DRI To Provisionally Release Seized 5 Kg Gold: CESTAT

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad Bench, has directed the provisional release of 5 kilograms of seized gold and nearly 784 grams of gold jewellery belonging to a Gorakhpur-based jewellery firm, holding that mere allegations of smuggling and the pendency of adjudication proceedings cannot be grounds to deny provisional release under Section 110A of the Customs Act, 1962. The bench of P.K. Choudhary (Judicial Member) and P. Anjani Kumar (Technical Member) allowed the appeal filed by Suresh Chand Gupta, partner of M/s Anuradha Jewellery, and overturned orders passed by customs authorities refusing provisional release of the seized goods. The case arose from a seizure operation conducted by officers of the Directorate of Revenue Intelligence (DRI) on August 20, 2024, in Lucknow. During the operation, DRI officials intercepted Suresh Chand Gupta while he was travelling from Gorakhpur to Lucknow carrying 30 pieces of primary gold weighing 5,000 grams and gold jewellery weighing 783.780 grams. The seized gold was valued at approximately ₹3.65 crore, while the jewellery was valued at over ₹42.68 lakh. Indian currency of ₹63,000 was also seized. Following the seizure, Gupta was arrested and remained in judicial custody until December 21, 2024. After securing bail, he sought provisional release of the seized goods under Section 110A of the Customs Act. However, despite repeated representations, no decision was taken by customs authorities, forcing him to approach the Allahabad High Court. Pursuant to directions issued by the High Court, customs authorities eventually considered the request but rejected the application for provisional release. The Commissioner (Appeals) subsequently upheld that rejection, leading to the present appeal before the Tribunal. Before the Tribunal, the appellant contended that the seized gold and jewellery were being transported from Gorakhpur to Lucknow for legitimate business purposes and were part of the stock maintained by the firm. It was argued that there was no evidence whatsoever linking the goods to any foreign origin, cross-border movement, or smuggling activity. The appellant further highlighted that the firm was a registered dealer in gold, silver, and jewellery and maintained substantial inventory over several financial years. Records showed that the firm regularly held between 66 kilograms and 76 kilograms of gold jewellery stock, making the transportation of 5 kilograms of gold a routine business transaction rather than an unusual event. According to the appellant, the seized gold was duly reflected in statutory stock registers maintained under GST laws and no foreign markings were found on the gold pieces. The firm also argued that customs authorities had failed to produce any evidence establishing that the goods were smuggled or imported unlawfully. Examining the matter, the Tribunal observed that Section 110A of the Customs Act specifically permits provisional release of seized goods pending adjudication and that the provision would become meaningless if authorities routinely denied release merely because a show-cause notice had been issued. The Bench noted that the seized goods were intercepted while being transported domestically between Gorakhpur and Lucknow and not during any act of import or export. The Tribunal also recorded that the gold and jewellery were reflected in the firm's stock registers maintained under GST law. Importantly, the Tribunal held that gold is not a prohibited item under customs law. Even if customs authorities ultimately ordered confiscation, the statute itself provides for redemption of such goods on payment of redemption fine. Consequently, denial of provisional release could not be justified solely on the basis of pending allegations. The Tribunal relied extensively on the landmark judgment of the Delhi High Court in Additional Director General (DRI) v. Its My Name Pvt. Ltd., which was subsequently affirmed by the Supreme Court. In that case, the courts had held that allegations contained in a show-cause notice remain mere allegations until established through adjudication and cannot automatically justify refusal of provisional release. The Tribunal observed that if issuance of a show-cause notice alone were sufficient to deny provisional release, Section 110A would effectively become redundant. It further noted that statements recorded during investigation cannot be treated as conclusive evidence until they undergo the evidentiary safeguards contemplated under Section 138B of the Customs Act. Addressing the department's concerns, the Bench observed that gold is a notified commodity under Section 123 of the Customs Act, under which the burden lies on the person concerned to establish lawful possession. In the present case, the appellant had produced stock registers and accounting records showing that the seized gold formed part of the firm's regular inventory. The Tribunal found that the facts of the case were substantially covered by the precedent in Its My Name Pvt. Ltd. and held that the balance of convenience favoured provisional release rather than continued detention of the goods. Allowing the appeal, the Tribunal directed customs authorities to provisionally release the seized gold subject to two conditions: Firstly, execution of a bond covering the full value of the seized goods; and secondly, furnishing of a bank guarantee equivalent to 50% of the value of the gold, with an auto-renewal clause in favour of the Revenue. The Bench further ordered that upon fulfilment of these conditions, the customs department must release the seized gold within ten working days. Case Details Case Title: Shri Suresh Chand Gupta Versus Commissioner, Customs, Lucknow Citation: JURISHOUR-1556-CES-2026(ALL) Case No.: Customs Appeal No.70820 of 2025 Date: 02.06.2026 Counsel For Appellant: Vineet Kumar Singh, Advocate Counsel For Respondent: Santosh Kumar, Authorized Representative Click Here To Read Order Read More: Printing and Dyeing Services Exempt Under Mega Exemption Notification: CESTAT Quashes Service Tax Demand on Job Work

DRI To Provisionally Release Seized 5 Kg Gold: CESTAT

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