upon
the statements of the Noticees 1 to 5 to establish the
foreign origin nature of the gold. Other than the
statements, there is no other evidence available on record
to show that the gold were smuggled into the country from
Bangladesh. It is incorrect to rely only on the statements
of the co-accused without any corroboration, to prove the
smuggled nature of the gold. It is a settled law that the
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
21
statement of the co-accused cannot be relied without any
independent corroboration.
31.1 In the case of Commissioner of Customs (Preventive),
Lucknow vs Shakil Ahmad Khan, it has been held that
confiscation based on retracted statements not
sustainable. The gist of the order is reproduced below:
Smuggling Burden of proof Retracted confessional
statements of co-accused No efforts made to prove
that confessional statements were voluntary Accused
were not examined during adjudication - HELD:
Confiscation and penalty order based only on
retracted statements of accused persons were not
sustainable - It was contrary to settled legal position,
illegal, arbitrary and liable to be set aside Sections
108, 111, 112 and 123 of Customs Act, 1962. (paras
22, 25, 26]
Evidence Confessional statement of co-accused - It is
not substantive evidence against another co-
accused- It can at best be used for assurance to
Court In absence of any substantive evidence, it was
inappropriate to base conviction of accused on
statements of co-accused Section 108 of Customs
Act, 1962. [para 25]
31.2 The Tribunal in the cases of Principal Commissioner of
Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019
(366) ELT 337 (T) dismissed the appeal of Revenue
holding that jewellery not bearing any foreign marking
other than statement of passenger no other proof
produced by Revenue to substantiate the claim that
jewellery were smuggled into India.
31.3 In view of the above discussion and relying upon the
the decisions cited above, we hold that the gold
bars/pieces cannot be confiscated based on the retracted
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
22
statements alone. Accordingly answer to question no (iii) is
negative.”
6.10. Further, in the case of Commissioner of Cus (Prev.), Patna
v. Lalit Krishna Agarwal [Final Order No. 77506 of 2023 dated
08.11.2023 in Customs Appeal No. 75499 of 2022 – CESTAT,
Kolkata], it has been observed that: -
“6. In fact, during the course of investigation, it is a fact
on record that boondi silver and silver jewellary were
recovered from the shop of the respondent. So, the
question arises that in the absence of any seizure of
Port or Airport or not having any foreign markings
on the goods seized from the respondent, how the
officers came to the conclusion that the goods are
third country origin goods. Therefore, first, onus on
the Revenue is to make a reasonable belief that the
goods are of third country . Admittedly, no such
evidence has been produced by the Revenue to allege that
to make a reasonable belief, the goods are of third country
origin. In the absence of that, the goods in question
cannot be confiscated.”
(Emphasis supplied)
6.11. We also find that a similar case has been dealt with by the
Tribunal in the case of Commissioner of Cus., Chennai-III v.
Mohammed Ali Jinnah [Final Order No. 40289 of 2023 dated
20.04.2023 in Customs Appeal No. 40099 of 2020 – CESTAT,
Chennai]. The relevant observations of the Tribunal in the said
case are as follows: -
“38. The evidence put forward by the department to allege
that the gold is smuggled from Sri Lanka is too flimsy to be
accepted. The Commissioner (Appeals) in para 34 has held
as under:-
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
23
"34. In view of the above findings, it is held that the
essential things for confiscation namely proof of the
gold having been smuggled into India was not
proved. The investigation has assumed that the
impugned gold was smuggled from Sri Lanka and no
corroborative evidence was produced by the DRI.
More so, it was certified by the Court that the gold
bars do not have foreign markings. AA has
proceeded on wrong premises that the impugned
crude Gold bars are of foreign origin. There was no
positive evidence except the statement of the
appellant. The retracted statement has not been
corroborated with findings/evidence/statements of
others ie the person supposed to have handed over
the same to the appellant for transporting and the
person who was supposed to receive. The burden of
proof has not been discharged by the department. It
has been proved that there was a violation of
principles of natural justice by not allowing cross
examination. Respectfully following the ratio of the
Hon'ble Supreme Court in M/s. Oudh Sugar Mills Vs.
