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2025 (3) TMI 636 - AT - CustomsLawful possession of Gold seized - discharge of burden of proof under Section 123 of the Customs Act 1962 or not - HELD THAT - The learned Commissioner (Appeals) has very clearly established through his impugned order particularly para 5.9 and 5.10 that the gold which was seized was lawfully possessed by the respondent and the respondent has discharged the burden of proof required under Section 123 of Customs Act 1962. The appeal filed by Revenue dismissed.
ISSUES PRESENTED and CONSIDERED
The primary legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Lawful Possession of Gold Relevant Legal Framework and Precedents: The possession of gold is governed by the Customs Act, 1962, particularly Section 123, which places the burden of proof on the person from whom the goods are seized to show that they are not smuggled. Court's Interpretation and Reasoning: The Tribunal considered the agreements presented by the respondent, which demonstrated a chain of transactions involving the gold. The agreements dated 26.03.2022 and 29.03.2022 showed the transfer of gold for jewelry making, which supported the respondent's claim of lawful possession. Key Evidence and Findings: The Tribunal noted that the agreements and the statement from M/s. Divine Nursing Home Pvt. Ltd. substantiated the respondent's claim of lawful possession. The absence of foreign markings on the gold and the lack of evidence from the department to prove smuggling were crucial. Application of Law to Facts: The Tribunal found that the respondent had lawfully procured the gold under valid agreements and that there was no evidence of smuggling. Treatment of Competing Arguments: The Tribunal dismissed the department's argument regarding the absence of markings and the non-examination by a Chemical Examiner, noting that the government-approved valuer had certified the gold's purity. Conclusions: The Tribunal concluded that the respondent lawfully possessed the gold, and the department failed to prove otherwise. 2. Burden of Proof under Section 123 of the Customs Act, 1962 Relevant Legal Framework and Precedents: Section 123 of the Customs Act, 1962, requires the person from whom goods are seized to prove that they are not smuggled. Court's Interpretation and Reasoning: The Tribunal agreed with the Commissioner (Appeals) that the respondent had discharged his burden of proof by providing valid documentation and agreements. Key Evidence and Findings: The agreements and the statement from M/s. Divine Nursing Home Pvt. Ltd. were pivotal in proving the lawful origin of the gold. Application of Law to Facts: The Tribunal applied Section 123 and found that the respondent had met the requirements to prove the gold was not smuggled. Treatment of Competing Arguments: The Tribunal noted that the department did not provide any evidence to counter the respondent's documentation. Conclusions: The Tribunal upheld the finding that the respondent discharged his burden of proof under Section 123. 3. Origin and Smuggling of Gold Relevant Legal Framework and Precedents: The determination of whether goods are smuggled involves examining evidence of foreign origin and illegal importation. Court's Interpretation and Reasoning: The Tribunal found no evidence of foreign origin or smuggling, as the department could not prove any foreign markings or illegal importation. Key Evidence and Findings: The lack of foreign markings and the failure to conduct chemical testing were significant in the Tribunal's reasoning. Application of Law to Facts: The Tribunal found that the department did not meet its burden to prove the gold was smuggled. Treatment of Competing Arguments: The Tribunal dismissed the department's claims as unsupported by evidence. Conclusions: The Tribunal concluded that there was no evidence of smuggling. 4. Justification for Confiscation and Penalty Relevant Legal Framework and Precedents: Confiscation and penalties are governed by the Customs Act, requiring proof of illegal possession or smuggling. Court's Interpretation and Reasoning: The Tribunal agreed with the Commissioner (Appeals) that the confiscation and penalty were unjustified due to the lack of evidence of smuggling. Key Evidence and Findings: The agreements and the lack of evidence from the department were crucial in overturning the confiscation and penalty. Application of Law to Facts: The Tribunal found that the original order for confiscation and penalty was not supported by evidence. Treatment of Competing Arguments: The Tribunal noted that the department's arguments were repetitive and unsupported by new evidence. Conclusions: The Tribunal upheld the decision to set aside the confiscation and penalty. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: "The appellant has fully discharged the burden of proof as required under Section 123 of the Customs Act, 1962 by producing the above mentioned documents for the licit procurement of the impugned gold, recovered from his possession, at the time seizure." Core principles established: The burden of proof under Section 123 requires valid documentation to prove lawful possession, and the absence of evidence from the department to prove smuggling is crucial. Final determinations on each issue: The Tribunal upheld the Commissioner (Appeals) decision, confirming the respondent's lawful possession of the gold, the discharge of the burden of proof, the lack of evidence of smuggling, and the unjustified confiscation and penalty.
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