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2024 (4) TMI 382 - AT - CustomsSmuggling - Absolute confiscation of three gold bars and one small piece of remelted gold - Penalty u/s 112(a) and (b)(i) of Customs Act - failure to examine witnesses during adjudication proceedings - retraction of statements - HELD THAT - Admittedly there were no foreign markings on the gold seized and subsequently confiscated being 1129 gms of gold. Further admittedly the gold is comprised of bar/rods and bits and is not of standard shape size and weight as in the case of gold of foreign origin. It is further found that Revenue has not laid any evidence as to the smuggled nature of gold save and except assumption and presumption based on the statements of Mr. NPK Mr. VVRK recorded at the time of seizure. As such statements have been subsequently retracted the initial statements have lost their evidentiary value. It is further found that Revenue has failed to examine their witnesses during adjudication proceedings as required under section 138B of the Act. Further the appellant Mr. R. Rajasekhar who has claimed the ownership of the gold has led cogent evidence in the form of his business records and account statements in support of the gold in question. It is further found that such cogent explanation has not been found to be untrue but have been arbitrarily rejected by Revenue. It is also found that the explanation given by these appellants has been corroborated by the statement of smelters/melters both at Jaggayyapet and at Chennai. Accordingly it is found that appellants have discharged the onus under section 123 of the Act. The impugned orders set aside - appeal allowed.
Issues Involved:
1. Absolute confiscation of gold and imposition of penalties. 2. Validity of statements and retractions. 3. Evidence of licit possession of gold. 4. Compliance with procedural requirements under section 165 of Cr.P.C. and CBIC Circular No.01/2017-Cus. 5. Burden of proof under section 123 of the Customs Act. Summary: Issue 1: Absolute Confiscation of Gold and Imposition of Penalties The appellants challenged the confiscation of gold and the imposition of penalties. The adjudication order confirmed the absolute confiscation of gold weighing 1000.460 gms and 129 gms, seized from Mr. N. Pavan Kumar (NPK) and Mr. V. Venkata Rama Krishna (VVRK) respectively, under Panchanama dated 02.12.2020 & 03.12.2020. Penalties were imposed under section 112(a) and (b) of the Customs Act. Issue 2: Validity of Statements and Retractions The initial statements of NPK and VVRK, recorded at the time of seizure, indicated that they were carrying gold purchased in Chennai without documents. These statements were later retracted, with claims that they were not given voluntarily. The Tribunal found that the retracted statements had lost their evidentiary value and noted that the Revenue failed to examine witnesses as required under section 138B of the Act. Issue 3: Evidence of Licit Possession of Gold Mr. R. Rajasekhar, the employer of NPK and VVRK, provided business records and account statements to support the licit possession of the gold. The Tribunal found that the explanation given by the appellants was corroborated by the statements of smelters/melters and that the Revenue arbitrarily rejected this cogent explanation without finding it untrue. Issue 4: Compliance with Procedural Requirements The Tribunal noted that the officers did not draw a seizure report as required under section 165 of Cr.P.C. and CBIC Circular No.01/2017-Cus. The absence of a seizure report/memo indicated non-compliance with procedural guidelines, rendering the proceedings ab initio void and illegal. Issue 5: Burden of Proof under Section 123 of the Customs Act The Tribunal emphasized that the burden of proof was on the person from whose possession the gold was found or who claimed the gold. The appellants successfully discharged this burden by providing evidence of licit possession, which was not disproven by the Revenue. Conclusion: The Tribunal allowed the appeals, set aside the impugned orders, and ordered the return of the confiscated gold to Mr. R. Rajasekhar. If the gold had already been disposed of by the Revenue, he was entitled to receive the sale proceeds along with interest as per Rules. All penalties imposed were set aside.
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