UOI, I am constrained to set aside the order of the
adjudicating authority confiscating the impugned
gold and imposing penalty on the appellant. It is
ordered to release the two crude gold bars weighing
3.097 kg to the appellant Mohammed Ali Jinnah
39. After appreciating the facts and evidence discussed
above, we are of the opinion that the view arrived by the
Commissioner (Appeals) is legal and proper and does not
require any interference. The issue on merits is found
against the appellant / Revenue and in favour of the
respondent. We make it clear that in this appeal we have
not addressed the issue as to whether the Show Cause
Notice issued by DRI is valid and proper.”
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
24
6.12. The Hon’ble Supreme Court, in Gian Chand v. State of
Punjab (1962 AIR 496), has categorically held that mere
suspicion is not sufficient to justify seizure, and the prosecution
must provide substantive evidence of foreign origin. Further, we
observe that in Union of India v. Mahesh Raj (1990 SCC (3)
115), the Hon’ble Supreme Court ruled that the burden under
Section 123 arises only if there is prima facie evidence
indicating foreign origin, which is entirely absent in this case.
Also, in D. Bhoormull (1974 AIR 859), the Hon’ble Supreme
Court emphasized that suspicion alone is not a substitute for
evidence. In Umrao Lal v. Commissioner of Customs (2016
(331) E.L.T. 216 (Tri.-Del.), it was held that in the absence of
markings or material evidence proving foreign origin,
confiscation is not sustainable.
6.13. By relying on the decisions cited supra, we hold that the
Department has failed in establishing the foreign origin or
smuggled character of the gold pieces so as to attract the
provisions of Sections 111(b) and 111(d) of the Customs Act,
1962. We find that the Ld. Commissioner (Appeals) has given a
categorical finding to arrive at the conclusion that the gold
pieces in question are not liable for confiscation. We do not find
any reason to disagree with the categorical findings given by
the Ld. Commissioner (Appeals) in this regard.
7. We, therefore, proceed to examine the other issues arising in
the present appeals, particularly the evidentiary value of the
statements recorded during investigation and whether the
Department has otherwise been able to establish the foreign
origin and smuggled character of the impugned gold so as to
attract the provisions of Sections 111(b) and 111(d) of the
Customs Act, 1962. We find that department’s case heavily
relies on the alleged statement of the Respondent No. 1, Shri
Balbir Singh and the Respondent No. 2, Shri Dharmendra
Kumar. We find that the respondent’s have pointed out that the
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
25
both statements were recorded under duress and coercion and
the respondent’s statement dated 2.12.2022 dated 02.12.2022
was retracted at the earliest available opportunity, through
letters dated 26.12.2022, 04.01.2023 and 16.1.2023. We
observe that a retracted statement has no evidentiary value
without having any corroborative evidence further. In the
present case, we find that apart from the statements recorded
during the course of investigation, no independent or
contemporaneous material has been brought on record to
establish that the gold pieces recovered from Respondent No.1
were of foreign origin or represented smuggled goods.
7.1. We find that the next limb upon which the case of the
Revenue substantially rests is the evidentiary value attributed to
the statements of Shri Balbir Singh and Shri Dharmendra Kumar
in the present proceedings. We find considerable force in the
contention advanced on behalf of the Respondents that the
evidentiary value of these statements deserves to be examined
with circumspection, especially taking note of the retraction. In
this regard, we find that the Ld. Commissioner (Appeals) has
rightly held that except the statement of the Respondents, one
of which is also retracted later on, there is no other evidence on
record to show that gold pieces in question were smuggled into
the country (India) from Bangladesh. The Ld. Commissioner
(Appeals) have found that except for the statements, including
the retracted statement, there is no independent or
corroborative evidence. Follow-up searches at the residences of
co-accused persons yielded no incriminating material. No further
investigation was carried out to verify the alleged foreign origin
of the gold or its supposed smuggling from Bangladesh. Thus,
we observe that the Respondents cannot be held guilty merely
on the basis of a retracted statement, particularly when the
conditions prescribed under Section 108/153 of the Customs
Act, 1962 were not fulfilled. In the case of Shreyas Agrawal v.
