The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, has delivered a significant ruling in a gold smuggling case, setting aside a ₹20 lakh penalty imposed on Ajit Shinde, Director of Magna Projects Pvt. Ltd., while reducing a ₹75 lakh penalty on co-accused Chetan Palgota to Rs.10 lakh citing lack of evidence.
The bench of R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) has observed that there is no evidence to clearly indicate that the appellant was having possession of the said 40 pieces of gold, as alleged, in his possession or that the said gold had been received from his physical possession, the quantum of penalty imposed on the appellant under Section 112(b) of the Act is very harsh.
The case originated from a March 2014 operation by the Directorate of Revenue Intelligence (DRI), which led to the seizure of 353 foreign-marked gold biscuits weighing 11.664 kilograms and valued at over ₹12.35 crore from a Kolkata premises. Several individuals, including Palgota, were apprehended at the scene, while investigations later drew connections to Magna Projects Pvt. Ltd.
The Commissioner of Customs (Preventive) had earlier imposed a ₹20 lakh penalty on Shinde under Section 112(b) of the Customs Act, 1962, holding him liable for abetting smuggling. However, the tribunal observed that:
- No gold was seized from Shinde’s possession.
- There was no corroborative evidence linking him to the smuggled consignment.
- Statements and call records cited by the department were either circumstantial or unrelated to the date of seizure.
- Cross-examination of key witnesses was denied, undermining natural justice.
CESTAT concluded that “no direct evidence as to the involvement of Shri Ajit Shinde has been put forward by the Investigation” and set aside the penalty entirely.
In contrast, the tribunal acknowledged that Palgota was present during the DRI raid at Munshi Sadruddin Lane, where gold was recovered. However, the Panchanama (seizure record) did not establish that the gold was seized from his physical possession. Further, requests for cross-examination of Panch witnesses and DRI officers were not properly addressed.
Noting these gaps, the bench ruled that the ₹75 lakh penalty was “harsh and disproportionate” and reduced it to ₹10 lakh, while holding that Palgota’s presence indicated some level of involvement with the smuggling syndicate.
The order highlights the importance of procedural fairness, particularly the right to cross-examination and supply of relied-upon documents in customs adjudication. The tribunal stressed that denial of such rights vitiates proceedings under the Customs Act.
The CESTAT quashed the Ajit Shinde. Penalty on Chetan Palgota: Reduced from ₹75 lakh to ₹10 lakh. The appeals were thus partly allowed, modifying the earlier adjudication order of May 2017.
Case Details
Case Title: Shri Ajit Shinde Versus Commissioner of Customs (Preventive)
Case No.: Customs Appeal No. 76482 of 2017
Date: 02.09.2025
Counsel For Appellant: N. Chowdhury
Counsel For Respondent: Tariq Sulaiman
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