Kolkata–Agartala Passenger’s 255g Unmarked Gold: CESTAT Sets Aside Confiscation And Penalty For Lack Of Foreign-Origin Proof

On 25 July 2022, CISF personnel at Kolkata Airport detected an unmarked gold strip weighing 255.210 grams in the appellant’s baggage while he was travelling on a domestic flight from Kolkata to Agartala.

Customs seized the strip and, by Order-in-Original dated 28 June 2024, absolutely confiscated it under Sections 111(d), 111(l) and 111(m) of the Customs Act, 1962, and imposed a penalty of ₹4,00,000 under Section 112(b).

The Commissioner (Appeals) dismissed the appellant’s appeal as time-barred.

The appellant maintained that he first received the Order-in-Original through an RTI response dated 30 October 2024 and filed his appeal on 25 November 2024.

The Tribunal found that the Department had not established earlier service and held the appeal to the Commissioner (Appeals) timely.

On the merits, the appellant claimed the gold was family property, that his initial statement had been retracted, and that there was no evidence of foreign origin.

Section 110(1) of the Customs Act requires a proper officer to have a reasonable belief, founded on relevant material, before seizing goods; suspicion alone is insufficient.

The Tribunal applied Section 123 on the basis that the burden to prove that goods are not smuggled arises only where the statutory condition for its operation is met—here, the Tribunal found no prima facie evidence that the unmarked gold was foreign or smuggled.

Sections 111(d), 111(l) and 111(m) provide for confiscation in their respective statutory circumstances, while Section 112(b) provides for penalty for the specified dealings with goods liable to confiscation.

The Tribunal relied on Gian Chand v. State of Punjab and Union of India v. Mahesh Raj concerning the need for evidence of foreign origin and the operation of the burden of proof; on D. Bhoormull concerning proof in customs matters; and on Om Sai Trading Company v. Union of India, affirmed by the Supreme Court, and Tata Chemicals Ltd. v. Commissioner of Customs (Preventive) concerning the requirement that “reason to believe” rest on material and not mere suspicion.

It also relied on Tribunal decisions addressing unmarked gold and the insufficiency of uncorroborated or retracted statements to establish smuggling.

The Tribunal found that the gold was unmarked, was carried openly in hand luggage on a domestic journey, and had a purity of 99.7%; the record contained no independent evidence establishing foreign origin or smuggling.

The appellant’s initial statement was retracted within days, and the case was substantially founded on that statement, without corroboration.

In those circumstances, the Department had not established the factual basis necessary to shift the burden under Section 123 or to sustain confiscation under the invoked provisions.

The Tribunal also held that the domestic journey did not involve the baggage-declaration circumstances contemplated by Section 77, and that the essential ingredients of Sections 111(l) and 111(m) were absent.

Separately, because the Department produced no evidence of service of the Order-in-Original before the RTI response, the Commissioner (Appeals) had wrongly dismissed the appeal as delayed.

It set aside the Order-in-Original, vacated the absolute confiscation and the penalty, and allowed the appeal with consequential relief, if any, according to law.