Calcutta High Court
Commissioner Of Customs Preventive … vs Shri Anil Kumar Soni on 31 March, 2026
Author: Rajarshi Bharadwaj
Bench: Rajarshi Bharadwaj
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION [CUSTOMS]
ORIGINAL SIDE
CUSTA 30 OF 2025
IA NO: GA 2 OF 2025
COMMISSIONER OF CUSTOMS PREVENTIVE KOLKATA
VS
SHRI ANIL KUMAR SONI
CUSTA 31 OF 2025
IA NO: GA 2 OF 2025
COMMISSIONER OF CUSTOMS PREVENTIVE KOLKATA
VS
SHRI ANIL KUMAR GAUR
BEFORE:
THE HON'BLE JUSTICE RAJARSHI BHARADWAJ
AND
THE HON'BLE JUSTICE UDAY KUMAR
For the Appellant : Mr.Bhaskar Prasad Banerjee, Ld. Adv.
Mr. Tapan Bhanja, Ld. Adv.
For the Respondent : Mr. Arijit Chakraborti, Ld. Adv.
Mr. N.K. Chowdhury, Ld. Adv.
Ms. Nilotpal Chowdhury, Ld. Adv.
Mr. Prabir Bera, Ld. Adv.
Mr. Deepak Sharma, Ld. Adv.
Hearing concluded on : 13.02.2026
Judgment on : 31.03.2026
2
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
Uday Kumar, J:-
1. INTRODUCTION
1.1 These two appeals, preferred by the Commissioner of
Customs (Preventive), Kolkata, under Section 130 of the
Customs Act, 1962 (hereinafter “the Act”), challenge a
common Final Order of the CESTAT, Eastern Zonal Bench,
dated November 22, 2024. The litigation originates from a
singular investigative operation resulting in the interception of
1,999.90 grams of gold bullion and its subsequent absolute
confiscation by the Adjudicating Authority.
1.2 CUSTA 30 of 2025 concerns Shri Anil Kumar Soni (Respondent
No. 1), the proprietor of M/s A.R.P. Ornaments, who asserts
lawful ownership of the seized metal. CUSTA 31 of 2025
pertains to Shri Anil Kumar Gaur (Respondent No. 2), the
carrier from whose physical possession the bullion was
recovered. Since both appeals arise from an identical
evidentiary bedrock and involve synchronous questions of law
regarding the interpretation of Sections 108 and 123, they are
hereby disposed of by this Common Judgment.
3
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
2. ADMISSION AND SUBSTANTIAL QUESTIONS OF LAW
2.1. Upon a preliminary perusal of the records and having heard
the learned counsel for the Appellant, this Bench admits the
appeals on the following substantial questions of law:
a. Whether the Learned Tribunal was correct in holding
that the Department failed to establish “reasonable
belief” for seizure under Section 123 in a town
seizure?
b. Whether a confessional statement under Section
108, retracted after a period of two years, loses its
evidentiary value?
c. Whether the production of GST invoices without a
documentary nexus to the melting process is
sufficient to discharge the reverse burden of proof?
3. FACTUAL MATRIX
3.1 On May 25, 2018, acting on specific and credible intelligence,
Customs officers intercepted Shri Anil Kumar Gaur
(Respondent No. 2), at Howrah Railway Station. A search of
his person led to the recovery of two gold bars, weighing
1,999.90 grams, who was transporting the same
surreptitiously by hiding it within a specially stitched cotton
waist belt, worn beneath his garments. The contention of
4
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
Revenue that this unconventional clandestine way to carry the
gold constitutes the primary “fact in issue”, was erroneously
brushed aside by the Learned Tribunal merely on the ground
of technicality.
3.2 Following the interception and seizure, a statement was
recorded under Section 108 of the Act on May 26, 2018. In
this initial deposition, Shri Gaur admitted that he was an
employee of M/s A.R.P. Ornaments, Varanasi, and
categorically stated that the gold was of foreign origin, having
been received from an unidentified individual in the Sonapatty
area of Kolkata for transit to Varanasi. Notably, this stance
was not a momentary admission; it was reaffirmed by him in
a subsequent statement recorded nearly a year later, on April
5, 2019, wherein he once again confirmed the illicit nature of
the transit.
3.3 The narrative took a definitive turn when Shri Anil Kumar Soni
(Respondent No. 1), the proprietor of M/s A.R.P. Ornaments,
appeared before the authorities to claim ownership of the
seized metal. His defence was anchored on the assertion that
the gold was of “indigenous origin,” purportedly resulting from
the melting of approximately 4.7 kg of scrap ornaments
accumulated through his business over time and personal
sources.
5
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
3.4 He asserted that these ornaments were converted into two
bars of 99% purity and sent to Kolkata through Respondent
No. 2 for an exchange that allegedly failed due to
unfavourable market rates. To fortify this claim, the
Respondents produced a “paper trail” comprising GST returns
for “old ornaments” and corresponding purchase invoices.
3.5 The Revenue sought to dismantle this defence by relying on
scientific data that presents a formidable challenge to the
Respondents’ version of events. A report from the Central
Revenues Control Laboratory (CRCL) indicated that the gold
possessed a fineness of 99.5% to 99.6%. The Adjudicating
Authority identified a glaring “Identity Mismatch” in the
Respondents’ provenance; while the local melting of scrap
jewellery (commonly referred to as Kachcha gold) rarely
transcends a purity threshold of 91% to 92%, the seized bars
exhibited the 24-carat industrial standard typical of
international bullion. Achieving 99.6% requires industrial
electrolytic refining.
