HC Restores Gold Confiscation; High Purity and Concealment Prove Smuggling

The case arose from an interception by Customs officials at Howrah Railway Station on 25 May 2018, where 1,999.90 grams of gold bullion were recovered from the possession of Shri Anil Kumar Gaur. The gold was concealed inside a specially stitched waist belt worn beneath his clothes, indicating an attempt to avoid detection. In his statement recorded under Section 108 of the Customs Act, he admitted that the gold was of foreign origin and that he was carrying it on behalf of M/s A.R.P. Ornaments, owned by Shri Anil Kumar Soni.

Shri Soni later claimed ownership of the seized gold and stated that it was domestically sourced by melting old jewellery. To support this claim, GST returns and purchase invoices were produced. However, the CRCL report showed that the gold had a purity of 99.5% to 99.6%, which is usually associated with refined bullion and not locally melted jewellery. The Adjudicating Authority therefore ordered absolute confiscation and imposed penalties. The Tribunal later set aside the confiscation, treating the matter as a town seizure and accepting the GST documents, which led the Revenue to approach the High Court.

Issue Before Court: Whether the Tribunal was justified in setting aside confiscation by relying on the concept of “town seizure”, ignoring the scientific purity report, and treating GST invoices as sufficient to discharge the burden under Section 123 of the Customs Act.

HC’s Ruling: The High Court allowed the Revenue’s appeal and held that the Tribunal’s order was legally unsustainable. The Court observed that a reasonable belief is determined by the surrounding circumstances and not by the place of seizure. The concealment of gold in a waist belt and its high purity were sufficient to invoke the reverse burden under Section 123.

The Court also held that statements recorded under Section 108 have strong evidentiary value and a retraction made after 850 days without proof of coercion cannot be accepted. Since the GST documents did not establish the origin of such high-purity gold, the Court restored the order of absolute confiscation and upheld the penalties imposed.

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