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2021 (5) TMI 837 - AT - CustomsSmuggling - Foreign marked Gold - burden of proving the non-smuggled nature of the seized goods - gold jewellery confiscated covered by section 123 of the Customs Act or not - cash seized as sale proceeds of smuggled goods confiscated under section 121 covered by Section 123 of the Customs Act or not - reasonable belief that the goods/cash seized were smuggled so as to shift the burden under section 123 upon the appellants or not - discharge of responsibility of proving non-smuggled nature of the seized goods/cash - Confiscation - penalty - HELD THAT - The burden of proof shifts under Section 123, when (a) there must be goods to which the section applies; (b) the goods must have been seized; and (c) the seizure must be under a reasonable belief that they are smuggled goods. Whether the goods seized in the case are covered under section 123? - HELD THAT - There is also no allegation that the currency is smuggled. It has been confiscated as sale proceeds of smuggled goods, and not as smuggled goods. Such currency (being fruit of a poisonous tree), is liable to confiscation under section 121. A plain reading of section 123, which shifts the burden of proof, does not show it covers sale proceeds of smuggled goods. Therefore, while gold and manufactures thereof (jewellery in this case) are covered by section 123, currency is not covered at all. Thus, as far as currency is concerned, the burden of proof is on the department and not on the person from whom it is seized. Confiscation of Jewellery - HELD THAT - The case of the Revenue is NOT that it is smuggled but that it is made from smuggled gold. Therefore, notwithstanding this change of form (from primary gold to ornaments), jewellery would be liable to confiscation under section 120. If the jewellery was allegedly smuggled and was seized under such a reasonable belief, section 123 would apply. Since jewellery is not even alleged to be smuggled, section 123 does not apply unless it can be shown that it has been made out of smuggled gold. Whether the officers had a reasonable belief, as required under Section 123, that the seized goods were smuggled goods - HELD THAT - When searched, the gold was seized not only from their bags but also from concealed in shoes and from specially made pockets of the backpack. When asked, they could not produce any document to show legitimate import. The seized goods included 9 gold bars with foreign markings with purity of 99.5%, five cut pieces of gold and also of 99.5% purity and 120 foreign marked gold coins with a purity of 91.6%. The rest of the goods were jewellery and miscellaneous gold items of 87.5% purity. In our considered view, in this factual matrix, the officers had a reasonable belief that they were smuggled goods. Therefore, the condition of reasonable belief is fulfilled insofar as the alleged smuggled goods are concerned. - Similarly, the gold coins seized in the Jammu based businesses of Deepak were also of foreign origin and therefore, the officers had a reasonable belief that they were smuggled gold. The confiscation of these goods under sections 111(d) and section 111(i) are sustainable and confiscation under section 111(p) needs to be set aside. Gold jewellery weighing 4.687 kg and miscellaneous items of gold weighing 0.742 kg with a purity of 87.5% seized - HELD THAT - T he jewellery is not liable to confiscation in the absence of any evidence that it is smuggled or it has been made by converting smuggled gold. The mere fact that the jewellery was found along with the smuggled gold bars and gold coins makes no difference. Foreign origin gold coins weighing 1118.24 grams in all seized from the business premises of M/s. Radhika Jewellers and M/s. Baibhav Ornaments, Jammu seized on 24.8. 2017 - HELD THAT - Import of gold was permitted during the relevant period only by authorized agencies and the appellants were not so authorized. If they had purchased the gold from some authorized agency, they would have the documents to establish this fact. From the records of the case, it is evident that the appellants could not produce any such documents to show that these were not smuggled. Therefore, the presumption is that these are smuggled gold. As discussed above, these coins are liable for confiscation under section 111(d) of the customs Act. Indian currency amounting to ₹ 9,64,000 seized from Baibhav Ornaments and ₹ 3,64,500 seized from Radhika Jewellers - HELD THAT - The currency was seized under section 121 as sale proceeds of smuggled goods . This section states that Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation . This section does not shift the burden of proof to the person(s) from whom the cash is seized. It is for the Revenue to establish that the cash which was seized was (a) the sale proceeds; (b) the goods sold were smuggled goods; and (c) the person who has so sold the goods had either the knowledge or the reason to believe that the goods were smuggled. Merely because some unaccounted for cash is lying, it cannot be confiscated unless the three conditions in Section 121 are fulfilled - From the records of this case, it is not found that the Revenue has established any of these factors or even identified which were the smuggled goods which were sold by the person from whom the cash is seized. Penalty of ₹ 50,00,000 imposed on Deepak Handa under Section 112 - HELD THAT - It is not in doubt that Deepak was in possession of and was found carrying smuggled gold bars and gold coins which we have held were correctly confiscated under Section 111(d) and 111(p) of the Customs Act. Therefore, Deepak had rendered himself liable to penalty under section 112. A penalty of ₹ 50,00,000/- was imposed upon him. Considering that we had set aside some of the confiscations (jewellery and currency) as not sustainable, we reduce the penalty on Deepak Handa to ₹ 20,00,000/-. Penalty of ₹ 10,00,000 imposed on Ravi Handa under Section 112 - HELD THAT - Ravi Handa, brother of Deepak Handa was managing the Baibhav ornaments in Jammu where 1118 grams of the confiscated foreign marked gold coins recovered. Indian currency recovered from him was also confiscated which we have set aside. Considering these factors, it is found that Ravi Handa has rendered himself liable to penalty under Section 112 but the penalty needs to be reduced. Accordingly, we reduce the penalty imposed on Ravi Handa to ₹ 2,00,000/-. Appeal allowed in part.
