2026 Supreme(Online)(CESTAT) 1856
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Member (Judicial), K. Anpazhakan, Member (Technical)
Yamal Manojbhai Jagada – Appellant
Versus
Commissioner of Customs – Respondent
Customs Appeal No. 50352 of 2026
Advocates:
For the Appellants/Petitioners: Prakash Shah, Mihir Mehta, Ashish Batra
For the Respondents: Nikhil Mohan Goyal, Ranjan Prakash
Appeals against orders related to smuggled goods are maintainable before CESTAT, as smuggled goods are distinct from 'goods imported as baggage,' which are excluded under Section 129A of the Customs Act, 1962.
Headnote:(A) Customs Act, 1962 - Sections 2(3), 2(22), 2(39), 77, 78, 79, 80, 81, 104, 110, 111(d)(j)(l)(m), 112(a)(b), 114AA, 123, 124, 125, 128A, 129A, 129DD, 138B - Baggage Rules, 2016 - Rule 3 - Customs Baggage Declaration Regulations, 2013 - Regulation 3 - Principle of Natural Justice - Right to cross-examination - Valuation of goods - Smuggled goods vs. imported goods - Distinction between appeal and revision.
(B) Customs Act, 1962 - Section 138B - Statement as evidence in adjudication - Requirement of examination-in-chief - If Revenue chooses not to examine any witness, their statements cannot be considered as evidence. (Paras 14, 16.1, 22)
(C) Customs Act, 1962 - Section 129A(1) - First proviso - Exclusion of jurisdiction of CESTAT - Appeal against order of Commissioner (Appeals) relating to any goods imported or exported as baggage - The bar is absolute and cannot be waived by consent or by what the order says. (Paras 6, 7, 9)
(D) Customs Act, 1962 - Section 135B - Value of smuggled goods - Valuation cannot be based on a photocopy of an uncorroborated invoice with masked columns - Manufacturer's invoice confirmed by email by its Chief Legal Officer is reliable. (Paras 15, 16, 17, 19, 20, 21, 23, 24, 25, 26) (E) Customs Act, 1962 - Section 125 - Order of re-export - No condition can be imposed while giving offer for redemption of goods - Option to redeem for home consumption or re-export. (Paras 30, 31)
Facts of the case:
A passenger arrived from Dubai at IGI Airport, New Delhi. Based on profiling, he was intercepted after crossing the Green Channel. From his baggage, seven high-end luxury watches (Jacob & Co., Rolex, Piaget), a diamond-studded gold bracelet, and an iPhone were recovered. The total appraised value was assessed at Rs. 23,21,74,140/- with duty of Rs.8,93,87,044/-. The goods were seized under Section 110. The passenger failed to produce valid ownership documents. He initially stated the goods belonged to his uncle, a Dubai-based jeweller, but later changed his stand and claimed ownership. Invoices produced were found to be fabricated. A show cause notice was issued proposing confiscation, duty demand, and penalties. The adjudicating authority confiscated the goods, gave an option to redeem for re-export on payment of a redemption fine of Rs.50 lakh, and imposed penalties. The passenger and the Department appealed to the Commissioner (Appeals). The Commissioner (Appeals) set aside the Order-in-Original and remanded the matter for fresh adjudication, citing violation of natural justice (denial of cross-examination) and issues with valuation. Both parties then appealed to CESTAT.
Findings of Court:
CESTAT held that: (i) The appeal was maintainable before it because the Department itself had treated the goods as 'smuggled goods' and not as 'baggage'. Applying the Supreme Court's ratio in M. Ambalal (2011), smuggled goods are distinct from imported goods, and the exclusion clause under Section 129A(1) for 'goods imported or exported as baggage' does not apply. (ii) The valuation of the Jacob & Co. watch should be based on the manufacturer's invoice (Invoice No. 622 dated 22.12.2020) for USD 8,30,000/- confirmed by email by Ms. Natela Lolaev, Chief Legal Officer of Jacob Watches, and not on the photocopy of an uncorroborated invoice submitted by Sh. Pranav Saboo which had masked discount and total amount. (iii) Since the Department chose not to examine the witnesses (Pranav Saboo and Ovais Merchant) in adjudication, their statements could not be considered as evidence. Therefore, the remand for cross-examination was unwarranted. (iv) The redemption fine of Rs.50 lakh was maintained, but the composite penalty under Section 112(a) and (b) was reduced from Rs.50 lakh to Rs.10 lakh, and the penalty under Section 114AA was reduced from Rs.2 crore to Rs.50 lakh.
Issues: (1) Whether the appeal before CESTAT is maintainable in view of the exclusion for baggage matters under Section 129A of the Customs Act, 1962? (2) Whether the Commissioner (Appeals) was correct in remanding the matter for cross-examination? (3) What is the correct value of the Jacob & Co. watch for the purpose of duty? (4) Whether the quantum of redemption fine and penalties imposed by the adjudicating authority is appropriate? (5) Whether the goods can be redeemed for home consumption or only for re-export?