3.6 Crucially, despite claiming a transformation of scrap into
bullion, the Respondents signally failed to produce a single
“melting memo,” “refinery slip,” or “conversion certificate”
from a recognized refinery to explain how crude jewellery
reached such a high degree of scientific purity.
6
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
3.7 The Adjudicating Authority, applying the “Prudent Man” test,
found the clandestine concealment and the total lack of
industrial documentation to be irreconcilable with a legitimate
domestic transaction and accordingly ordered absolute
confiscation of the gold along with consequential penalties,
noting the CRCL Lab Report indicated a purity of 99.5% to
99.6%–atypical for local melting.
3.8 However, the tide turned at the appellate stage. This order
was overturned by the Commissioner (Appeals) and
subsequently by the Tribunal. They took the view that this
was a “town seizure” far from the international border.
3.9 This decision was subsequently overturned by the
Commissioner (Appeals) and affirmed by the Learned
Tribunal, primarily on the ground that the interception was a
“town seizure” occurring far from the international border.
The Learned Tribunal held that the absence of foreign
markings on the gold bars precluded the Department from
harbouring a “reasonable belief” of smuggling. The Tribunal
further dismissed the 850-day delay in the carrier’s retraction
of his confession as a mere “technical or venial” breach,
thereby vacating the confiscation and exonerating the
Respondents.
3.10 Aggrieved by this total exoneration, the Revenue has
approached this Bench, asserting that the Tribunal’s reliance
7
CUSTA 30 OF 2025 & CUSTA 31 OF 2025on the “Town Seizure” doctrine constitutes a misdirection in
law. The Revenue reiterates that the jurisdictional trigger of
Section 123 does not vary based on geography; once a
“Reasonable Belief” is formed–grounded in the surreptitious
conduct of the carrier and the nature of the goods–the
statutory burden shifts entirely to the claimant.
3.11 In its pursuit of an unattainable standard of proof, the
Tribunal has effectively sidelined the “Prudent Man” test
established by the Hon’ble Supreme Court in Collector of
Customs, Madras v. D. Bhoormall [1983 (13) E.L.T. 1546
(S.C.)]. The law does not demand mathematical certainty,
which is the foil of every smuggling investigation. It requires
only that the cumulative weight of the evidence, the
sophisticated concealment, the extreme purity of the goods,
and the revealing delay in retraction, creates a degree of
probability that any reasonable mind would accept as proof of
smuggling. To ignore this collective gravity is to render the
Customs Act toothless.
3.12 The Tribunal’s order is not merely erroneous; it is perverse. It
flagrantly ignores settled law regarding the potency of
statements recorded under Section 108. Such a statement is
a cornerstone of evidence, yet the Tribunal has allowed it to
be dismantled by a retraction that bears all the hallmarks of a
“calculated afterthought” and a legal ruse. By failing to
8
CUSTA 30 OF 2025 & CUSTA 31 OF 2025scrutinize the timing and motive of this retraction, the
Tribunal has rewarded the claimant’s subversion of the truth,
prioritizing a procedural facade over substantive justice.
3.13 We are now called upon to determine whether the
Respondents’ defence, when weighed against the scientific
data and the clandestine conduct of the carrier, is sufficient to
discharge the heavy onus placed upon them by the
legislature.
4. SUBMISSIONS ON BEHALF OF THE APPELLANT (REVENUE)
4.1 Mr. Bhaskar Prasad Banerjee, Learned Counsel appearing for
the Revenue, opened his challenge by characterizing the
impugned order of the Learned Tribunal as a “legal non-
sequitur” that fails to harmonize the clandestine facts of the
case with the specialized evidentiary standards of the
Customs Act. He contended that the Revenue’s case is
anchored on a “tripod of evidence”– namely
(i) The surreptitious modus operandi of concealment;
(ii) The voluntary judicial admissions recorded under
Section 108 of the Act, and
(iii) The scientific purity of the metal (99.6%) as
established by the CRCL Report.
9
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
All of which were brushed aside by the Tribunal as
fundamental evidentiary error. Mr. Banerjee
contended that the Tribunal’s failure to evaluate
these factors cumulatively, rather than in isolation,
constitutes a perversity of approach.
4.2 Building on this factual foundation, Mr. Banerjee submitted
that the gold in question squarely falls within the ambit of
“prohibited goods” as contemplated under Section 2(33) of
the Act. Relying on the seminal decision of the Apex Court in
Balkrishna Chhaganlal Soni v. State of West Bengal [(1974) 3
SCC 567] (particularly paragraphs 17 and 20), he argued that
the “reasonable belief” harboured by the seizing officers was
not a product of idle conjecture; clandestine transport of two
kilograms of gold bars (the notify commodity under Section
123), surreptitiously concealed in a specially stitched cotton
waist belt, is the quintessential hallmark of smuggling. This
position is further fortified by the ratio in Rahul Goyal v.
Commissioner of Customs (Prev.), 2017 (357) E.L.T. 1007
(Tri. – Del.) where it was held that the illicit nature of such
notified goods triggers the immediate rigors of Section 123,
shifting the onus of proof squarely upon the possessor.
