2019 (8) TMI 1639 - AT - Customs

Smuggling - Seizure of gold - Section 123 of the Customs Act, 1962 - whether Department s case is completely based on assumption and presumption? - HELD THAT - The instant case of seizure is based on a seizure of gold which is covered under Section 123 of the Customs Act, 1962 which caused an obligation on the owner to prove that it is not smuggled. In the instant case, it is on record that the seizure is made from a melting house. The gold is in cut pieces having no marking and has different purity. The claimants have submitted documentary evidence in support of the lawful possession which has not been controverted by the investigation. Thus, it is found that the claimants have duly discharged the burden of proof in terms of Section 123 of the Customs Act, 1962. On the other hand, the Department has not adduced any evidence documentary or otherwise that the gold is illegally imported. Considering the fact that gold is freely imported in the country and it is abundantly available in the market, it cannot be held that some gold found inside the Indian territory is smuggled in nature. There may be doubt and suspicion inviting investigation but cannot be sufficient for the purpose of penal action. Appeal allowed - decided in favor of appellant.

Summary

Issues: Seizure of gold under Customs Act, burden of proof on claimants, confiscation of seized gold, imposition of penalty.

In this case, the Customs Officer conducted a search at a melting owned by one individual, where gold was found in possession of multiple persons. The total seized gold weighed 2392.400 grams valued at ?59,81,000. Statements revealed that the gold belonged to different individuals for melting and conversion purposes. The Commissioner of Customs issued a show cause notice proposing confiscation of the gold and imposition of penalties under relevant sections of the Customs Act, alleging involvement in smuggling activities. The Commissioner found that the claimants failed to discharge the burden of proof under Section 123 of the Customs Act, leading to the confiscation of the gold and imposition of penalties on all four appellants.

The appellants challenged the order, arguing that the department failed to establish the seized gold as of foreign origin or smuggled. They contended that the gold had no foreign markings, and they provided evidence supporting lawful possession, shifting the burden of proving smuggling onto the department. The appellants claimed the department's case was based on assumptions and presumptions.

Upon review, the Tribunal found that the seizure was made from a melting house, with the gold in cut pieces lacking markings and having varying purity. The claimants successfully submitted documentary evidence supporting lawful possession, which remained uncontroverted by the investigation. The Tribunal noted that the department failed to provide any evidence of illegal importation of the gold, emphasizing that gold is freely imported and available in the market. Doubts and suspicions may warrant investigation but are insufficient for penal action. Consequently, the Tribunal set aside the impugned order, allowing the appeals filed by the appellants with consequential benefits.