Customs Act | Mere Purchase Of Gold Without Bill Not Enough To Prove Gold Smuggling: CESTAT

Dr. Rachna Gupta (Judicial Member) opined that the mere act of purchasing gold without bill is highly insufficient to confirm the grave allegations of conspiring the act of smuggling of gold. The order imposing penalty on the appellants and confiscating their money is not sustainable.

Section 121 of Customs Act, 1962, provides that where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation.

Section 123 of the Customs Act, 1962, deals with the burden of proof in cases where goods are seized on the suspicion of being smuggled.

In this case, huge quantity of foreign origin smuggled gold received at a shop and Rahul Kapoor was the owner of the said shop. Meanwhile the shops of the appellants were found coming inside the shop.

All of them were found in possession of Indian currency which they mentioned to be meant for purchasing the gold from Rahul Kapoor.

The entire amount of gold and the Indian currency recovered from the premises of Rahul Kapoor and the currency recovered from the appellants was seized holding the same to be relatable to sale proceeds or intended sale of the foreign origin smuggled gold as being liable for confiscation.

The proposal against the appellant was to confiscate the money which was recovered from their possession in terms of Section 121 of Customs Act 1962.

The Indian currency of the appellants was ordered to be confiscated and penalty of Rs. One lakh has been imposed on each of the appellants.

The appellants submitted that they are small scale jewellers and with a view of cost cutting, while preparing jewellery for their customers, that they started purchasing gold from Rahul Kapoor four months prior the date of impugned seizure as his gold rate was comparatively cheaper though by minor difference. However, they had no knowledge about involvement of Rahul Kapoor in such illegal activities.

The department submitted that all the appellants in their statements have submitted that Rahul Kapoor used to sell gold on less prices that too without any bill or any legal document while selling the gold and by cutting it from pure gold bar. The act acknowledged by them in their deposition amounts to sufficient knowledge to the appellant that they were purchasing the smuggled gold.

The Tribunal observed that Rahul Kapoor's statement cannot be the basis of passing any order against the appellant for holding them the conspirator/abettor in the crime of smuggling of gold.

Similarly in the statement of the partners of Rahul Kapoor viz. Vijay Kapoor and Monu Kapoor there is no allegation about the appellants to have been involved with them or to have knowledge about the gold which they were supposed to purchase to be the smuggled gold, added the bench.

Accordingly, the order imposing penalty on the assessee and confiscating their money is not sustainable, opined the bench.

The Tribunal did not find even single deposition which may amount to the admission of the appellants being involved in the act of alleged smuggling or having any knowledge about the said activity of their vender.

In view of the above, the Tribunal allowed the appeal.

Case Title: Rajesh Sehgal v. Principal Commissioner of Customs Preventive, New Delhi

Case Number: Customs Appeal No. 51467 of 2022

Counsel for Appellant: D.S. Chadha and Prabjyoti K. Chadha

Counsel for Respondent: V.J. Saharan

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