4.3 In the light of surreptitious conduct, Mr. Banerjee, Learned
Counsel for the Revenue vehemently challenged the Tribunal’s
finding that the Department failed to establish “Reasonable
10
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
Belief” merely because the interception occurred in domestic
territory–a “town seizure”–and the bars lacked foreign
markings. Drawing strength from the recent judgment of this
Court in Commissioner of Customs (Prev.) v. Rajendra Kumar
Damani [(2024) 389 ELT 444, CUSTA 16 of 2023], Mr.
Banerjee emphasized that “Reasonable Belief” is a subjective
satisfaction based on a “Standard of Prudence” rather than a
standard of mathematical certainty. This principle is mirrored
in Sampad Narayan Mukherjee v. Union of India [2019 (366)
ELT 280 (Cal)], which clarifies that the lack of foreign
inscriptions does not ipso facto preclude a prudent officer
from forming a belief of illicit origin when faced with
clandestine modus operandi. suspicious behaviour
4.4 Transitioning from the validity of the seizure to the weight of
the investigation, Mr. Banerjee placed heavy reliance on the
initial statements of Respondent No. 2 recorded under Section
108 of the Act. Ld. Counsel reminded this Bench that under
Section 138A, there exists a statutory presumption of a
culpable mental state, which the Respondents failed to rebut.
He argued that the carrier’s confession was not a solitary
instance but was reaffirmed a year later, making the
subsequent retraction after a staggering 850-day interval a
“calculated afterthought.” Citing Ciabro Alemao v.
Commissioner of Customs, Goa [2018 (362) ELT 465 (Bom)]
11
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
and the Division Bench rulings in Commissioner of Customs,
Airport and Adm. v. Himadri Chakraborty [2023 (386) ELT
418 (Cal)] and Ajay Saraogi v. Union of India [2023 (386) ELT
333 (Cal)], he argued that a stale retraction without
contemporaneous evidence of duress cannot diminish the
evidentiary sanctity of a statement recorded in a “deemed
judicial proceeding.”
4.5 Further, Mr. Banerjee contended that the Respondents’
defence of “indigenous melting” is a scientific fallacy. Relying
on the Kerala High Court in Commissioner of Customs, Cochin
v. Om Prakash Khatri [2019 (366) ELT 402 (Ker)] (specifically
paragraphs 12, 19-21), he submitted that the 99.6% purity of
gold (International Bullion Standard), as confirmed by the
CRCL Report, acts as a silent but formidable rebuttal to the
claim of crude local refining. The Respondents failed to bridge
the “Identity Mismatch”–producing a “paper trail” of GST
returns and invoices for 22-carat scrap while possessing 24-
carat industrial bullion, but failed to produce a single “melting
memo” or “refinery slip” to explain the transformation into 24-
carat bullion.
4.6 Addressing the preliminary objection regarding maintainability
and monetary limits, Mr. Banerjee invoked the “Threshold-
Neutral” exceptions. While acknowledging the revised Rs. 1
Crore limit under Instruction No. 390/Misc./30/2023-JC dated
12
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
02.11.2023, Mr. Banerjee pointed to the parent Circular dated
17.08.2011 and the Instruction dated 26.12.2014, which
exempt cases involving the interpretation of statutory
provisions like Section 123. Given that the combined value of
the gold and penalties in the present case exceeds Rs. 2.5
Crores, it was submitted that the appeal is fully maintainable
and that the Tribunal’s total exoneration of the respondents
constitutes a perversity of law that warrants this Court’s
intervention.
4.7 In view of the submissions made and the legal authorities
cited, Mr. Banerjee, moved this Court with the prayer that the
Final Order of the Learned CESTAT, Kolkata, dated November
22, 2024, be set aside in its entirety as being hit by the vice
of perversity, and sought the restoration of the Order-in-
Original, thereby upholding the absolute confiscation of the
1,999.90 grams of gold and the consequential penalties under
Sections 112(b) and 114AA of the Act. It is also prayed to
hold that the “Reverse Burden of Proof” under Section 123
remains undiluted by the location of seizure and that the
Respondents signally failed to discharge the same. Ultimately,
Mr. Banerjee prayed for a decree that reinforces the statutory
rigor of “Reasonable Belief” based on the clandestine conduct
and scientific purity of the metal, and for such other orders as
13
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
this Bench deems fit to protect the interests of the National
Exchequer.
5. SUBMISSIONS ON BEHALF OF THE RESPONDENTS
5.1. Per contra, Mr. Arijit Chakraborti, Learned Counsel appearing
for the Respondents, has raised a multi-layered defence,
primarily contending that the Revenue’s appeal is a
“procedural overreach” that ignores both the binding nature of
departmental circulars and the constitutional safeguards
protecting citizens against coerced evidence. He argued that
the Tribunal’s order is a well-reasoned finding of fact, which
correctly identified that the Revenue failed to cross the
jurisdictional threshold from “mere suspicion” to “reasonable
belief.”
5.2. Opening with a formidable preliminary objection, Mr.
Chakraborti submitted that this appeal is hit by the bar of
maintainability. Relying on the recent dictum of the
Meghalaya High Court in Commissioner of Customs
(Preventive) v. Daleep Kumar Verma & Ors. [Cus App No.