Commissioner of Customs in Customs Appeal No. 75324 of
2023, the CESTAT, Kolkata vide Order dated 12.07.2023
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
26
(457/2023 dated 18.05.2023) held that retracted statements
cannot be the sole basis to conclude that gold is of smuggled
origin.
7.2. On perusal of the statements, given by Shri Balbir Singh
and the Shri Dharmendra Kumar, we find that the so-called
confession about the gold being smuggled is very general in
nature. We find that nowhere they have been questioned as to
how the gold in question was smuggled from Bangladesh to
India. No critical details about the persons who carried the gold
from across the border, what was place of crossing the
international borders, what was the mode of transport and how
the finances were arranged etc. were neither asked by officers
nor stated by the Respondents. The facts claimed to have been
confessed regarding the alleged smuggling of the impugned
Gold are very general in nature. It would be very naïve to
expect that the Respondents would confess the most minute
details, even if they actually smuggled the impugned goods.
What is intriguing is that the officers did not even put the
relevant and pertinent questions to unearth or establish the act
of smuggling. As such, it is not open for the Department to
draw conclusions from a general statement to particularize the
details about the impugned goods. As admittedly, the gold
having no foreign markings, the onus would be on Department
to prove the smuggled nature of the same. This onus was not
discharged. Moreover, the provisions of Section 138B of the
Customs Act have not been complied with and therefore, the
sanctity of the statement recorded under section 108 has been
lost and consequently, they cannot be conclusively relied upon.
We find that the Ld. Commissioner (Appeals) has given a
categorical finding regarding non-reliability of the statements
recorded in the present case. We do not find any reason to
disagree with the categorical findings given by the Ld.
Commissioner (Appeals) in this regard.
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
27
8. Further, we observe that it is the consistent case of the
Respondents that the said gold pieces had been purchased from
domestic sources. The Respondents consistently maintained the
licit nature of the gold and has provided documentary evidence
including invoices and stock details to substantiate their claim of
legal procurement and possession. The Respondent No. 2 has
produced copies of Tax Invoices dated 03.11.2022, 05.11.2022
and 07.11.2022 issued by M/s Middya Gold, Kolkata in their
favour, in support of their claim that the respondents’ firm i.e.
M/s R.P. Ornaments had purchased 1497.000 gms of “Gold
bullion” (99.50%) from M/s Middya Gold, Kolkata. The
respondents have also submitted the Bank account details of
their firm i.e. M/s R.P. Ornaments. On examining the said Bank
Account details, we find that the firm owned by respondent 2
had made payment of Rs.19,00,000/- to M/s Middya Gold on
03.11.2022, which is the bill amount of purchase bill dated
03.11.2022. Further, the Respondent No. 2 has produced a copy
of Gold refine voucher dated 01.11.2022 showing the recovery of
295.560 gms of “Gold bullion” from gold ornaments. Copies of
tax invoices dated 03.11.2022, 05.11.2022 and 07.11.2022 have
also provided in support.
8.1. We find that the Respondent No. 2 vide his letter dated
2.12.2022 submitted comprehensive invoices to establish his
ownership and legal procurement of the seized gold. We find that
the Ld. Commissioner (Appeals) has meticulously examined this
documentary evidence and correctly concluded that the
respondent was in legal possession of the seized gold. We find
that the department’s allegations of fabrication of invoices are
baseless and unsubstantiated. The statement of Mohd. Mohsin,
who is is a third-party, relied upon by the department is self-
serving and lacks independent corroboration. Minor
discrepancies, if any, in the invoices are common in day to day
in business transaction and cannot negate the fundamental fact
of licit procurement when the overall documentary evidence
supports the respondent’s claim.