Issues Involved:
1. Applicability of Section 123 of the Customs Act regarding the burden of proof for the non-smuggled nature of seized goods. 2. Confiscation of gold jewellery under Section 123. 3. Confiscation of cash as sale proceeds of smuggled goods under Section 121. 4. Reasonable belief of officers regarding the smuggled nature of seized goods/cash. 5. Validity of confiscation under Sections 111(d), 111(i), and 111(p). 6. Validity of confiscation of gold jewellery under Sections 111(d), 111(i), and 111(p) read with Section 120. 7. Validity of confiscation of cash under Section 121. 8. Appropriateness of penalties imposed under Section 112. Detailed Analysis: 1. Applicability of Section 123 of the Customs Act: The tribunal concluded that Section 123 applies to the seized gold and gold jewellery, shifting the burden of proof to the appellants to demonstrate that the goods were not smuggled. The gold bars, coins, and small pieces of gold were found to have foreign markings and high purity, justifying the officers' reasonable belief that they were smuggled. The appellants failed to provide evidence to counter this presumption. 2. Confiscation of Gold Jewellery: The tribunal determined that the confiscation of gold jewellery under Section 123 was not applicable because the jewellery was not alleged to be smuggled but was claimed to be made from smuggled gold. The evidence did not support the claim that the jewellery was made from smuggled gold, and thus, the confiscation under Sections 111(d), 111(i), and 111(p) read with Section 120 was not sustainable. 3. Confiscation of Cash as Sale Proceeds of Smuggled Goods: The tribunal found that the currency seized was not covered under Section 123 and there was no allegation that it was smuggled. The burden of proof remained with the Revenue to establish that the cash was the sale proceeds of smuggled goods, which they failed to do. Consequently, the confiscation of cash under Section 121 was set aside. 4. Reasonable Belief of Officers: The tribunal upheld that the officers had a reasonable belief that the seized gold was smuggled, based on the circumstances of the seizure, including the concealment of gold and the lack of documentation. This justified the application of Section 123, shifting the burden of proof to the appellants. 5. Validity of Confiscation under Sections 111(d), 111(i), and 111(p): The tribunal upheld the confiscation of gold bars, coins, and small pieces of gold under Sections 111(d) and 111(i) due to the prohibited nature of gold import during the relevant period and the concealment of the gold. However, it set aside the confiscation under Section 111(p) as gold was not notified under Chapter IVA during the relevant period. 6. Validity of Confiscation of Gold Jewellery: The tribunal found that the confiscation of gold jewellery under Sections 111(d), 111(i), and 111(p) read with Section 120 was not sustainable because there was no evidence that the jewellery was made from smuggled gold. 7. Validity of Confiscation of Cash: The confiscation of cash under Section 121 was found to be unsustainable as the Revenue could not prove that the seized cash was the sale proceeds of smuggled goods. 8. Appropriateness of Penalties Imposed under Section 112: The tribunal acknowledged that penalties under Section 112 were correctly imposed on the appellants due to their involvement with smuggled gold. However, considering the setting aside of some confiscations (jewellery and cash), the penalties were reduced. The penalty on Deepak Handa was reduced to ?20,00,000, and the penalty on Ravi Handa was reduced to ?2,00,000. Conclusion: The appeals were partly allowed, modifying the impugned orders as follows: - Confiscation of gold jewellery weighing 4.687 kg and miscellaneous items of gold weighing 0.742 kg seized from Deepak Handa was set aside. - Confiscation of Indian currency seized in Jammu was set aside. - Penalty on Deepak Handa was reduced to ?20,00,000. - Penalty on Ravi Handa was reduced to ?2,00,000.
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