2005 (9) TMI 501 - AT - Customs

Confiscation and penalty - Smuggled gold - Penalty - Confiscation of gold - Foreign marked gold - Evidence - Practice - Gold - Smuggled gold

Issues Involved:
1. Confiscation of 500 gold bars under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties under Section 112 of the Customs Act, 1962.
3. Legality and credibility of the documents provided by the appellants.
4. Burden of proof under Section 123 of the Customs Act, 1962.
5. Role and liability of the carriers and employees involved.

Detailed Analysis:

1. Confiscation of 500 Gold Bars:
The Commissioner of Customs ordered the confiscation of 500 gold bars under Section 111(d) of the Customs Act, 1962, due to the suspicion that these were smuggled into India without paying import duty. The gold bars were found in the possession of various individuals who failed to produce documents proving the payment of customs duty. The appellants argued that the gold was legally acquired from authorized dealers and provided supporting documents, including invoices and delivery challans from M/s. Riddhi Siddhi Bullion Ltd. (RBL) and ABN Amro Bank. The Tribunal found that the Commissioner had overlooked credible documentary evidence, such as the letter from ABN Amro Bank confirming the sale of "CREDIT SUISSE" marked gold bars to RBL. The Tribunal concluded that the confiscation order could not be upheld as the appellants had produced sufficient evidence to prove the legal acquisition of the gold bars.

2. Imposition of Penalties:
Penalties were imposed on various individuals under Section 112 of the Customs Act, 1962, for their involvement in the transportation and possession of the gold bars. The Commissioner held that the carriers and employees were liable for penalties as they transported the gold in a concealed manner, which indicated smuggling. However, the Tribunal found that the carriers were merely employees acting under the instructions of the bullion dealers and were not aware that the gold was allegedly smuggled. The Tribunal also noted that the practice of carrying gold in shoes or waist belts was common in the bullion market and did not necessarily indicate smuggling. Therefore, the penalties imposed on the carriers and employees were set aside.

3. Legality and Credibility of Documents:
The appellants provided various documents, including invoices and delivery challans, to prove the legal acquisition of the gold bars. The Commissioner doubted the credibility of these documents, citing reasons such as the lack of specific markings on the invoices. The Tribunal, however, found that the documents were credible and supported the appellants' claims. The Tribunal noted that the practice of not mentioning specific markings on invoices was common in the bullion market and that the documents from ABN Amro Bank and RBL were not questioned by the authorities. The Tribunal concluded that the appellants had produced sufficient evidence to prove the legal acquisition of the gold bars.

4. Burden of Proof:
Under Section 123 of the Customs Act, 1962, the burden of proof lies on the person from whose possession the goods are seized to prove that the goods are not smuggled. The Tribunal found that the appellants had discharged this burden by providing credible documentary evidence of the legal acquisition of the gold bars. The Tribunal noted that the documents from authorized dealers and banks supported the appellants' claims and that the authorities had not provided any evidence to the contrary. Therefore, the Tribunal concluded that the appellants had successfully discharged the burden of proof.

5. Role and Liability of Carriers and Employees:
The Commissioner had imposed penalties on the carriers and employees for their involvement in the transportation and possession of the gold bars. The Tribunal found that these individuals were merely employees acting under the instructions of the bullion dealers and were not aware that the gold was allegedly smuggled. The Tribunal noted that the practice of carrying gold in shoes or waist belts was common in the bullion market and did not necessarily indicate smuggling. Therefore, the penalties imposed on the carriers and employees were set aside.

Conclusion:
The Tribunal concluded that the appellants had fully accounted for the gold and other articles under seizure and that there was no justification for confiscation or imposition of penalties. The appeals were allowed, and the order of the Commissioner was set aside.

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