A delivery challan discharges the Section 123 burden, shifting to Revenue to prove the gold was smuggled.

On 23 February 2022, DRI officers intercepted Vijay Kumar Bind at Gaya Railway Station and recovered two gold bars weighing 1,499.400 grams.

Bind carried a delivery challan issued by Raj Shree Jewellers, owned by the appellant, identifying the gold as goods for delivery to M/s. Satvik Gold LLP.

The Department alleged that the gold had been smuggled from Bangladesh; Bind’s Section 108 statement referred to the appellant and alleged smuggling.

The appellant claimed the gold had been lawfully purchased and relied on a GST invoice and GSTR-2A entry.

The adjudicating authority ordered absolute confiscation under Sections 111(b), 111(d) and 111(p) of the Customs Act, 1962.

The Commissioner (Appeals) upheld confiscation but set aside the penalties following the appellant’s death.

The appellant appealed to the Tribunal

1. Whether the seizure of the gold was sustainable under Section 110 of the Customs Act where the person carrying it produced a delivery challan and the circumstances did not establish a reasonable belief that it was smuggled

2. Whether the appellant discharged the burden under Section 123, and whether the Department established that the gold was smuggled so as to justify confiscation

Section 123 of the Customs Act places the burden on the person from whose possession notified goods, including gold, are seized to prove that they are not smuggled; once that burden is discharged, the onus shifts to the Revenue to establish smuggling

The Tribunal treated a reasonable belief that goods are smuggled as a prerequisite to seizure under Section 110 and held that the mere fact that the goods were gold was insufficient, in the circumstances, to sustain that belief

Confiscation under Sections 111(b), 111(d) and 111(p) was not sustainable where the evidence did not establish that the gold was smuggled

The Tribunal found that Bind had the delivery challan at the time of interception and that this fact was not disputed by the Revenue.

It held that the challan discharged the initial burden under Section 123, shifting the onus to the Department to prove foreign origin and smuggling

The seizure was a town seizure, and the gold’s purity was 99.7%; the Tribunal found no reasonable belief that the gold was smuggled.

It also accepted the invoice and corresponding GSTR-2A entry as evidence of licit procurement, finding that the documents showed lawful acquisition and had not been negated by the Department.

The Revenue therefore failed to establish grounds for confiscation

It directed the authorities to release the gold to the appellant within 30 days of receiving the order.

It also found no penalty imposable on the appellant and upheld the Commissioner (Appeals)’ decision to drop the penalties