2024 (4) TMI 82 - AT - Customs

Smuggling - Gold - absolute confiscation - redemption fine - penalty - failure to produce any documents regarding the possession of gold - discharge of onus to prove - HELD THAT - Admittedly, the seizure of the 2 gold bits is a town seizure at Renigunta Railway Station when the employee of the appellant was on-board the train. Further, admittedly the 2 gold bits totally weighing 697 gms are of irregular shape and size, having no foreign markings. Further, the person who was in possession at the relevant time - Mr Kaluva Hari Obulesu had stated that he had purchased the said gold at Chennai and was carrying it to Proddutur for his employer/appellant. Under these facts, there was no basis on which the Customs Officer could have formed an opinion that the gold is of foreign origin and/or smuggled in nature. Both the appellant and his employee Mr Kaluva Hari Obulesu have stated that the gold have been purchased at Chennai from Mr Hari Gopal against payment made in cash. They also gave the proper address and location of Mr Hari Gopal at Chennai. The appellant also explained the source of money for the purchase of gold - Revenue have rejected this contention on the basis of report received from Chennai Customs, that when their person went to enquire from Mr Hari Gopal, he could not locate him - the report received vide letter dated 17.08.2020 from the office of Commissioner of Customs is not a RUD and hence no reliance can be placed on the same. Accordingly, the appellant have discharged the onus under Section 123 of the Customs Act. All the allegations made by Revenue are by way of assumptions and presumptions which have no legs to stand. The impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues in this appeal involve the justification of absolute confiscation of gold bits under Section 111 (a), (b) and (d) of the Customs Act and the imposition of penalty under Section 112 (b)(i) of the Customs Act.

Confiscation of Gold and Penalty Imposition:
The appeal questioned the order of absolute confiscation of 2 gold bits weighing 697 gms valued at Rs. 30,01,979 under Section 111 (a), (b) and (d) of the Customs Act and the imposition of a penalty of Rs. 5 lakhs on the Appellant under Section 112 (b)(i) of the Customs Act. The employee of the Appellant was intercepted by Customs Officers while carrying the gold bits and failed to produce any legal documents regarding possession. The Customs Officer verified the gold's purity and value, leading to the confiscation order and penalty imposition.

Appellant's Defense and Revenue's Allegations:
The Appellant, engaged in a jewellery business, claimed to have purchased the gold bits from a specific seller in Chennai, Mr. Hari Gopal, against cash payment. The Appellant's employee, who was carrying the gold, also confirmed the purchase details. However, the Revenue alleged that the lack of valid documents supported the assumption that the gold was smuggled. The Appellant provided evidence of the seller's existence and location, disputing the Revenue's claim of fictitiousness. The Revenue's allegations were deemed vague and based on assumptions by the Appellant's legal counsel.

Tribunal's Decision and Findings:
The Tribunal found that the seizure of the gold bits lacked a basis for assuming foreign origin or smuggling. Both the Appellant and the employee provided consistent statements regarding the purchase of gold from Mr. Hari Gopal in Chennai. The Tribunal held that the Revenue's allegations were unfounded assumptions and the Appellant had sufficiently discharged the burden of proof under Section 123 of the Customs Act. Consequently, the appeal was allowed, the impugned order was set aside, and the Appellant was entitled to the return of confiscated gold or its sale proceeds with interest.

Conclusion:
The Tribunal's decision favored the Appellant, emphasizing the lack of evidence supporting the Revenue's allegations of smuggling and highlighting the Appellant's successful defense regarding the legitimate purchase of the gold bits from a known seller. The Appellant's appeal was upheld, leading to the reversal of the confiscation order and penalty imposition.