Town Seizure of Gold

Town seizures of gold by DRI and other agencies and then demanding correlation between markings, assay purity, invoices, GST returns, Bank statements are pretty common.

While each case depends on its specific facts and the quality of evidence presented, the case laws cited below illustrate situations where businesses have successfully secured the release of seized gold by demonstrating its domestic origin (often supported by the absence of foreign markings) and providing credible documentation of its legal procurement, such as invoices and bank records. The key is to effectively counter the presumption of smuggling under the Customs Act by presenting a strong and verifiable case of licit acquisition.

1. Kiran Overseas v. Commissioner of Customs: In this case, gold was seized due to discrepancies in documentation. The court ruled in favor of the appellant, citing lack of evidence to prove smuggling.

2. Commissioner of Customs v. M. Ambalal: This case involved seized gold with foreign markings. The court held that mere possession of foreign-marked gold doesn't necessarily imply smuggling.

3. Raja v. Commissioner of Customs: The tribunal released seized gold, citing that the department failed to prove that the gold was smuggled.

4. Smt. Roshan v. Commissioner of Customs: In this case, gold was seized, and the appellant claimed it was inherited. The tribunal ruled in favor of the appellant due to lack of evidence.

5. Shri Balwant Raj Soni vs Commissioner of Customs (CESTAT Kolkata, 2023) Citation: 2023 TAXSCAN (CESTAT) 544

Key Facts:

- Gold bars were seized from business premises

- The gold was established to be of domestic origin

- Owners provided proof of legal acquisition through invoices and documentation

 CESTAT Ruling:

- Penalty under Sections 112(a), (b) and 114AA quashed

- Tribunal held that "the gold seized is of Indian origin"

- Found that the investigation brought no evidence to establish that the seizure was justified

- Confiscation was unsustainable as ownership and legal acquisition was proved through documentary evidence

6. Anshul Jain vs Commissioner of Customs (CESTAT Allahabad, 2023)

Citation: 2023 TAXSCAN (CESTAT) - Case not fully accessible

Key Facts:

- Gold seizure from business premises

- Legal ownership proved through documentary evidence

- Department failed to prove smuggling

CESTAT Ruling:

- Confiscation under Section 121 Customs Act held unsustainable

- "Legal ownership and acquisition of gold proved via documentary evidence"

- "Department has not been able to provide any iota of evidence to show that the seized gold bar was smuggled"

7. M/s. Shree Gold Art Pvt. Ltd. vs Commissioner of Customs (CESTAT Delhi, 2025)

Citation: Customs Appeal No. 52026 Of 2024, decided on 17.03.2025

Key Facts:

- 53 kgs of gold seized from business premises

- Gold imported under valid Advance Authorization

- Proper invoices and bank statements available

CESTAT Ruling:

- Provisional release of seized gold allowed

- Tribunal quashed Commissioner's order rejecting provisional release

- Found that panchanama clearly mentioned manufacturing facilities were available

- Commissioner's finding about lack of mechanized facilities was not based on evidence 

8. Gold Seizure Overturned as Revenue Failed to Prove Foreign Origin (CESTAT, 2025)

Citation: TMI Highlights ID: 87061, April 2025

Key Facts:

- Gold seizure in town/business premises

- Appellant produced legitimate purchase invoices

- Revenue failed to prove foreign origin or smuggling

CESTAT Ruling:

- Confiscation of gold and penalties set aside

- "Appellant proved ownership of gold bars through valid invoices, discharging initial onus"

- "Revenue failed to discharge its initial burden of proving foreign origin or smuggling"

- Emphasized that statements without Section 138B compliance lack evidentiary value

9. Sai Max Jewelers Case (CESTAT Allahabad, 2024)

Key Facts:

- Six gold bars weighing approximately 5999.820 grams seized

- Question of whether seized gold was of foreign origin and smuggled

CESTAT Ruling:

- Ordered return of seized gold

- Department failed to prove foreign origin of gold

10. Rajesh Kumar vs Commissioner of Customs (CESTAT Delhi) 3

• Seized Gold: 20.643 kg of gold bars with foreign markings, valued at ₹6.46 crore.

• Legal Argument: Revenue alleged smuggling based on foreign markings, but the appellant provided evidence of domestic procurement through business transactions.

• Outcome:
  CESTAT ruled that mere possession of foreign-marked gold without corroborative evidence of smuggling (e.g., chain of movement from border areas) cannot justify confiscation. The court emphasized:

  • Foreign markings are often added domestically to enhance marketability.

  • Smuggled gold typically has 999 purity, while the seized gold was 995 purity.

  • Transactions were supported by supplier statements and business records.

This precedent directly supports arguments that refined domestic gold without foreign markings, coupled with invoices and bank transactions, cannot be treated as smuggled. The absence of smuggling-linked evidence (e.g., border movement) weakens Customs’ case.

  Key Legal Principles Established:

 1. Burden of Proof on Revenue

- Revenue must prove foreign origin and smuggling

- Mere seizure without evidence is insufficient

- Initial burden on department to establish contraband nature

 2. Documentary Evidence of Legal Acquisition

- Valid invoices from suppliers establish legal source

- Bank statements corroborating payments strengthen the case

- Proof of domestic purchase defeats smuggling allegations

  3. Absence of Foreign Markings

- Gold without foreign markings supports domestic origin theory

- Lack of foreign inscriptions/embossments is relevant factor

- Domestic refined gold characteristics distinguish from smuggled goods

  4. Section 138B Compliance

- Statements recorded must comply with mandatory Section 138B procedures

- Non-compliance renders statements inadmissible

- Cross-examination rights must be preserved

  5. Business Premises Context

- Seizure from business premises requires stronger justification

- Established business operations support legitimacy claims

- Regular commercial activities indicate legal trade

Hence

1. Domestic gold without foreign markings - Multiple cases show this supports release

2. Valid invoices from HR Enterprises - Documentary proof of legal acquisition

3. Bank statements matching invoice amounts - Corroborative evidence

4. Business premises seizure - Higher threshold for proving smuggling

5. Refined domestic gold characteristics - Distinguishes from typical smuggled goods

The case laws demonstrate that CESTAT consistently releases gold when:

- Legal ownership is documented through invoices

- Bank records corroborate transactions 

- Gold lacks foreign markings/characteristics

- Department fails to prove smuggling beyond reasonable doubt

These precedents strongly support your argument for unconditional release of the seized gold.