2019 (9) TMI 247 - AT - Customs

Source of Gold bars of foreign origin - Received under Will - appellants contention is that Will does not require any registration under the Registration Act and the same was Notarized as is clear from the stamp of the Notary Public, who is an officer of the court - absolute confiscation - conversion of absolute confiscation into option of redemption. HELD THAT - No doubt that gold is specified item in terms of the provisions of section 123 of the Customs Act and the onus to prove that the foreign origin gold, found in possession of any person, was legally imported by them is on the possessor. In the present case, the appellants have contended that the gold bars in question were possessed by them as a result of execution of the Will by her grandmother, after her death in the year 2010. Revenue has tried to find some holes in the said Will to discard the same and to cast the onus on the appellants to prove the licit receipt of the gold bars - No investigations, no enquiries stand made from the Notary, who Notarized the Will or from the office of the District Magistrate, where the same was probated. As such, the Revenue s endeavor to discard the said Will without the production of any evidence to establish the same as a fraudulent document, cannot be appreciated. There was no requirement to amend the specifications of the gold bar in the old Will inasmuch as no specifications, in any case, were mentioned in the original Will - apart from the said gold bars, Revenue has not found any other gold bars from the possession of the appellant. If the gold bars mentioned in the Will of Smt.Dadan Devi were not the one which stand seized and confiscated by the officers, then the authorities would have found another set of three gold bars from the appellants possession. The gold in question were possessed by the appellants as a result of the legacy transferred to the appellants by Smt.Disha Tulsiani s grandmother through her Will, it cannot be held that the goods in question were smuggled items. In such a scenario, the confiscation of the same or imposition of penalties upon the appellants cannot be held to be sustainable. The Revenue s appeals which are only against conversion of absolute confiscation into option of redemption, no longer survives - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over confiscated gold bars; Authenticity of Will; Redemption of confiscated gold; Imposition of penalties.

Analysis:

1. Dispute over confiscated gold bars: The case involved the confiscation of three gold bars of foreign origin weighing around 3.5 kgs. recovered from a bank locker operated by two individuals. The Income Tax department handed over the seized gold to the DRI for further action under the Customs Act, 1962. The dispute arose regarding the ownership and legality of possession of the gold bars.

2. Authenticity of Will: The central issue revolved around a Will dated 3 April 2005, through which the gold bars were claimed to have been transferred to the appellants by their grandmother. The appellants maintained that the gold bars were part of the legacy left by the grandmother and were given to them as per the terms of the Will. The Revenue disputed the authenticity and validity of the Will, raising technical and procedural objections.

3. Redemption of confiscated gold: The original adjudicating authority ordered absolute confiscation of the gold bars and imposed penalties on the appellants. The Commissioner(Appeals) allowed redemption of the gold bars on payment of a redemption fine and applicable duty, while upholding the penalties imposed. The subsequent appeal challenged the conversion of absolute confiscation into an option for redemption.

4. Imposition of penalties: Penalties were imposed on the appellants by the original adjudicating authority under section 112 of the Customs Act, 1962. The Commissioner(Appeals) upheld the penalties, leading to further appeals by both the appellants and the Revenue. The issue of penalties was intertwined with the authenticity and legality of possession of the gold bars.

5. Judgment: The Tribunal, after considering the evidence and arguments presented, found in favor of the appellants. The Tribunal concluded that the gold bars were possessed by the appellants as part of the legacy transferred through the Will, and hence, were not smuggled items. Consequently, the confiscation of the gold bars and the imposition of penalties were set aside, and all three appeals by the appellants were allowed. As a result, the Revenue's appeals, which contested the conversion of confiscation into redemption, were rejected as they no longer survived in light of the appellants' successful appeal.