2018 (2) TMI 949 - AT - Customs

Absolute confiscation - Gold - smuggling - restricted goods - penalty - Held that - the course of investigation made they submit that they have procured the gold from the dealers in open market but could not identify or could not produce any licit document for procurement of gold from the dealers in open market. As per Section 123 of the Act, the burden is on M/s. Keshavlal Khemchand to show the source of procurement of the said gold which they have failed to do so - the penalty on Keshavlal Khemchand is rightly imposed. Confiscation of Gold - Held that - the source of procurement of the gold has not been established - the gold is rightly confiscated. Appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against order confiscating gold and imposing penalties under Section 112(b) of the Customs Act 1962.

Analysis:
The case involved an appeal against an order confiscating gold recovered from a person and imposing penalties on the appellants under Section 112(b) of the Customs Act 1962. The facts revealed that intelligence indicated the person was dealing with smuggled gold. During a search, gold bars of foreign origin were found in possession of the person, who claimed to be a goldsmith receiving the gold for making ornaments from a company. However, no legal documentation was provided for the procurement of the gold. The company, when searched, admitted supplying the gold but also failed to produce proper documentation. The authorities concluded that due to the lack of legitimate documentation, the gold was liable for confiscation as smuggled goods, leading to penalties on both parties.

The appellant argued that there was no malicious intent or knowledge of the gold's smuggled nature, as the gold was procured from the company. They contended that since the gold was available in the open market and sourced from various dealers, it should not be considered smuggled. The appellant also cited a previous case to support their argument. However, the opposing party emphasized that under Section 123 of the Customs Act, the source of procurement for restricted items like gold must be provided, which the appellants failed to do. The authorities justified the confiscation and penalties based on this failure.

After hearing both sides, the judicial member found that the person receiving the gold failed to examine proper documentation before accepting it, leading to the rightful imposition of penalties. Regarding the company, they could not establish the source of procurement for the gold, as required by law, justifying the penalties imposed. The confiscation of the gold was upheld due to the failure to establish its legitimate source. The case law cited by the appellant was deemed inapplicable to the current situation, as the circumstances differed. Consequently, the appeals filed by the appellants were dismissed, upholding the impugned order of confiscation and penalties.

In conclusion, the judgment upheld the confiscation of the gold and the imposition of penalties under Section 112(b) of the Customs Act 1962, emphasizing the importance of establishing the legitimate source of restricted items like gold to avoid penalties and confiscation in such cases.