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2021 (9) TMI 405 - AT - CustomsSmuggling - Gold bars - goods of foreign origin or not - burden of proof u/s 123 of the Customs Act, 1962 - sanctity of the statement recorded under section 108 - Confiscation - penalty - HELD THAT - Admittedly this is a case of town seizure wherein, the impugned gold was intercepted, initially taken possession of by the officer of GRP and then handed over to the Customs. Admittedly, the gold did not have any tell-tale foreign markings and it was merely accused that the markings were removed to hoodwink investigation. The place where seizure took place is not Customs Area - Hon ble Supreme Court in the case of GIAN CHAND AND OTHERS VERSUS STATE OF PUNJAB 1961 (11) TMI 1 - SUPREME COURT , wherein in case of seizure by the Police and thereafter the possession was shifted to the Customs Officer held that the pre-requisite of seizure is not satisfied. Accordingly, it is held that the circumstances as required under the Customs Act are not satisfied and consequentially the whole burden or onus to establish the smuggled nature of gold is on the Revenue. As admittedly, the gold having no foreign markings, the onus would be on department to prove the smuggled nature of the same. This onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, it cannot be conclusively relied upon - Valuer is expected to arrive at the purity and value of the Gold in a scientifically established manner. If his services were required only to value the Gold, the same can be arrived on the basis of day to day Bullion rates announced by various exchanges. In addition, fact remains that the Gold did not have any foreign markings; it has not been established that the same has been smuggled. The circumstances would certainly create reasons to believe that the impugned gold could be a smuggled one necessitating further probe. It does not constitute reasonable belief to seize the goods under Section 123 of the Customs Act, 1962. Confiscation - HELD THAT - Neither foreign origin of the gold nor the nature of the same being smuggled is conclusively established other than merely relying on the conclusions drawn from the statement of Shri Dhuria. In the absence of action under Section 138B of Customs Act, 1962 by Revenue, statement of Shri Dhuria alone cannot be relied upon for sustaining the allegation of smuggling of gold, under the provisions of the Customs Act. Further, no reasonable belief has been established that the impugned Gold is liable for confiscation. Penalty - HELD THAT - When goods are not held to be liable for confiscation, no penalty can be imposed under Section 112 of Customs Act, 1962. The respondent Commissioner are directed to return the gold seized forthwith and/or if the gold has been disposed, to return the sale proceeds along with interest as per rules, within six weeks of the date of receipt or service of the copy of this order - appeal allowed.
Issues Involved:
1. Legitimacy of the seizure of gold by the GRP and subsequent handling by Customs. 2. The burden of proof regarding the smuggled nature of the gold. 3. Admissibility and reliability of statements under Section 108 of the Customs Act. 4. Validity of the valuation and purity assessment of the seized gold. 5. Compliance with procedural requirements under the Customs Act, including Section 138B. 6. Ownership claim and supporting documentation for the seized gold. 7. Imposition of penalties under Section 112(b) of the Customs Act. Issue-wise Detailed Analysis: 1. Legitimacy of the Seizure of Gold by the GRP and Subsequent Handling by Customs: The gold was intercepted by GRP officers and handed over to Customs. The Tribunal noted that the seizure location was not a Customs Area, and the gold did not have foreign markings. The Supreme Court in Gian Chand & Ors held that a seizure by police does not satisfy the pre-requisite of a seizure under the Customs Act, thereby shifting the burden to the Revenue to prove the smuggled nature of the gold. 2. The Burden of Proof Regarding the Smuggled Nature of the Gold: The Tribunal found that the gold did not have foreign markings, and the only evidence was a general statement by Shri Kishan Kumar Dhuria. The onus was on the department to prove the smuggled nature of the gold, which was not discharged. The Tribunal emphasized that mere suspicion or general statements are insufficient to establish smuggling. 3. Admissibility and Reliability of Statements Under Section 108 of the Customs Act: The statement of Shri Kishan Kumar Dhuria under Section 108 was the primary evidence relied upon by the Revenue. However, the Tribunal noted that the statement was general and did not specifically confess to the smuggling of the impugned gold. The Tribunal also highlighted the non-compliance with Section 138B, which requires examination and cross-examination of witnesses, thereby affecting the statement's evidentiary value. 4. Validity of the Valuation and Purity Assessment of the Seized Gold: The Tribunal criticized the valuation process, noting that the valuer did not subject the gold to any scientific analysis to determine its purity. The method used was not specified, and the Tribunal referenced previous cases where touchstone methods were deemed insufficient for conclusive findings. The lack of a proper assay report undermined the reliability of the valuation. 5. Compliance with Procedural Requirements Under the Customs Act, Including Section 138B: The Tribunal found that the procedural requirements under Section 138B were not fulfilled. The statements used by the Revenue were not corroborated by cross-examination, rendering them inadmissible as evidence. This non-compliance significantly weakened the Revenue's case. 6. Ownership Claim and Supporting Documentation for the Seized Gold: Shri Sarvendra Kumar Mishra claimed ownership of the gold, supported by an invoice from M/s Jalan Jewellers. The Tribunal noted that the Revenue did not find the invoice to be false and failed to conduct a thorough investigation into M/s Jalan Jewellers. The Tribunal emphasized that the burden of proving the smuggled nature of the gold was on the Revenue, which was not met. 7. Imposition of Penalties Under Section 112(b) of the Customs Act: Given that the gold was not conclusively proven to be smuggled, the Tribunal held that the penalties under Section 112(b) could not be sustained. The Tribunal referenced previous judgments where penalties were set aside due to insufficient evidence of smuggling. Conclusion: The Tribunal allowed the appeals, setting aside the impugned order-in-appeal. It directed the respondent Commissioner to return the seized gold or its sale proceeds with interest within six weeks. The Tribunal's decision was based on the failure of the Revenue to prove the smuggled nature of the gold, non-compliance with procedural requirements, and the lack of reliable evidence.
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