The Customs, Excise and Service Tax Appellate Tribunal (Hyderabad) allowed an appeal against an order confirming confiscation of 100 grams of gold kada/bangle and penalty under Section 123 of the Customs Act, 1962.
The Department had treated the gold as smuggled based on its high purity (999) and inland movement. The appellant, a registered manufacturer, produced specific GST invoices from two registered domestic dealers (M/s Augmount Enterprises Pvt Ltd and M/s Preeti Jewellers) showing purchase of 999 purity gold, and stated the kada was manufactured therefrom and sent for job-work via a domestic courier.
The Tribunal followed the Calcutta High Court's decision in Commissioner of Customs (Preventive), Kolkata v. Anil Kumar Soni & Anil Kumar Goud (CUSTA Nos. 30 & 31 of 2025, decided 31.03.2026), which held that: (i) reasonable belief under Section 123 is not dependent on geographical location of seizure; (ii) absence of foreign markings does not ipso facto negate reasonable belief; but (iii) reasonable belief must arise from tangible material and totality of circumstances, not mere suspicion. In Anil Kumar Soni, the reverse burden was applied because 2 kg of gold was concealed in a waist belt, the carrier admitted foreign origin under Section 108, purity was 99.5-99.6%, and the explanation of melting old 22-carat ornaments lacked refinery records.
Distinguishing those facts, the Tribunal held: the seized article was a kada/bangle (not concealed bullion); no foreign markings were found; transportation via domestic courier for job-work was not clandestine concealment; and crucially, the appellant's claim was purchase of 999 purity gold itself — not conversion of 22-carat scrap into high-purity bullion — so the identity-mismatch reasoning of Anil Kumar Soni did not apply. The earlier remand by this Tribunal had specifically directed verification of the invoices; in the absence of any finding that they were false or lacked nexus, they could not be brushed aside. Section 123 does not permit confiscation on a presumption upon a presumption; the claimant's documentary evidence must be objectively evaluated. Mere purity plus domestic transportation, without proof of concealment, incriminating admissions, foreign markings, or falsity of purchase documents, is insufficient to sustain confiscation.
The impugned order was set aside insofar as it related to the appellant; confiscation and penalty were set aside; the appeal was allowed with consequential relief.
