2023 (8) TMI 205 - AT - Customs

Absolute confiscation of seized gold weighing 999.940 grams of gold - levy of penalty - burden to prove that the goods are not smuggled goods - invocation of Section 123 of CA - HELD THAT - The theory of reverse burden under this provision can be invoked if there is a reasonable belief that the goods in question are smuggled one. The show cause notice in the present case was issued in November, 2020 whereas the appellant had made his submission vide his letter dated 30.09.2020 mentioning that the gold recovered from his possession was the gold melted into bar/brick out of the jewellery and the ornaments belonging to the family of three brothers including the appellant. The said jewellery also included the jewellery inherited from their grandfather. The appellant along with the said letter had produced pictures/photos of his family members wearing the gold jewellery. He even had given the letter issued by the person who had melted the said jewellery. It is department s admitted case that there were no foreign markings on the gold recovered from the appellant. It is also department s own acknowledgement that case against appellant is an accidental case which is not based on any pre-information. When the seizure is not even based on any information against the appellant, the detained/seized gold had no foreign marking, nothing incriminating against appellant was recovered from Innova. The mere fact that the gold has purity of 999.80 as good as that of foreign gold is opined to be highly insufficient a fact to form such reasonable belief as is required for invoking Section 123 of the Customs Act. The most of the findings of the authority are the outcome of the presumption. While rejecting the plea of gold being melted out of family jewellery, the authority has simply held the said submission to be the concocted one, without any cogent proof or reasoning except on the presumption that it cannot be a coincidence that three of the brothers will decide at the same time to get the jewellery in their possession to be melted that too to into one common piece. There is no rebuttal to the submission that three of the brothers including the appellant had inherited the ancestral jewellery. The subsequent findings that the size and purity of the melted gold exactly matched with the world s most widely traded small gold bar, cannot be a coincident, are also presumptive. There was no reasonable belief with the DRI officers at the time of detaining/seizing the gold from appellant, the onus was upon the department to prove that the gold in the hands of the appellant was the foreign smuggled gold. Apparently and admittedly, there was no foreign marking. No doubt, in case the gold is acknowledged to be melted, there remains no possibility of any marking on the melted piece of gold. However, it is still for the department to prove that the gold with the appellant is from the illicit source - there are no such evidence by the department. The defence taken by the appellant is held to have been rejected on the basis of assumptions and surmises. In the absence of any evidence by the department but a reasonable corroborative evidence by the appellant that the gold bar in his hand was the melted gold out of his joint family entire jewellery - the gold in question is not proved to be the smuggled gold of foreign origin. Mere purity thereof being equivalent to the purity of foreign gold is wrongly held to be the criteria to hold the melted gold as the gold of foreign origin. Investigation rather is observed to be faulty. Apparently and admittedly those slips have no connection with the appellant. The only slip discussed in the entire order is the slip which was recovered from the appellant who was accidently found present in M/s. New Satyam Tounch Centre when a search was effected in the said centre pursuant to recovery of its slips from the Innova car about along with a huge quantity of gold (five times the gold detained from the appellant) - Since department, despite query raised, was unable to inform about any other proceedings/prosecution with respect to the said recovery of 5514.8 grams of gold, an intimation is hereby given to the Chairman, Central Board of Indirect Taxes and Customs (CBIC) to enquire about the proceedings, if any, pursuant thereto and to take appropriate action about the recovery of that huge quantity of gold, if no action found taken. Copy of this order accordingly be forwarded to the Chairman, CBIC. The chairman is also required to send the report of said enquiry to this Tribunal. The order under challenge is not at all sustainable - Appeal allowed.

Summary

Issues Involved:
1. Legality of the absolute confiscation of 999.940 grams of gold.
2. Imposition of penalty on the appellant.
3. Invocation of Section 123 of the Customs Act, 1962.
4. Evaluation of evidence and burden of proof.

Summary:

1. Legality of the absolute confiscation of 999.940 grams of gold:
The appellant's gold was confiscated based on the suspicion that it was smuggled, following the interception of an Innova car with smuggled gold and slips from M/s. New Satyam Tounch Centre. The appellant claimed the gold was melted family jewelry. The Tribunal found no foreign markings on the gold and noted that the appellant had provided sufficient evidence, including an affidavit from the melter and bus tickets corroborating his movements. The Tribunal concluded that the confiscation was based on presumptions without concrete evidence.

2. Imposition of penalty on the appellant:
The penalty was imposed based on the assumption that the gold was smuggled. The Tribunal found this to be an outcome of presumptions and surmises, noting the appellant's consistent and corroborated defense. The penalty was deemed unjustified and was set aside.

3. Invocation of Section 123 of the Customs Act, 1962:
Section 123 shifts the burden of proof to the person from whom the goods are seized if there is a reasonable belief that the goods are smuggled. The Tribunal held that the section was wrongly invoked as there was no reasonable belief that the gold was smuggled. The department failed to provide evidence that the gold was of foreign origin, and the appellant successfully demonstrated the gold's domestic origin.

4. Evaluation of evidence and burden of proof:
The Tribunal criticized the department's reliance on presumptions rather than concrete evidence. The appellant's evidence, including the affidavit from the melter and the bus tickets, was found credible. The Tribunal noted the absence of foreign markings on the gold and the lack of any incriminating evidence linking the appellant to smuggling. The department's failure to provide substantial proof led to the conclusion that the confiscation and penalty were unjustified.

Conclusion:
The Tribunal set aside the order of absolute confiscation and the imposition of penalty, allowing the appeal. The department was instructed to provide a report on the proceedings related to the recovery of 5514.8 grams of gold from the Innova car.