Verified purchase records discharged the Section 123 burden, defeating confiscation absent evidence of smuggling.

On 16 January 2022, DRI officers intercepted Manoj Kumar Pathak at Gaya Railway Station and recovered two gold bars weighing 1,499.600 grams.

Pathak allegedly stated that he had received the gold in Kolkata and was carrying it on the appellant’s directions; the gold was seized under Section 110 of the Customs Act, 1962.

The appellant claimed ownership and produced an invoice dated 5 October 2021 from Shah Suresh and Brothers, reflected in the appellant’s GSTR-2A, as evidence of licit purchase.

The adjudicating authority ordered absolute confiscation under Sections 111(b), 111(d) and 111(p); the Commissioner (Appeals) upheld confiscation but dropped the penalties against the appellant following his death.

Whether the seized gold could be treated as smuggled and absolutely confiscated when the seizure was a town seizure, the gold’s purity was 99.7%, and the appellant produced purchase documents reflected in GSTR-2A.

Whether the appellant had discharged the burden under Section 123 of the Customs Act, thereby requiring the Revenue to prove that the gold was smuggled.

Section 123 of the Customs Act, 1962 places the burden of proving that notified goods such as gold are not smuggled on the person from whose possession they are seized, once the provision is attracted; upon that burden being discharged, the onus shifts to the Revenue to establish smuggling.

The gold had been seized under Section 110, while Sections 111(b), 111(d) and 111(p) were invoked as grounds for confiscation.

The Tribunal found that the invoice and corresponding GSTR-2A entry sufficiently supported the appellant’s claim that the gold had been purchased through licit means.

It also noted that this was a town seizure and that the gold’s purity was 99.7%, below 99.9%.

In those circumstances, the Tribunal found no basis to believe the gold was of foreign origin and held that the appellant had discharged the burden under Section 123. The Revenue, which then bore the onus of proving that the gold was smuggled, had failed to do so.

It upheld the dropping of penalties against the appellant and directed the authorities to release the gold to him within thirty days of receipt of the order. The appeal was disposed of accordingly.