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2025 (4) TMI 72 - AT - CustomsLevy of penalties u/s 112(a) and 112(b)(i) of the Customs Act 1962 - smuggling of Gold - Burden to prove - applicability of provisions of Section 123 of the Customs Act - HELD THAT - The Commissioner (Appeals) has mainly relied upon the judgment of this Tribunal dated 16.11.2022 which involved the same case though in respect of a different co-noticee Shri J. Suresh where it was held that the said impugned gold was not proved to be a smuggled gold nor the transaction was held to be illegal. As pointed out by both the sides this matter has now been finally decided by the Hon ble High Court of Andhra Pradesh whereby the Departmental appeal against the said order has been dismissed and the order of the Tribunal has been upheld. It is also not in dispute that the gold in question is the same in respect of which the Tribunal has allowed the appeal in favour of Shri J. Suresh who was allowed to have received the said gold from the Respondent. Thus once the gold is not of smuggled nature or prohibited penalty under Section 112(a) and 112(b)(i) would not be sustainable. Similarly confiscation of cash under Section 121 would not be tenable. Moreover the confiscation of impugned gold has already been set aside by Tribunal in the appeal filed by co-noticee Shri J. Suresh. Conclusion - Once the gold is not of smuggled nature or prohibited penalty under Section 112(a) and 112(b)(i) would not be sustainable. Similarly confiscation of cash under Section 121 would not be tenable. There are no infirmity in the order passed by the Commissioner (Appeals) - Appeal filed by the Department is dismissed.
ISSUES PRESENTED and CONSIDERED
The primary legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Whether the gold was smuggled and subject to penalties under Section 112(a) and 112(b)(i) - Relevant Legal Framework and Precedents: The Department argued that the gold was smuggled, relying on precedents such as Collector of Customs, Madras Vs D. Bhoormull and Collector of Customs, Madras Vs Nathella Sampathu Chetty. These cases emphasize the Department's ability to form a reasonable belief of smuggling even without direct evidence of foreign origin. - Court's Interpretation and Reasoning: The Tribunal found that the Commissioner (Appeals) had correctly relied on a previous Tribunal decision dated 16.11.2022, which involved the same gold but different parties. This decision, upheld by the High Court of Andhra Pradesh, found no evidence that the gold was smuggled. - Key Evidence and Findings: The evidence centered around the Tribunal's prior decision and the High Court's affirmation that the gold was not proven to be smuggled. - Application of Law to Facts: The Tribunal applied the legal standards from the cited precedents but found them inapplicable due to the lack of evidence proving the gold's smuggled nature. - Treatment of Competing Arguments: The Department's argument for a reasonable belief of smuggling was countered by the Respondent's reliance on the Tribunal's and High Court's findings, which were deemed more persuasive. - Conclusions: The Tribunal concluded that penalties under Section 112(a) and 112(b)(i) were not sustainable as the gold was not proven to be smuggled. 2. Whether the confiscation of cash under Section 121 was justified - Relevant Legal Framework and Precedents: Section 121 of the Customs Act allows for confiscation of sale proceeds of smuggled goods. The applicability depends on proving the goods were smuggled. - Court's Interpretation and Reasoning: The Tribunal found that since the gold was not proven to be smuggled, the confiscation of cash as sale proceeds was also unjustified. - Key Evidence and Findings: The Tribunal's prior decision and the High Court's dismissal of the Department's appeal were pivotal, affirming the lack of evidence for smuggling. - Application of Law to Facts: Without evidence of smuggling, the legal basis for cash confiscation under Section 121 was nullified. - Treatment of Competing Arguments: The Department's rationale for confiscation based on alleged smuggling was invalidated by the Tribunal's findings. - Conclusions: The Tribunal affirmed that the confiscation of cash was not tenable. SIGNIFICANT HOLDINGS - Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal concluded, "Once the gold is not of smuggled nature or prohibited, penalty under Section 112(a) and 112(b)(i) would not be sustainable. Similarly, confiscation of cash under Section 121 would not be tenable." - Core Principles Established: The burden of proof lies with the Department to establish that goods are smuggled. Reasonable belief must be supported by evidence, and prior judicial findings are significant in determining the nature of goods. - Final Determinations on Each Issue: The Tribunal dismissed the Department's appeal, upholding the Commissioner (Appeals)'s decision to set aside penalties and confiscation due to lack of evidence proving smuggling.
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