2013 (11) TMI 1231 - AT - Customs

Import of gold sovereigns - Appellant failed to produce any documentary evidence in support of licit acquisition/possession and/or importation of the said gold sovereigns, and also reasonably explain the possession of the said currency, the gold sovereigns were seized by the officers on the reasonable belief that these were smuggled and liable to confiscation under Customs Act, 1962 and also for contravention of the provisions of Gold Control Act, 1968 - Confiscation u/s 121 - Seizure u/s 119 - Penalty u/s 112 - Held that - apparently it may appear plausible answer that such sovereign gold coins bearing inscriptions of period prior to independence might have been possessed by his family members prior to independence, but when the officers, on a specific information initiated investigation and questioned about its licit possession on its seizure from the possession of the appellant in a bullion market, not from his house or any of his or family members bank lockers. Burden is heavier on the Appellant to establish the licit possession of the said gold coins through cogent and reliable evidences. However, on analysis of the evidences on record, I find that the approach of the appellant is ambivalent and incoherent. Initially when the goldcoins were recovered from his possession, while he was in a bullion shop, his instant reaction was that the gold coins had been procured by him from the open market but failed to disclose the name of the shops/vendors. Similarly, the explanation on the possession of Indian currency as proceeds of sale of silver, were on investigation later found to be false. Thus, the Appellant has miserably failed to discharge the burden and also in establishing the second line of defense that it belonged to their family properly which fact has been found to be untrue from a categorical statement dated 12.6.1987of his elder brother, which the Appellant never disputed not the same has been retracted at any point of time. Mere declaring the value of the gold coins and reflecting the same in their Income Tax Returns would not ipso facto establish that these gold coins were acquired/possessed licitly by him. Also, ongoing through the said Income Tax Returns, I find that the same were filed after the date of seizure of the gold coins, hence, could not be of much assistance to the claim of the Appellant that these were their family property. Besides, I agree with the Ld. A.R. for the Revenue that exoneration from the charges under the Gold Control Act, would not automatically be applicable to the proceedings initiated under the Customs Act,1962 as the object and purpose of these Acts are different - Following decision of ANNAPURNA YARN FABRICS Versus COMMISSIONER OF CUS. (PORT), KOLKATA 2002 (5) TMI 178 - CEGAT, KOLKATA - Decided against assessee.

Summary

Issues Involved:
1. Legitimacy of the possession of 45 gold sovereigns and Indian currency of Rs.20,000 by the appellant.
2. Validity and reliability of the appellant's retracted statement.
3. Applicability of the Gold Control Act versus the Customs Act.
4. Burden of proof regarding the licit possession of gold coins of foreign origin.
5. Impact of Income Tax Returns on establishing licit possession of the gold coins.
6. Confiscation of Indian currency as proceeds of contraband goods.

Detailed Analysis:

1. Legitimacy of the possession of 45 gold sovereigns and Indian currency of Rs.20,000 by the appellant:
The appellant was intercepted by Customs Officers with 45 gold sovereigns weighing 301.450 grams and Indian currency of Rs.20,000. The appellant failed to produce any documentary evidence supporting the licit acquisition/possession or importation of the gold sovereigns and could not reasonably explain the possession of the currency. The gold sovereigns were seized on the reasonable belief that they were smuggled and liable to confiscation under the Customs Act, 1962, and the Indian currency was seized on the belief that it was the sale proceeds of smuggled contraband.

2. Validity and reliability of the appellant's retracted statement:
The appellant's statement dated 03.06.1987, wherein he disclosed the source of the gold sovereigns and Indian currency, was later retracted. The principle of law on the validity and reliability of a retracted statement is well settled: retraction diminishes its evidentiary value but does not discard it entirely. The statement was not a confessional one but provided information on the source of the gold coins. The appellant's retraction on 13.06.1987 did not provide any material information disclosing the correct source of the gold coins, hence the retraction did not help the appellant's case.

3. Applicability of the Gold Control Act versus the Customs Act:
The proceedings under the Gold Control Act were dropped, but the confiscation under the Customs Act was upheld. The Customs Act requires establishing the licit procurement of even one gram of gold of foreign origin through cogent evidence. The object and purpose of the Gold Control Act are different from those of the Customs Act. The former deals with licensing and procedural control over possession, while the latter focuses on preventing smuggling.

4. Burden of proof regarding the licit possession of gold coins of foreign origin:
The burden of proving the licit possession of the gold coins, being goods of foreign origin, rests on the appellant under Section 123 of the Customs Act. The appellant's initial claim was that the gold coins were procured from the open market, but he failed to name the vendors. The subsequent claim that the gold coins were family property was also found to be false based on the statement of the appellant's brother. The appellant's inconsistent and incoherent explanations failed to discharge the burden of proof.

5. Impact of Income Tax Returns on establishing licit possession of the gold coins:
The appellant argued that the gold coins were ancestral family property and were declared in Income Tax Returns. However, merely declaring the value of the gold coins in Income Tax Returns does not establish their licit possession. The Income Tax Returns were filed after the seizure, which diminishes their relevance in proving lawful possession.

6. Confiscation of Indian currency as proceeds of contraband goods:
The appellant's explanation for the possession of Rs.20,000 was that it was the proceeds from the sale of silver. However, the vendors named by the appellant denied any transactions with him. The appellant failed to establish the licit source of the currency, justifying its confiscation under Section 121 of the Customs Act.

Conclusion:
The appeal was dismissed, and the order of the Commissioner (Appeals) was upheld. The confiscation of the gold sovereigns and Indian currency was deemed legal and proper. The appellant failed to discharge the burden of proof regarding the licit possession of the gold coins and the source of the currency. The retracted statement did not aid the appellant's case, and the proceedings under the Customs Act were justified despite the dropping of charges under the Gold Control Act.