2012 (8) TMI 143 - AT - Customs

Confiscation of diamonds Held that - Assessee had produced purchase vouchers in relation to the diamonds - proprietary firm was registered with the Sales Tax department - - in the event of seizure of non-notified goods burden of poof is on Revenue to prove that there was illegal import and inability of the litigant to produce documents showing legal importation does not ipso facto prove that the goods were smuggled - department has failed to discharge their burden to prove that these documents are fabricated and diamonds in question are illicitly purchased - in favour of the appellant

Summary

Issues:
- Confiscation of diamonds under Section 111(o) of the Customs Act, 1962
- Allegation of smuggling against deceased husband
- Failure to verify genuineness of purchase vouchers
- Appeal against absolute confiscation and penalty imposition
- Submission of relevant documents by appellant
- Burden of proof on Revenue for illicit purchase
- Lack of corroborative evidence by Revenue
- Legal principles regarding burden of proof in seizure cases

Analysis:
1. Confiscation of diamonds under Section 111(o) of the Customs Act, 1962:
- The case involved the absolute confiscation of diamonds weighing 154.04 carets under Section 111(o) of the Customs Act, 1962, based on allegations of smuggling against the deceased husband of the appellant.

2. Allegation of smuggling against deceased husband:
- The deceased husband of the appellant, engaged in the purchase and sale of cut and polished diamonds, was accused of smuggling diamonds into India, leading to the seizure of diamonds from his office premises.

3. Failure to verify genuineness of purchase vouchers:
- The Tribunal set aside the confiscation order due to the Commissioner's failure to verify the genuineness of the purchase vouchers produced by the assessee, leading to a remand for fresh adjudication.

4. Appeal against absolute confiscation and penalty imposition:
- The appellant challenged the absolute confiscation of the seized diamonds, arguing that the purchases were bona fide and supported by relevant documents, while contesting the legality of the confiscation without proper basis.

5. Submission of relevant documents by appellant:
- The appellant submitted purchase vouchers, sales tax registration, Import and Export code, and RBI code documents to prove the legitimacy of the diamond purchases, emphasizing that all relevant documents were provided at the time of seizure.

6. Burden of proof on Revenue for illicit purchase:
- The appellant contended that the burden of proving illicit purchase rested with the Revenue, citing legal precedents where the burden to establish smuggling of non-notified goods was on the Revenue.

7. Lack of corroborative evidence by Revenue:
- Despite allegations of smuggling, the Revenue failed to provide corroborative evidence to prove illicit purchase of the seized diamonds, relying mainly on the initial statements of the deceased husband.

8. Legal principles regarding burden of proof in seizure cases:
- The Tribunal emphasized the legal principle that in seizure cases involving non-notified goods, the burden of proof lies with the Revenue to establish illegal importation, and the inability to produce documents showing legal importation does not automatically prove smuggling.

9. Conclusion:
- After detailed analysis, the Tribunal found that the appellant had successfully demonstrated the bona fide nature of the diamond purchases through the submission of relevant documents, while the Revenue failed to provide sufficient evidence to prove illicit purchase. Consequently, the impugned order of confiscation was set aside, and the appeal was allowed in favor of the appellant.