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
28
8.2. In the course present proceedings, we find that the
department has placed reliance on purported copy of tax invoice
dated 3.11.2022 issued by the supplier M/s Middya Gold 3/3 Atta
Para Lane Syithimore, Kolkata, West Bengal, stated to have been
recovered from the office record of the said issuer, and has
sought to draw an adverse inference solely on the ground that
the printed format/ layout of this office copy differs from the
copy of the same invoice earlier submitted by the respondent. In
this regard, we find that the 2 documents are, in substance and
in law, one and the same tax invoice relating to a single
transaction, and that the difference complaint off by the
department is confined entirely to printed layout and does not
extend to any particular that determines tax liability. For the
sake of convenience, a tabular comparison is set out below:
Particulars Respondent Copy Office Copy
Recovered By
Department
Supplier Middya Gold Kolkata Middya Gold Kolkata
Buyer R.P. Ornament
R.P. Ornament
Varanasi
Varanasi
Invoice date 03.11.2022 03.11.2022
Description of Goods Pure Gold 99.5% Pure Gold 99.5%
HSN 7108 7108
Quantity 367.000gm 367.000gm
Rate per gm 5026.32 5026.32
Taxable value 1844660.19 1844660.19
IGST @ 3% 55339.81 55339.81
Total invoice value 1900000.00 1900000.00
8.3. From the above table, it is evident that every material
particular relevant to the transaction and to the determination of
the tax liability- namely the identity of the supplier and buyer,
date and description and HSN classification of the goods, the
quantity, the rate, the taxable value, the rate and amount of
integrated tax (IGST), and the total invoice value- is identical in
both copies without any variance. We observe that the
Respondent being the recipient / buyer in the transaction had no
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
29
role whatsoever in the generation, formatting or printing of the
invoice, which was solely within the domain of the supplier, M/s
Middya Gold, Kolkata. Any variance in the copy handed over to
the respondent at the time of purchase and the copy
independently retained or reprinted by the supplier in its own
office records is attributable exclusively to the suppliers internal
billing practice and software configuration, and for which the
respondent exercises no control and therefore cannot be held
responsible or be visited with any adverse consequences.
Further, we are of the view that the minor formatting differences
can be attributed to innocuous technological factors, such as M/s
Middya Gold using one software version to generate the
customer’s PDF and another system or print to PDF driver for
their internal office copy. These variables are a normal by
product of digital document management and are not indicators
of manipulation. Thus, we observe that both documents are
merely two different outputs of the same electronic line data
entry.
8.4. We also find that the observation regarding the absence of
stock registers or physical stock of the respondent shop during
search on 9.12.2022 is an extraneous observations made by the
Ld. Adjudicating authority. Business stocks fluctuate daily and
the absence of stock at a particular point of time cannot be
constitute evidence of illicit activity.
9. From the impugned order, we find that the Ld. Commissioner
(Appeals) has observed that this is a case of town seizure and
the respondent consistently claimed the gold to be ancestral
property. We find that the Revenue has not brought in any
evidence to disprove the claim of the Appellant that gold in
question was their ancestral property. We find that the seizure
was neither made at an international border nor within a notified
customs area, and the gold did not bear any foreign markings.
Thus, Section 123 of the Customs Act cannot be invoked as
there was no reasonable belief that the gold was smuggled.
Customs Appeal No.70566 of 2025
Customs Appeal No.70567 of 2025
30
9.1. In view of the above findings, we hold that the Ld.
Commissioner (Appeals) has given a categorical finding and set
aside the confiscation of the gold. We do not find any reason to
disagree with the categorical findings given by the Ld.
Commissioner (Appeals) in this regard.
9.2. We also find that there is no evidence available on record
to implicate any of the Respondents in relation to the alleged
offence of smuggling of gold. In view of the discussions in the
preceding paragraphs, it has been held that the gold in question
is not liable for confiscation as rightly observed by the Ld.
Commissioner (Appeals) in the impugned order, and
accordingly, the impugned order setting aside the confiscation
has been upheld. As the confiscation has not been sustained
and allegation against the Respondents in relation to the alleged
act of smuggling of gold or abetting the smuggling of gold has
not been established, we hold that no penalty imposable on the
Respondents herein. Accordingly, we uphold the setting aside of
the penalties in the impugned order.
10. In the result, we uphold the impugned order and reject the
appeals filed by the Revenue, with consequential relief to the
respondents, if any, as per law. The cross-applications stand
disposed of in these terms.
(Order pronounced in open court on 04.11.2026)
Sd/-
(P. K. CHOUDHARY)
MEMBER (JUDICIAL)
Sd/-
(K. ANPAZHAKAN)
MEMBER (TECHNICAL)