2021 (5) TMI 282 - AT - Customs

Maintainability of appeal - Smuggling - Gold - baggage goods - Absolute Confiscation - HELD THAT - It is a fact on record that the gold in question has been seized when the appellant was travelling in domestic flight from Jammu to Srinagar, in that circumstances, the goods in question cannot be said as imported goods. The revenue is heavily relying on Section 123 of the Customs Act say that when any goods on the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the appellant. Admittedly, if revenue is having a reasonable belief that they are smuggled goods, then the burden of proof that the goods are not imported lies on the appellant. But firstly, there should be a reasonable belief that the gold in question is smuggled one is to be established by the revenue to invoke Sec. 123 of the Customs Act.In the impugned order as well as adjudication order, nowhere it has been established that there was a reasonable belief that the goods in question are smuggled goods which is the bone contention to invoke Section 123 of the Customs Act, 1962. Revenue has failed to discharge that they are initial burden that on reasonable belief that the goods in question are smuggled goods. Further, it has been found that only market enquiry was done for valuation and purity of the goods in question. No fact has been brought on record by way of testing of the goods in question that the marking made on the goods are genuine or not. As no such investigation has been done to establish that the goods in question are of foreign origin, therefore, the provision of Section 123 of the Customs Act is not applicable to the facts of this case - Further, the appellant has never admitted that the goods are of foreign origin or has been smuggled. The proceedings against the appellant are bad in law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Jurisdiction of the Tribunal regarding the appeal against the confiscation of gold.
2. Whether the gold in question was imported goods or not.
3. Burden of proof under Section 123 of the Customs Act, 1962.
4. Adequacy of evidence and legal basis for absolute confiscation and penalty imposition.

Issue 1: Jurisdiction of the Tribunal
The issue of jurisdiction was raised concerning whether the appeal was maintainable before the Tribunal as the goods were considered baggage. The Tribunal held that since the goods were being transported domestically within India, they did not have the character of imported goods. Therefore, the objection regarding jurisdiction was dismissed, allowing the Tribunal to hear the appeal.

Issue 2: Imported Goods or Not
The Tribunal analyzed the definition of imported goods under Section 2(25) of the Customs Act, which refers to goods brought into India from a place outside India. As the gold in question was being transported within India from Jammu to Srinagar, both domestic locations, it was concluded that the goods were not imported. This determination supported the appellant's position and allowed the Tribunal to proceed with the case.

Issue 3: Burden of Proof under Section 123
The burden of proof under Section 123 of the Customs Act was a crucial aspect of the case. The appellant argued that the revenue failed to establish a reasonable belief that the seized gold was smuggled goods, a prerequisite for invoking Section 123. The lack of evidence supporting the goods being of foreign origin and the absence of proper investigation led the Tribunal to rule that the provisions of Section 123 were not applicable in this case.

Issue 4: Adequacy of Evidence and Legal Basis for Confiscation
The Tribunal considered the evidence presented, including market inquiries and valuation reports, to determine the legality of the absolute confiscation and penalty imposition. It was noted that no specific provisions of the Customs Act were invoked in the show cause notice, rendering it vague and legally insufficient. The Tribunal also highlighted the lack of evidence supporting the gold being of foreign origin and the appellant's denial of such claims. Consequently, the Tribunal held that the proceedings were flawed in law, leading to the setting aside of the impugned order and allowing the appeal with consequential relief.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT Chandigarh provides a comprehensive overview of the issues addressed and the Tribunal's findings on each aspect of the case.