2019 (1) TMI 450 - AT - Customs

Penalty u/s 112 of CA - Smuggling - 1 KG gold bar - illegal possession and transaction of smuggled foreign gold bars - penalty upheld on the ground that appellant had not proved beyond doubt that gold bar is a legally imported one - Held that - The gold bar in question was not seized in a customs area. However, as per the provisions of Section 123, which inter alia apply to gold, where any goods specified therein are seized under reasonable belief that they are smuggled goods, then the burden of proving that they are not smuggled goods shall be either on the person from whose possession the goods were seized or the person, if any, who claims to be the owner of the gold - The only fly in the ointment is that there is a definite discrepancy in the markings found on the impugned gold bar vis- -vis markings on the gold bars imported by MMTC Ltd., Chennai. The claim of having acquired and being in possession of legally imported gold bar, will surely crumble - based on the facts on record, the burden of proving that the gold is not smuggled is inter alia on the appellants herein and secondly, such a burden has not been satisfactorily cast off - imposition of penalty under Section 112 of the Customs Act, 1962 on the appellant is very much justified - quantum of penalty reduced from ₹ 1,50,000/- imposed to ₹ 50,000/- - appeal allowed in part.

Summary

Issues:
1. Alleged possession and transaction of smuggled foreign gold bars.
2. Confiscation of goods under Section 111 and imposition of penalties under Section 112 of the Customs Act, 1962.
3. Burden of proof under Section 123 of the Customs Act, 1962.
4. Discrepancy in markings on the gold bar.
5. Applicability of Section 112 for penalty imposition.

Analysis:

Issue 1: Alleged possession and transaction of smuggled foreign gold bars
The case involved the seizure of a gold bar with foreign markings from an individual who was alleged to be involved in possession and transaction of smuggled foreign gold bars. The original authority ordered the confiscation of the gold bar and imposed a penalty on the appellant. The Commissioner (Appeals) upheld the penalty, leading to the appellant appealing to the forum.

Issue 2: Confiscation of goods under Section 111 and imposition of penalties under Section 112
The original authority concluded that the transaction of the gold bar on credit basis was not acceptable in normal trade, indicating a malafide intention of dealing with smuggled gold. The appellant claimed to have purchased the gold bar in the normal course of business, but discrepancies in the markings raised suspicions. The forum found that the burden of proving the gold was not smuggled was on the appellant, and as this burden was not satisfactorily discharged, the gold was liable for confiscation under Section 112.

Issue 3: Burden of proof under Section 123
The burden under Section 123 of the Customs Act, 1962 is rebuttable, and the burden is not as heavy as that of the prosecution. The appellant argued that the burden had not been shifted to the department to prove that the gold was smuggled. However, the forum found that the burden of proving the gold was not smuggled was on the appellants, and this burden was not satisfactorily discharged.

Issue 4: Discrepancy in markings on the gold bar
There was a notable discrepancy in the markings on the seized gold bar compared to the markings on gold bars imported by a specific entity. The appellant's argument that the discrepancy was only a suspicion without substantive proof was not accepted by the forum, as the burden of proof had not been discharged adequately.

Issue 5: Applicability of Section 112 for penalty imposition
The forum held that the imposition of a penalty under Section 112 of the Customs Act, 1962 on the appellant was justified. However, considering the appellant's role compared to other implicated persons, the penalty was reduced from &8377;1,50,000 to &8377;50,000. The forum found that the appellant had not satisfactorily discharged the burden of proof regarding the legality of the gold bar's importation.

This detailed analysis covers the key issues involved in the legal judgment, highlighting the arguments presented by both sides and the forum's ultimate conclusions based on the facts and legal provisions.