1999 (9) TMI 98 - HC - Customs

Summary

Issues Involved:
1. Applicability of Sections 106 and 114 of the Evidence Act.
2. Applicability of Section 123 of the Customs Act.
3. Binding nature of criminal court acquittal on the Tribunal.
4. Burden of proof regarding the possession of contraband gold.
5. Relevance of prior judgments in similar cases.

Detailed Analysis:

1. Applicability of Sections 106 and 114 of the Evidence Act:
The court examined whether the Tribunal was justified in applying Sections 106 and 114 of the Evidence Act. The prosecution argued that the burden to explain the possession of contraband gold with foreign markings lies on the accused, as per Section 106, which states that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The court cited the Supreme Court ruling in *Collector of Customs v. D. Bhoormull* (1983 (13) E.L.T. 1546 (S.C.)) which held that the prosecution is not required to prove its case with mathematical precision, but only to establish a degree of probability that a prudent man may believe in the existence of the fact in issue. The court also referenced *State of Maharashtra v. Natwarlal Damodardas Soni* (1983 (13) E.L.T. 1620 (S.C.)), emphasizing that illegal importation of gold could be presumed under Sections 106 and 114 if the totality of facts warranted such a presumption.

2. Applicability of Section 123 of the Customs Act:
The court discussed the applicability of Section 123 of the Customs Act, which places the burden of proof on the person from whom the goods are seized to prove that they are not smuggled. The appellant argued that the acquittal in the criminal case was based on the non-applicability of Section 123, as the seizure was not based on reasonable belief. However, the court noted that the criminal court's finding on the non-applicability of Section 123 was not binding on the Tribunal, as it did not address the contraband nature of the gold. The court cited the Supreme Court's decision in *Amba Lal v. Union of India* (1983 (13) E.L.T. 1321 (S.C.)), which held that while Section 106 of the Evidence Act does not apply directly, the customs authorities must still prove their case.

3. Binding Nature of Criminal Court Acquittal on the Tribunal:
The court examined whether the acquittal in the criminal case was binding on the Tribunal. The appellant contended that the criminal court's acquittal should be binding, as it found the seizure was not based on reasonable belief. However, the court highlighted that the criminal court's acquittal was based on technical grounds and did not address the merits of the contraband nature of the gold. The court referenced *P. Channappa v. Mysore Revenue Appellate Tribunal* (AIR 1966 Mysore 68), which held that tribunals cannot re-examine charges already decided by a competent criminal court, provided the acquittal was on merits.

4. Burden of Proof Regarding the Possession of Contraband Gold:
The court discussed the burden of proof on the appellant to explain the possession of a large quantity of gold slabs with foreign markings. The court cited several Supreme Court judgments, including *Labhchand Dhanpat Singh Jain v. State of Maharashtra* (AIR 1975 SC 182) and *Balumal Jamnadas Batra v. State of Maharashtra* (1983 (13) E.L.T. 1558 (S.C.)), which held that the burden of proving an innocent receipt of gold lies upon the appellant under Section 106 of the Evidence Act. The court concluded that the appellant failed to provide a satisfactory explanation for the possession of the gold, thus raising a presumption under Section 114 of the Evidence Act that the gold was illegally imported.

5. Relevance of Prior Judgments in Similar Cases:
The court reviewed several prior judgments to determine the relevance and applicability of legal principles to the current case. The court noted that in *Pooranmal v. Director of Inspection* (AIR 1974 Supreme Court 348), the Supreme Court held that an adverse inference could be drawn if the person fails to explain the facts within their knowledge. The court also referenced *Santosh Gupta v. Union of India* (1990 (48) E.L.T. 210 (Bom.)), where the burden of proof was deemed discharged based on a preponderance of probabilities. However, the court found that the appellant in the current case did not meet this burden.

Conclusion:
The court concluded that the Tribunal was justified in applying Sections 106 and 114 of the Evidence Act and that the acquittal in the criminal case did not bind the Tribunal. The appellant failed to provide a convincing explanation for the possession of the contraband gold, and the totality of facts warranted a presumption of illegal importation. Therefore, the reference was answered against the assessee and in favor of the revenue.