Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 2039

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Commissioner of Customs (Preventive) – Appellant
Versus
Abhishek Mundhra – Respondent
Customs Appeal No. 75343 of 2026

Advocates:
For the Appellants/Petitioners: Sameer Chitkara, Subrata Debnath
For the Respondents: Aditya Dutta

The burden of proof regarding the smuggled nature of seized goods does not shift to the owner until the revenue first establishes, through cogent and objective evidence, their foreign origin. Reasonable belief for seizure requires more than mere suspicion or vague intelligence.

Headnote:(A) Customs Act, 1962 - Sections 110(1), 111(b), 111(d), 112(a), 112(b) and 123 - Smuggling - Seizure of goods - Reasonable belief - Burden of proof - Revenue failed to establish prima facie evidence of foreign origin for confiscated goods (gold strips and silver granules) - Absence of foreign markings or evidence of illegal import renders 'reasonable belief' for seizure under Section 110(1) unsustainable - Burden of proof to establish smuggling under Section 123 does not shift to possessor unless Revenue first proves foreign origin or creates a valid legal foundation for such suspicion - Mere suspicion based on vague intelligence or internal melting process does not establish smuggled nature - Documents showing domestic purchase and processing are valid until proven otherwise - Confiscation and penalties set aside. (Paras 8.2, 8.4, 9.3, 10.2, 11.2, 12.1)

(B) Appeals - Scope of interference - Appellate authority acts within jurisdiction by evaluating whether the Revenue discharged its initial burden of proof - Seizure of assets without cogent and credible evidence of illicit importation is liable to be set aside. (Paras 11.2, 14)

Facts of the case:
Officers intercepted consignments of gold strips and silver granules during transit within the country. The Department alleged these constituted smuggled goods based on intelligence, subsequently imposing absolute confiscation and heavy penalties. The claimants produced documents including vouchers and invoices indicating domestic procurement and processing, which were rejected by the original adjudicating authority but accepted by the Commissioner (Appeals).

Findings of Court:
The Court found that the intelligence was vague and insufficient to establish 'reasonable belief.' The gold and silver lacked foreign markings and the Department failed to establish foreign origin. Evidence of domestic procurement was provided and not convincingly refuted by the Revenue.

Issues: Whether the seizure was based on 'reasonable belief,' whether the burden of proof shifted to the claimants, and whether the confiscation and associated penalties were legally sustainable.

Ratio Decidendi: Before invoking the presumption under the statute, the Revenue must first establish the foreign character and smuggled nature of the goods. In the absence of foreign markings or conclusive proof of arrival from abroad, the burden does not shift to the owner, and confiscation is unjustified.

Result: Appeal dismissed; Impugned order upheld.

Table of Content
1. factual procedural history regarding the seizure and initial adjudication. (Para 1 , 2)
2. summary of rival contentions regarding burden of proof and reasonable belief. (Para 3 , 4)
3. establishing reasonable belief under section 110(1) requires objective material proofs. (Para 6 , 7 , 8)
4. burden of proof under section 123 applies only after establishing foreign origin. (Para 9)
5. domestic source documentation rebuts allegations of illicit smuggling. (Para 10)
6. confiscation under section 111(b) mandates clear evidence of smuggled status. (Para 11)
7. penalties under section 112 require established mala fide intention. (Para 12 , 13 , 14)

FINAL ORDER NO. 75650 / 2026

ORDER: [PER SHRI K. ANPAZHAKAN]

The present appeal has been filed by the Revenue against the Impugned Order-in-Appeal dated 16.01.2026, wherein the Ld. Commissioner (Appeals) has set aside the Order-in-Original dated 27.08.2025.

2. The facts leading to the present appeal are summarized as under:

(i) Pursuant to an intelligence to the effect that a substantial quantity of foreign origin gold are smuggled into India from Bangladesh and subsequently transported under the guise of ‘gold jewellery’ through the courier named ‘M/s. Sequel Logistics Pvt. Ltd.’ [SLPL], the officers of DRI intercepted some consignments of ‘gold jewellery’ kept for transport through NSCBI Airport to Chennai by Indigo Airlines on 01.08.2020. Such consignments were allegedly booked by one Shri Vijay Kumar alias Pintu allegedly a key member of the smuggling syndicate in the name of M/s. Olympia Impex Pvt. Ltd. [subsequently found to be non-existent].

(ii) The DRI officers examined the said jewellery kept in two containers at the office premises of SLPL at ECC terminal NSCBI Airport. During the course of examination, the said Shri Vijay Kumar was present. On questioning, Shri Vijay Kumar admitted that the gold had been smuggled into India from Bangladesh and subsequently was melted into the present form but no document could be produced by him against such claim. During such examination a Govt. approved valuer was also present.

(iii) Detailed examination revealed a total of 271 number of yellow coloured metal strips/bangles allegedly to be of 24 Carat purity weighing 15000 grams in total and as per the valuer those gold in strip form could not be classified as ‘jewellery’. Vijay Kumar also made confession to the effect that he was an employee of Mundhra Jewellers Pvt. Ltd. (MJPL)/Mundhra Bullion Pvt. Ltd. (MBPL) at their Kolkata office at 4th Floor Room No. 2, Gold Plaza, 26, Adi Banstala Lane, Kolkata- 700007.

(iv) Shri Vijay Kumar submitted two challans named as “Manufacturing Receipt Voucher (outstation delivery note)” bearing no. RV/026 and RV/027 both dated 31.07.2020 for despatch of 10028.550 grams and 5020.150 grams of Gold Round Strips to Chennai. The Challans have declared the goods as “Gold Jewellery”. Subsequent assay report at CRCL revealed the gold to have purity of 99.5% -99.7%.

(v) In his statement, Shri Vijay Kumar submitted that the gold strips were made out of 1 Kg Gold Bars smuggled from Bangladesh and melted at the melting shop of Shri Jiten Shah at Bir Anantram Mondal Lane, Kolkata-90 near Shitirmore. He further submitted that under instruction of Mukesh Kumar Sharma another employee of Mundra Group of Companies at Chennai, he had gone to Jiten Shah’s melting shop at Shitirmore with such 15 pieces of 1KG gold bars which he had received from ‘one Laltu’ after being smuggled from Bangladesh.

(vi) Subsequently, based on such statement of Vijay Kumar, the gold bangles weighing a total of 15000 grams [271 pieces] were seized. As a follow-up, Mundhra Bullion Pvt. Ltd. (MBPL) Kolkata office at 4th Floor Room No. 2, Gold Plaza, 26, Adi Banstala Lane, Kolkata- 700007 was searched which led to the recovery of 1754.290 grams of silver granules believed of foreign origin valued at Rs. 99,994 and some incriminating documents.

(vii) During subsequent follow-up action, Ashi

Click Here to Read the rest of this document

2026 Supreme(Online)(CESTAT) 2039

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALAshok Jindal, Judicial Member, K. Anpazhakan, Technical MemberCommissioner of Customs (Preventive) – AppellantVersusAbhishek Mundhra – RespondentCustoms Appeal No. 75343 of 2026

The burden of proof regarding the smuggled nature of seized goods does not shift to the owner until the revenue first establishes, through cogent and objective evidence, their foreign origin. Reasonable belief for seizure requires more than mere suspicion or vague intelligence.

Cases Referred (1)

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Commissioner of Customs (Preventive) – Appellant
Versus
Abhishek Mundhra – Respondent
Customs Appeal No. 75343 of 2026