1/2024, dated 22.10.2024] and the Manipur High Court in
Commissioner of Customs (Preventive) Shillong v. R.K. Swami
Singh [2025 (35) Centax 262 (Manipur)], he contended that
the subject matter relates to valuation and is hit by the
monetary limits prescribed in the Revenue’s own Instruction
14
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
No. 390/Misc./30/2023-JC dated 02.11.2023, which precludes
appeals where the amount is below Rs. 1 Crore. He further
fortified this stance by invoking the Constitution Bench in
Collector of Central Excise, Vadodara v. Dhiren Chemical
Industries [(2002) 2 SCC 127] and the Madras High Court in
Commissioner of Central Excise, Chennai-IV v. Sundaram
Fasteners Limited [2014 (304) ELT 7 (Mad)], asserting that
departmental instructions are mandatory commands that the
Revenue cannot bypass at its convenience, thereby creating
an “estoppel by circular.”
5.3. Inextricably linked to this procedural bar, Mr. Chakraborti
argued that the entire proceedings are vitiated by the lack of
a valid “Reasonable Belief” at the inception of the seizure.
Drawing support from the Gujarat High Court in Union of India
v. Abdulkadar Abdulgani Hasmani [1991 (55) ELT 497 (Guj)]
and this Court’s decision in Commissioner of Customs Excise
& Service Tax v. Nand Kishore Somani [2016 (337) ELT 10
(Cal)], Mr. Chakraborti submitted that in an inland “town
seizure” where gold lacks foreign markings, the Department
cannot harbour a belief of smuggling based solely on the
manner of transport. He emphasized that as per the ratio in
Commissioner of Customs, Excise & Service Tax Rohtak v.
Merino Panel Product Ltd. [(2022) 1 Centax 59 (S.C)], and
Rara Brothers v. M.L. Dey [2000 (125) ELT 425 (Patna HC)],
15
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
“Reasonable Belief” must be a judicial conclusion, rooted in
tangible material rather than “suspended animation” or “mere
suspicion,” a threshold the Revenue failed to satisfy.
5.4. Transitioning to the evidentiary weight of the carrier’s
statement, Mr. Chakraborti placed heavy reliance on the
landmark ruling in Vinod Solanki v. Union of India & Anr.
[(2008) 16 SCC 537], for the contention that a confession is
“weak evidence,” particularly when the same was extracted
under duress and physical threat. The legal principle
explained in Vinod Solanki (supra), that the Court must weigh
the evidentiary value by bearing in mind the attending
circumstances of the retraction, as the initial statement was
extracted under duress and physical threat. Therefore, these
statements should be excluded as not admissible due to effect
of Section 24 of the Indian Evidence Act, read with the
constitutional safeguards of Article 20(3).
5.5. He further contended that the 850-day delay in retraction,
characterized by the Revenue as an afterthought, must be
weighed against the attending circumstances and the lack of
independent corroboration. Relying on the principles of
natural justice highlighted in Ajay Saraogi (supra),
Commissioner of Customs Airport and Adm. v. Himadri
Chakraborty (supra), and the Bombay High Court in Union of
India v. Imtiaz Iqbal Pothiawala [2019 (365) ELT 167 (Bom)],
16
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
he contended that the absence of regular books of account
cannot ipso facto lead to an inference of smuggling, and
Revenue’s reliance on the CRCL report without allowing cross-
examination of the experts is a fatal flaw in the adjudicatory
process.
5.6. Mr. Chakraborti maintained that the Respondents successfully
discharged their burden by producing a “paper trail” of GST
returns and purchase invoices for old ornaments. Citing the
very recent decision in Commissioner of Customs (Preventive)
v. Shri Prahlad Kumar Das [Cus Ref 2/2025, dated 13.10.25],
Mr. Chakraborti asserted that once purchase invoices and GST
returns for “old ornaments” are produced, the Department
cannot discard them in favour of a presumed “identity
mismatch.”
5.7. He submitted that the purity of 99.6, in itself, would not be a
sole ground for holding the presumption of smuggled gold
bar. He further underscored that the minor difference in
weight (1,999.900g vs 2000g) is an artefact of scale
calibration rather than any criminal intent. Referring the
above facts he argued that any minor discrepancy in weight
or purity is merely a “technical or venial” breach as per the
ratio held in Hindustan Steel Ltd. v. State of Orissa [1969 (2)
SCC 627], which does not warrant the draconian measure of
absolute confiscation.
17
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
5.8. Mr. Chakraborti underscored that the Respondents
successfully discharged their onus validly by producing
documentary evidence, including GST returns and purchase
invoices. Therefore, he prayed for dismissal of the Revenue’s
appeal at the threshold and the affirmation of the Tribunal’s
order, was seeking total exoneration and the release of the
seized gold.
6. THE CORE CONTROVERSY
6.1. We find ourselves at the intersection of two competing legal
narratives. On one hand, the Revenue seeks to enforce the
strictures of the “Reverse Burden” under Section 123,
predicated upon the carrier’s surreptitious conduct and the
high scientific purity of the metal. Conversely, the
Respondents seek sanctuary under the “Town Seizure”
doctrine and the purported regularity of their commercial
documentation.
6.2. The threshold issue before this Bench is whether the
Tribunal’s decision to prioritize the Respondents’ “paper trail”
of domestic transactions over the Department’s investigative
findings and scientific data constitutes a perversity of law. We
must determine if the Respondents successfully bridged the
“Identity Mismatch”–the vast scientific gulf between the “raw
18
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
scrap” they allegedly processed and the international-
standard “high-purity bullion” intercepted by the Revenue.
