2020 (1) TMI 359 - AT - Customs

Smuggling of Gold - onus to prove - whether the appellant has satisfactorily discharged his onus under Section 123 of the Customs Act, 1962 to the effect that the gold seized from him is not smuggled gold? - seizure of Gold - confiscation of Indian Currency - imposition of penalty. HELD THAT - The allegation is that the appellant has smuggled gold, which is liable for confiscation under Section 111 of the Customs Act, 1962. The gold was not seized while it was being smuggled either at the Port or at the Airport. It was seized from his shop in the City. In such cases, Section 123 of the Customs Act, 1962, provides in respect of the gold and some other notified goods, if the seizure was under reasonable belief, that they are smuggled, the onus of proving that they are not rests upon the person from whom the goods were seized. Reasonable belief - HELD THAT - The seizure was based on the information that they had received and that the documents pertaining to the gold, were not found in shop at the time of seizure. There is nothing on record to suggest that the pieces which were seized had any foreign markings. Under these circumstances, we find that there was no reasonable belief for the seizure - Further, we find that the appellant had produced various documents to show how he came in the possession of gold and these documents, on investigation, were found to be genuine. It is for this reason that the Ld. Commissioner has refrained from imposing any penalty upon the appellant under Section 114AA of the Customs Act, 1962 - not only was there no reasonable belief for seizure of the gold and the Currency in the first place, but also that the appellant has satisfactorily explained that the gold and currency which were in his possession. The confiscation of gold and the currency and imposition of penalty upon the appellant under Section 112 of the Customs Act, 1962, are, therefore, not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellant has satisfactorily discharged the onus under Section 123 of the Customs Act, 1962 regarding the seized gold.
- Whether the seizure of gold under Section 111, confiscation of Indian Currency under Section 121, and imposition of penalty under Section 112 are sustainable.

Analysis:
1. Issue of Discharging Onus under Section 123:
The case involved the seizure of gold and Indian Currency from the appellant's premises, suspected to be smuggled. The appellant failed to produce stock registers or documents proving legal possession during the search. However, he later submitted documents claiming the gold and currency belonged to other companies. The Ld. Commissioner found discrepancies in statements and held that the appellant failed to discharge the onus under Section 123.

2. Seizure and Confiscation under Sections 111 and 121:
The Ld. Commissioner ordered confiscation of the seized gold and Indian Currency under Sections 111 and 121, respectively. The appellant argued that the seizure lacked a reasonable belief of smuggling as the gold pieces did not bear foreign markings. The Tribunal noted that the seizure was not based on reasonable belief and found no foreign markings on the seized gold. The appellant provided genuine documents proving the legality of possession, leading to the unsustainability of confiscation under these sections.

3. Imposition of Penalty under Section 112:
The Ld. Commissioner imposed a penalty on the appellant under Section 112. The appellant contended that the documents submitted were genuine and not fabricated. The Tribunal agreed, stating that the appellant satisfactorily explained the possession of gold and currency, rendering the penalty unsustainable. The impugned order was set aside, and the appeal was allowed.

4. Conclusion:
The Tribunal concluded that the appellant had adequately proven the legality of the seized gold and currency, refuting the allegations of smuggling. The lack of reasonable belief in the seizure, coupled with the genuine documents provided by the appellant, led to the setting aside of the confiscation and penalty. The appeal was allowed, emphasizing the importance of meeting the burden of proof under Section 123 and the necessity of reasonable belief in seizure actions under the Customs Act, 1962.