2024 (7) TMI 938 - AT - Customs

Absolute Confiscation - penalty - foreign marking on the seized gold - Indian Currency - town seizure - onus to prove u/s 123 of the Customs Act, 1962 - HELD THAT - The facts placed as the Seizure Memo, the gold has been seized in the office premises of Shri Om Prakash Shah, who is the brother of the appellant and there was no foreign marking on the gold and later on, on testing the same, the purity of gold is 99.5% to 99.6%. There is no foreign marking on the gold and it is a case of town seizure, therefore, before seizure of the said gold, it is the duty of the officer, who effected the seizure of gold, has to make out the reasonable belief that the gold is of foreign origin, which is absent in the facts and circumstances of the case. As the gold does not have any foreign marking, moreover, it is a case of town seizure, therefore, the provision of Section 123 of the Customs Act, 1962, cannot be invoked unless and until there is no reasonable belief that the gold in question is of foreign origin. In the case of Nand Kishor Sumani 2015 (10) TMI 2329 - CESTAT KOLKATA , when the purity of gold was less than 99.99% and no foreign marking on the gold seized and it was a town seizure, in that circumstances, this Tribunal has held ' There could be non-observance of provisions of some other enactments like income-tax or sales tax laws but the same cannot be grounds for confiscation of goods under Section 111 of the Customs Act, 1962 when there is no iota of evidence that seized gold bars are of foreign origin or smuggled into India. Suspicion/presumption howsoever strong cannot take the place of an evidence.' The gold in question cannot be confiscated. Consequently, the confiscation of gold in this case is set aside and no penalty is imposable on the appellant - the impugned order qua confiscation of gold and imposing the penalty on the appellant is set aside - appeal allowed.

Summary

Issues Involved:
1. Legitimacy of the confiscation of gold.
2. Imposition of penalty on the appellant.
3. Applicability of Section 123 of the Customs Act, 1962.
4. Determination of the gold's origin (foreign or domestic).

Detailed Analysis:

1. Legitimacy of the Confiscation of Gold:
The appellant contested the absolute confiscation of gold seized from him, arguing that the gold did not have any foreign markings and was of a purity (99.5% to 99.6%) that did not indicate foreign origin. The appellant claimed the gold was obtained from his mother, supported by Wealth Tax Returns and Wealth Assessment documents for the year 2015-16. The appellant cited several precedents to support his contention that the confiscation was unwarranted.

2. Imposition of Penalty on the Appellant:
The adjudicating authority imposed a penalty of Rs. 3,50,000/- on the appellant while releasing the Indian currency and not imposing any penalty on Shri Rahul Malakar. The appellant appealed against this decision, arguing that the penalty was unjustified given the lack of evidence proving the gold was of foreign origin.

3. Applicability of Section 123 of the Customs Act, 1962:
The Tribunal examined whether the provisions of Section 123 of the Customs Act, 1962, which shifts the burden of proof to the person from whose possession goods are seized, were applicable. The Tribunal noted that for Section 123 to apply, there must be a reasonable belief that the goods are of foreign origin. In this case, the absence of foreign markings and the fact that it was a town seizure meant that the reasonable belief requirement was not met.

4. Determination of the Gold's Origin (Foreign or Domestic):
The Tribunal referred to the case of Nand Kishor Sumani, where it was held that gold without foreign markings and with a purity less than 99.99% could not be presumed to be of foreign origin. The Tribunal noted that the purity of the seized gold was 99.5% to 99.6%, and there were no foreign markings. Additionally, the appellant provided purchase bills and statements from the seller confirming the domestic origin of the gold.

Conclusion:
The Tribunal concluded that the confiscation of the gold was not justified as there was no reasonable belief that the gold was of foreign origin. Consequently, the confiscation order was set aside, and the penalty imposed on the appellant was also annulled. The appellant was entitled to claim the gold, and the appeal was allowed with consequential relief.

Final Judgment:
The Tribunal set aside the impugned order regarding the confiscation of gold and the imposition of the penalty on the appellant. The appellant was entitled to the return of the seized gold, and the appeal was allowed with consequential relief. The judgment was pronounced in the open court on 15.07.2024.