7. DETERMINATION ON THE PRELIMINARY OBJECTION AS
TO MAINTAINABILITY
7.1. In adjudicating the challenge to the maintainability of these
consolidated appeals, we must first address the Respondents’
contention that this Court is divested of jurisdiction by both
statutory mandate and administrative policy. The challenge is
twofold: first, that the dispute falls within the exclusionary
category of “valuation” under Section 130(1) of the Customs
Act, 1962; and second, that the appeal is barred by the ₹1
Crore monetary threshold prescribed by CBIC Instruction No.
390/Misc./163/2010-JC (as modified on November 2, 2023).
We find it imperative to dissect these objections through the
prism of the specialized evidentiary architecture of the Act.
7.2. The Respondents assert that since the Learned Tribunal
vacated the “confiscation,” such a determination is
inextricably linked to “assessment,” thereby reserving
exclusive jurisdiction for the Hon’ble Supreme Court under
Section 130E(b). We find this objection to be a fundamental
misconstruction of the statutory scheme. The “valuation”
contemplated under the exclusionary clause refers to the
technical quantification of duty for assessment purposes. In
19
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
sharp contradistinction, an order of “Absolute Confiscation”
under Section 111 is an enforcement action predicated on the
illicit nature of the goods–an action in rem against the
property itself.
7.3. This position is firmly anchored in the celebrated ratio
decidendi of Navin Chemicals Mfg. & Trading Co. Ltd. v.
Collector of Customs [1993 (68) E.L.T. 3 (S.C.)], which
clarifies that determining whether goods are liable to
confiscation is a question of statutory violation, not an
arithmetic exercise of tax quantification.
“The determination of a question relating to the rate of
duty or the value of goods for the purposes of
assessment… does not include a question of whether
the goods are liable to confiscation or whether a penalty
is imposable.” (Paragraph 11)7.4. Parallel to this statutory objection, the Respondents invoke
the policy bar, contending that the appeal is precluded by the
Rs. 1 Crore threshold. While departmental circulars are
binding on the Revenue, they do not act as an absolute ouster
of judicial review, as observed by the Constitution Bench in
Dhiren Chemical Industries (supra). The parent Circular No.
390/Misc./163/2010-JC dated August 17, 2011, identifies
“threshold-neutral” scenarios where an appeal must be filed
regardless of the amount. Specifically, cases involving the
interpretation of a statutory provision (such as Section 123)
20
CUSTA 30 OF 2025 & CUSTA 31 OF 2025or those of a recurring legal nature are exempt from
monetary bars. The “Town Seizure” doctrine and the
discharge of the reverse burden are recurring legal
controversies that demand judicial finality.
7.5. Furthermore, even if the monetary threshold were to be
strictly applied, the Respondents’ objection is both legally
infirm and factually moot. The value of the 1,999.90 grams of
gold at the time of seizure was approximately Rs. 1.5 Crores,
which, when coupled with the cumulative penalties exceeding
Rs. 1 Crore, places the financial impact of this litigation well
above the revised limit. Most significantly, where a Tribunal
arrives at a finding by ignoring material evidence–specifically
the 99.6% purity and the 850-day delay in retraction–such a
finding is hit by the vice of perversity. Since perversity in a
finding of fact constitutes a Substantial Question of Law, this
Court is duty-bound to intervene.
7.6. Accordingly, we hold that the setting aside of an absolute
confiscation is an enforcement dispute, the interpretation of
Section 123 is a recurring legal necessity, and the total value
exceeds the policy threshold. The preliminary objections as to
maintainability are, therefore, overruled.
7.7. We shall now proceed to evaluate the merits of the “tripod of
evidence” presented by the Revenue.
21
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
8. THE MERITS OF THE SEIZURE AND SCIENTIFIC PURITY
8.1. Having navigated the procedural thickets of maintainability,
we now enter the substantive core of this controversy: the
merits of the seizure and the scientific purity of the subject
gold. Our inquiry is directed toward whether the Learned
Tribunal was legally justified in reversing the order of absolute
confiscation by compartmentalizing the evidence, rather than
evaluating the cumulative weight of what the Revenue aptly
describes as a “tripod of evidence.” This tripod–comprising
the clandestine manner of transport, the voluntary admissions
under Section 108, and the high scientific purity of the
metal–forms the bedrock of the Department’s case.
Conversely, the respondents seek sanctuary under the “town
seizure” doctrine, arguing that an inland interception of
unmarked gold creates an insurmountable evidentiary gap
that a mere “paper trail” of commercial transactions can
sufficiently bridge.
8.2. As a preliminary factual observation, we note that the value of
the 1,999.90 grams of gold (approx. Rs. 1.5 Crores) and the
total penalties (Rs. 1.02 Crores) satisfy both the monetary
and legal thresholds for this Court’s intervention. The sheer
volume of the metal and its concentration into high-purity
22
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
bars elevate this matter beyond a routine commercial dispute
into the realm of a grave statutory violation under the Act.
8.3. Regarding the first evidentiary pillar–the clandestine manner
of transport–it is an admitted fact that the gold was found
neither in a briefcase, nor a commercial parcel, nor even
personal baggage. It was found secreted within a specially
stitched cotton waist belt worn by Respondent No. 2 beneath
his garments. The Learned Tribunal characterized this as a
“technicality” of transport; however, we find this
characterization to be legally fragile. Applying the “Prudent
Man” test as envisaged under Section 123, the choice of a
hidden waist belt for transporting high-value bullion is a
potent indicator of an intent to evade detection–a
quintessential hallmark of illicit transit that warrants the
formation of “Reasonable Belief.”
