2024 (5) TMI 574 - AT - Customs

Seizure - Burden of proof - Inviolability of section 123 - reasonable belief - Onus for proving the goods to be not smuggled - Seizure outside the customs area within the territorial frontiers of the country places - Seeking redemption of confiscated goods - HELD THAT - In appellate proceedings of M/s Vihari Jewels, Ms Vihari Rajesh Sheth and Shri Jiten Sheth, the entirety of burden, as proposed in the show cause notice, was decided, in relation to the very same goods among others, without reference to the status of the appellant herein vis- -vis the impugned goods. The consequences of the approval of the order of the original authority, which had kept the appellant herein out of its ken and as upheld in entirety against those persons, was set aside by the Tribunal in re Vihari Jewels. Despite that, and notwithstanding the decision of the Tribunal having been rendered before finalisation of the order impugned here, the first appellate authority proceeded to give a different treatment to the goods already impugned before the Tribunal. The impugned order is, thus, in ignorance of essential facts that impinge upon the options available to the first appellate authority at the time deciding the appeal impugned now. Thus, it would be appropriate to set aside the impugned order and restore the dispute to the first appellate authority to decide the appeal afresh in the light of law as legislated and judicially determined after affording fresh opportunity to the appellant herein to make written and oral submissions. The appeal is, thus, disposed off by remand to Commissioner of Customs (Appeals), Mumbai.

Summary

Issues Involved:
1. Applicability of Section 123 of the Customs Act, 1962.
2. Validity of seizure and confiscation of goods under Section 111 of the Customs Act, 1962.
3. Entitlement to redeem confiscated goods under Section 125 of the Customs Act, 1962.

Issue-wise Summary:

1. Applicability of Section 123 of the Customs Act, 1962:
The appellant argued the inviolability of Section 123 of the Customs Act, 1962, which places the burden of proving that goods are not smuggled on the person from whose possession they were seized. The Tribunal noted that Section 123 applies to specific goods enumerated therein, including gold and manufactures thereof, watches, and any other class of goods specified by the Central Government. The appellant contended that the strict regimen of Section 123 was set out in previous Tribunal decisions, and the goods in question, diamond-studded jewelry, were not seized from a customs area but from within the country, thus placing the onus on customs authorities to prove smuggling.

2. Validity of Seizure and Confiscation under Section 111 of the Customs Act, 1962:
The goods were seized based on reasonable belief of being smuggled, supported by evidence from investigations, including entries in a red diary and electronic devices seized from Ms. Vihari Sheth. The original authority confiscated the goods under Section 111 of the Customs Act, 1962, but offered redemption to Ms. Vihari Sheth. The Tribunal examined whether the goods were indeed smuggled and whether the onus of proof was properly discharged. It was noted that the goods were purchased through valid transactions with taxes paid, and the presumption of smuggling under Section 123 could not be applied to the appellants who were bona fide purchasers.

3. Entitlement to Redeem Confiscated Goods under Section 125 of the Customs Act, 1962:
The first appellate authority allowed the purchasers, including the appellant, to redeem the goods on payment of a fine and applicable duties. The appellant argued that the first appellate authority acted in excess of jurisdiction by upholding the confiscation while concurring with their plea for the right to the goods as owners. The Tribunal highlighted that the goods were not intercepted in a customs area, and the onus of proving licit possession was satisfactorily discharged by the appellants. The Tribunal found that the imposition of penalties and the presumption of smuggling were not justified, leading to the decision to set aside the impugned order and remand the case for fresh consideration.

Conclusion:
The Tribunal set aside the impugned order and remanded the case to the Commissioner of Customs (Appeals), Mumbai, for a fresh decision in light of the law, after affording the appellant an opportunity to make written and oral submissions. The appeal was disposed of by remand.