2011 (7) TMI 73 - HC - Customs

Confiscation - Penalty - appellant had filed three affidavits of his family members and that of his own to state that the gold belonged to his wife and two daughter-in-laws - the proper officer had confirmed a reasonable belief of the gold bars being the smuggled gold ornaments and, therefore, they were seized under the Customs Act - if the provisions of Section 110 are satisfied where the proper officer would have a reason to believe that goods are liable to confiscation and is satisfied that the goods seized can be presumed to be smuggled goods and he seizes the goods, then the burden of proving otherwise would be on the person from whom the same were seized - hus, both the authorities below have based their opinions and findings on all these facts cumulatively to arrive at a conclusion that the gold seized was the smuggled goods liable to be confiscated for having been smuggled in contravention of the provisions of the Customs Act and those who purchased the gold, including the present appellant, did so with an intention to make profit knowing fully well that the same were smuggled - the amount of penalty in the instant case is very less and the additional reason why this calls for no interference is also a meager amount of penalty and the same would not require any interference in the wake of the seizure of the gold bars - Appeal is dismissed

Summary

Issues Involved
1. Legality of the confiscation of gold bars under the Customs Act.
2. Imposition of penalty under Section 112(B) of the Customs Act.
3. Validity of the seizure under Section 102 of the Code of Criminal Procedure.
4. Burden of proof regarding the smuggled nature of the gold.
5. Reliance on statements recorded under Section 108 of the Customs Act.
6. Consideration of retracted statements and affidavits.

Detailed Analysis

1. Legality of the Confiscation of Gold Bars
The appellant challenged the order of confiscation of gold bars weighing 2254.750 grams valued at Rs.7,18,857/- under Section 111 read with Section 120 of the Customs Act. The gold was seized by the Police Sub-Inspector of Jamnagar under Section 102 of the Code of Criminal Procedure and handed over to the Customs Department. The Customs Department, after forming a reasonable belief that the gold was smuggled, seized it under the Customs Act. The Tribunal confirmed the confiscation, holding that the gold was smuggled into India in contravention of the Customs Act.

2. Imposition of Penalty under Section 112(B)
The Commissioner of Customs imposed a penalty of Rs.2,00,000/- on the appellant under Section 112(B) of the Customs Act. The Tribunal upheld this penalty, stating that the appellant had the intention to make a profit from the smuggled gold, knowing fully well that it was smuggled.

3. Validity of the Seizure under Section 102 of the Code of Criminal Procedure
The appellant argued that the initial seizure under Section 102 of the Code of Criminal Procedure and subsequent handing over to the Customs Department did not constitute a seizure under Section 110 of the Customs Act. Therefore, the burden of proof should remain on the prosecuting agency. However, the Court noted that once the police handed over the seized goods to the Customs Department, the Customs authorities acted within their jurisdiction under the Customs Act.

4. Burden of Proof
The appellant contended that the burden of proof should not shift to him as the seizure was not under Section 110 of the Customs Act. The Court, however, held that the Customs Department had sufficient reason to believe that the gold was smuggled, thereby justifying the seizure under the Customs Act. The burden of proving otherwise was on the appellant, which he failed to discharge.

5. Reliance on Statements Recorded under Section 108
The appellant argued that exclusive reliance on statements recorded under Section 108 of the Customs Act was erroneous. The Court clarified that the case did not rely solely on these statements. The statements of the smugglers and purchasers, recorded under Section 108, were corroborated by other documentary evidence, establishing that the gold was smuggled.

6. Consideration of Retracted Statements and Affidavits
The appellant retracted his statement, claiming the gold belonged to his family members and presented affidavits and bills to support his claim. The Court found that the retraction and supporting documents did not undermine the overwhelming evidence against the appellant. The differences in the purity of gold and anomalies in the bills further weakened his case.

Conclusion
The High Court dismissed the appeal, upholding the confiscation of the gold bars and the imposition of the penalty. The Court found no merit in the appellant's arguments and concluded that the Customs authorities acted within their jurisdiction and based their decision on substantial evidence. The civil application was also disposed of in light of the dismissal of the appeal.