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2023 (4) TMI 174 - AT - CustomsAbsolute Confiscation - Smuggling - gold coins - silver granules - Indian currency - purity of seized gold bars - Retracted statement - statement of co-accused without any corroborative evidence - burden of prove - notified items under Section 123 of the Customs Act, 1962 - HELD THAT - During the course of investigation, the gold was seized, which is deemed to be believed as foreign origin and the currency seized is to be believed the sale proceeds of smuggled gold of foreign origin. It is the fact on record that there is no mark found on the gold seized. Moreover, purity of gold was also found 99.5% and not 99.9%. Further, during the course of investigation, the Noticee No.(1) has made a statement stating that the source of procurement of the said gold is made from an old jewellery purchased in exchange of cash during the long period of time and due and the stock of gold was melted through the said old jewellery and converted into gold bars. The said fact has not been verified by the Revenue. As the noticees have explained the source of procurement of gold, which is not denied by the Revenue, further having no mark on the gold and purity of gold is also not in conformity of the foreign gold, the benefit of doubt goes in favour of the notices. As the Noticee No.(1), (2) (3) have submitted the smuggled/procured gold in question is made out of old jewellery purchased in cash and the said fact has not been denied by the Revenue by any cogent evidence, therefore, it is held that the gold in question is not liable for confiscation and hence, the same is required to be released - Revenue has failed to establish the fact that the cash recovered from the Noticee No.(1) (2) (3) are the sale proceeds of the smuggled gold, therefore, the cash seized cannot be confiscated - No penalties are imposable on the Noticee No.(1), (2) (3). The proceedings initiated by the impugned show-cause notices are set aside - Appeal allowed - decided in favour of appellant.
Issues Involved:
1. Confiscation of gold bars, gold coins, and silver granules. 2. Confiscation of Indian currency. 3. Imposition of penalties on the Noticees. 4. Validity of retracted statements. 5. Burden of proof regarding the smuggled nature of the gold. 6. Appeal against dropping of penalty against Noticee No. 5 and 6. Detailed Analysis: 1. Confiscation of Gold Bars, Gold Coins, and Silver Granules: The adjudicating authority confiscated 11 gold bars, 9 gold coins, and 509.100 grams of silver granules under Sections 111(b) and 111(d) of the Customs Act, 1962, on the grounds that they were believed to be of foreign origin and smuggled into the country. However, the purity levels of the seized gold (99.5% to 99.6%) did not match the typical purity of foreign-origin gold (99.99%). The Tribunal cited precedents where the absence of foreign markings and lower purity led to the conclusion that the gold was not smuggled (e.g., Ram Nath Sah vs. Commissioner of Customs, Patna). The Noticees explained that the gold was procured from old jewelry purchased over time and melted into bars, a claim not refuted by the Revenue. Therefore, the confiscation of the gold and silver was deemed unjustified, and the items were ordered to be released. 2. Confiscation of Indian Currency: The Indian currency amounting to Rs. 1,59,76,500/- was confiscated under Section 121 of the Customs Act, 1962, on the assumption that it represented the sale proceeds of smuggled goods. The Tribunal emphasized that for such confiscation to be valid, the sale of smuggled goods and the knowledge of their smuggled nature must be established, which the department failed to do. The Tribunal referenced cases like Ramchandra vs. Collector of Customs, which held that mere suspicion without concrete evidence is insufficient for confiscation. Consequently, the confiscation of the currency was not sustainable, and it was ordered to be released. 3. Imposition of Penalties on the Noticees: Penalties were imposed on Noticee No. 1 (Rs. 70,00,000/-) and Noticee Nos. 2 and 3 (Rs. 10,00,000/- each) under Sections 112(a) and 112(b) of the Customs Act, 1962. The Tribunal found that the statements implicating the Noticees were retracted and lacked corroborative evidence. The Tribunal referred to cases like Jindal Drugs Pvt. Ltd. vs. Union of India, which held that retracted statements without corroboration have no evidentiary value. Therefore, the penalties on Noticee Nos. 1, 2, and 3 were set aside. 4. Validity of Retracted Statements: The Tribunal noted that the statements of the Noticees were recorded under coercion and were retracted at the earliest opportunity. Citing precedents, the Tribunal held that retracted statements without independent corroborative evidence are not admissible. The Tribunal referenced decisions like Superintendent of Customs vs. Bhanabhai Khalpabhai Patel, reinforcing that uncorroborated retracted statements cannot be relied upon. 5. Burden of Proof Regarding the Smuggled Nature of the Gold: The Tribunal emphasized that the burden of proving the smuggled nature of the gold lies with the department, especially when the gold is a notified item under Section 123 of the Customs Act, 1962. The department failed to provide conclusive evidence that the gold was of foreign origin. The Tribunal cited cases like Ram Nath Sah vs. Commissioner of Customs, Patna, where the absence of foreign markings and lower purity led to the release of the seized gold. 6. Appeal Against Dropping of Penalty Against Noticee No. 5 and 6: The Commissioner (Appeals) had dropped the penalty proceedings against Noticee Nos. 5 and 6, which was contested by the Revenue. The Tribunal upheld the Commissioner's decision, noting that the statements implicating Noticee Nos. 5 and 6 were retracted and lacked corroborative evidence. The Tribunal referenced its own recent decision in the case of Commissioner of Customs (Preventive) vs. Shri Amit Jalan & Shri Ashok Kumar Jalan, where penalties were not imposed due to the absence of corroborative evidence. Conclusion: The Tribunal set aside the confiscation of gold, silver, and currency, and the penalties imposed on Noticee Nos. 1, 2, and 3. The appeals filed by the Revenue against the dropping of penalties on Noticee Nos. 5 and 6 were dismissed. The proceedings initiated by the show-cause notices were set aside, and the appeals filed by Noticee Nos. 1, 2, and 3 were allowed.
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