2023 (7) TMI 1131 - AT - Customs

Levy of Penalty u/s 112 (b) (i) of the Customs Act - Smuggling of Gold Bars - non-production of valid documents for the legal import/possession of the gold bars - discharge of onus to prove - allegation based on retracted statements - HELD THAT - The statements were retracted within few days at the first opportunity when the appellant (and others) was produced before the court of the magistrate. It is further found that arranging of Creta car for the purpose of smuggling by this appellant, as alleged, is not established as the said car is admittedly purchased by Mr. Sohan Singh and payment for the same was made through banking channel to the seller. From the facts on record, it is not established that this appellant was paying the rent for the Noida flat, where other persons alleged to be involved in smuggling were living. Further, it is found that no statement have been recorded of the landlord in support of allegation of the revenue. Further admittedly gold in question does not belong to this appellant, nor he has claimed the said gold from the department. It is further found that the whatsapp chat relied upon by revenue is also not supported by the appropriate certificate as required under Section 138C of the Act. The revenue have placed reliance on the diary, stated to be recovered from the Noida flat, but the appellant was never put any question regarding the contents of the said diary. Thus the contents of the said diary have been wrongly relied upon by revenue in imposing the penalty. Further admittedly the name of the appellant is not mentioned in the said diary, wherein the name of one Anchal Jain is mentioned, from whom money is received as per the diary for expenses. There is violation of the provision of Section 138C of the Act, as well as the principles of natural justice. It is also found that it is the case of town seizure, and revenue have not laid any evidence as to the smuggled nature of gold, save and except assumption and presumption, and relying on the retracted statement. The provision of Section 123 of the Act are not attracted on this appellant, as neither he was found in possession of the gold, nor have claimed the seized gold. The penalty provision under Section 112(b)(i) is not attracted - Appeal allowed.

Issues Involved:
1. Legality of penalty under Section 112(b)(i) of the Customs Act.
2. Validity of the retracted statements.
3. Ownership and smuggled nature of the seized gold.
4. Confiscation of silver bars.

Summary of Judgment:

1. Legality of Penalty under Section 112(b)(i) of the Customs Act:
The Appellant contested the penalty of Rs. 25 lakhs imposed under Section 112(b)(i) of the Customs Act. The Tribunal found that the penalty provision under Section 112(b)(i) was not attracted as the appellant was neither found in possession of the gold nor claimed ownership of the seized gold. The Tribunal noted that the car used for smuggling was purchased by Mr. Sohan Singh and not by the appellant, and there was no evidence that the appellant paid the rent for the Noida flat where the alleged smugglers were staying.

2. Validity of the Retracted Statements:
The Tribunal observed that the entire case of the revenue was based on the retracted statements of the appellant and co-noticees. These statements were retracted at the first opportunity when they were produced before the magistrate. The Tribunal emphasized that the statements alone, especially when retracted, could not form the basis for imposing penalties without corroborative evidence. The Tribunal also highlighted the failure of the revenue to comply with Section 138B of the Customs Act, which requires examination of witnesses in adjudication proceedings.

3. Ownership and Smuggled Nature of the Seized Gold:
The Tribunal found that the revenue did not establish that the seized gold belonged to the appellant. The appellant had not claimed the gold, and there was no evidence linking him directly to the smuggling activities. The Tribunal criticized the revenue for not making any effort to inquire from Mr. Ramey and Mr. Thomas, who were said to be the owners of the gold. Additionally, the Tribunal found that the provisions of Section 123 of the Customs Act, which shift the burden of proof to the person from whose possession the goods are seized, were not applicable to the appellant.

4. Confiscation of Silver Bars:
The Tribunal set aside the confiscation of three silver bars weighing 1,454.99 grams. The appellant had provided purchase vouchers for the silver, showing its licit purchase. The Tribunal directed the revenue to return the silver bars to the appellant or disburse the sale proceeds with interest if the bars had already been sold.

Conclusion:
The Tribunal allowed the appeal, set aside the penalty imposed on the appellant, and ordered the return of the confiscated silver bars. The judgment emphasized the need for corroborative evidence when relying on retracted statements and highlighted procedural lapses by the revenue authorities.

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