2024 (5) TMI 834 - AT - Customs

Smuggling - seizure of foreign origin gold bars - Confiscation - Penalty - No document regarding sale purchase/transportation - Violation of the provisions of Section 7 (1) (c) Section 11 Section 46 of the Act read with the Section 123 - burden or onus to establish the smuggled nature of gold - HELD THAT - We find that the impugned gold intercepted initially taken possession by the officer of GRP and then handed over to Customs. Admittedly the gold did not have any tell-tale foreign marking and it was merely accused that the markings were removed to hoodwink investigation. The place of seizure is not in Customs area. Hon ble Supreme Court in the case of Gian Chand Ors 2013 (7) TMI 1155 - SUPREME COURT wherein in case of seizure by the Police and thereafter the possession was shifted to the Customs Officer held that the pre-requisite of seizure is not satisfied. Accordingly it is held that the circumstances as required under the Customs Act are not satisfied and consequentially the whole burden or onus to establish the smuggled nature of gold is on the Revenue. In addition to the above fact remains that the gold did not have any foreign marking; Department under established that the same has been smuggled. The situation would certainly create reasons to believe that the impugned gold could be smuggled one necessitated further prove. It does not constitute reasonable belief to seize the gold u/s 123 of the Act. Thus we do not find any reasons to interfere with the impugned Order-in-Appeal passed by the learned Commissioner (Appeals) and accordingly the same is sustained. The appeals filed by the Department are thus dismissed.

Issues Involved:
A. Whether the evidences available on record prove that the Gold bars/pieces were allegedly smuggled into India from Bangladesh without any legal documents.
B. Whether the benefit of the presumption u/s 123 of the Customs Act goes in favor of Revenue or not.
C. Whether the retracted statements of the co-accused can be relied upon to establish the guilt of the Respondents.
D. Whether the term "smuggling" has been defined under the Customs Act, and the evidentiary value of the statements recorded in custody.

Summary:

Issue A: Alleged Smuggling of Gold Bars
The Tribunal found that the case was based on mere pretence, hearsay evidence, and suspicion, which cannot replace proof. The respondents, M/s Sai Max Traders, M/s Sai Max Jewellers, and Shri Shiv Raj Singh, provided comprehensive documentary evidence, including purchase invoices, stock registers, GST returns, and a follow-up report from Kolkata Customs, establishing lawful procurement and Indian origin of the gold. The Adjudicating Authority concluded that the prosecution failed to prove the gold bars were smuggled, thus holding them as of Indian origin.

Issue B: Presumption u/s 123 of the Customs Act
The Tribunal noted that the burden of proof u/s 123 did not favor the Department. The gold bars lacked foreign markings, and the case involved a town seizure far from any international border or Customs area. The Tribunal emphasized that reasonable belief must be based on objective material, which was absent in this case. The Adjudicating Authority and Commissioner (Appeals) both found that the respondents had successfully discharged any onus cast upon them by providing credible evidence of lawful procurement.

Issue C: Reliance on Retracted Statements
The Tribunal reiterated that retracted statements of co-accused require independent corroboration to sustain a conviction. In this case, the statement of Shri Shiv Raj Singh, which was based on conjectures and surmises, was not supported by any independent and reliable evidence. The Tribunal cited multiple judgments emphasizing that uncorroborated confessions of co-accused cannot form the sole basis for penalizing the respondents.

Issue D: Definition of "Smuggling" and Evidentiary Value of Statements
The Tribunal clarified that "smuggling" implies goods of foreign origin imported illegally. The respondents provided substantial evidence, including a follow-up report from Kolkata Customs, confirming the lawful transfer of gold between their Delhi and Kolkata entities. The Tribunal criticized the Department for concealing the Kolkata Customs report, which supported the respondents' claims. The Tribunal upheld the findings of the Adjudicating Authority and Commissioner (Appeals) that the seized gold was of Indian origin and not smuggled.

Conclusion:
The Tribunal dismissed the Department's appeals, upheld the Order-in-Appeal, and directed the return of the seized gold or its sale proceeds with interest. The Tribunal found no credible evidence to support the Department's allegations of smuggling.

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