2022 (2) TMI 681 - AT - Customs

Smuggling - Baggage Rules - gold ornaments - prohibited goods or not - jurisdiction of the authority - Burden of proof - absolute confiscation - penalty - HELD THAT - When the gold ornaments were found on his body, which were not declared and hence seized, it was the reasonable belief of the authorities that the same were smuggled, at which point of time the burden under Section 123 of the Customs Act, 1962 shifted on to the appellant. Hence, it was for him to discharge the onus. The appellant has, in his statement given under Section 108 ibid., stated that the gold ornaments in question were given to him by Imran , whose phone number was also mentioned by him, but nowhere has he tried to offer any explanation with regard to the source of acquiring the gold ornaments in question, proof for his employment in Dubai, proof of purchase like invoices of the said gold ornaments, etc., which means that the he has never discharged the onus on him in terms of Section 123 ibid. Moreover, mensrea may not be relevant in such cases since in this case, the gold was found well-concealed. It is also immaterial whether the gold in question belonged to him or he was doing it for someone else. Gold was found in his possession and hence, he is answerable, in terms of Section 123 ibid. Hence, the only recourse for the authorities was to treat the same as smuggled goods and confiscate, as provided under the relevant statutory provisions. Absolute Confiscation - HELD THAT - In the first place appellant did not declare to the authorities and did not seek to pay applicable duty on the gold. He also did not prove the bona fide purchase of the gold in question and all throughout his claim was that one Imran had given him the gold. Under these circumstances, there are no reason to interfere with the discretion exercised by the Commissioner in not allowing the goods to be redeemed. Penalty - HELD THAT - This is a case where a passenger was found in possession of gold to such extent that is not permissible under any law, the same was found hidden without declaring, which made the said gold in question liable for confiscation within the meaning of Section 111 ibid and therefore, the imposition of penalty under Section 112(b) of the Customs Act, 1962 is justified. But however, since the appellant has identified/treated him as a carrier for Imran and the revenue has not brought on record any updates on further investigation about said Imran, thus the penalty imposed on the appellant is very much on the higher side. Hence, that as a deterrent, penalty be restricted to ₹ 100,000/-. Appeal allowed in part.

Summary

Issues:
1. Declaration of dutiable goods upon arrival at the airport.
2. Confiscation of gold ornaments and imposition of penalties.
3. Jurisdiction of the authority in confiscation of goods.
4. Applicability of Sections 108, 112(b), and 123 of the Customs Act, 1962.
5. Justification for absolute confiscation and penalty imposition.
6. Reasonableness of penalty amount and involvement of a third party in the case.

Analysis:
1. The appellant arrived at Bangalore Airport from Dubai and declared the value of dutiable goods as 'nil,' leading to a subsequent examination of his baggage revealing concealed gold ornaments. The appellant disputed the jurisdiction of the authority, but the Commissioner confirmed absolute confiscation of the gold ornaments and imposed a penalty of ?15,00,000 under Section 112(b) of the Customs Act, 1962.

2. The appellant challenged the confiscation of gold, arguing that the goods were not prohibited and should be released or re-exported based on liberalization policies. The appellant also contested the penalty imposed under Section 112(b) of the Customs Act, 1962. The appellant failed to prove the bona fide purchase of the gold and solely claimed to be a carrier for a third party, Imran.

3. The burden of proof shifted to the appellant under Section 123 of the Customs Act, 1962, upon the discovery of concealed gold ornaments. The appellant's failure to provide evidence regarding the source of the gold, employment in Dubai, or purchase invoices led to the conclusion that he did not discharge the onus. The authorities treated the gold as smuggled goods due to non-declaration and concealment, justifying confiscation under statutory provisions.

4. The Tribunal upheld the confiscation decision, noting the appellant's failure to declare the gold or pay applicable duty. The appellant's claim of receiving the gold from Imran without evidence of legitimate purchase further supported the decision not to allow redemption of the goods. The imposition of penalties under Section 112(b) was deemed justified due to possession of gold exceeding permissible limits and concealment.

5. However, considering the appellant's role as a carrier for Imran and the lack of updates on further investigation regarding Imran, the Tribunal deemed the original penalty amount excessive. To serve as a deterrent, the penalty was reduced to ?100,000. The appeal was disposed of with this modification.

This detailed analysis covers the issues raised in the legal judgment, addressing the declaration of goods, confiscation of gold, jurisdictional aspects, statutory provisions, justification for confiscation and penalties, and the reasonableness of the penalty amount in light of the appellant's involvement as a carrier for a third party.