Mere act of purchasing gold without bill is highly insufficient to confirm the grave allegations of conspiring the act of smuggling of gold.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside the penalties imposed and the confiscation of currency seized during a raid connected to an alleged gold smuggling racket.
The bench of Rachna Gupta (Judicial Member) allowed appeals stating that there was no conclusive evidence proving their involvement in the alleged smuggling conspiracy.
The case arose from a 2018 raid conducted by the Directorate of Revenue Intelligence (DRI) at a Karol Bagh jewellery shop operated by Rahul Kapoor. During the search, foreign-origin gold weighing over 31 kg and Indian currency amounting to Rs. 3.12 crore were recovered. The DRI also seized Rs. 6 lakh, Rs. 9.5 lakh, Rs. 9.34 lakh, and Rs. 3.1 lakh respectively from the four appellants, who had arrived at the shop purportedly to purchase gold.
The department alleged that the appellants were part of a criminal conspiracy to purchase smuggled gold, citing their dealings with Kapoor, who sold gold without proper documentation at prices slightly below market rates. Consequently, the Principal Commissioner of Customs (Preventive), New Delhi, ordered confiscation of their currency and imposed penalties of ₹1 lakh each under Sections 117 and 121 of the Customs Act, 1962.
The tribunal observed that the appellants were found with currency before any gold transaction occurred, thereby nullifying claims of purchasing smuggled goods. No evidence or deposition established that the appellants were aware that the gold they intended to buy was of smuggled origin. Statements from Rahul Kapoor and his partners did not implicate the appellants in the smuggling operation. The investigation and digital forensic analysis failed to produce any direct or circumstantial proof of conspiracy or abetment.
The Tribunal emphasized that mere purchase of gold without a bill does not equate to smuggling, especially without evidence of mens rea (criminal intent).
CESTAT allowed the appeals and ordered the refund of seized currency to the appellants. The penalties imposed were declared unsustainable in law, bringing the multi-year legal battle to a favorable end for the Panipat-based jewellers.
Case Details
Case Title: Rajesh Sehgal Versus Principal Commissioner of Customs Respondent Preventive, New Delhi
Case No.: Customs Appeal No. 51467 of 2022
Date: 03/07/2025
Counsel For Appellant: D.S. Chadha & Ms. Prabjyoti K. Chadha
Counsel For Respondent: V.J. Saharan
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