2024 (4) TMI 1016 - AT - Customs

Smuggling - Confiscation of Silver Jewellery, Silver Boondi Indian Currency - third country origin - Penalty - recovery of contraband goods from the house and Gaddi - Burden of proof - presumption u/s 123 - HELD THAT - We find that the search made on the basis of that respondent is dealing with the contraband goods and during the course of investigation, no contraband goods were recovered. The respondent being a trader in silver ornaments/silver boondi, was searched and 79.58 kgs. of Silver Jewellery, 50 kgs. of Silver Boondi, Indian Currency amounting to Rs. 79,00,000/- were recovered. These were presumed by the Revenue and these are the third country origin, but no such evidence has been produced by the Revenue to allege that these are third country origin. In fact, during the course of investigation, it is a fact on record that boondi silver and silver jewellery were recovered from the shop of the respondent. So, the question arises that in the absence of any seizure of Port or Airport or not having any foreign markings on the goods seized from the respondent, how the officers came to the conclusion that the goods are third country origin goods. Therefore, first, onus on the Revenue is to make a reasonable belief that the goods are of third country. Admittedly, no such evidence has been produced by the Revenue to allege that to make a reasonable belief, the goods are of third country origin. In the absence of that, the goods in question cannot be confiscated. Furthermore, the confiscation of Indian Currency recovered from the respondent was not proved by the Revenue that the same is sale proceed of the goods of third country origin. In that circumstances, the Indian Currency cannot be seized or confiscated. We do agree with the observations made by the Ld. Commissioner (Appeals). Thus, we do not find any infirmity in the order passed by the Ld. Commissioner (Appeals) and do agree with the same. Hence, we do not find any merit in the appeal filed by the Revenue. Accordingly, the same is dismissed.

Summary

Issues Involved:
1. Confiscation of Silver Boondi and Silver Jewellery under Sections 111 and 123 of the Customs Act, 1962.
2. Confiscation of Indian Currency as sale proceeds of smuggled goods under Section 121 of the Customs Act, 1962.
3. Imposition of Penalty under Section 112 of the Customs Act, 1962.

Summary:

1. Confiscation of Silver Boondi and Silver Jewellery:
The Revenue alleged that the Silver Boondi and Silver Jewellery recovered from the respondent were of third country origin and thus liable to confiscation under Sections 111 and 123 of the Customs Act, 1962. However, the Tribunal found no evidence proving the goods were of foreign origin. The respondent provided purchase invoices and stock records, which were accepted as valid. The Tribunal emphasized that "reasonable belief" for seizure must be based on concrete evidence, which was lacking in this case. Therefore, the confiscation of these items was deemed improper.

2. Confiscation of Indian Currency:
The Revenue claimed that the Indian Currency amounting to Rs. 79,00,000/- was the sale proceeds of smuggled goods and thus liable to confiscation under Section 121 of the Customs Act, 1962. The Tribunal found that the Revenue failed to provide evidence linking the currency to the sale of smuggled goods. The respondent's GST returns and cash books showed legitimate business transactions. The Tribunal concluded that the confiscation of the currency was not justified.

3. Imposition of Penalty:
The Tribunal noted that the imposition of a penalty under Section 112 of the Customs Act, 1962, was contingent on proving the goods were smuggled. Since the Revenue failed to establish this, the penalty imposed on the respondent was set aside.

Conclusion:
The Tribunal upheld the order of the Commissioner (Appeals) and dismissed the Revenue's appeal, ruling that the confiscation of Silver Boondi, Silver Jewellery, and Indian Currency, as well as the imposition of a penalty, were not justified. The respondent was entitled to the return of the seized goods and currency.