The Customs, Excise and Service Tax Appellate Tribunal at Mumbai set aside absolute confiscation of 2,415.8 grams of gold seized from domestic air cargo and penalties on four jewellers.
Gold seized in domestic transit cannot be confiscated under Sections 111(d) and 111(j) of the Customs Act, 1962 unless the Revenue shows a nexus with import, and jewellers who produce purchase invoices, GST records and banking payments discharge their initial burden, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai has held [Pothys Swarna Mahal P. Ltd. & Ors. v. Commissioner of Customs, Mumbai Prev, 2026-juristway.com-3464-CESTAT(Mumbai)-Customs].
The Bench of Ajay Sharma, Member (Judicial), who wrote the order, and Pullela Nageswara Rao, Member (Technical), allowed four appeals by Pothys Swarna Mahal, Mahalaxmi Jewellery, K Jewellery and Yashoda Chains.
On 14 and 15 Jul 2021, officers searched the Santacruz air cargo terminal and seized gold carried by two domestic logistics companies under delivery challans without import documents. Of 1,22,789.30 grams seized, most was released on documents. Absolute confiscation was ordered of 4,419.3 grams, of which 2,415.8 grams was in these appeals, with penalties under Section 112(a)(i) of ₹3 lakh to ₹9 lakh. The authorities held that the burden under Section 123, which applies to notified goods such as gold, had not been discharged, citing foreign markings and erased serial numbers.
The Tribunal found that the jewellers had produced tax invoices from domestic bullion suppliers, delivery challans for job work, GST returns and payments through RTGS or NEFT. The suppliers and challan recipients were never examined and their documents were not found false, so the burden shifted to the Revenue and was not discharged.
No bill of entry, airway bill or statement of any courier or airline linked the gold to any act of importation. One seizure was at a domestic air-cargo agent’s premises during movement between two GST-registered jewellers for job work.
The Tribunal also rejected the valuer’s report, which gave purity and called pieces foreign-marked without disclosing method or establishing origin through recognised testing. Following Konkan Synthetic Fibres, it held an unreasoned expert opinion cannot found a finding of foreign origin.
It added that gold is not an absolutely prohibited item, and absolute confiscation without the option of redemption would not have been proportionate even if a contravention had been made out. Confiscation and the penalties were set aside.
2026-juristway.com-3464-CESTAT(Mumbai)-Customs
