Case law

Allahabad High Court · 2 Sep 2026

Commissioner Of Customs (Preventive) Lko. vs Anand Navalchand Pugaliya

Legal principle

Reasonable belief backed by substantive evidence of foreign origin is a sine qua non for seizure and for shifting the burden of proof under Section 123; mere suspicion is insufficient, and the customs authorities must first establish that the goods were smuggled before the burden shifts to the person claiming ownership.

Court decision

The appeals were partly allowed: the substantial questions were answered in the affirmative only with respect to the three gold bars, reinstating the adjudicating authority's confiscation of the gold (holding the CESTAT's contrary finding perverse), while the orders of the Commissioner (Appeals) and CESTAT were upheld regarding the silver and cash, which were not confiscable. The penalties imposed by the adjudicating officer on the respondent and the two carriers were reduced to 50%, and Customs Appeals Nos. 2 and 3 were disposed of accordingly.

Facts

On November 28, 2020, DRI officers intercepted two carriers at Prayagraj travelling by bus from Nagpur and recovered three gold bars (2,997 grams, marked 'Valcambi Suisse 1 KG Gold 995.0') concealed in their shoes; the carriers admitted carrying smuggled foreign-origin gold for delivery on the direction of Anand Navalchand Pugaliya, proprietor of M/s Pugaliya Jewellers. A search of Pugaliya's premises yielded silver bullion weighing 2,43,640.64 grams and cash of Rs. 29,71,270/-, seized under Section 110 on the belief they were smuggled or sale proceeds of smuggled goods. The adjudicating authority ordered absolute confiscation of gold and silver under Section 111 and cash under Section 121, with penalties under Section 112(b), but the Commissioner (Appeals) set aside the confiscation and penalties, which the CESTAT affirmed. The Revenue appealed to the Allahabad High Court (Lucknow Bench) under Section 130.

Key provisions