8.4. The second, and perhaps most scientifically damning pillar, is
the purity of the metal. The Respondents’ defense rests on
the claim that they melted “old ornaments” (22-carat
jewellery) to produce these bars. However, the CRCL Lab
Report confirms a fineness of 99.5% to 99.6%. We must
observe that the transition from scrap jewellery to industrial-
standard 24-carat bullion is not a product of simple
“indigenous melting” in a local crucible. It requires an
23
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
electrolytic refining process to remove the alloys (copper,
silver, or zinc) inherent in jewellery.
8.5. While the Respondents produced GST returns for “old
ornaments,” they signally failed to produce any “Melting
Memos” or “Refinery Certificates” from a recognized refinery
to explain how 22-carat scrap reached a 99.6% international
bullion standard. This “Identity Mismatch” creates a chasm in
the defense that the Tribunal appears to have overlooked. In
the absence of a documented industrial provenance, the high
purity of the metal, when coupled with the surreptitious
concealment, provides a robust foundation for the Revenue’s
invocation of the reverse burden under Section 123.
9. ANALYSIS ON REASONABLE BELIEF AND STATUTORY
BURDEN (SECTION 123)
9.1 The tectonic plates of this legal dispute rest upon the interplay
between “Reasonable Belief” under Section 123 and the
evidentiary sanctity of the investigations conducted therein.
We find that the Learned Tribunal’s primary justification for
exoneration–the domestic location of the interception–
represents a fundamental misapplication of the statutory
framework. Section 123 constitutes a self-contained code; it
does not establish a geographical hierarchy for the formation
of “Reasonable Belief.” Whether bullion is intercepted at an
24
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
international border or within a domestic metropolis, the
jurisdictional trigger remains the “Prudent Man Test” as
propounded in D. Bhoormall (supra).
9.2 In distilling the essence of “Reasonable Belief,” we are guided
by the seminal observations of the Hon’ble Supreme Court in
D. Bhoormall (supra), which clarify that the Revenue is not
mandated to establish its case with mathematical certainty at
the threshold stage. Rather, it must demonstrate a degree of
probability such that a “prudent man” would, based on the
available material, believe in the illicit origin of the goods.
This subjective satisfaction, as reaffirmed by this Court in
Rajendra Kumar Damani (supra), is generally insulated from
judicial review unless found to be wholly arbitrary or
capricious. The Patna High Court observed in M.L. Dey (supra)
that reasonable belief is more than mere suspicion; it is a
belief reached by a prudent man applying his mind judicially
to the facts.
9.3 We find that the Tribunal’s reliance on a “town seizure”
doctrine creates an artificial evidentiary barrier that ignores
the realities of modern smuggling. Under settled law, the
validity of a seizure under Section 110 must be tested against
the Standard of Prudence, not a Standard of Location. The
“Reasonable Belief” mandated by statute is not a final
25
CUSTA 30 OF 2025 & CUSTA 31 OF 2025conviction of guilt, but a prima facie satisfaction derived from
the totality of the circumstances.
9.4 In the instant case, the “belief” was not anchored in the mere
possession of gold, but in the highly surreptitious conduct of
Respondent No. 2. Two kilograms of bullion were not
transported through transparent commercial channels; they
were bound to the carrier’s person in a specially stitched
cotton waist belt–a quintessential hallmark of clandestine
movement. To hold that such a modus operandi does not
constitute “material” for reasonable belief is to substitute
judicial reality with clinical isolation.
9.5 Furthermore, the absence of foreign markings does not ipso
facto vitiate “Reasonable Belief.” To hold otherwise would be
to ignore the strategic defacement frequently employed by
smuggling syndicates to mask provenance. Smuggled gold
does not lose its illicit character by moving inland or through
the tactical removal of origin stamps. Applying the ratio of D.
Bhoormall (supra), we find that the clandestine manner of
transport and the lack of contemporaneous provenance
constituted sufficient “material” for a prudent officer to form a
valid belief.
9.6 Consequently, we hold that the jurisdictional prerequisite of
Section 123 was fully satisfied, and the burden of proof
26
CUSTA 30 OF 2025 & CUSTA 31 OF 2025shifted squarely and inextricably to the Respondents–a
burden they signally failed to discharge.
10. THE EVIDENTIARY SANCTITY OF SECTION 108
STATEMENTS
10.1. Regarding the Learned Tribunal’s summary dismissal of the
statements recorded under Section 108 of the Act, we find it
imperative to delineate the specialized statutory landscape
governing such evidence. Section 108 empowers a Gazetted
Officer of Customs to summon any person to provide evidence
or produce documents. Sub-section (3) mandates that all
persons so summoned are “bound to state the truth,” and
crucially, under sub-section (4), such inquiries are elevated by
legal fiction to the status of “judicial proceedings” within the
meaning of Sections 193 and 228 of the Indian Penal Code.
This statutory character fundamentally distinguishes these
depositions from ordinary confessions recorded by police
authorities.
