2018 (3) TMI 32 - AT - Customs

Smuggling - Gold bars - seizure of cash and gold bars - confiscation - Held that - The gold, which was seized as per the stock register on 29.04.2014 is matching as in the closing stock gold weighing 14675.082 gm was available. Thus, the gold weighing 510.220 gm is explained. In the jewellery shop, a cash of ₹ 9,35,900/- is not unusual which is the sale proceeds. Thus, we are of the opinion that the seized gold and cash is not liable to confiscation being duly accounted. The seized cash has nothing to do with the seizure of the gold bars. The seized cash is duly accounted for and cannot be considered as the sale proceeds of the smuggled gold - Regarding seized gold, it was also reflected in the stock register and hence there is no justification to seize the gold. So, the gold of 510.220 gms. valued at ₹ 15,45,966/- released and also the cash of ₹ 9,35,900/- in favour of the owner of M/s Kunal Jewellers. Appeal allowed in part.

Summary

Issues:
Gold smuggling case involving multiple parties, confiscation of gold bars, penalties imposed, justification of penalties, ownership claims, source of gold purchase, cooperation during investigation, stock register matching, legitimacy of seized cash, release of seized gold and cash.

Analysis:

1. Confiscation of Gold Bars:
The case involved the detention of individuals with gold bars hidden in shoes and chest, confirmed to be of foreign origin. The DRI Officers seized 14 gold bars from the carriers, totaling 13999.700 gms. The Commissioner of Customs passed an order confiscating the gold bars and imposing penalties, leading to the filing of appeals by the assessee-Appellants.

2. Ownership Claims and Source of Gold Purchase:
The key person, Shri Purushottam Haribhau Kawale, claimed ownership of the gold bars but failed to explain the source of purchase adequately. The gold was claimed to be purchased from M/s S.K. Gold, Mumbai, but discrepancies were found in the quality and origin of the gold. The defaced markings on the gold bars raised suspicions of smuggling, leading to the decision of confiscation.

3. Penalties Imposed and Justification:
The employees of the jeweler, acting as carriers, were found to be aware of the illegal nature of the gold they were transporting. Penalties were rightly imposed on them. Shri Pradip Gupta and Shri Guddu Jalan, associated with the carriers, were penalized for lack of cooperation during the investigation. The penalties were modified to a lesser amount considering the circumstances of the case.

4. Legitimacy of Seized Cash and Gold:
During the investigation, gold and cash were seized from the business premises of M/s Kunal Jewellers. The seized gold and cash were presumed to be related to smuggling activities. However, upon scrutiny, it was found that the gold was duly accounted for in the stock register, and the cash was the legitimate sale proceeds of the business. Therefore, the seized gold and cash were released in favor of M/s Kunal Jewellers.

5. Conclusion:
The Tribunal partly allowed the appeals filed by the assessee-Appellants, upholding the impugned order with modifications. The decision was based on the findings related to ownership claims, source of gold purchase, cooperation during the investigation, and the legitimacy of seized cash and gold. The release of the seized gold and cash was ordered, while penalties were justified and modified accordingly.

This comprehensive analysis highlights the key aspects of the legal judgment involving a gold smuggling case, ownership disputes, penalties, and the legitimacy of seized assets, providing a detailed overview of the Tribunal's decision.