Ratio Decidendi: The court ruled that smuggled goods are not 'goods imported as baggage' for the purpose of the jurisdictional bar in the first proviso to Section 129A(1) of the Customs Act, as per the Supreme Court's decision in M. Ambalal & Co. (2011). Since the Department itself treated the goods as smuggled goods and invoked Section 123 (burden of proof for smuggled goods), the appeal was maintainable before CESTAT. On merits, the valuation must be based on the manufacturer's confirmed invoice, and the remand for cross-examination was erroneous because the Department did not examine the witnesses. The court modified the penalties.
Result: Appeal allowed. The Department was directed to redeem the confiscated goods within two weeks if the appellant availed the option of redemption on payment of redemption fine and amounts as stated in the order.
| Table of Content |
|---|
| 1. procedural history and parties' grounds of appeal. (Para 1 , 2 , 3 , 4) |
| 2. department's submissions on maintainability of appeal and distinction between 'baggage' and 'smuggled goods'. (Para 5 , 6 , 7 , 8 , 10 , 11 , 12 , 13) |
| 3. evaluating evidence and need for cross-examination under section 138b customs act. (Para 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25) |
| 4. valuation of goods based on manufacturer's invoice and reduction of penalties. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32) |
ASHOK JINDAL:
The present appeal is filed by the passenger Mr. Yamal Manojbhai Jagada (hereinafter referred to as the “appellant”), against the impugned Order-in-Appeal dated 17.04.2026, passed by the Ld. Commissioner of Customs (Appeals). The Ld. Commissioner of Customs (Appeals) had allowed the appeal of the Appellant by way of remand for fresh adjudication, while setting aside the impugned Order-in-Original dated 13.09.2024 passed by the Adjudicating Authority.
2. Aggrieved against the Order-in-Original passed by the Ld. Adjudicating authority, the appellant filed his appeal before the Ld. Commissioner of Customs (Appeals), wherein he has raised the following grounds:
(i) denial of cross-examination of witnesses,
(ii) valuation of one seized Jacob & Co. watch by ignoring the value of the subject watch shown in the invoice sent by Ms Natela Lolaev, Chief Legal Officer of the manufacturer M/s Jacon & Co. vide her email sent on 11.11.2022 to the officers of Customs, by preferring to rely on alleged copy of uncorroborated invoice submitted by Sh. Pranav Shankar Sahoo, CEO of M/s Ethos Limited having masked discount and total amount,
(iii) imposition of redemption fine in case of re-export relying upon Union of India v. Sankar Pandi - 2018 (360) E.L.T. A214 (S.C.),
(iv) imposition of composite penalty u/s 112(a) and 112(b) of the Act, and
(v) the quantum of penalty.
3. The Appeal contained the prayers to:-
―I. Set aside Order-in-Original No. 901HK/ADC/Yamal & Hiren/ICD-PPG/2024-25 dated 13.09.2024 so far it relates to the Appellant;
2. Allow appeal filed by the Appellant with consequential relief;
3. Pass such order(s) or direction(s) in favour of the Appellant as the Hon'ble Commissioner may deem fit in the facts and circumstances of the case and in the interest of justice.‖
4. The Department had also filed cross-appeal for setting aside the same Order-in-Original dated 13.09.2024 with prayers to decide the following points:
(i) To examine the correctness of Order-in-Original giving the option of redemption of goods to the appellant contrary to the provisions of the Customs Act, 1962, establish practice & judicial pronouncements, and
(ii) To examine the role of co-noticee Mr.Hiren Vithaldas Dhakan for not imposing any penalty on him in the instant case.
4.1. Vide the impugned common Order, the Ld. Commissioner of Customs (Appeals) has remanded the matter back to Adjudicating Authority for fresh adjudication mainly on the grounds of violation of principles of natural justice by not affording opportunity to the Appellant to cross-examine one Mr. Pranav Sahoo, and Mr. Ovais Merchant, after considering manufacturer‟s invoice supported by email confirmation from the manufacturer. Department‟s appeal was also allowed by directing fresh adjudication.
5. Learned Counsel appearing for the appellant had invited our attention to the records and the written submissions filed by the Appellant in support of the appeal.
6. In response to the instant Appeal, the Department has filed its written response in two parts. The first part of their written response to the Appeal read as under-
―Subject- Proceedings before CESTAT in the matter of Mr. Yamal Manojbhai Jagada Diary No 5133/2026 and Shri Hiren Vithaibdas Dhakan Diary No. 51134/2026— reg
Please refer to hearing dated 28.04.2026 on the subject mentioned above.
In this regard, the brief and the prayer of the department in the above said matter are as under:
Mr. Yamal Manojbhai Jagada (h
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