2002 (12) TMI 547 - AT - Customs

Issues Involved:
1. Confiscation of precious stones of foreign origin.
2. Confiscation of Indian currency under Section 121 of the Customs Act, 1962.
3. Imposition of personal penalty under Section 112 of the Customs Act, 1962.
4. Validity of the valuation report and expert opinion.
5. Right to cross-examination of the Government-approved valuer.
6. Burden of proof regarding the foreign origin of goods.
7. Procedural compliance under Section 105 of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Confiscation of Precious Stones of Foreign Origin:
The Commissioner ordered the confiscation of precious stones valued at Rs. 1,50,13,475.00 under Section 111 of the Customs Act, 1962, giving an option to redeem the same on payment of a fine and Customs Duty. However, the Tribunal found that the foreign origin of all goods was not conclusively proven. The statement of Shri Satish A. Mehta, who falsely claimed to be the Manager of a non-existent firm, could not be relied upon. The certification by the Government-approved valuer was also not accepted due to the lack of cross-examination. Consequently, the confiscation under Section 111 was set aside.

2. Confiscation of Indian Currency:
The Commissioner ordered the confiscation of Indian currency amounting to Rs. 6,98,880.00 under Section 121 of the Customs Act, 1962, alleging it to be the sale proceeds of smuggled goods. However, the Tribunal found no evidence proving the currency was linked to smuggled goods. Therefore, the confiscation of the currency was set aside.

3. Imposition of Personal Penalty:
Personal penalties of Rs. 15.00 lakhs each were imposed on Shri Sachin A. Mehta and Shri Satish A. Mehta under Section 112 of the Customs Act, 1962. Since the confiscation of precious stones and Indian currency was not upheld, the imposition of personal penalties was also set aside.

4. Validity of the Valuation Report and Expert Opinion:
The valuation report by M/s. S.K. Mehta & Co., a Government-approved valuer, was challenged by the appellants. The Tribunal noted that the valuer was not produced for cross-examination, thus invalidating the certification regarding the foreign origin of the goods.

5. Right to Cross-Examination of the Government-Approved Valuer:
The appellants' request to cross-examine the valuer was denied by the Commissioner. The Tribunal highlighted the importance of cross-examination in establishing the credibility of the valuer's report, which was not adhered to in this case.

6. Burden of Proof Regarding the Foreign Origin of Goods:
The Tribunal reiterated that the burden of proving the smuggled nature of goods lies with the Customs authorities. The investigations did not conclusively establish the foreign origin or illegal importation of the precious stones. The Tribunal cited legal precedents to support the principle that the burden of proof shifts to the assessee only when the Department discloses all evidence against them.

7. Procedural Compliance Under Section 105 of the Customs Act, 1962:
The Tribunal observed that there was no evidence that the records of the seizure were produced before the Collector, as mandated by Section 105(2) of the Customs Act, 1962. This procedural lapse was noted but assumed to have been corrected since the seizure was not set aside by the Collector.

Conclusion:
The Tribunal set aside the orders of confiscation of precious stones and Indian currency, and the imposition of penalties on both appellants. The appeals were allowed, emphasizing the need for concrete evidence and procedural compliance in customs adjudications.

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