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2006 (1) TMI 320 - AT - CustomsConfiscation of goods - Smuggled gold - Penalty - burden to prove - HELD THAT - The appellants have stated that the gold under seizure was actually purchased by Smt. G. Sumitra Devi mother of L. Vijaya Lakshmi from one Shri P. Krishnan who had bought it when he came to India from Singapore on 14-9-96 and from Shri M. Nagaraj who had bought it from MMTC Ltd. Secundrabad on 9-4-96. The baggage receipt and the original invoice were produced. A part of the gold purchased by G. Sumitra Devi was kept in bank lockers at Kurnool and Hyderabad for safe custody by Smt. L. Vijaya Lakshmi daughter of Smt. Sumitra Devi with the consent of Shri L. Eswar Reddy Son-in-law of G. Sumitra Devi and husband of Smt. L. Vijaya Lakshmi. The rest of the gold under seizure was gifted by Smt. Sumitra Devi to her daughter-in-law Smt. G. Sudha Madhuri wife of Shri G. Pratap Reddy (son of Smt. G. Sumitra Devi) who in turn kept in the bank locker of Smt. L. Vijaya Lakshmi. The Adjudicating Authority has not accepted the above version. According to the Adjudicating Authority the defence of the notice is totally fabricated. In our view since the initial burden to prove that the goods are smuggled is on the Department s the department has a responsibility to come out with positive evidence and establish the source of procurement of the gold especially when the explanation of the appellants is not accepted. The department has failed to discharge its owners u/s 123 of the Customs Act. Therefore on this point alone the order-in-original cannot be sustained. The other pleas of the appellants have not been considered. Hence we allow the appeal with consequential relief.
Issues:
1. Seizure of Foreign Marked Gold (FMG) Biscuits by Customs authorities. 2. Confiscation of seized goods under Section 111 of the Customs Act. 3. Imposition of penalty under Section 112 read with Section 114A of the Customs Act. 4. Challenge to the findings of the Adjudicating Authority. 5. Time-barred Show Cause Notice under Section 124 of the Customs Act. 6. Applicability of Section 123 of the Customs Act. 7. Burden of proof on the Department to establish source of procurement of gold. 8. Consideration of documentary evidence by the Adjudicating Authority. 9. Decision on the appeal and consequential relief. Analysis: 1. The case involved the seizure of Foreign Marked Gold (FMG) Biscuits by Customs authorities from bank lockers following their initial seizure by the Anti-Corruption Bureau. The Customs officers seized the goods under Section 110 of the Customs Act, believing them to be liable for confiscation under Section 111 of the Act. 2. The Adjudicating Authority, after issuing Show Cause Notices under relevant sections of the Customs Act, confiscated the gold valued at Rs.13.98 lakhs and imposed penalties on the appellants under Section 112 read with Section 114A of the Act. The Authority held that the appellants failed to discharge the burden of proof under Section 123 of the Customs Act to prove that the seized gold was not smuggled goods. 3. The appellants challenged the findings of the Adjudicating Authority, arguing that the Show Cause Notice was time-barred as it was issued beyond the six-month period stipulated by law. They contended that the Corrigendum issued to the Notice was inadmissible as it changed the character of the original document. 4. The learned CA for the appellant argued that the appellant, a responsible government servant, provided an explanation for how the gold came into his possession, thereby discharging the burden of proof. He cited case laws to support the argument that the Department must prove the goods are smuggled. 5. The Adjudicating Authority did not accept the documentary evidence presented by the appellant regarding the origin of the seized goods. The Tribunal observed that the Department failed to discharge its burden under Section 123 of the Customs Act to establish the source of procurement of the gold, especially when the appellants' explanation was not accepted. 6. The Tribunal held that since the Department failed to provide positive evidence to establish the source of procurement of the gold, the order-in-original confiscating the goods could not be sustained. Consequently, the appeal was allowed with consequential relief, emphasizing the Department's responsibility to meet the burden of proof in such cases.
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