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2025 (2) TMI 565 - AT - CustomsSmuggling of gold jewelry - burden of proof regarding the origin of the gold lies with the appellants or the Customs Department under Section 123 of the Customs Act 1962 - HELD THAT - The appellants satisfactorily proved that seized gold belongs to them. There are no any material retractions or contradictions in their statement. Their statements are natural. No any special delays in statement of Appellant No. 1 on 05.04.2022 and 23.05.2022. Findings of Adjudicating Authority as well as Commissioner (Appeals) are based on assumptions and presumptions. M/s Jain Jewellers accepted to receive payment through RTGS. In business payment as such in the statement are natural transaction. Hon ble Supreme Court in the case of Union of India Vs Kasambhai Umerbhai Kureshi 1979 (2) TMI 216 - BOMBAY HIGH COURT held that where there was nothing on record to show that the goods were seized by the Police on reasonable belief that they were smuggled goods Section 123 would not apply. Revenue relied on Commissioner of Customs Cochin Vs Om Prakash Khatri 2019 (3) TMI 457 - KERALA HIGH COURT in which it is held that Burden of proof reasonable belief unmarked gold recovered from the possession of two persons and their statements as to the source of the gold sufficient to have a reasonable belief that gold is smuggled. No satisfactory explanation given to prove the legitimacy of the gold carried by intercepted persons. Burden of proof under Section 123 of Customs Act 1962 being only of a reasonable belief effectively discharged by Department. Mere fact that interception and seizure not affected in an international border or near an airport or seaport irrelevant. Onus to prove that the gold was not smuggled so as to upset the reasonable belief entertained by Department shifted and squarely rested on owner. Registered produced and the transactions alleged as well as the quantity seized and that seen from the alleged Travel Authorisation Vouchers not tallying . The seized gold or ornament there is no sufficient reason to believe the gold is smuggled. Appellants have given satisfactory explanation about the seized gold. Therefore this case law is not applicable in this case. Conclusion - Revenue prima facie failed to establish reasonable belief that they are smuggled gold. Whereas appellants successfully proved the legitimacy of the gold carried by them. Appeals have merit and are liable to be allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Legitimacy of Seizure and Confiscation of Gold Jewelry The relevant legal framework involves the Customs Act, 1962, particularly Sections 111 and 123. Section 111 deals with the confiscation of improperly imported goods, while Section 123 places the burden of proof on the person from whom goods are seized to prove that they are not smuggled. The Court examined the evidence provided by the appellants, including invoices and bank transaction details, to demonstrate that the gold was purchased legitimately from M/s Jain Jewellers and M/s Shree Jewellers in Chennai. The appellants argued that the gold did not bear foreign markings and was domestically acquired, thus not subject to seizure under the suspicion of smuggling. The Court found that the appellants satisfactorily proved the ownership and legitimate purchase of the seized gold jewelry. There were no contradictions in their statements, and the transactions were consistent with normal business practices. 2. Burden of Proof under Section 123 of the Customs Act, 1962 Section 123 of the Customs Act requires that when goods are seized under the belief that they are smuggled, the burden of proof lies on the person from whom the goods were seized. The Court noted that the appellants provided invoices and bank transaction details as evidence of legitimate purchase, shifting the burden back to the Customs Department to prove smuggling. The Court referenced the Supreme Court's decision in Union of India Vs Kasambhai Umerbhai Kureshi, which held that without reasonable belief of smuggling, Section 123 does not apply. The Court found that the Customs Department failed to establish a reasonable belief that the gold was smuggled. 3. Admissibility of Statements and Claims of Coercion The appellants claimed that their initial statements were obtained under coercion and subsequently retracted them. The Court considered the retraction and the subsequent statements made by the appellants and other witnesses, such as the proprietor of M/s Jain Jewellers, which corroborated the appellants' claims of legitimate purchase. The Court emphasized that the statements were consistent and supported by documentary evidence, thus dismissing the claims of coercion as not materially affecting the legitimacy of the appellants' claims. 4. Evaluation of Competing Arguments The Customs Department argued that the appellants failed to prove that the gold was not smuggled, relying on the initial statements and the provisions of Section 123. However, the Court found that the appellants provided sufficient evidence to refute the presumption of smuggling, as required by the legal framework. The Court also considered the decision in Commissioner of Customs, Cochin Vs Om Prakash Khatri, which dealt with the burden of proof and reasonable belief. However, the Court distinguished this case, noting that the appellants provided a satisfactory explanation and evidence for the legitimacy of the gold, rendering the cited case inapplicable. SIGNIFICANT HOLDINGS The Court held that the Customs Department failed to establish a reasonable belief that the seized gold was smuggled. The appellants successfully proved the legitimacy of their ownership and purchase of the gold jewelry. Core Principles Established:
Final Determinations:
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