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2026 Supreme(Online)(CESTAT) 1466

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P. K. Choudhary, Judicial Member, P. Anjani Kumar, Technical Member
Commissioner of Customs (Preventive), Lucknow – Appellant
Versus
Gaurav Tiwari – Respondent
Customs Appeal No.70074 of 2026|Customs Appeal No.70075 of 2026|Customs Appeal No.70076 of 2026

Advocates:
For the Appellants/Petitioners: Shri A.K. Choudhary, Authorised Representative
For the Respondents: Shri Kapil Vaish, Chartered Accountant

Reasonable belief of smuggling must exist at seizure time under Section 110 for Section 123 presumption; town seizure without foreign markings, corroboration, or verified smuggling proof fails, especially with retracted statement and unrefuted licit purchase claims. (38 words)

Headnote:(A) Customs Act, 1962 - Sections 110, 123, 138B - Smuggled gold and silver - Seizure in town area - Intelligence about transportation of smuggled gold in vehicle led to apprehension and recovery of gold and silver bars from hidden cavity - No foreign markings, purity below international standard, no seizure at customs area or border - Initial statement admitting smuggling retracted, no corroborative evidence from searches, no verification of purchase invoices - Reasonable belief for seizure under Section 110 not established at time of seizure - Presumption under Section 123 not invocable without prior reasonable belief of smuggling - Statement not examinable under Section 138B, cannot be sole basis - Confiscation and penalties set aside. (Paras 8, 9, 11, 14, 15)

(B) Evidence - Retracted statement - Requires corroboration, especially when contradicted by other respondents - No joint confrontation or rebuttal to retraction - Follow-up investigation over a year yielded no evidence of foreign origin or smuggling route - Invoices from recognized dealer not disproved by enquiry at seller's end - Claim of licit purchase not negated. (Paras 11, 14)

(C) "Reason to believe" - Must exist anterior to seizure, based on honest and reasonable grounds, not subjective satisfaction - Town seizure lacks strong indicia of smuggling unlike border/customs area seizures - No material proving smuggled nature despite time for investigation. (Paras 11, 12)

Facts of the case:
Vehicle apprehended on intelligence, gold and silver recovered from cavity. Driver claimed transporting on commission basis initially, later retracted stating family purchase from savings and land sale with invoices. Other respondents denied connection, claimed mere rate exchange calls. Adjudicating authority confiscated goods and vehicle, imposed penalties; appellate authority set aside for lack of reasonable belief.

Findings of Court:
No reasonable belief of smuggling at seizure time; presumption unavailable; retracted statement inadmissible without Section 138B compliance or corroboration; invoices not falsified.

Issues: Whether reasonable belief of smuggling existed for seizure and presumption; admissibility of retracted statement as sole evidence; sufficiency of town seizure without foreign markings or corroboration.

Ratio Decidendi: Reasonable belief under Section 110 must precede seizure for Section 123 presumption; town seizures require strong evidence of smuggling absent border context; uncorroborated retracted statements insufficient; failure to verify claims or investigate sellers undermines confiscation.

Result: Appeals dismissed.

Table of Content
1. factual background of gold seizure and proceedings (Para 2 , 3)
2. respondents argue no presumption of smuggling (Para 4 , 5)
3. revenue challenges appellate reversal of confiscation (Para 6 , 8)
4. no reasonable belief for seizure in town without markings (Para 9 , 11)
5. statements require corroboration; burden not shifted (Para 10 , 12 , 13 , 14 , 15)
6. appeals dismissed; no interference with appellate order (Para 16 , 17)

P. ANJANI KUMAR:

These appeals are filed by Commissioner of Customs (Preventive) Lucknow against the impugned Orders-In-Appeal No. 222-224-Cus/Appl/LKO/2025 dated 04/07/2025 passed by Commissioner (Appeals), Customs, CGST & Central Excise, Lucknow.

2. Brief facts of the case are that on the basis of intelligence received to the effect that one person carrying foreign origin smuggled gold in a Maruti Suzuki Swift car bearing Registration No. DL 5CQ 9162 and would be travelling on 23.11.2023 towards Mathura from Delhi; when the vehicle was about to cross the toll plaza, the Officers of DRI apprehended the vehicle and Shri Gaurav Tiwari (Respondent No.1) was driving the vehicle. On search of the vehicle, 10 pieces of yellow metal weighing 4253.96 gram and 03 Silver metal pieces weighing 12736 grams were recovered from the cavity created. The same was seized under the reasonable believe that the gold was smuggled. Statement of Shri Gaurav Tiwari was recorded on 24.11.2023 wherein he stated that he belongs to Mathura and was transporting silver and silver items on commission basis for Shri Mukul Aggarwal (Respondent No.2) and Shri Rakesh Choudhary (Respondent No.3) who were running their respective jewelry and bullion shops in Mathura. He did not have any documents showing the licit purchase of the recovered gold and silver which were made by melting smuggled foreign origin gold. On 25.11.2023 Shri Gaurav Tiwari (Respondent No.1) was arrested and was remanded to the judicial custody by the CJM, Meerut. Search was conducted at the residence of Shri Gaurav Tiwari (Respondent No.1) on 26.12.2023. and the search did not reveal any incriminating evidence. Search was also conducted at the shop of Shri Mukul Aggarwal (Respondent No.2) and Shri Rakesh Choudhary (Respondent No.3) at Mathura. Both were not present at the time of search of the premises. They did not appear on summons either. The analysis of call data record revealed that Shri Gaurav Tiwari (Respondent No.1) was in continuous contact with Shri Mukul Aggarwal (Respondent No.2) and Shri Rakesh Choudhary (Respondent No.3) during the period from 01.11.2023 to 23.11.2023. Show cause notice dated 22.01.2024 and corrigendum dated 23.07.2024 was issued to the Appellant proposing to confiscate Gold seized and to impose penalties. Shri Gaurav Tiwari (Respondent No.) in his reply dated 24.06.2024, submitted that his father and brother were in the business of testing silver from the shop at Mathura. He is also engaged in small business of silver ornaments and took orders for purchase of silver ornaments from local dealers and gets it manufactured on job work basis. The seized gold and silver bars were purchased by his parents and grandparents during the Financial Year 2007-08 by spending their savings, sale proceeds of 32 Bighas of Land in 2002, sale proceeds of gold and silver ornaments from M/s Brijwasi Bullion & Jewellers Pvt. Ltd. Shri Mukul Aggarwal (Respondent No.2) and Shri Rakesh Choudhary (Respondent No.3) filed reply dated 24.06.2024 submitting that they have no connection whatsoever with the seized gold Bar/ Silver Bar/Maruti Suzuki Car. Shri Gaurav Tiwari (Respondent No.1) was in the business of purchase of silver jewelry on commission basis and had shop near to their shop. They have never purchased or sold gold or silver to Shri Gaurav Tiwari (Respondent No.1). They were in contact with each other to exchange the rate of gold and silver.

3. Shri Kapil Vaish, learned Chartered Accountant appeared before the adjudicating authority for personal h

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2026 Supreme(Online)(CESTAT) 1466

Reasonable belief of smuggling must exist at seizure time under Section 110 for Section 123 presumption; town seizure without foreign markings, corroboration, or verified smuggling proof fails, especially with retracted statement and unrefuted licit purchase claims. (38 words)

Cases Referred (1)