2007 (3) TMI 648 - AT - Customs

Summary

Issues:
Appeal against Order-in-appeal confiscating seized diamonds, foreign currency, and imposing penalties.

Analysis:
1. The case involves the confiscation of seized diamonds and foreign currency, along with penalties imposed on various individuals. The appellant, as the owner of the confiscated diamonds, was penalized under Section 112 of the Customs Act, 1962.

2. The customs officers raided the business premises of the appellant based on information and found polished diamonds and foreign currency. The appellant and others failed to provide any explanation or documents for possessing the diamonds, leading to seizure. A show cause notice was issued for confiscation under the Import Export Control Act and Customs Act, 1962.

3. The appellant argued that the diamonds were de-notified from the provisions of the Customs Act after the seizure, shifting the burden of proof to the Department to establish smuggling. The Income Tax department's re-assessment found no income suppression related to the diamonds, supporting the appellant's claim of legitimate possession.

4. The appellant's advocate contended that the authorities failed to verify the accounts and documents provided by the appellant, contradicting the findings of the lower authorities. The Division Bench's decision in a similar case emphasized the Department's burden to prove smuggling post de-notification of goods.

5. The Commissioner (Appeals) found the appellant did not account for the seized diamonds and lacked proper documentation. However, the appellant's submissions and records indicated otherwise, challenging the findings of non-accountability.

6. Considering the de-notification of diamonds from Section 123 of the Customs Act, the burden of proof shifted to the Department. The Division Bench's precedent highlighted that once goods are de-notified, the appellant is not obligated to prove non-smuggling, which was applicable in the current case.

7. The Tribunal found that the Department failed to provide evidence of smuggling post de-notification, leading to the setting aside of the confiscation of diamonds and penalties imposed on the appellant. The accountability of the seized diamonds was justified by the appellant's records, aligning with the Division Bench's decision.

8. The confiscation of foreign currency was upheld due to the unconvincing explanation provided by the appellant regarding its possession. However, the penalty on the appellant for the currency confiscation was not imposed, considering the circumstances.

9. The Tribunal allowed the appeal partly, setting aside the confiscation of diamonds and associated penalties, while upholding the confiscation of foreign currency. The decision was based on the Division Bench's ruling and the lack of evidence proving smuggling post de-notification.

10. The judgment was pronounced on 16-3-2007, granting relief to the appellant in light of the legal principles and evidence presented during the proceedings.