2017 (12) TMI 1111 - AT - Customs

Confiscation - gold bars - smuggling - penalty - Held that - the seizure of the gold biscuits and the subsequent proceedings are prima facie vitiated there being no warrant of search in the name of the appellant. Further it is apparent from the record that no reason was recorded against the appellant for any alleged evasion of Central Excise duty or evasion of any Customs duty - further the appellant have discharged the onus as required under Section 123 of the Customs Act 1962 - confiscation and penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of gold bars under Customs Act.
2. Legality of search proceedings.
3. Adjudication process timelines.
4. Onus of proof under Section 123 of the Customs Act.
5. Appeal against Order-in-Original.

Confiscation of gold bars under Customs Act:
The appeal challenged the Order-in-Appeal confirming the confiscation of two gold bars seized from the appellant's locker, along with a penalty under Section 112 of the Customs Act. The appellant claimed the gold bars were legally acquired, received as gifts, and supported this with documentary evidence.

Legality of search proceedings:
The appellant argued that the search proceedings were flawed as no search warrant was issued for the locker seized, and the search was conducted based on verbal directions. The appellant also contended that the search violated natural justice principles and fair play, citing relevant legal precedents.

Adjudication process timelines:
The appellant raised the issue of the adjudication process being time-barred as per a Board Circular, asserting that the proceedings were without jurisdiction due to delays. This was a key point in challenging the validity of the confiscation and penalty.

Onus of proof under Section 123 of the Customs Act:
The appellant successfully demonstrated the legal acquisition of the gold bars by providing purchase invoices and other supporting documents. The appellant argued that no adverse inference should be drawn as the onus under Section 123 of the Customs Act was discharged satisfactorily.

Appeal against Order-in-Original:
The appeal was filed against the Order-in-Original that confiscated the gold bars and imposed a penalty. The appellant sought relief by challenging the legality of the confiscation and penalty, emphasizing the lack of a search warrant, the lawful acquisition of the gold bars, and the timely discharge of the onus of proof.

The judgment by the Appellate Tribunal CESTAT Allahabad, delivered by Mr. Anil Choudhary, Member (Judicial), addressed various critical issues. The Tribunal found the seizure and subsequent proceedings regarding the gold bars to be flawed due to the absence of a search warrant specifically against the appellant. It was noted that no reasons were recorded against the appellant for any alleged duty evasion. The appellant's explanation of receiving the gold bars as gifts from her late mother was supported by documentary evidence, including a purchase invoice. The Tribunal also discredited the statement of the landlord regarding the existence of R.D. Jewelers, emphasizing the lack of evidentiary value. Ultimately, the Tribunal ruled in favor of the appellant, setting aside the confiscation and penalty, and ordering the return of the gold bars. The judgment highlighted the importance of procedural fairness, onus of proof under the Customs Act, and adherence to legal requirements in search proceedings and adjudication timelines.