2024 (4) TMI 43 - AT - Customs

Smuggling - foreign origin Gold - burden to prove purchase has been discharged by the Appellant under section 123 of Customs Act - seized goods are liable to confiscation or not - difference of opinion - HELD THAT - The Show Cause Notice has proceeded on an erroneous notion that the burden of proof is required to be jointly discharged by Appellant No. 1 to 4 along with Appellant No. 5. In fact the only person who would be required to discharge the burden of proof would be Appellant No. 5. Framing of charges on Appellant No. 1 to 4 on this count is erroneous. The ownership claimant Rinku Verma Appellant No. 5 has produced 4 Invoices towards purchase from Snehal Gems Pvt Ltd. The transaction details by way of ledger and bank have been produced by him. Taking this lead the Revenue has caused investigation at the end of Snehal Gems who have confirmed the transactions in respect of 4 Invoices and also produced their purchase invoices and many other records which are part of the relied upon documents in the Show Cause Notice. No proper conclusion has been arrived at by Revenue to disprove the claims of Rinku Verma and Snehal Gems Pvt Ltd. The issues raised in the reply to Show Cause Notice have not been properly addressed. The Revenue had an original lead about the procurement of the gold in question by way of cash transaction between Shashi Kant Patil and Rinku Verma. Even as it was important for the Revenue to prove the gold in question was not procured from Snehal in view of clear lead the Revenue was also required to prove that the gold in question was procured way of cash transactions from Shashi Kant Patil. This lead has been completely abandoned without any proper reason. This is a serious lapse on the part of the Revenue - In this case since there were contrary claims the onus was on the Revenue was on two folds. Firstly to disprove the claim of Rinku Verma that the gold was procured through proper Invoices secondly to prove that the gold was in fact procured on cash basis from Shashi Kant Patil. As per my detailed observations on both these counts the Revenue has failed. The onus under Section 123 stands discharged by Appellant No. 5 claimant of ownership since Revenue has not come out with any specific adverse evidence against these Invoices and transactions. Also Appellants 1 to 4 were in no way required to discharge this burden in terms of Section 123. The Hon ble Member Judicial is agreed upon that burden of proof stands discharged under Section 123 and hold that seized goods are not liable for confiscation - The reference is answered and the difference of opinion stands resolved.

Summary

Issues Involved:
1. Whether the appellants have discharged their burden under Section 123 of the Customs Act, 1962, making the goods not liable for confiscation.
2. Whether the appellants have failed to discharge their burden under Section 123 of the Customs Act, 1962, making the goods liable for confiscation.

Summary:

Issue 1: Discharge of Burden under Section 123 of the Customs Act, 1962
The appellants argued that they had provided sufficient documentary evidence to prove the licit purchase of the gold from Snehal Gems Pvt Ltd. This included invoices, payment details through banking channels, and the ledger account maintained by the seller. The Department, however, focused on the third statement where the appellants retracted their earlier statements and claimed the gold belonged to Rinku Verma, who also provided supporting documents. The investigation confirmed the transactions between Rinku Verma and Snehal Gems Pvt Ltd. The Tribunal noted that the burden of proof lies with the person claiming ownership (Rinku Verma) and not with the carriers (Appellants 1 to 4).

Issue 2: Failure to Discharge Burden under Section 123 of the Customs Act, 1962
The Department argued that the initial statements made by the appellants indicated that the gold was procured from Shashi Kant Patil on a cash basis, which was later denied by Shashi Kant Patil. The Department did not pursue this lead further and instead focused on the retracted statements and the transactions with Snehal Gems Pvt Ltd. The Tribunal observed that the Department failed to conduct a thorough investigation to disprove the claims made by Rinku Verma and Snehal Gems Pvt Ltd. The Tribunal criticized the Department for abandoning the initial lead and not verifying the documents provided by the appellants adequately.

Tribunal's Conclusion:
The Tribunal concluded that the burden of proof under Section 123 was solely on Rinku Verma, who had provided sufficient evidence to prove the licit purchase of the gold. The Department's failure to disprove these claims and the lack of a thorough investigation led the Tribunal to hold that the appellants had discharged their burden of proof. Consequently, the seized goods were not liable for confiscation. The Tribunal agreed with the Member (Judicial) and resolved the difference of opinion in favor of the appellants.