CESTAT Restores Exoneration of Jewellery Trader Luxury Watch Smuggling Case

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has restored the exoneration of Gujarat-based jewellery trader in a high-profile luxury watch smuggling matter involving seized watches valued at Rs. 23.21 crore, holding that the Commissioner (Appeals) could not summarily overturn findings in his favour without identifying any legal or factual defect in the original order. The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) observed that customs authorities had not examined certain individuals during adjudication proceedings in the manner required under Section 138B of the Customs Act for reliance upon their statements. The bench noted that allegations regarding a “smuggling racket” remained based on assumptions and conjectures rather than concrete proof. The dispute arose from an appeal filed by Hiren Vithaldas Dhakan against an Order-in-Appeal dated April 17, 2026. The Commissioner (Appeals) had set aside an earlier adjudication order and remanded the matter for fresh adjudication, despite the Adjudicating Authority having already exonerated Dhakan from all charges. Aggrieved by the remand, Dhakan approached the Tribunal challenging the reversal of his clean chit. According to the Department's allegations in the Show Cause Notice, Dhakan was allegedly the “mastermind” behind a syndicate involved in smuggling high-end watches through airports into India without payment of customs duties. Authorities claimed that passenger Yamal Manojbhai Jagada had been instructed by Dhakan to transport and clear the luxury watches through customs while evading duties. The Department also relied upon WhatsApp chats, statements of individuals connected to the case, invoices and communications relating to Jacob & Co. watches, and other investigative material. The Department sought imposition of penalties under Sections 112 and 114AA of the Customs Act, 1962 on Dhakan, alleging active involvement and abetment in the smuggling operation. The proposed penalties related to seized goods valued at more than ₹23 crore. However, Dhakan denied all allegations and maintained that he had been residing outside India as a Non-Resident Indian for more than 25 years and was carrying on business activities in the UAE. He argued that he had cooperated with the investigation by responding to summons through email and offering to provide statements through audio-visual means. The Tribunal noted that the Adjudicating Authority had examined the evidence in detail and had concluded that the allegations against Dhakan lacked substantial corroboration. A significant factor considered was the retraction made by the passenger, who had initially implicated Dhakan but later stated before the Delhi High Court that his earlier statement had not been voluntary and had been made under coercion. The passenger subsequently asserted that Dhakan had no knowledge of the transaction and accepted complete responsibility himself. The Adjudicating Authority had also observed that the WhatsApp chats relied upon by the Department did not demonstrate any instruction by Dhakan to evade customs duty or to smuggle the watches into India. It found no evidence establishing his role in the alleged smuggling activities. Criticising the approach of the Commissioner (Appeals), the Tribunal held that factual findings recorded by the Adjudicating Authority could not be casually brushed aside. It observed that the appellate authority had failed to indicate any perversity, illegality, or prima facie defect in the exonerating findings before remanding the matter for reconsideration. Setting aside the remand order, the Tribunal restored the original order dated September 13, 2024 insofar as it related to Dhakan and allowed his appeal. The ruling reinforces the principle that appellate authorities cannot disturb detailed findings in favour of an assessee without assigning clear reasons and demonstrating defects in the conclusions already reached. Case Details Case Title: Hiren Vithaldas Dhakan Versus Commissioner of Customs Citation: JURISHOUR-1279-CES-2026(DEL) Case No.: Customs Appeal No. 50353 of 2026 Date: 15.05.2026 Counsel For Appellant: Prakash Shah, Senior Advocate Counsel For Respondent: Nikhil Mohan Goyal and Shri Ranjan Prakash, Authorized Representative Click Here To Read Order Read More: Smuggled Luxury Watch Can’t Automatically Be Treated as ‘Baggage’: CESTAT

CESTAT Restores Exoneration of Jewellery Trader Luxury Watch Smuggling Case

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