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2018 (10) TMI 1161 - HC - CustomsSmuggling - Gold - setting aside of Confiscation by totally discarding the confessional statements - section 108 of the Customs Act, 1962 - burden/ onus cast on respondent in terms of the provisions of section 123 of the Customs Act, 1962. Whether the Tribunal is justified in allowing the Appeal of the Respondents herein and setting aside the order of confiscation of the seized gold, by totally discarding the confessional statements given by the Respondents under the provisions of section 108 of the Customs Act, 1962, which are in the nature of admissible legal evidence, as clearly mandated by the Hon ble Supreme Court in the case of K. I. Pavunny v/s. The Assistant Collector (HQ), 1997 (2) TMI 97 - SUPREME COURT OF INDIA ? - Held that - This question essentially proceeds on the basis that as the Respondent had made a confessional statement under Section 108 of the Act, it is admissible as evidence and warrants, confirming the show cause notice. This particularly, in the absence of the party being able to explain away the confession made - We specifically called upon the learned Additional Solicitor General to show us any confessional statement made by Respondent No.1 and/or other Respondents i.e. Driver, Employees/ Agents to the effect that, the seized confiscated gold is a smuggled gold. However, he was unable to show us any confessional statements in respect of gold made either by Respondent No.1 and/or his Drivers/ Employee/ Agents - the occasion to apply the Supreme Court s decision in the case of K. I. Pavunny V. Asst. Collector would not arise in the present facts - this substantial question of law is answered in the affirmative i.e. in favour of the Respondent- Assessee and against the Appellant- Revenue. Whether the Tribunal is justified in holding that the Respondents have discharged their burden/ onus cast on them in terms of the provisions of section 123 of the Customs Act, 1962 to prove and/or establish that the huge quantity of 575 gold bars seized from their custody is not the smuggled one, inspite of the fact that no legal evidence, such as maintenance of any basic Books of Accounts whatsoever, Registration details under the provisions of Sales Tax, Payment of Purchase Price of the gold, Payment of Government Levies, like Income Tax, Sales Tax etc., duly supported by the Annual Returns, etc has been produced/ brought on record by the Respondents? - Held that - In the absence of evidence in the form of regular Books of Account, Registration under the Income Tax and Sales Tax, etc., cannot ispo facto lead to the conclusion that the seized gold bars, are smuggled gold bars. These may lead to proceedings for breaches of other Acts but it does not follow from it that the gold bars are smuggled goods. In fact, if a person in possession of the stolen gold is able to establish that it had come into India after a proper declaration and compliance of the Act, no confiscation under the Act, can arise. Proceedings under the Indian Penal Code may be initiated by the police for theft, but it would not by reason of theft become smuggled goods. Section 123 of the Act, statutorily imposes a reverse burden of proof i.e. not upon the person (Revenue) who assert that the gold in possession of the Respondent No.1 is smuggled gold but on the person (Respondent No.1) who is found in possession of goods notified under Section 123 of the Act. However, this reverse burden of proof does not do away with the manner of discharging the burden of proof. Thus, the manner of discharging the burden of proof by shifting of the onuswould be as applicable to all other civil proceedings. The impugned order of the Tribunal has on appreciation of facts, come to a conclusion that the Respondent No.1 herein has discharged his burden under Section 123 of the Act, that the 575 gold bars seized on 8th March, 2000 were not smuggled gold. This finding of fact has not been shown to us, to be perverse. Thus, it is a possible view on the available facts and the evidence produced by Respondent No.1 - question is answered in the affirmative i.e. in favour of the Respondent and against the Appellant. Appeal dismissed.
Issues Involved:
1. Admissibility and impact of confessional statements under Section 108 of the Customs Act, 1962. 2. Burden of proof under Section 123 of the Customs Act, 1962 regarding the seized gold bars. Detailed Analysis: 1. Admissibility and Impact of Confessional Statements: The first substantial question of law addressed whether the Tribunal was justified in allowing the appeal of the Respondents and setting aside the order of confiscation of the seized gold by discarding the confessional statements given under Section 108 of the Customs Act, 1962. The Revenue argued that these statements should be considered admissible legal evidence, as mandated by the Supreme Court in previous cases. The Court noted that even if confessional statements are admissible, they must contain a clear confession by the deponent to form the basis of the confirmation of the show cause notice. The Court reviewed the statements recorded from the Respondent and his associates but found no confessional statements indicating that the seized gold was smuggled. Consequently, the Court held that the Tribunal's decision to discard these statements was justified, as no fault could be found in the Tribunal's order dated 3rd June 2005. Therefore, this substantial question of law was answered in the affirmative, in favor of the Respondent-Assessee and against the Appellant-Revenue. 2. Burden of Proof under Section 123 of the Customs Act: The second substantial question of law concerned whether the Respondents had discharged their burden under Section 123 of the Customs Act to prove that the seized gold bars were not smuggled, despite not producing legal evidence such as books of accounts, sales tax registration, or payment of government levies. The Court emphasized that the absence of such documentation does not automatically lead to the conclusion that the gold bars are smuggled. The Court reviewed the evidence, including the statements of the Respondent and other witnesses, invoices, and the explanation provided for the source of the gold. The Tribunal had found that the Respondent had discharged the burden of proof by showing the source of the gold bars and corroborating the evidence with statements from independent witnesses. The Court held that the Tribunal's finding that the Respondent had discharged the burden of proof was based on a possible view of the facts and evidence, and this finding was not perverse. The Court noted that the Revenue had not pursued further investigation to disprove the Respondent's evidence. Therefore, the Court concluded that the Tribunal's decision was justified and answered this substantial question of law in the affirmative, in favor of the Respondent and against the Appellant. Conclusion: Both substantial questions of law were answered in the affirmative, resulting in the dismissal of the appeal. The Court granted a stay of the order for four weeks to allow the Revenue to approach the Supreme Court. The Notice of Motion was disposed of as infructuous.
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