$~3 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CUSAA 46/2023 COMMISSIONER OF CUSTOMS (PREV.) ....Appellant Through: Ms. Anushree Narain, SSC versus RAJESH KUMAR .....Respondent Through: Mr. Rahul Raheja, Mr. Rohit Raheja, Mr. Gaurav Prakash, Advs.

CORAM:

JUSTICE PRATHIBA M. SINGH JUSTICE SHAIL JAIN

O R D E R

% 16.12.2025

1. This hearing has been done through hybrid mode.

2. The present appeal has been filed on behalf of the Appellant inter alia challenging the order dated 31st October, 2022 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter, ‘the impugned order’).

3. A brief background of the present case as stated in the appeal is that the Respondent was working in the bullion market as a broker in Kucha Mahajni, Chandini Chowk, Delhi. He was involved in the trade of selling gold received on consignment basis. On 14th October, 2016, the Directorate of Revenue Intelligence, Delhi Zonal Unit, New Delhi searched the premises of the Respondent. During the said search, around 20 kgs of gold of foreign origin, having a market value of Rs. 6,46,57,189/- was recovered. There was also recovery of a substantial amount of currency.

4. On the basis of these facts, the concerned Additional Commissioner, vide Order-in-Original dated 31st January, 2019, directed seizure of the said gold weighing around 20 kgs, having a market value of Rs. 6,46,57,189/- and confiscation of the Indian currency bearing an actual value of Rs. 6,43,74,000/-. The impugned order held the said confiscation of goods to be bad in law and inter alia, observed that the seized goods of the Respondent herein are not liable for confiscation. It is this order dated 31st October, 2022 which is challenged by the Appellant vide the present appeal.

5. On 2^nd April, 2025, the questions of law were framed for adjudication in this matter.

6. During the pendency of this appeal, the Respondent, Shri Rajesh Kumar passed away on 4^th November, 2025.

7. The clear issue that arises for consideration in this matter is whether the penalty, if any, imposed by the Department against the Respondent would abate or not.

8. A perusal of the Impugned Order would show that the Customs, Excise and Service Tax Appellate Tribunal, (hereinafter, ‘CESTAT’) has set aside the confiscation of goods of the Respondent on the ground that there was no definite evidence to arrive at a conclusion that the gold weighing around 20 kgs was smuggled.

9. This was a case of town seizure and not of seizure in the Customs area and since there was no chain of events to support the movement of smuggled goods to the town from anyone coming from the International Border, the CESTAT held that the conclusion that the gold weighing around 20 kgs is smuggled, cannot be arrived at. The operative portion of the impugned order is set out below:

“23. I further find substance in the submission of ld. Counsel for the appellant that investigation does not adduce any evidence to arrive at a definite conclusion, if the gold was smuggled or not. Penalty under Section 112(b) requires mens rea to be established i.e. conscious knowledge of the appellant that he was dealing in smuggled gold. This fact is not coming out from the evidence on record. Admittedly, it is a case of town seizure and not a seizure (or near) in customs area or in the vicinity of international border. Thus, the suspicion of Revenue that the gold is smuggled does not lead to inevitable evidence that the gold is smuggled. Admittedly, the seized gold was of 99.5°/o purity, whereas normally the smuggled gold is of 99.9% purity. On this score also there can be no presumption of gold being smuggled only on the basis of foreign marking. In absence of any chain of events supporting movement of smuggled gold from the border area or customs area to town or a person coming from an international border, I hold that simply possession of foreign marking gold without a bill does not lead to the conclusion that it is smuggled. It has been so held by this