2022 (5) TMI 393 - AT - Customs

Reduction of redemption fine and penalty - Smuggling - foreign origin gold - dismantled power tools such as Ryobi brand 6 Orbittal Buffer car cleaning machine, steel measuring tapes, etc. - confiscation made on the basis of voluntary statements of the assessees - proper verification not carried out - non-speaking order - HELD THAT - It is clear that judgements are available which are supporting the counter-stand of both the parties. This makes it clear that the applicability of the judgements would depend on the facts of each case and hence, it is essential that proper facts be brought on record in the first place, to apply the judgements. When the assessee-appellant himself admits that the gold pieces given by the customers were being melted and converted into gold rings, there should be some documentary evidence, at least identifying the owner of such gold pieces, but apparently no such attempt seems to be made to place on record any such vital documentary evidence. This minimum effort having not been done, mere reliance on the voluntary statement is not justified - further it is found from the records that the Revenue had entertained a doubt that the assessee-appellant had improperly imported gold into India. Section 11 of the Customs Act, 1962 deals with the power to prohibit importation or exportation of goods; (2) (f) thereunder prohibits uncontrolled import and export of gold or silver. Section 101 ibid. empowers the Revenue to search suspected persons in certain cases. It is for the assessee-appellant, who has canvassed to having retracted his statement recorded under Section 108 ibid., to explain before the Revenue authorities as to the source of the gold in question, including the names and addresses of its customers. The same would also apply to the half cut piece of gold bar with the marking Cambi, Suisse 100 gm Gold 999.9 , since the initial burden, within the meaning of Section 123 ibid., is always on the person from whose possession the gold, including the one with foreign marking, is seized, to prove that none of the seized gold was smuggled. The retraction statement does not deny the seizure of gold through the Mahazar and in the said retraction, he has clearly admitted, voluntarily, that the gold in question belonged to his customers - It is well-settled that when a retraction is made, then both the original statement as well as the retraction statement have to be looked into very carefully and hence, once a retraction is made, the burden is more on the appellant to place on record the identity of his customers since he had only admitted that the gold seized belonged to them. In the Order-in-Original, apparently, the so-called retraction is not considered; as admitted in the said retraction, if the first assessee-appellant is able to place on record the details of his customers, who are the owners of the seized gold, then, the situation may be different, in which event, perhaps, the order of confiscation may vary - In respect of the seizure of gold bar with foreign marking, undoubtedly it is a town seizure. The assessee-appellant has nowhere offered any explanation as to the source of the same and hence, the same is liable for absolute confiscation - These aspects have not at all been considered and discussed in the orders of the lower authorities and hence, to this extent, the Order-in-Original is a non-speaking order. The First Appellate Authority has also not considered these aspects, including the contentions of the assessee-appellant as to retraction and hence, to this extent, the impugned order is also a non-speaking order. The matter is remanded to the file of the Adjudicating Authority. The Adjudicating Authority shall consider the retraction statement in the light of the discussions contained hereinabove and the requirement of law - Appeal allowed by way of remand.

Issues Involved:
1. Confiscation of seized gold.
2. Reduction of redemption fine and penalties.
3. Validity of retraction of statements.
4. Burden of proof regarding the source of the gold.
5. Absolute confiscation of foreign-marked gold.

Detailed Analysis:

1. Confiscation of Seized Gold:
The Adjudicating Authority ordered the confiscation of 2.810 kgs of gold valued at Rs. 91,95,725/-, with an option to redeem under Section 125 of the Customs Act, 1962, on payment of a fine of Rs. 9,20,000/-, along with applicable duty and penalties. The First Appellate Authority reduced the redemption fine to Rs. 4,60,000/- and penalties under Section 112 to Rs. 2,00,000/-, Rs. 20,000/-, and Rs. 10,000/- respectively.

2. Reduction of Redemption Fine and Penalties:
The First Appellate Authority reduced the redemption fine and penalties imposed by the Adjudicating Authority. The assessees contended that the fine and penalties were still on the higher side and should have been deleted entirely. The Department argued that the gold should have been confiscated absolutely due to the lack of proof of its source.

3. Validity of Retraction of Statements:
The assessees argued that the statements were obtained under coercion and retracted the next day. The Department contended that there was no specific retraction and that the initial statements should be considered valid. The Tribunal found that the retraction should have been considered by the Adjudicating Authority, especially since the assessees admitted to melting gold pieces given by customers.

4. Burden of Proof Regarding the Source of the Gold:
The Tribunal emphasized that the initial burden under Section 123 of the Customs Act, 1962, lies with the assessees to prove that the gold was not smuggled. The assessees failed to provide documentary evidence identifying the owners of the gold pieces. The Tribunal noted that the retraction did not deny the seizure but admitted that the gold belonged to customers, necessitating proof of the source.

5. Absolute Confiscation of Foreign-Marked Gold:
The Tribunal held that the half-cut piece of gold bar with foreign markings was liable for absolute confiscation due to the lack of explanation for its source. The Tribunal noted that the gold bar with foreign marking amounted to the importation of prohibited goods.

Conclusion:
The Tribunal set aside the orders of the lower authorities to the extent that they did not consider the retraction and the requirement for the assessees to prove the source of the gold. The matter was remanded to the Adjudicating Authority to reconsider the retraction and the source of the gold, and to pass an appropriate order regarding confiscation and/or redemption. The penalty on the other two assessees would depend on the outcome of the penalty on the first assessee. The appeals were allowed by way of remand, and the stay petitions filed by the Revenue were disposed of.

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