2023 (7) TMI 1410 - AT - Customs

Smuggling - seizure of foreign origin gold and silver - Onus to prove - gold from licit means or not - reasonable belief - confiscation - Penalty - failed to produce any licit documents in support of possession/acquisition - benefit of presumption under section 123 of Customs Act 1962 - HELD THAT - Relying on the decision of this Tribunal in the case of Shri Balwant Raj Soni 2023 (5) TMI 940 - CESTAT KOLKATA we hold that the Revenue has no reasonable belief that the gold was smuggled. Therefore they have not discharged the responsibility for forming the reasonable belief under Section 123 of the Customs Act 1962 without which the burden of proof will not shift on the appellants from whom the gold has been seized . We further take note of the fact that there is no mark showing that the gold of foreign origin and purity of gold also remains between 99.5 % to 99.7 % whereas the normal foreign origin gold will be of purity of 99.99 %. Thus without coming to the belief that the gold is of the purity of 99.9 % it cannot be alleged on presumption that it is smuggled one. Evidences proving smuggling of gold from Bangladesh - The appellants have discharged their onus u/s 123 of the Customs Act 1962 by producing invoices in support of their claim that they are the owners of the gold in question. In view of the evidences and discussions we hold that the appellant has discharged the onus that the source of procurement of gold. We further take note of the fact that as the Revenue has failed to prove from the facts and circumstances of the case we have come to the conclusion that in the absence of evidence on record it cannot be held that the gold in question is of smuggled in nature therefore the same can be released to the appellants. Therefore no penalty is imposable under Section 112 (a) 112 (b) and 114AA of the Customs Act 1962. Accordingly penalties imposed on the appellants are also set aside. In the result the appeals are allowed.

Issues Involved:
1. Formation of reasonable belief u/s 123 of the Customs Act, 1962.
2. Evidence proving the gold bars/pieces were smuggled from Bangladesh.
3. Reliance on retracted statements to establish guilt.
4. Imposition of penalties on the appellants.

Summary:

Issue No. 1: Formation of Reasonable Belief u/s 123 of the Customs Act, 1962
The Tribunal examined whether the presumption u/s 123 of the Customs Act, 1962, favored the Revenue. It was alleged that the appellants were involved in smuggling gold and silver from Bangladesh, leading to searches and recoveries. The Tribunal referred to the judgment in *Shri Balwant Raj Soni*, which emphasized that the burden of proof lies with the Department, and the presumption u/s 123 does not apply if the gold is of Indian origin. The Tribunal concluded that the Revenue did not have a reasonable belief that the gold was smuggled, as there was no irrefutable evidence proving the gold's foreign origin.

Issue No. 2: Evidence Proving Smuggling from Bangladesh
The Tribunal scrutinized whether the evidence on record proved that the gold bars and pieces were smuggled from Bangladesh. The appellants produced invoices showing legal procurement from M/s Prithvi Gold. The Tribunal noted that the investigating authority did not verify the authenticity of these invoices. The appellants discharged their onus u/s 123 by providing valid documents. Thus, the Tribunal held that the evidence did not establish that the gold was smuggled.

Issue No. 3: Reliance on Retracted Statements
The Tribunal evaluated the reliance on retracted statements of the co-noticees to establish guilt. It referred to the judgment in *Shri Balwant Raj Soni*, which held that retracted statements cannot be the sole basis for establishing smuggling without independent corroboration. The Tribunal found that the Revenue's case relied heavily on such statements without additional evidence. Consequently, the Tribunal ruled that the retracted statements could not be used to prove the gold was smuggled.

Issue No. 4: Imposition of Penalties
Given the lack of evidence proving smuggling, the Tribunal concluded that the gold was not liable for confiscation. Consequently, no penalties could be imposed on the appellants u/s 112(a), 112(b), and 114AA of the Customs Act, 1962. The Tribunal set aside the penalties and allowed the appeals.

Conclusion:
The Tribunal held that the appellants successfully demonstrated the legal procurement of the gold, and the Revenue failed to prove smuggling. The gold was not liable for confiscation, and no penalties were imposable. The appeals were allowed.

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