2022 (12) TMI 625 - HC - Customs

Smuggling of gold - town / city seizure - onus to prove the smuggling - the person in possession of the gold appears to have given an explanation stating that he had purchased gold ornaments weighing 2.14 kgs. from the local market, specifying the name of seller - he paid the same by account payee cheque - HELD THAT - after considering these facts, the Tribunal has held on facts that no evidence could be adduced by the Department in the subsequent investigation that the seized gold was of foreign origin and smuggled into the country. Further, the Tribunal held that the respondent had submitted all the relevant document including GST, purchase invoice etc. covering the gold which have been examined by the Department and no discrepancies were pointed out. Appeal of the revenue dismissed.

Summary

Issues:
1. Burden of proof under Section 123 of the Customs Act
2. Necessity of foreign inscription to prove foreign origin of gold
3. Proof of reasonable belief in case of seizure by the department
4. Binding effect of wrong recording of facts and interpretations by a trial court

Analysis:
1. The primary issue before the Tribunal was whether the seized gold was contraband or smuggled goods. The Tribunal considered whether the Revenue had established the existence of reasons to believe that the gold was smuggled, whether it was of foreign origin, and whether the Customs had followed the correct procedure regarding the search and seizure of the gold.

2. The Tribunal examined the explanation provided by the person in possession of the gold, stating that he had purchased the gold ornaments and bars from specific sources, providing details of the transactions and payments made through legitimate channels. The person claimed to have been coerced into signing a statement without understanding its content. The Tribunal noted that the Department failed to produce evidence during subsequent investigations to prove that the seized gold was of foreign origin and smuggled into the country. Additionally, the respondent submitted relevant documents, including GST and purchase invoices, which were examined by the Department without any discrepancies being found.

3. The Tribunal concluded that the issue at hand was primarily factual, and the substantial questions of law raised by the Revenue were deemed irrelevant to the appeal. As a result, the Tribunal dismissed the appeal and left the substantial questions of law open for future consideration. The application for stay was also closed accordingly.

In summary, the judgment focused on the burden of proof under Section 123 of the Customs Act, the necessity of foreign inscription to prove the foreign origin of gold, the requirement to establish reasonable belief in cases of seizure by the department, and the impact of wrong recording of facts and interpretations by a trial court on the parties involved. The Tribunal's decision was based on the factual findings and the lack of evidence presented by the Department to support the claim of smuggling, ultimately leading to the dismissal of the appeal.