2023 (5) TMI 1087 - AT - Customs

Smuggling - two gold pieces of rectangular bar and one irregular shaped piece of gold of foreign origin along with the Indian currency - cogent reason of any reasonable belief with the DRI Officers to opine the recovered gold to be a foreign origin or not - burden to prove - invocation of Section 123 of the Customs Act 1962 - Absolute Confiscation - penalty. Whether Section 123 of the Customs Act 1962 is invocable in the given set of circumstances? - HELD THAT - The burden of proof shifts under Section 123 when (a) there must be goods to which the section applies; (b) the goods must have been seized; and (c) the seizure must be under a reasonable belief that they are smuggled goods - in the present case at the time of interception and preparing of Panchanama about recovery of gold from the appellant in his statement as was recorded under Section 108 of Customs Act 1962 the appellant admitted that the gold in his possession was actually the gold of foreign origin however it got remelted for erasing the foreign markings but 99.9% purity mark was still got embossed thereupon - He also admitted to have no documents for proving that he was legally possessing that quantity of gold in the form of several number of uneven pieces. These particular admissions are sufficient for investigating officers to raise a presumption under Section 114 of Evidence Act that the gold has been illegally imported and thus to invoke the reverse burden of proof i.e. the burden of proof that the gold recovered is not the smuggled on lies upon the appellant in. Otherwise also the statement as recorded under Section 108 of the Customs Act are admissible into evidence. Hon ble Supreme Court in the case of NARESH J. SUKHAWANI VERSUS UNION OF INDIA 1995 (11) TMI 106 - SUPREME COURT held that the statement recorded under Section 108 of the Customs Act 1962 made before the customs officers is not a statement recorded under Section 161 of Cr.PC. for customs officers not being the police officers. Therefore the statement got recorded by customs officer is the material piece of evidence which can be used as substantive evidence connecting the deponent with the alleged contravention of the customs act. Question stands decided in favour of Revenue and it is held that Section 123 of the Customs Act 1962 has rightly been invoked by the department. Whether the gold recovered in question was actually the gold of foreign origin illegally imported into Indian Territory and thus is liable for confiscation? - HELD THAT - There is no evidence to prove the retracted statement. Thus the burden of proof upon the appellant stands undischarge. In absence thereof the only substantial piece of evidence is the admission of appellant as was recorded under Section 108 of the Act that the gold concealed on his waist is the gold of foreign origin which has been brought to Indian illegally. It is therefore sold at the cheaper rates and that the appellant knows that it is the smuggled gold. With respect to the Indian currency in possession of the appellant the appellant under the theory of reverse burden of proof could not produce any evidence to show that the same is not the sale proceed of the gold which he purchased from a person the identify whereof has not been disclosed for the reason that the seller was inhabit of smuggling gold of foreign origin getting it melted and selling it on the lesser prices to the appellant - the definition of import in Section 2(23) of the Customs Act 1962 has no relevance as to who had brought the article into India from a place outside India. The expression is defined to mean an act of bringing into India from a place outside India. Section 2(23) of the Act defines prohibited goods. It was the mandatory duty of the appellants to prove that too by way of documentary evidence that the gold in question is the part of such quantity of the gold as has been imported in furtherance of the said circular and the said policy. If they claim it to be of Indian origin they had to produce the document of their purchase. As already mentioned nothing is produced by the appellant - it is held that recovered gold has rightly been confiscated. Hence this point of adjudication also stands decided in favour of the department. Whether appellants are liable for penalty? - HELD THAT - The appellant in this case had acquired possession of such gold which they could not prove to be of India origin nor the valid possession could be proved. There has been no denial that appellant was purchasing the gold at the cheaper rate. There is rather an acknowledgement that gold was smuggled one hence was cheaper. Section 112(b) of the Act is wide enough to penalise even a person acquiring possession or in anyway dealing with the goods which he knows or has reason to believe are liable for confiscation under Section 111. Confiscation has already been upheld. Thus it is held that the appellant had rendered them liable for imposition of penalty. There are no infirmity in the findings of the adjudication authorities below while imposing penalty upon the appellant. The issue stands decided in favour of the Revenue and against the appellant - appeal dismissed.

Summary

Issues Involved:
1. Invocability of Section 123 of the Customs Act, 1962.
2. Legitimacy of the confiscation of gold as foreign origin and illegally imported.
3. Liability of the appellants for penalty.

Summary:

First Issue: Invocability of Section 123 of the Customs Act, 1962

Section 123 of the Customs Act postulates the theory of 'reverse burden of proof.' The section applies when goods are seized under reasonable belief of being smuggled, shifting the burden of proof to the possessor. The appellant admitted under Section 108 of the Customs Act that the gold was of foreign origin and smuggled. This admission justifies invoking Section 123, shifting the burden to the appellant to prove otherwise. The Tribunal affirmed that Section 123 was rightly invoked by the department.

Second Issue: Legitimacy of the Confiscation of Gold

The appellant argued that the gold was purchased in India and not smuggled. However, the delayed retraction and lack of credible evidence to support the claim of legal purchase failed to discharge the burden of proof. The recovered gold did not match the description in the invoices provided. The gold's purity indicated foreign origin, and its concealment justified confiscation under Sections 111(d) and 111(i) of the Customs Act. The Tribunal upheld the confiscation, noting the appellant's failure to prove the gold was not smuggled.

Third Issue: Liability of the Appellants for Penalty

The appellant's possession of the gold, acknowledged as smuggled and purchased at a cheaper rate, rendered them liable under Section 112(b) of the Customs Act. The Tribunal found no infirmity in the penalty imposed by the adjudicating authorities, emphasizing the broad scope of Section 112(b) to penalize individuals dealing with goods liable for confiscation.

Conclusion

All three points of adjudication were decided in favor of the Revenue and against the appellant. The appeal was dismissed, affirming the confiscation of the gold and the penalties imposed.