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2025 (4) TMI 119 - AT - CustomsAbsolute confiscation of Gold with penalty - Town Seizure - admissible evidence to prove the foreign origin and smuggling of subject gold - admissibility and reliability of the statement made by appellant u/s 108 of the Customs Act - HELD THAT - The case of the Revenue is based on the statement of Shri Suresh Kumar non-retraction of such statement invocation of Section 123 of the Act and statements of the authorized representative of M/s Radha Mohan Purshottam Jewels and proprietor of M/s Ambay Jewellers and Bullion Merchants. A perusal of the impugned order shows that the Appellant raised specific objection in respect of non-compliance of Section 138B vis- -vis the statement of Shri Suresh Kumar which objection has been turned down on the ground that the cross-examination of Shri Suresh Kumar was never sought by the Appellant. This cannot be a ground for not complying with the mandatory procedure specified under Section 138B of the Act. Hon ble Delhi High Court in Basudev Garg vs. Commissioner of Customs 2013 (5) TMI 350 - DELHI HIGH COURT has also considered the effect of Section 138B of the Act and has held that both Section 9D and Section 138B are identical. The compliance of Section 138B was not dependent upon whether the Appellant sought opportunity of cross examination or not. It was for the adjudicating authority to follow the procedure and only then he could have relied upon the statement - the statement being an hear say statement cannot be relied upon solely to conclude that the subject gold was of foreign origin and was illegally imported from Bangladesh. Further since the present case is that of town seizure and not that of seizure at Airport Seaport or Land Customs Station the initial onus was on the Revenue to show that the subject gold was of foreign origin and was smuggled into India. Apart from the statement of Shri Suresh Kumar which has no evidentiary value as discussed above there is no evidence on record to suggest that the subject gold was smuggled. On the contrary the Appellant produced invoices regarding legal procurement of subject gold and upon enquiry been made the sellers also confirmed the transaction of sale of gold by them to the firm of the Appellant. Imposition of penalty under Section 112(b) on the Appellant - HELD THAT - Once necessary material to prove smuggling of subject gold is not on record no penalty can be imposed on the Appellant. Conclusion - i) The statement of Shri Suresh Kumar is inadmissible due to non-compliance with Section 138B rendering it unreliable as evidence. ii) The Revenue failed to meet the burden of proof under Section 123 as there is no substantive evidence of the gold s foreign origin or smuggling. iii) The confiscation of gold and imposition of penalties are not justified as the case is based on presumption rather than evidence. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in the judgment include:
ISSUE-WISE DETAILED ANALYSIS Confiscation of Gold and Imposition of Penalties Relevant Legal Framework and Precedents: The confiscation was based on Sections 111(d) and 120 of the Customs Act, which deal with the illegal importation and smuggling of goods. Penalties were imposed under Section 112(b) for abetment of such activities. Court's Interpretation and Reasoning: The Tribunal examined whether the gold was of foreign origin and smuggled, relying heavily on the statement of Shri Suresh Kumar. However, the Tribunal noted that the burden of proof under Section 123 was not met by the Revenue, as there was no substantive evidence apart from the contested statement. Key Evidence and Findings: The statement of Shri Suresh Kumar was pivotal, but its admissibility was questioned due to non-compliance with Section 138B. The Tribunal found that the statement was not corroborated by other evidence, and the invoices provided by the Appellant indicated legal procurement. Application of Law to Facts: The Tribunal applied the principles from precedents such as Jindal Drugs Pvt. Ltd. and Basudev Garg, emphasizing the mandatory compliance with Section 138B for admitting statements as evidence. Treatment of Competing Arguments: The Appellant argued that the statement was not voluntary and was retracted. The Revenue contended it was admissible as it was never formally retracted. The Tribunal sided with the Appellant, finding the statement unreliable without compliance with Section 138B. Conclusions: The Tribunal concluded that the confiscation and penalties were not justified due to the lack of substantive evidence of smuggling and foreign origin of the gold. Admissibility and Reliability of Statements Relevant Legal Framework and Precedents: Section 138B of the Customs Act and its interpretation in cases like Jindal Drugs Pvt. Ltd. and Basudev Garg were central to determining the admissibility of statements. Court's Interpretation and Reasoning: The Tribunal emphasized that statements recorded under coercion or without compliance with Section 138B cannot be admitted as evidence. The Tribunal highlighted the procedural requirements for admitting such statements. Key Evidence and Findings: The Tribunal found that the statement of Shri Suresh Kumar was not admitted following the procedure under Section 138B, rendering it inadmissible. Application of Law to Facts: The Tribunal applied the legal standards for admissibility, noting that the statement's reliability was compromised due to its retraction and lack of corroboration. Treatment of Competing Arguments: The Appellant's argument regarding the involuntary nature and retraction of the statement was accepted, while the Revenue's reliance on the statement was rejected. Conclusions: The Tribunal concluded that the statement could not be relied upon as substantive evidence, leading to the dismissal of the confiscation and penalties. Burden of Proof and Foreign Origin of Gold Relevant Legal Framework and Precedents: Section 123 of the Customs Act places the burden of proof on the accused to show lawful possession of goods suspected to be smuggled. Court's Interpretation and Reasoning: The Tribunal found that the Revenue failed to meet the burden of proof, as the only evidence was the inadmissible statement of Shri Suresh Kumar. Key Evidence and Findings: The Tribunal noted the lack of evidence showing the gold's foreign origin or smuggling, as the statement was hearsay and not based on personal knowledge. Application of Law to Facts: The Tribunal applied the burden of proof principles, finding that the Appellant had provided sufficient evidence of legal procurement through invoices. Treatment of Competing Arguments: The Tribunal rejected the Revenue's presumption-based arguments, emphasizing the need for substantive evidence. Conclusions: The Tribunal concluded that the Revenue's case was based on presumption without evidence, leading to the dismissal of the confiscation and penalties. SIGNIFICANT HOLDINGS The Tribunal held that:
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