Legal principle

A retracted statement whose maker is denied for cross-examination despite a specific request cannot be relied upon as legal evidence under Section 138B of the Customs Act, and confiscation or penalty resting solely on such inadmissible material cannot be sustained.

Court decision

The Tribunal allowed the appellant's appeal and set aside the impugned Order-in-Appeal dated 11.07.2025 in its entirety to the extent it related to Vishwajit Deshmukh; the order of absolute confiscation of the gold seized from his premises and the penalty under Section 112 were set aside in entirety, with consequential relief as per law.

Facts

DRI, acting on specific intelligence of a Nepal-Patna-Mumbai gold smuggling syndicate, intercepted two Sudanese passengers arriving by the Patna-Mumbai Janta Express and recovered about 38.76 kg (net) of 24-carat gold in paste concealed in waistcoats, valued at Rs.22.63 crore, followed by searches at Colaba forex premises of Saif Sayeed Khan and at 'Manish Gold' in Zaveri Bazaar, where owner Manish Jain admitted procuring smuggled gold from African nationals and sending it for melting. The premises of the appellant, Vishwajit Deshmukh, proprietor of M/s JD Bullion, which carried on gold melting/refining for commission, were searched and raw gold was detected and seized as liable to confiscation under Section 111 of the Customs Act, 1962. The authorities below ordered absolute confiscation of the gold seized from the appellant and imposed a penalty under Section 112, which the Commissioner (Appeals) upheld; the appellant then appealed to the CESTAT, Mumbai.

Key provisions

• Section 111, Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 112(b), Customs Act, 1962 — Penalty for improper importation of goods
• Section 138B, Customs Act, 1962 — Relevancy of statements under certain circumstances
• Section 123, Customs Act, 1962 — Burden of proof in certain cases
• Section 124, Customs Act, 1962 — Issue of show cause notice before confiscation of goods etc
• Section 2, Customs Act, 1962 — Definitions