2005 (10) TMI 414 - AT - Customs

Summary

Issues Involved:
1. Legality of the seizure and confiscation of gold biscuits.
2. Burden of proof under Section 123 of the Customs Act.
3. Validity of retraction of statements by the appellants.
4. Consideration of redemption of confiscated goods.

Detailed Analysis:

1. Legality of the Seizure and Confiscation of Gold Biscuits:
On 25-8-1994, Customs officers seized four gold biscuits with foreign marks weighing 432.500 grams from the business premises of a partnership firm. The partners admitted that the gold biscuits were purchased from an unknown person and failed to provide documentary evidence of customs duty payment or lawful acquisition. Consequently, the gold biscuits were seized under Section 111(d) of the Customs Act, and penalties were imposed on the partners under Section 112(b). The adjudicating authority and the Commissioner (Appeals) upheld the decision, leading to the present appeals.

2. Burden of Proof under Section 123 of the Customs Act:
The appellants argued that they had provided documents proving the licit acquisition of the gold biscuits, shifting the burden to the Department to prove the smuggled nature of the goods. They cited several legal precedents to support their claim that establishing a preponderance of probability of lawful acquisition was sufficient to discharge their burden under Section 123 of the Customs Act. However, the Tribunal noted that the appellants, being partners, had a joint and several liability to prove the gold was not smuggled. The confessional statements of two partners, admitting the gold was smuggled, were not validly retracted, and the third partner's explanation did not convincingly establish lawful acquisition. Therefore, the Tribunal concluded that the appellants failed to discharge their burden of proof under Section 123.

3. Validity of Retraction of Statements by the Appellants:
The statements of two partners admitting the gold was smuggled were retracted after a fortnight, without any explanation for the delay or allegations of coercion by Customs officers. The Tribunal found the retractions invalid and upheld the original confessional statements. The third partner's different story and the delayed presentation of duty-paying documents did not establish a preponderance of probability of lawful acquisition, especially when the other partners did not mention the availability of such documents during the seizure.

4. Consideration of Redemption of Confiscated Goods:
The appellants argued that the lower authorities should have considered allowing the redemption of the gold biscuits on payment of a fine, citing the liberal import policy of the Government and relevant case law. The Tribunal noted that the lower authorities did not examine the redeemability of the gold biscuits and remanded this aspect to the original authority for reconsideration in accordance with law and principles of natural justice.

Conclusion:
The Tribunal upheld the confiscation of the gold biscuits and sustained the penalties imposed on the appellants, reducing the penalty on one partner to Rs. 5,000/-. The question of whether the gold biscuits could be redeemed on payment of a fine was remanded to the original authority for adjudication. The appeals were disposed of in these terms.