10.2. Following the celebrated Constitution Bench decision in Illias
v. Collector of Customs, Madras [AIR 1970 SC 1065], it is
settled law that Customs Officers are not “police officers” for
the purposes of Section 25 of the Evidence Act. Their primary
mandate is the protection of the National Exchequer and the
prevention of smuggling; since they lack the power to file a
27
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
charge sheet under Section 173 of the Code of Criminal
Procedure, a confession recorded by them is admissible as
substantive evidence. Such statements are neither hit by the
exclusionary rules of the Evidence Act nor do they violate the
constitutional protection against self-incrimination enshrined
in Article 20(3). As the Apex Court clarified in Ramesh
Chandra Mehta v. State of West Bengal [AIR 1970 SC 940], at
the stage of a Section 108 inquiry, the deponent is not an
“accused” in the technical sense, rendering the shield of
Article 20(3) unavailable.
10.3. The core controversy here lies in the evidentiary weight
attached to a retracted statement. For a retraction to be
legally potent, it must be contemporaneous. We are guided by
the ratio in K.I. Pavunny v. Asst. Collector (HQ), Central
Excise Collectorate, Cochin [1997 (3) SCC 721], wherein the
Supreme Court held:
“It is the duty of the court to look into the facts and
circumstances of each case to find whether the
confession was voluntary… If the court is satisfied that
the confession was voluntary and true, it can form the
basis of conviction.”
10.4. As held in Ciabro Alemao (supra) and reaffirmed by this Court
in Ajay Saraogi (supra), the failure to complain of duress
before a Magistrate at the first available opportunity is fatal to
a plea of coercion. In the present case, Respondent No. 2
28
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
(Shri Gaur) appeared before the authorities a full year after
the initial seizure and voluntarily reaffirmed his statement.
10.5. The silence of the Respondents for over two years, followed
by a retraction–a staggering 850 days later–only upon the
receipt of a Show Cause Notice, marks it as a “calculated
afterthought” and a strategic ruse. The Tribunal’s decision to
prioritize this stale denial over a twice-confirmed judicial
statement is perverse. The law cannot allow a “deemed
judicial proceeding” under Section 108 to be neutralized by a
belated signature of convenience. A voluntary statement
recorded in such proceedings cannot be displaced by a
subsequent denial unless the attending circumstances clearly
demonstrate coercion. In this instance, the Respondents’
prolonged silence speaks louder than their belated
protestations.
11. THE SCIENTIFIC REBUTTAL: PURITY AND PROVENANCE
11.1 The Respondents’ defense rests upon a purported “paper trail”
that collapses under the weight of scientific reality. While they
maintain that the seized gold was “indigenous”–refined from
local 22-carat scrap ornaments–the CRCL Report confirms a
fineness of 99.6%. We find a total “Identity Mismatch” here:
the production of documentation for “Scrap” (Material X)
29
CUSTA 30 OF 2025 & CUSTA 31 OF 2025cannot, in law or science, discharge the burden of proof for
“High-Purity Bullion” (Material Y).
11.2 In the specialized gold trade, an immutable distinction exists
between “Kachcha gold” (locally melted jewelry) and “995
Bullion” of international standards. Achieving 99.6% fineness
through crude local melting, without industrial-grade
electrolytic refining, is a scientific improbability. High-purity
gold of this grade is the product of sophisticated chemical and
electrolytic processes specifically designed to extract base
metal alloys (copper, silver, or zinc) inherent in jewellery–a
transformation far beyond the capabilities of rudimentary local
crucibles.
11.3 Following the ratio of the Kerala High Court in Commissioner
of Customs v. Om Prakash Khatri [2019 (366) E.L.T. 402
(Ker)], we hold that high purity acts as a “silent but
formidable rebuttal” to any claim of indigenous origin. As
observed in Paragraph 19 of the said judgment, such purity
constitutes potent circumstantial evidence of foreign origin
when the possessor fails to establish industrial provenance. In
the absence of a “Melting Memo” or “Refinery Certificate,” the
Respondents’ paper trail is effectively a “trail to nowhere.”
11.4 Furthermore, we find the Learned Tribunal’s invocation of the
“Venial Breach” doctrine from Hindustan Steel Ltd. v. State of
Orissa (supra) to be wholly misplaced. The ratio in Hindustan
30
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
Steel protects bona fide technical errors where there is no
contumacious conduct. However, the total failure to prove the
legal origin of two kilograms of industrial-grade bullion is a
foundational failure of proof, not a technicality. As observed in
Merino Panel Product Ltd. (supra), the protection of “technical
breaches” cannot be extended to shield conduct
fundamentally designed to circumvent the rigors of Section
123.
11.5 Applying the “Prudent Man” test, we hold that a legitimate
trader would neither transport high-value bullion concealed in
a waist belt nor lack the essential refinery documentation
required to verify its transformation. The cumulative weight of
the scientific purity matching international standards, the
absence of payment particulars in the ledgers, and the lack of
refinery records satisfy us that the Respondents signally failed
to discharge their statutory burden. The Tribunal’s finding that
these discrepancies were merely “technical mistakes” is
perverse and cannot be sustained.
12. CONCLUSION AND FINAL DETERMINATION
12.1. In adjudicating the merits of these consolidated appeals, we
find a fundamental subversion of the “Reverse Burden of
Proof” at the Tribunal level. Following a threadbare analysis of
the record, we conclude that the impugned order suffers from
31
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
fatal legal and factual infirmities. The Learned Tribunal
proceeded on the erroneous assumption that the Revenue
must establish the entire “smuggling chain” with
mathematical precision. Such an approach negates the
legislative intent behind Section 123 of the Act, which shifts
the onus of proof onto the claimant to rebut the presumption
of illicit origin once “Reasonable Belief” is established.
