2020 (1) TMI 483 - AT - Customs

Smuggling - Gold Bullion - gold moved for the purpose of melting/re-melting - confiscation on reasonable belief that the goods were illegally imported into India through unauthorized route without any valid documents - HELD THAT - The adjudicating authority has taken the view that the claim of lawful acquisition of the subject gold by M/s. Anjani Gold Private Limited, dealing with in Gold Bullion for years and handing over gold of such high value to a person without any written agreement is surprising and unacceptable. Non-mentioning of marks brand as found on two gold biscuits in the Tax Invoice and holding the subject gold for about three months in a stock was observed as deceitful attempt to salvage the seized gold. Learned Commissioner in passing the impugned order did not find that the burden of proof as envisaged under Section 123 of the Customs Act, 1962 had been discharged by the appellant. The appellant is the Director of a Company admittedly dealing with gold bullion. It is also on record that apprehension of Shri Amol Deshmukh with the subject gold was not brought to the notice of the claimant before he was produced to the Judicial Magistrate under arrest. On perusal of the statements recorded by the Revenue, it reveals that at no point of time ownership of the gold was agitated. The seized gold was duly recorded in the Books of Accounts of M/s. Anjani Gold Private Limited which was admittedly computerized. The purchase invoice issued by State Bank of India showing that 198015.52 grams in Customs auction is also not disputed by the Revenue - the obligation under Section 123 of the Customs Act, 1962 has been discharged by the claimant of the gold. The revenue has not been able to adduce any evidence to prove that the subject gold has been illegally imported by the appellants and the order of confiscation under Section 111(b) and under Section 111(d) of Customs Act is not sustainable as imposition of penalty under Section 112 is consequential to confiscation of goods under the Customs Act - imposition of penalty on the Director of a Company without making the Company a party to the proceeding is not justifiable and accordingly set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of seized goods under the Customs Act.
2. Imposition of penalties under various sections of the Customs Act.
3. Burden of proof on the appellants.
4. Justifiability of penalizing the Director of a Company without involving the Company in the proceedings.

Analysis:

Issue 1: Confiscation of seized goods under the Customs Act
The case involved the apprehension of an individual with gold biscuits, leading to the seizure of the goods under Section 110 of the Customs Act, 1962. The Customs authorities proposed confiscation of the seized goods under Sections 111(b) & 111(d) of the Act. The adjudicating authority ordered absolute confiscation of the gold and imposed penalties on the individuals involved. However, the Tribunal found discrepancies in the handling and verification of the seized goods, questioning the delay in seizing the gold after a customs auction and the lack of proper documentation. The Tribunal held that the burden of proof under Section 123 of the Customs Act had not been discharged by the appellants, leading to the order of confiscation being set aside.

Issue 2: Imposition of penalties under various sections of the Customs Act
Penalties were imposed under Sections 112(b) and 114AA of the Customs Act on the individuals involved in the case. The Tribunal noted that the penalties were consequential to the confiscation of goods under the Act. However, since the order of confiscation was set aside due to lack of proof and discrepancies in handling the seized goods, the imposition of penalties was deemed not sustainable. The Tribunal further highlighted that penalizing the Director of a Company without involving the Company in the proceedings was not justifiable, especially when the confiscation of goods was set aside.

Issue 3: Burden of proof on the appellants
The Tribunal emphasized that the appellants, being a Company dealing with gold bullion, had discharged their obligation under Section 123 of the Customs Act. The seized gold was properly recorded in the Company's Books of Accounts, and the purchase invoice from the State Bank of India was not disputed. The Tribunal found that the revenue had failed to provide evidence of illegal importation by the appellants, leading to the conclusion that the burden of proof had been met by the claimant of the gold.

Issue 4: Justifiability of penalizing the Director of a Company without involving the Company
The Tribunal set aside the imposition of penalties on the individuals involved, highlighting that penalizing the Director of a Company without making the Company a party to the proceedings was not justifiable. Moreover, when the confiscation of the seized goods was overturned, penalization of the appellants was deemed not maintainable. The Tribunal allowed the appeals, providing consequential relief to the appellants and dismissing one appeal as infructuous.

In conclusion, the Tribunal's decision revolved around the lack of proper documentation, discrepancies in handling the seized goods, and the failure of the revenue to prove illegal importation, leading to the setting aside of the order of confiscation and penalties imposed on the individuals involved.