2016 (5) TMI 174 - AT - Customs

Denial of ownership claim and imposition of penalty - Section 112(b) of the Customs Act, 1962 - Seizure of 7 gold bars concealed in the rectum - No foreign markings found on the seized gold bars - Appellant contended that the seized gold bars were made from the gold ornaments belonging to his family - Held that - none of the seized gold bars bear any foreign markings. The method of concealment of the seized gold bars in the rectum of appellant is no doubt very suspicious, but that does not establish that seized gold bars are of foreign origin. Secondly the seizure of gold bars has also not been effected in a Customs area to shift the onus on appellants. Therefore, in view of the decision of Tribunal in the case of Nand Kishore Modi v. CC(Prev.), West Bengal 2015 (10) TMI 2132 - CESTAT KOLKATA , once appellant Shri Swadesh Ch.Paul has produced the evidence of licit acquisition of 7(seven) gold bars then an enquiry was required to be made at the end of Nantu Banik, Pinky Jewellary to refute the claim of the appellant Shri Swadesh Ch. Paul. In the absence of any such investigation claimant Shri Swadesh Ch.Paul has discharged his burden that 7(seven) gold bars seized from Shri Babul Roy belonged to him and are not of foreign origin. The only evidence in the form of first statement of Shri Babul Roy, which was also subsequently retracted, cannot be made as the sole basis to hold that the seized gold bars are of foreign origin and smuggled. - Decided in favour of appellant with consequential relief

Summary

Issues Involved:
1. Ownership of seized gold bars.
2. Validity of initial and retracted statements.
3. Burden of proof regarding the smuggled nature of gold.
4. Adequacy of investigation and procedural fairness.

Issue-wise Detailed Analysis:

1. Ownership of Seized Gold Bars:
The Appellants challenged the Order-in-Appeal denying ownership of the seized gold bars. The Appellant Shri Babul Roy initially admitted the gold bars were of Bangladesh origin but retracted this statement, claiming they belonged to Shri Swadesh Ch. Paul. The latter provided a certificate from Pinky Jewellary asserting the gold was converted from family ornaments. The Tribunal noted that the Adjudicating authority failed to investigate this claim thoroughly, despite a remand order emphasizing the need for a detailed examination of ownership and the source of the gold. The Tribunal found that the Adjudicating authority relied on a prior, now-invalidated, Order-in-Appeal and did not verify the documents provided by Shri Swadesh Ch. Paul, thus failing to establish the gold's foreign origin conclusively.

2. Validity of Initial and Retracted Statements:
The Tribunal scrutinized the initial and retracted statements of Shri Babul Roy. The initial statement admitted the gold's smuggled nature, but the retraction and subsequent affidavit suggested otherwise. The Tribunal highlighted that the retraction occurred on the same day, raising doubts about the initial statement's credibility. The Tribunal also noted the lack of evidence showing any influence or pressure on Shri Babul Roy to retract his confession.

3. Burden of Proof Regarding the Smuggled Nature of Gold:
The Tribunal addressed the burden of proof, referencing the case law of Kewal Krishan v. State of Punjab, which places the onus on the person from whom the gold is seized to prove it is not smuggled if it bears foreign markings. However, in this case, the seized gold bars had no foreign markings. The Tribunal found that the Revenue failed to prove the gold's smuggled nature, as the only evidence was the retracted statement of Shri Babul Roy. The Tribunal also dismissed the local gold-smith's certification of the gold's foreign origin as unsubstantiated.

4. Adequacy of Investigation and Procedural Fairness:
The Tribunal criticized the lack of thorough investigation by the Adjudicating authority. Despite the remand order's directive for a detailed inquiry, the Adjudicating authority did not verify the documents provided by Shri Swadesh Ch. Paul or investigate the claim's validity through Pinky Jewellary. The Tribunal emphasized the need for a fair opportunity for the Appellants to defend their claims, which was not provided. The Tribunal also referenced the case law of Nand Kishore Modi v. CC(Prev.), West Bengal, which supports the notion that presenting purchase bills can discharge the burden of proving licit acquisition of gold.

Conclusion:
The Tribunal concluded that the Appellants had provided sufficient evidence of the gold's licit acquisition and that the Revenue had not proved the gold was smuggled. The Appeals were allowed, and the Tribunal ordered consequential reliefs for the Appellants. The operative part of the order was pronounced in open court.