CESTAT Kolkata Upholds Gold Confiscation, Quashes Currency Seizure for Lack of Nexus with Smuggling

Case Overview

Case: Rajendra Roy Vs Commissioner of Customs (Preventive) (CESTAT Kolkata)

The Customs, Excise and Service Tax Appellate Tribunal, Kolkata ("CESTAT" or "the Tribunal") recently delivered a significant ruling in a matter concerning the confiscation of foreign-origin gold biscuits and Indian currency seized during a customs search operation. The Tribunal drew a clear distinction between the evidentiary standards required for upholding confiscation of smuggled goods vis-à-vis the confiscation of currency alleged to represent sale proceeds of such goods — granting partial relief to the appellants.

Background and Facts of the Case

On 25.06.2018, Officers of the Divisional Preventive Unit (DPU), Barasat Customs Division, carried out a search at the workshop premises of M/s. Tarak Nath Melting House situated at the 2nd Floor, 5/1, Ram Kumar Chandra Lane, Kolkata – 700 007. During this operation, two individuals were found on the premises:

  • Shri Avijit Bhandari (Appellant No. 2) — from whose bag six gold biscuits and Indian currency were directly recovered
  • Shri Rajendra Roy (Appellant No. 1) — who was present accompanying Shri Avijit Bhandari

The recovered items included:

  • 06 (six) Ten Tola gold biscuits collectively weighing 699.810 grams, bearing foreign inscriptions
  • Indian currency amounting to Rs. 70,00,000/- (Rupees Seventy Lakhs)

Neither appellant was able to produce any documentation — bills, invoices, vouchers, or purchase records — to demonstrate lawful acquisition or possession of the gold. The goods were accordingly seized under Section 110 of the Customs Act, 1962, vide Seizure Case No. 01/IMP/CL/GOLD/CUS/BCD/DPU/2018-19 dated 25.06.2018.

Statements were recorded from both appellants on 25.06.2018 and 26.06.2018, following which they were arrested under Section 104 read with Section 135 of the Customs Act, 1962, and subsequently enlarged on bail by the Chief Metropolitan Magistrate, Calcutta.

A Chemical Examination conducted at Custom House, Kolkata confirmed, vide Assay Report dated 23.07.2018 (Lab No. 1126-1134/SZD(G)-447-455 dated 10.07.2018), that the purity of the seized gold was 99.8% by weight, indicating its foreign character.

Proceedings Before Lower Authorities

A Show Cause Notice dated 19.06.2019 was issued proposing:

  • Confiscation of the six gold biscuits under Section 111(b) and Section 111(d) of the Customs Act, 1962
  • Confiscation of the Indian currency of Rs. 70,00,000/- under Section 121 of the Customs Act, 1962
  • Imposition of penalties on both appellants under Section 112(a) and Section 112(b) of the Customs Act, 1962

The adjudicating authority, vide Order-in-Original No. 02/ADC(P)/CUS/WB/19-20 dated 08.07.2020, ordered absolute confiscation of both the gold and the Indian currency, and imposed penalties of Rs. 2,00,000/- on Shri Rajendra Roy and Rs. 2,50,000/- on Shri Avijit Bhandari.

On first appeal, the Commissioner of Customs (Appeals), Custom House, Kolkata, vide Order-in-Appeal Nos. KOL/CUS(PORT)/AKR/757-760/2021 dated 07.10.2021, rejected both appellants' appeals while allowing relief to two co-noticees by setting aside penalties imposed on them. Aggrieved by this outcome, the appellants approached CESTAT Kolkata.

Issues Before the Tribunal

The Tribunal was called upon to adjudicate the following principal questions:

  1. Whether the absolute confiscation of the six foreign-origin gold biscuits was legally sustainable?
  2. Whether the order of redemption under Section 125 of the Customs Act, 1962 should have been granted?
  3. Whether confiscation of Indian currency amounting to Rs. 70,00,000/- under Section 121 of the Customs Act, 1962 was justified in absence of corroborative evidence?
  4. Whether penalties imposed on both appellants under Section 112 were legally warranted?

Arguments Advanced

Contentions of the Appellants