Calcutta High Court Quashes CESTAT Order for Lack of Reasoning in Gold Smuggling Case

The Calcutta High Court has set aside an order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, on the ground that it was a “non-speaking order” lacking independent reasoning. The Court directed the Tribunal to reconsider the matter afresh and pass a detailed, reasoned order. The bench Justice Rajarshi Bharadwaj and Justice Uday Kumar, found that the Tribunal had failed to discharge its adjudicatory duty by passing a non-speaking order. Providing reasons is a fundamental principle of administrative law and forms the “live link” between the adjudicator’s mind and the issues in controversy. The case arose from an appeal filed by the Principal Commissioner of Customs (Preventive) challenging a CESTAT order dated July 4, 2025, which had summarily rejected a stay application filed by the Revenue. The dispute relates to the seizure of 2755.200 grams of foreign-origin gold, valued at approximately ₹89.87 lakh, allegedly smuggled into India. The matter traces back to a search operation conducted on March 28, 2019, at the premises of the respondent, a proprietor engaged in the jewellery business. During the search, customs authorities recovered three gold bars bearing foreign markings such as “SUISSE” and “PAMP.” Based on a reasonable belief of smuggling, the gold was seized under Section 110 of the Customs Act, 1962. During the investigation, the respondent provided inconsistent explanations regarding the source of the gold. Initially, it was claimed that the gold was purchased from a jeweller, which was later denied by the alleged seller. Subsequently, the respondent asserted that the gold was received through a “gold exchange” transaction with his brother, but this claim was unsupported by any entries in the statutory financial records for the relevant period. The Adjudicating Authority ordered absolute confiscation of the gold, holding that the respondent failed to discharge the burden of proof under Section 123 of the Customs Act, which places the onus on the possessor to prove lawful import in cases involving notified goods such as foreign-marked gold. However, the Commissioner (Appeals) reversed this decision in November 2024. Aggrieved by the appellate relief granted to the respondent, the Revenue approached CESTAT seeking a stay of the order. However, the Tribunal rejected the stay application through a brief order stating that the impugned order was not “ex facie illegal or without jurisdiction,” without providing any substantive reasoning. This summary rejection became the subject matter of challenge before the High Court. The Court noted that the Tribunal did not engage with critical aspects raised by the Revenue, including the statutory presumption under Section 123 of the Customs Act; the evidentiary inconsistencies in the respondent’s explanations; and the rejection of procurement claims by the alleged seller. The High Court observed that the Tribunal’s conclusion lacked foundational reasoning and amounted to a “mere fiat,” thereby preventing meaningful judicial review. The Court framed a substantial question of law on whether a quasi-judicial authority is justified in dismissing a stay application involving serious allegations and significant revenue implications through a non-speaking order, without addressing statutory mandates such as Section 123 of the Customs Act. Setting aside the Tribunal’s order, the High Court remanded the matter back to CESTAT for fresh consideration. The Tribunal has been directed to rehear the stay application and the main appeal on merits; pass a reasoned and speaking order; provide both parties a fair opportunity of hearing; and complete the exercise within six weeks. The Court also stayed the operation of the Commissioner (Appeals)’ order and directed that the seized gold shall remain in the custody of the Customs Department until a fresh decision is rendered. Case Details Case Title: Principal Commissioner Of Customs Preventive Vs Shri Litan Karmakar Citation: JURISHOUR-707-HC-2026(CAL) Case No.: CUSTA 12 OF 2026 Date: 09.04.2026 Counsel For Petitioner: Kaushik Dey, Ld. Adv. Counsel For Respondent: Nilotpal Chowdhury, Ld. Adv. Click Here To Read Order Read More: Non-Supply of Forensic Audit Addendum Not Fatal if Not Relied Upon: Calcutta High Court Upholds Fraud Classification by Bank

Calcutta High Court Quashes CESTAT Order for Lack of Reasoning in Gold Smuggling Case

Membership Required

Latest articles

LTCG Addition Unsustainable in Absence of Direct Evidence Linking Assessee to Penny Stock Manipulation: ITAT

GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing

Retrospective GST Cancellation Can’t Invalidate Genuine Transactions: Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand

HCL Infosystems Wins: ITAT Quashes Assessment on Non-Existent Entity

More like this

LTCG Addition Unsustainable in Absence of Direct Evidence Linking Assessee to Penny Stock Manipulation: ITAT

GST Pre-Deposit Non-Compliance: Allahabad High Court Allows Appeal Subject to Rs. 30 Lakh Balance Deposit, Recognises Offline Filing

Retrospective GST Cancellation Can’t Invalidate Genuine Transactions: Jaipur Commissioner (Appeals) Quashes Rs. 95,670 ITC Demand

About us

Company

Categories