2013 (6) TMI 346 - HC - Customs

Confiscation of Gold - gold with foreign marks - illicit nature of the gold - onus to prove - Held that - The scope of Section 123 of the Customs Act, 1962 was discussed by the Supreme Court in Union of India & Ors. v. Rajendra Prabhu & Anr., 2001 (3) TMI 97 - SUPREME COURT OF INDIA . It was held that where the authorities on the basis of materials on record, which may be sufficient in the circumstances of the case came to conclusion that gold biscuits have been in possession of the respondents were liable for confiscation and respondents committed offence under Section 112, even without taking option of presumption under Section 123, the department could have directed confiscation as the burden in such case falls upon the person from whose possession such gold biscuits of foreign markings were seized. Regarding 16 pieces of gold comprising of eight gold biscuits recovered from beneath the grass of the lawn attached to the premises, the suspicion of the authorities cannot be doubted. The concealment of these gold pieces with foreign markings were sufficient to create reasonable believe that the gold being of foreign origin, in the absence of any evidence of their valid import was smuggled gold. The burden thus under Section 123 (1) was on the appellant to prove that the goods were either non-foreign origin or were validly purchased. - Decided against assessee.

Issues Involved:

1. Confiscation of gold biscuits and pieces under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties under Section 112 of the Customs Act, 1962.
3. Validity and admissibility of statements recorded under Section 108 of the Customs Act, 1962.
4. Burden of proof under Section 123 of the Customs Act, 1962.
5. Request for cross-examination of witnesses and experts.
6. Application for rectification of mistakes in the CESTAT order.

Detailed Analysis:

1. Confiscation of Gold Biscuits and Pieces under Section 111(d) of the Customs Act, 1962:

The Customs Appeal arose from the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which upheld the confiscation of 1681.500 grams of gold biscuits and pieces. The gold was treated as having foreign marks, and the appellant failed to prove the licit nature of the gold. The Addl. Commissioner, Customs and Central Excise, Kanpur, had ordered the confiscation under Section 111(d) of the Customs Act, 1962, and imposed penalties.

2. Imposition of Penalties under Section 112 of the Customs Act, 1962:

Penalties of Rs. 50,000/- each were imposed on two individuals. The Commissioner (Appeals) and CESTAT upheld these penalties, emphasizing that the appellants failed to provide evidence of lawful import or acquisition of the gold. The concealment of gold pieces and foreign markings created a reasonable belief that the gold was smuggled.

3. Validity and Admissibility of Statements Recorded under Section 108 of the Customs Act, 1962:

The statements recorded under Section 108 were considered valid and admissible. The adjudicating officer relied on the Supreme Court judgments, which held that such statements could form the basis for conviction if believed to be voluntary and true. The burden of proof was on the accused to show that the statements were not voluntary. The retraction of statements by one of the individuals was not accepted as it was not addressed to the officer to whom the statement was given.

4. Burden of Proof under Section 123 of the Customs Act, 1962:

The burden of proof under Section 123(1) was on the appellant to prove that the goods were either non-foreign origin or were validly purchased. The adjudicating authority and CESTAT found that the appellant failed to discharge this burden. The concealment of gold pieces with foreign markings was sufficient to create a reasonable belief that the gold was smuggled.

5. Request for Cross-Examination of Witnesses and Experts:

The request for cross-examining the assayer and panch witnesses was not accepted. The assayer's report was considered sufficient proof, and the experts are generally not allowed to be cross-examined. The two jewellers, whose statements were recorded, were not relied upon by the prosecution, and thus their cross-examination was not deemed necessary.

6. Application for Rectification of Mistakes in the CESTAT Order:

The application for rectification of mistakes in the CESTAT order was rejected. The CESTAT found no errors on the face of the records warranting recall of the order and rehearing the appeal. The application was based on hearsay and not supported by any affidavit of the counsel. The non-acceptance of submissions does not constitute errors or mistakes apparent on the face of records.

Conclusion:

The High Court dismissed the customs appeals, finding no error in the reasoning given by the customs authorities and the Tribunal. The appellant failed to discharge the burden of proof regarding the lawful acquisition of the gold. The statements recorded under Section 108 were rightly accepted, and the request to send the gold to the mint for ascertaining its purity and origin was not considered at this stage. The confiscation of gold and imposition of penalties were upheld.

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