2020 (1) TMI 315 - AT - Customs

Smuggling - Gold converted into ornaments - authority of CISF Officer to intercept the gold - reliability on statements - corroborative statements - Seizure - Absolute Confiscation - penalty - HELD THAT - The entire case was made out by the department as smuggled gold on the basis of conjecture and surmises that the seized gold bangles were made out of smuggled gold converted into ornaments. There are no direct or indirect link in support of the allegation of the department. The Investigating Officer should have enquired the matter in detail in support of their allegation. It appears that the Investigating Officer in the present case had merely proceeded on the basis of the initial statement and have not examined the details thoroughly. They have not investigated even the Invoices submitted by the appellants with the proper local authorities. In such situation, the seizure of gold bangles worn by the Appellant No. 1, cannot be sustained. It is significant to note that the entire case is made out on the basis of statement of Appellant No. 1 - The other statements including Appellant No. 1 s subsequent statement and purchase documents were discarded as afterthought. Apparently, the statement dated 23.06.2017 of Appellant No. 1 is uncorroborative in nature. The gold bangles cannot be held to be of smuggled nature. Hence, the confiscation of the gold bangles and imposition of penalties are not justified - Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Authority of CISF to intercept gold.
2. Reason to believe for seizure under Customs Act, 1962.
3. Ownership and origin of the seized gold bangles.
4. Evidentiary value of initial and subsequent statements.
5. Validity of purchase documents and their timing.
6. Allegation of smuggling based on gold purity.

Detailed Analysis:

1. Authority of CISF to intercept gold:
The appellants argued that the CISF had no authority to intercept the gold bangles. However, the Tribunal found that the CISF officers, upon suspecting smuggling, appropriately handed over the appellant and the gold to the Customs authorities. The objection regarding the CISF's authority was dismissed as the CISF acted within their duty to report suspicious activities to Customs.

2. Reason to believe for seizure under Customs Act, 1962:
The Customs authorities seized the gold bangles under the belief that they were smuggled into India. The Tribunal noted that the CISF had reasonable suspicion, leading to the involvement of Customs. The initial suspicion and subsequent actions by Customs were deemed lawful.

3. Ownership and origin of the seized gold bangles:
The appellants claimed the gold bangles were family property inherited by Appellant No. 2. Multiple statements from family members supported this claim, stating the gold was ancestral and intended for sale due to financial hardship. The Tribunal found these statements consistent and credible, contrasting with the initial statement given under duress by Appellant No. 1.

4. Evidentiary value of initial and subsequent statements:
The initial statement by Appellant No. 1, made on 23.06.2017, suggested involvement in smuggling. However, subsequent statements from various family members, including Appellant No. 1, provided a consistent narrative of the gold's legitimate origin. The Tribunal emphasized that the initial statement alone, without corroborative evidence, could not substantiate the smuggling allegation.

5. Validity of purchase documents and their timing:
The appellants produced purchase documents from "Ram Thakur Jewellery" to substantiate their claim. The Customs authorities dismissed these as afterthoughts, noting discrepancies and the non-existence of the shop. However, the Tribunal found that the documents, dating back to 1988-1991, were credible and that the Customs officers failed to verify the shop's historical existence adequately.

6. Allegation of smuggling based on gold purity:
The Show Cause Notice alleged that the high purity of the gold bangles (99.47% to 99.49%) indicated smuggling, as such purity is uncommon in jewelry. The Tribunal found this reasoning speculative and unsupported by direct evidence. The purity alone was insufficient to prove smuggling without corroborative evidence.

Conclusion:
The Tribunal concluded that the entire case was built on conjecture and surmises without substantial evidence. The initial statement of Appellant No. 1 was not corroborated by further investigation, and the subsequent consistent statements and purchase documents provided by the appellants were credible. The confiscation of the gold bangles and the imposition of penalties were not justified. The appeals were allowed, and the impugned order was set aside, granting consequential relief to the appellants.

Order Pronounced:
The judgment was pronounced in the open court on 06 January 2020.

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