IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, CHENNAI Customs Appeal No. 40912 of 2013 (Arising out of Order in Original No. 01/2013 dated 18.01.2013 passed by the Commissioner of Customs, Trichy)

Shri K. Sivamani Appellant S/o Kunju Pillai No. 4/7, Keela Mada Vilagam Vedaranyam Taluk Nagapattinam District.

Vs.

Commissioner of Customs Respondent No. 1, Williams Road Cantonment, Trichy – 620 001.

APPEARANCE:

Shri S. Satishchandrasekaran, Advocate for the Appellant Smt. O.M. Reena, Authorised Representative for the Respondent CORAM Hon’ble Shri M. Ajit Kumar, Member (Technical)

Hon’ble Shri Ajayan T.V., Member (Judicial)

FINAL ORDER NO. 40615/2026 Date of Hearing: 13.08.2025 Date of Decision: 02.02.2026 Per M. Ajit Kumar, This appeal is filed by the appellant against Order in Original No.

01/2013 dated 18.01.2013 passed by the Commissioner of Customs, Trichy who has imposed a penalty of Rs.2.50 crores under section

112(a) of the Customs Act, 1962.

2. Brief facts of the case are that Customs officers allegedly acting on specific intelligence, intercepted a TATA Sumo Grande (EX) near Vailankanni on 10 November 2011. Shri J. Anand and the driver Shri Vedayan were found as occupants of the vehicle. Upon inspection, of the vehicle, officers allegedly found and seized 156 foreign-marked gold biscuits (totaling 15,600 grams, valued at ₹4,52,40,000), along with the vehicle. Investigation revealed that Shri J. Anand was previously known for smuggling, and his phone records linked him to Shri Sathish Kumar, a driver for the appellant K. Sivamani. Shri K. Sivamani and Shri J. Anand were close relatives. They were involved in illegal smuggling activities through Kodiakarai coastal region, collaborating with contacts in Sri Lanka. The appellant herein was allegedly found to be the mastermind of the illegal activity. A Show Cause Notice was issued for confiscation and penalties. The Commissioner of Customs ordered absolute confiscation of the gold and vehicle (with an option to redeem the vehicle for ₹1,25,000) and imposed a penalty of ₹2,50,00,000 on both J. Anand and K. Sivamani under Section 112(a) of the Customs Act, 1962. Aggreived by the said order, Shri K. Sivamani has appealed this decision before us.

3. The learned Advocate Shri S. Satishchandrasekaran appeared for the appellant and Ld. Authorized Representative Smt. O.M. Reena appeared for the respondent.

3.1 Shri S. Satishchandrasekaran the Ld. Counsel for the appellant submitted the following:

A) The Ld. Commissioner Appeals has relied upon notification no.31/2003-CUS, dated 01/03/2003, which is applicable for import of gold by eligible passengers and found that the said notification was not applicable in this case as it was not dealing with the case of a passenger. The Ld. Counsel stated that the authorities failed to verify whether the individuals from whom the gold was seized, or the other co-noticees, qualified as eligible passengers. As a result, the proceedings are fundamentally flawed on this basis alone.

B) He further contended that Section 123 of the Customs Act, which places the burden of proof on the person from whom goods are seized, is not applicable in this case. Both the Show Cause Notice and the Order in Original proceed solely on the presumption that the gold biscuits originated from Sri Lanka, without any supporting evidence, including from the 108 statements recorded. Therefore, the confiscation of the gold under Section 111(d) is based on conjecture and is unsustainable.

C) Additionally, there is no indication that the officers who conducted the search were “proper officers” as defined under Section 2(34) read with Sections 105, 106, and 106A of the Act. This renders the seizure improper and the entire action unreliable. The statements recorded under Section 108 were taken without explaining the relevant legal provisions to the deponents, making both the Show Cause Notice and the Order in Original legally untenable.

D) The counsel also highlighted the lack of corr