2020 (9) TMI 177 - AT - Customs

Smuggling - Gold - Silver - silver coins - currencies - foreign origin - party receipts and invoices submitted belatedly were fabricated - Confiscation - redemption fine - penalty - HELD THAT - On 04-08-2015, the Officers of the Department searched the premises of Sri Ratan Kumar Shah (Appellant No.1) and recovered three cut pieces of gold and some quantity of silver and silver coins along with Indian Currency and Nepali Currency, which has been reflected in the Seizure List prepared in the Customs Office at Forbeshganj. The Seizure List shows the total value of the gold, silver and currencies, which comes to ₹ 40,80,158/-. The Officers did not take the jewellery from the shop premises of the Appellant No.1. Also, the Appellant No.1 was kept in the custody of the Customs Authority in the Customs Office for the period from 04-08- 2015 to 07-08-2015 and he was allowed to leave the Customs House on 07-08-2015 on furnishing Bail Bond. This is a case of seizure from the shop premises/a case of town seizure by Customs Officials and not from any Port or Airport while being smuggled. Since the appellant was ill, he could not take steps for release of the seized goods. There is no evidence also to show that the goods were actually having any foreign markings. The Essay Certificate dated 07-10-2015 do not also suggest the gold were of foreign origin since the purity was in the range of 992.8 to 993.6. The imported gold generally is having purity of 999 per mille. It is very difficult to hold that the gold were smuggled one. The documents submitted by the Appellant No.1 appear to be genuine and on submission of the documents he has discharged the burden under Section 123 of the Customs Act, 1962. There is no evidence on record to show that the seller Shri Ratan Lal Soni of Shri Balaji Impex was an active collaborator in this transaction, rather Department did not proceed to investigate in respect of the purchase documents submitted by Shri Ratan Lal Soni during investigation showing purchase of imported gold from different importers. Since the Appellant No.1 had discharged the burden, the confiscation cannot be held to be legal and proper. Redemption fine and penalty - HELD THAT - Without going into the proper determination of redemption fine, I am inclined to hold that redemption fine is not required to be paid since the confiscation under Section 111(a) and (b) of the Customs Act, 1962 in respect of gold and silver has been held to be not maintainable as also confiscation of Indian Currency and Nepali Currency are held to be not maintainable under Section 121 of the Customs Act, 1962, in the absence of evidence that the said currencies are the sale proceeds of the smuggled goods - Since, I find confiscation is not maintainable, the imposition of penalty is also not maintainable apart from being not maintainable for imposing composite penalty. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Confiscation of gold, silver, and currencies.
2. Imposition of penalties on the appellants.
3. Validity of the documents submitted for the gold and silver.
4. Determination of the origin of the seized gold and silver.
5. Legality of the confiscation of Indian and Nepali currencies.

Detailed Analysis:

1. Confiscation of Gold, Silver, and Currencies:
The Adjudicating Authority confiscated the gold, silver, and currencies valued at ?40,80,158/- under Sections 111(a) and 111(b) of the Customs Act, 1962, alleging that they were of foreign origin and smuggled. The appellant was given the option to redeem the goods on payment of a redemption fine of ?12,24,048/- and penalties were imposed on both appellants. The Tribunal found that the confiscation was based on assumption and not supported by valid evidence. The documents provided by the appellant No.1, including invoices and statements from the seller (Shri Balaji Impex), were found to be genuine. The Tribunal held that since the goods were supported by valid documents, the burden under Section 123 of the Customs Act, 1962, was discharged, and the confiscation was not maintainable.

2. Imposition of Penalties on the Appellants:
Penalties of ?4,00,000/- on Appellant No.1 and ?2,00,000/- on Appellant No.2 were imposed under Sections 112(a), 112(b)(ii), and 114AA of the Customs Act, 1962. The Tribunal found no evidence of abetment or illegal importation by Appellant No.2 and noted that the penalties were composite in nature, which is not legally tenable. The Tribunal set aside the penalties, stating that the confiscation itself was not maintainable, thus the penalties could not be imposed.

3. Validity of the Documents Submitted for the Gold and Silver:
The appellant No.1 submitted invoices from Shri Balaji Impex, which were accepted by the seller. The Tribunal noted that the seller provided purchase documents from different importers and confirmed the transaction. The Adjudicating Authority’s doubt about the documents was found to be based on speculation. The Tribunal emphasized that documentary evidence prevails over oral evidence and found that the appellant had discharged the burden under Section 123 of the Customs Act, 1962.

4. Determination of the Origin of the Seized Gold and Silver:
The Department alleged that the gold bars had markings indicating foreign origin (Rand Refinery Mark - 9950). However, the Tribunal found no evidence to support that the gold was of foreign origin. The purity of the gold was within the range of 992.8 to 993.6, which does not typically indicate smuggled gold. The Tribunal also noted that the seller did not mention any markings or country of origin in the invoices. Thus, the Tribunal concluded that the gold and silver were not proven to be of foreign origin.

5. Legality of the Confiscation of Indian and Nepali Currencies:
The Tribunal found no evidence that the Indian and Nepali currencies were the sale proceeds of smuggled goods. The appellant provided explanations for the currencies, which were not rebutted by the Department. The Tribunal held that the confiscation of the currencies under Section 121 of the Customs Act, 1962, was not maintainable.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals of both appellants with consequential relief. The confiscation of gold, silver, and currencies was deemed not maintainable, and the penalties imposed were also set aside. The Tribunal emphasized the importance of documentary evidence over assumptions and found that the appellants had discharged their burden under Section 123 of the Customs Act, 1962.

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