2023 (2) TMI 243 - AT - Customs

Smuggling - foreign origin gold bars - absolute confiscation - penalty - confiscation of Mercedes car under Section 115 and its redemption on payment of fine of Rs. 10 lakhs correct - fine of Rs. 50 lakhs imposed on the appellant under Section 112(b)(i) - burden to prove - prohibited goods or not - Whether the seized gold was correctly confiscated? - HELD THAT - Section 123 shifts the burden of proof from the Department to the person from whom the goods have been seized in respect to gold and certain other goods which are notified. Undisputedly, the bars in question were of gold and they had foreign markings and were packed in a bag with the address of the jeweller in Dubai. The bars were examined by an expert and were held to be foreign origin gold of 995 purity. All these gave the officers reasonable belief that the gold bars were of foreign origin. Since import of gold is restricted, if foreign origin gold bars were legally imported it was incumbent upon the importer and any other person to whom they may have been sold to show documents that the gold was legally imported. The seizure of the gold from the possession of the appellant as recorded in the Panchnama and admitted in the statement which is also affirmed the appeal before us by the appellant itself is undisputed. It is also undisputed that it had foreign markings and has been certified by the jewellery expert to be of foreign origin. The only question which remains is if it was legally imported or smuggled and the burden of proving that it was legally imported rests upon the appellant. There is not even an assertion in the application before the learned CMM by the appellant that he had legally imported the gold. Therefore, we find no force in the submission of the appellant that his statement under Section 108 cannot be relied upon. The other submission made by the learned counsel for the appellant is that nature of the gold is that he had requested Shri Ahadees to supply legally imported gold and, therefore, it should be considered so. This submission cannot be accepted for the reason for the simple reason that there was no documents at the time of seizure to show that the gold was legally imported. No documents have been produced till date to show that the gold was legally imported - the undisputed gold is of a foreign origin and was reasonably believed to be smuggled by the officers and was seized and the appellant had not discharged his burden to show that it was not smuggled gold. Therefore, the absolute confiscation of the disputed gold needs to be upheld. Mercedes car - HELD THAT - The learned counsel for the appellant agrees that the appellant represents the company M/s PRK Diamond Pvt. Ltd. Since the show cause notice was issued to the appellant proposing confiscation of the car, we find no force in the argument that notice should have been issued to M/s PRK Diamond Pvt. Ltd. It is not open to the appellant to represent M/s PRK Diamond Pvt. Ltd. to seek release of the car but claim that he does not represent M/s PRK Diamond Pvt. Ltd. when it comes to receiving show cause notice and answering it. The car was allowed redemption on payment of fine of Rs. 10 lakhs - this is a reasonable amount of redemption fine imposed, if the appellant chooses to redeem the car. Penalty under Section 112(b)(i) of Rs. 50 lakhs imposed upon the appellant - HELD THAT - s per Section 112(b) any person who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 is liable to penalty. In case of prohibited goods this penalty shall not exceed the value of the goods or Rs. 5000/- whichever is greater. In this case, it is undisputed that the appellant was in possession of the confiscated gold. Even in the appeal before us, the appellant is not disputing this fact. Therefore, he is squarely covered by Section 112(b)(i). The value of the confiscated gold is Rs. 1,84,16,505.68. The penalty imposed is only Rs. 50 lakhs - this amount of penalty is reasonable and calls for no interference. Appeal dismissed.

Summary

Issues Involved:
1. Confiscation of 8 gold bars under Section 111(b) and 111(d) of the Customs Act, 1962.
2. Confiscation and redemption of the Mercedes car under Section 115.
3. Imposition of penalty on the appellant under Section 112(b)(i).

Issue-wise Detailed Analysis:

1. Confiscation of 8 Gold Bars:
The appellant challenged the seizure and confiscation of 8 gold bars valued at Rs. 1,84,16,505.68 under Section 111(d) of the Customs Act, 1962. The gold bars were seized based on intelligence received by the Directorate of Revenue Intelligence (DRI) and were found in the appellant's possession without any supporting documents for legal import. The gold bars had foreign markings and were certified to be of 995 purity by an expert. The appellant's statements, corroborated by Shri Ahadees, revealed that the gold was smuggled from Dubai by a person named Harish. The appellant failed to produce any documents to prove the legal import of the gold, thereby failing to discharge the burden of proof under Section 123 of the Customs Act. The Tribunal upheld the absolute confiscation of the gold bars as the appellant did not provide any evidence to counter the presumption of smuggling.

2. Confiscation and Redemption of the Mercedes Car:
The Mercedes car bearing registration No. DL ICQ 7525, used in the smuggling operation, was seized under Section 115(2) of the Customs Act. The appellant argued that the car belonged to M/s PRK Diamonds Pvt. Ltd., and no show cause notice was issued to the company. However, the Tribunal noted that the appellant, as the Director of the company, represented the company and sought the release of the car. The Tribunal found that the car was rightly confiscated and allowed its redemption on payment of a fine of Rs. 10,00,000/-. The appellant's attempt to evade the DRI officers by speeding away in the car further substantiated its use in smuggling activities.

3. Imposition of Penalty on the Appellant:
A penalty of Rs. 50,00,000/- was imposed on the appellant under Section 112(b)(i) for his involvement in acquiring, possessing, and dealing with smuggled gold. The Tribunal noted that the appellant was in conscious possession of the smuggled gold and had admitted to receiving and selling smuggled gold on previous occasions. The appellant's activities, such as using a mobile number registered in a fictitious name and conducting transactions in a public place, indicated his mens rea. The penalty was considered reasonable and proportionate to the value of the smuggled gold, which was Rs. 1,84,16,505.68.

Conclusion:
The Tribunal upheld the confiscation of the gold bars and the Mercedes car, as well as the penalties imposed on the appellant. The appeal was dismissed, and the impugned order was affirmed in its entirety. The Tribunal emphasized the appellant's failure to provide any evidence of legal import and his involvement in smuggling activities, justifying the actions taken by the DRI.