2016 (9) TMI 1169 - HC - Customs

Confiscation of seized gold under Sections 111(d) and 111(p) of the Customs Act, 1962 - imposition of penalty under Section 112(b) of the Customs Act, 1962 - contravention of the provisions of Section 11 of the Customs Act, 1962 read with Section 3(1) of the Import & Export (Control) Act, 1947 - foreign marked gold weighing 19831.805 gms - import of gold prior to or after prohibition - prohibition in import of gold bars vide notification dated 25th of August, 1948 - whether the gold bars acquired before of after prohibition and is seizure and confiscation of gold bars justified if acquired after issuance of prohibition notification? Held that - though the initial onus was on Revenue to prove the illegal import of gold and that such illegal import stand established when almost 20 Kg. of gold with foreign marking was confiscated in the year 1950. Since the gold was seized in the year 1950, it would be believed to have been imported soon before that as such gold imported would not be kept as such for a long period as alleged that it was imported between the years 1941 to 1949. In fact, the prohibition of import of gold came into force on 25th of August, 1948. Therefore, for more than two years, it is unbelievable that imported gold will be retained as such. Such stand of the Revenue has to be examined keeping in view the stand taken by the assessee that he purchased the gold when there was no prohibition and also stated that he purchased it from Reserve Bank of India through brokers. The assessee has failed to discharge the special fact within his knowledge as to when the gold was purchased and through whom the purchase of the gold was made. To avoid the rigour of prohibition, the onus was on the respondent being a fact within his special knowledge, thus, in terms of Section 106 of the Evidence Act, the onus was on respondent and thereafter his wife to prove that the gold imported is prior to prohibition vide notification dated 25th of August, 1948 and or has been purchased from the Reserve Bank of India. - there is no proof of any of these facts - learned Tribunal erred in law in holding that mere assertion that gold has been purchased cannot partake the character of proof of legal purchase. Seizure and confiscation of gold bars justified - petition disposed off - decided in favor of Revenue.

Issues Involved:
1. Whether the Tribunal was justified in holding that there was no seizure of gold bars from the respondent by the Customs Department.
2. Whether the Tribunal was justified in holding that the foreign origin gold never came into the possession of Nirmala Mitra and if such a finding is perverse.
3. Applicability of Section 178A of the Sea Customs Act, 1878 and Section 123 of the Customs Act, 1962 to the seized gold.
4. Onus of proving the smuggled nature of the gold and the legality of its import.

Detailed Analysis:

1. Whether the Tribunal was justified in holding that there was no seizure of gold bars from the respondent by the Customs Department:
The Tribunal had referred to the Supreme Court judgment in Gian Chand & Ors. Vs. State of Punjab to conclude that there was no seizure by the customs authorities under the Customs Act. It held that the gold was initially seized by the police and later transferred to the customs, which does not constitute a seizure under the Customs Act. However, the High Court found this conclusion incorrect, stating that the symbolic possession of the articles initially seized by the police was with Smt. Nirmala Mitra on the date of the detention of goods by the Customs. The Court clarified that the goods were seized by the Customs Authorities on 4th March 1993, after notice to the respondent, thereby constituting a legal seizure under the Act.

2. Whether the Tribunal was justified in holding that the foreign origin gold never came into the possession of Nirmala Mitra and if such a finding is perverse:
The High Court noted that the Judicial Commissioner had ordered the delivery of the goods to Smt. Nirmala Mitra but with a restraint on physical delivery. The goods were kept in the State Bank of India under the symbolic possession of Smt. Nirmala Mitra. The Customs Authorities seized the goods after serving notice to the bank and the respondent. Therefore, the High Court held that the finding of the Tribunal that the goods never came into the possession of Nirmala Mitra was contrary to the facts on record and was not sustainable.

3. Applicability of Section 178A of the Sea Customs Act, 1878 and Section 123 of the Customs Act, 1962 to the seized gold:
The Tribunal had held that the onus to prove the non-smuggled nature of the gold was not on the appellant (respondent) as the provisions of Section 178A of the Sea Customs Act, 1878 or Section 123 of the Customs Act, 1962 were not in operation at the time of the original seizure by the police in 1950. The High Court, however, found that the relevant time to consider the legality of import was the year 1950 or prior thereto. Since the gold bars bore foreign markings, they were presumed to be imported, and the onus was on the respondent to prove lawful import or purchase from authorized sources like the Reserve Bank of India.

4. Onus of proving the smuggled nature of the gold and the legality of its import:
The High Court emphasized that the initial onus was on the Revenue to prove the illegal import of gold, which was established when almost 20 kg of gold with foreign markings was confiscated in 1950. The respondent's claim that the gold was purchased from the Reserve Bank of India through brokers was not substantiated with any proof. The Court cited various judgments, including Collector of Customs, Madras vs. D. Bhoormall, to assert that the burden of proof could shift to the respondent to show that the goods were not smuggled. Since the respondent failed to provide evidence of lawful purchase, the Tribunal erred in holding that the respondent had discharged the onus.

Conclusion:
The High Court concluded that the seizure and confiscation of the foreign marked gold bars were legal and proper. The Tribunal's order was found unsustainable, and the questions of law were answered in favor of the Revenue. The order passed by the Adjudicatory Authority was restored.

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