12.2. We hold that the Learned Tribunal’s order is hit by the vice of
perversity. By disregarding the scientific impossibility of the
defence and the evidentiary sanctity of the Section 108
statements, the Tribunal effectively reversed the statutory
burden of proof without the Respondents having discharged
their legal obligations. The protection of the “Venial Breach”
doctrine under Hindustan Steel Ltd. (supra) cannot be
extended to a foundational failure of proof involving two
kilograms of industrial-grade bullion. A legitimate commercial
transaction of such magnitude is not transported secreted in a
waist belt, nor does it lack the requisite industrial
nomenclature of refinery documentation.
12.3. Having traversed the factual matrix and the statutory
landscape, this Court is of the firm opinion that the impugned
order is not merely an alternative view of facts, but a
fundamental miscarriage of justice rooted in a misapplication
of the law.
32
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
12.4. We reiterate the following conclusive legal principles as the
basis of our determination:
(a) We hold that “Reasonable Belief” is a behavioural
and material construct, not a geographical one.
The “Town Seizure” doctrine cannot serve as a
legal sanctuary for the illicit transport of high-
purity bullion. Once the modus operandi--
clandestine concealment--is established, the
jurisdictional trigger of Section 123 is complete.
(b) We reaffirm that a statement recorded in a
“deemed judicial proceeding” carries a
presumption of truth. A non-contemporaneous
retraction, appearing after a staggering 850-day
interval, must be discarded as a “calculated
afterthought” unless corroborated by independent
medical or judicial evidence of duress.
(c) We hold that in matters of bullion, Scientific Purity
is the ultimate provenance. A “paper trail” of GST
returns for scrap ornaments cannot bridge the
identity mismatch between jewellery alloys and
99.6% pure international-standard bullion. The
transition from scrap to 24-carat bullion requires
industrial electrolytic refinement, not rudimentary
local melting. The failure to produce “Melting
33
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
Memos” or “Refinery Slips” is fatal to the
discharge of the reverse burden of proof.
13. CONSEQUENTIAL ORDERS AND DIRECTION
13.1 Accordingly, the Substantial Questions of Law are answered in
the affirmative, in favour of the Revenue. The impugned order
of the Learned Tribunal dated November 22, 2024, is found to
be legally unsustainable and perverse. We, therefore, pass
the following orders and directions:
i. CUSTA 30 of 2025 and CUSTA 31 of 2025 are hereby
allowed.
ii. The common Final Order Nos. 77590-77591 of 2024
dated November 22, 2024 passed by the Learned
CESTAT, Eastern Zonal Bench, Kolkata, is hereby set
aside for being perverse and contrary to the settled
principles of the Customs Act.
iii. The Order-in-Original No. 59/ADC(P)/CUS/ WB/2020-
21 dated November 12, 2020, passed by the
Adjudicating Authority, directing the absolute
confiscation of the 1,999.90 grams of gold and
imposing consequential penalties on Respondent No.
1 and Respondent No. 2, is restored in its entirety.
34
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
iv. The absolute confiscation of the 1,999.900 grams of
gold is upheld.
v. The Revenue is directed to proceed with the final
disposal of the said confiscated gold in accordance
with the prescribed statutory procedures and the
Disposal Manual.
vi. A penalty of Rs. 6,00,000/- (Rupees Six Lakhs)
under Section 112(b) and a further penalty of Rs.
90,00,000/- (Rupees Ninety Lakhs) under Section
114AA (for the production of
manufactured/fabricated documentation) against Shri
Anil Kumar Soni (Owner/ respondent no. 1) are
confirmed.
vii. A penalty of Rs. 6,00,000/- (Rupees Six Lakhs)
under Section 112(b) against Shri Anil Kumar Gaur
(Carrier/ respondent no. 2) is confirmed.
viii. The Respondents are directed to deposit the
aforesaid penalty amounts within four weeks from
the date of this order.
ix. In the event of default, the Revenue is granted the
liberty to initiate recovery proceedings under Section
142 of the Act, including the attachment of personal
and business assets.
35
CUSTA 30 OF 2025 & CUSTA 31 OF 2025
x. The appellant-Department is directed to immediately
invoke, encash, and appropriate any Bank
Guarantees, Cash Deposits, or securities furnished by
the respondents during the pendency of the
litigation.
xi. Given our specific finding that the accounting trail
produced was “manufactured,” we direct the Registry
to forward a copy of this judgment to the
Jurisdictional Commissioner of GST and the Income
Tax Authorities for an inquiry into the potential
“Kachcha” accounts of M/s A.R.P. Ornaments.
14. All connected pending applications, including GA 2 of 2025 in
both appeals, stand disposed of accordingly.
15. No order as to costs.
16. Urgent certified copy of this judgment, if applied for, be
issued to the parties on usual terms.
17. Order pronounced in open Court.
I AGREE
(RAJARSHI BHARADWAJ, J.) (UDAY KUMAR, J.)
Later:
Learned Counsel appearing for the respondent prays for stay
of operation of this judgment and order for a period of four weeks.
Such prayer is considered and rejected.
(RAJARSHI BHARADWAJ, J.) (UDAY KUMAR, J.)
