2024 (4) TMI 699 - AT - Customs

Seizure of Gold - Extension of time u/s 110 (2) of the Customs Act for issuance of SCN - Absolute Confiscation of gold recovered during the course of search - imposition of penalties - failure to submit the documents of procurement of gold bars of foreign origin at the time of seizure in terms of Section 123 of the Customs Act 1962 - Admissibility of statements. Extension of time under Section 110 (2) of the Customs Act - HELD THAT - It is found that during the course of investigation Panchanama was drawn and in Panchanama while seizing the gold some papers were also recovered from the possession of the Appellant No. (2) but the details of those papers were neither supplied or mentioned in the Panchanama nor recorded in the relied upon documents - further the fact noted is that as per the examination report of CRCL the purity of gold was found 99.5%. Although the gold is having a foreign markings that does not establish that the gold is foreign gold as the foreign marking gold contains purity of 99.9%. In that circumstances the Revenue has failed to make the reason to believe that the gold in question is smuggled in nature. Applicability of provisions of Section 123 of the Customs Act 1962 - HELD THAT - As the purity of gold was 99.5% although there is an inscription of gold being of foreign origin which does not establish that the gold in question is of smuggled in nature. Moreover one of the gold bar is having marked as MMTC PAMP that the gold bar cannot be of foreign origin and smuggled one which itself breaks the case of the Revenue. The Revenue is also relying the marking of MMTC PAMP Indian marks therefore how can it be alleged that the gold in question is of foreign origin and smuggled one therefore the Revenue has failed to make out a case of reasonable belief that the gold in question is smuggled one. Consequently the provisions of Section 123 of the Customs Act 1962 are applicable to the facts of the case. Admissibility of statements - HELD THAT - The case of the Revenue is based only on the basis of statement of the Appellant No.(2) during the course of interrogation on 19.06.2016 no further corroborative evidence has been produced by the Revenue in support of their allegation that the gold in question is of foreign origin and smuggled one. Without corroborative evidence the statement of the Appellant No.(2) dated 19.06.2016 is inadmissible. Thus the gold in question cannot be held liable to be confiscated. Consequently the order for confiscation of gold in question is set aside. As the gold in question is not liable for confiscation therefore no penalties can be imposed on the appellants. The impugned order is set aside - appeal allowed.

Issues Involved:
1. Legality of the confiscation of gold under Section 110 of the Customs Act, 1962.
2. Admissibility and genuineness of the invoices provided by the appellants.
3. Applicability of Section 123 of the Customs Act, 1962 regarding the burden of proof.
4. Validity of the statements made by the appellants under duress.

Summary:

1. Legality of the confiscation of gold under Section 110 of the Customs Act, 1962:
The appellants argued that the gold was seized u/s 110 of the Customs Act, 1962 on 18.06.2016, and the show-cause notice was not communicated within the stipulated six months, rendering the confiscation illegal. The Tribunal noted that the extension order was passed on 15.12.2016 but was received by the appellants only on 17.01.2017, beyond the six-month period. Thus, the confiscation was deemed illegal as per Section 110 (2) of the Act.

2. Admissibility and genuineness of the invoices provided by the appellants:
The appellants provided photocopies of invoices to establish licit possession of the gold. The Tribunal observed that during the Panchanama, some papers were recovered but not detailed or recorded in the relied-upon documents. The Tribunal accepted the invoices as valid evidence since the seller (Appellant No.1) admitted to issuing them, and no contrary evidence was provided by the Revenue.

3. Applicability of Section 123 of the Customs Act, 1962 regarding the burden of proof:
The Tribunal emphasized that the burden of proof u/s 123 of the Customs Act shifts to the Revenue once the appellants provide prima facie evidence of licit possession. The CRCL report indicated the gold's purity as 99.5%, which does not align with foreign-origin gold typically having 99.9% purity. Hence, the Revenue failed to establish the gold as smuggled.

4. Validity of the statements made by the appellants under duress:
The Tribunal found that the Revenue's case relied heavily on the statements made by Appellant No.(2) during interrogation, which were later retracted, citing duress. Without corroborative evidence, these statements were deemed inadmissible. The Tribunal ruled that the statements alone could not substantiate the allegation of the gold being of foreign origin or smuggled.

Conclusion:
The Tribunal set aside the order of confiscation and penalties, ruling that the gold in question is not liable for confiscation and the appellants are entitled to consequential relief. The appeals were allowed.

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