2024 (3) TMI 1194 - HC - Customs

Smuggling - two kilograms of gold, with Swiss markings - Contraband item - number of material facts as well as the judgments cited were overlooked while arriving at conclusions - reliability of statements - burden to prove - HELD THAT - It is from the statement under Section 108 itself that the identity of the person intercepted was revealed, which was found to be verified and correct by the Assistant Commissioner (Preventive) - The identity of the owner of the gold seized from the intercepted person also was revealed from the statement. The statement also admitted the person having boarded Howrah-Mumbai Mail Express, and that he was travelling to Raipur; in the course of which, some persons in civil dress woke him up and introduced themselves as officers of DRI, Patna. They searched his body and during the course of search, the smuggled gold kept hidden and covered inside the pants, was detected. So much of the statement has not been retracted from. The person intercepted had also disclosed the name of the person from whom he had received the gold bars at Kolkata, who had directed him to hand over the same to the respondent, who was his employer. The statement indicated the intercepted person having confessed to his knowledge, that the gold was smuggled from Bangladesh, as told to him by one Sonu, who handed over the gold bars for onward transmission to his employer, the respondent - The retraction admits the possession of the gold bars at the time of interception. The description of which, as is found with the DRI, is also admitted to be that which was seized. There is no escape from the fact that the contraband was imported as revealed from a mere visual inspection, which discloses the markings on the gold bars. Now, the question arises as to whether the alleged owner of the goods referred to as Noticee No. 2, the respondent herein, had obtained valid possession through a legal import made by him - The First Appellate Authority found that the entire case of the Department spins around the confessional statement of the intercepted person. The First Appellate Authority found that the statement recorded under Section 108 was specifically stated to be under duress and there was a finding by the Original Authority that he had not retracted the statement; while, in fact, the statement was specifically retracted. It was found that Section 108 of the Act, though is substantive evidence, some corroboration has to be available before acting upon it, which can be the slightest corroboration. The First Appellate Authority and the Tribunal had entirely relied on the invoice dated 21.07.2017 produced by Noticee No.2 to hold that the seized gold bars were purchased from Saheli Gems and Jewellers Pvt. Ltd. It cannot but held that the reliance placed is wholly irrelevant since the two sets of bill books produced requires further evidence to establish the transactions between Saheli Gems and Jewellers and Adinath Jewellers having occurred on the day it is said to have occurred; prior to the interception and seizure, especially since no payment was made for the purchase - If Saheli Gems and Jewellers had imported it by a proper bill of entry filed and the same received from a notified entry point for the purpose of home consumption, then and only then would the burden of proof under Section 123 be discharged and the goods seized from Noticee No.1 be absolved of the confiscation proceedings under the Customs Act. The falsity of the story projected by the owner of the gold bars, is one another circumstance standing against the claim raised by the owner and in favour of the confiscation proceedings. Whoever be the owner, the gold being one manufactured outside the country, if it is seized in the same form, the owner who raises a claim for release of the said gold should establish unequivocally before the Authority that it had been brought into India duly in accordance with the provisions of the Customs Act. This is the rigor placed on the person possessing or the owner of the seized goods, by Section 123, which puts the burden of proof squarely on the person from whose possession or the owner who has entrusted the said gold to the person possessing it, to establish the source from which it has been received. The appellate authorities have found the findings of the original authority, regarding the absence of proof of the transaction, including the movement of the goods to be bad, only by reason of the invoice produced - the invoice is not a document on which any reliance can be placed. Even if such reliance can be placed, in the present case, the gold bars; which demonstrably were manufactured and sourced from outside the country, should be proved to have been brought into the country in accordance with the provisions of the Customs Act. The orders of the Appellate Authorities set aside - the orders of the original authority restored - appeal allowed with costs computed at Rs. 5,000/- which can be recovered from the respondent by the Revenue.

Summary

Issues Involved:
1. Validity of the seizure of gold u/s 123 of the Customs Act, 1962.
2. Evidentiary value of the statement recorded u/s 108 of the Customs Act.
3. Burden of proof on the owner to establish legal importation of the gold.
4. Allegations of coercion and duress in obtaining the statement.
5. Relevance and authenticity of the invoice produced by the owner.

Summary:

Issue 1: Validity of the Seizure of Gold u/s 123 of the Customs Act, 1962
Two kilograms of gold with Swiss markings were seized based on prior information. The gold was confiscated and penalties were imposed under the Customs Act. The First Appellate Authority reversed the order, but the Tribunal affirmed the reversal. The High Court examined whether the Appellate Authority erred in its findings by overlooking material facts and judgments. The Court found that the gold bars were indubitably sourced from abroad, and the seizure was valid as the intercepted person and the owner failed to establish legal importation.

Issue 2: Evidentiary Value of the Statement Recorded u/s 108 of the Customs Act
The intercepted person gave a sworn statement under Section 108, which was later retracted. The Court noted that even if the statement was retracted, it holds evidentiary value if corroborated by other material evidence. The Court found that the statement's retraction did not affect its validity as the intercepted person admitted to possession of the gold bars with Swiss markings, which were clearly imported.

Issue 3: Burden of Proof on the Owner to Establish Legal Importation of the Gold
The Court emphasized that under Section 123 of the Act, the burden of proof lies on the person from whom the gold was seized or the owner to establish legal importation. The owner failed to provide sufficient evidence to prove that the gold was imported in accordance with the Customs Act. The invoices produced did not contain descriptions of the gold bars, and the payments were made after the seizure, making the transaction suspicious.

Issue 4: Allegations of Coercion and Duress in Obtaining the Statement
The respondent argued that the statement under Section 108 was obtained under threat and coercion. The Court acknowledged that statements recorded under duress cannot be used against the person. However, the Court found that the intercepted person's admission of possession and the description of the gold bars were sufficient to establish that the gold was imported, irrespective of the retracted statement.

Issue 5: Relevance and Authenticity of the Invoice Produced by the Owner
The invoices produced by the owner were dated before the confiscation but lacked evidence of payment at the time of seizure. The Court found the invoices to be concocted documents as the payments were made after the seizure. The First Appellate Authority and the Tribunal's reliance on these invoices was deemed irrelevant and based on extraneous considerations.

Conclusion:
The High Court set aside the orders of the Appellate Authorities and restored the orders of the original authority, concluding that the appellate orders were perverse and based on irrelevant material. The appeal was allowed with costs of Rs. 5,000/- to be recovered from the respondent by the Revenue.