2020 (12) TMI 427 - AT - Customs

Smuggling - Foreign Origin Gold Bars - entire case of the Revenue is based upon the initial statement of Shri Karan Soni which was also retracted by him on the next day itself, when he was produced before the Judicial Magistrate - legality of conversion of absolute confiscation into an option for redemption of gold - HELD THAT - It is well settled law that for upholding the charge of smuggling, the goods have to be first established to be of foreign origin. It is required to be done by concrete and positive evidence. The retracted statement of deponent without any further corroboration from independent source, cannot be considered to be legal proof for holding the gold to be of foreign origin. It is further seen that the observation of the Adjudicating Authority that mere no marking and purity of gold cannot be taken as a proof of fact that gold was not of foreign origin, cannot be appreciated inasmuch as the onus to show that the gold was of foreign origin lies upon the Revenue. The Adjudicating Authority has also not disputed the fact that Shri Karan Soni retracted from his statement before CJM, Varanasi immediately on the next date. However, he has not given any weightage to the said retraction only on the ground that Shri Karan Soni never bothered or never felt the need to bring to the notice of the immediate Superior of the investigating officer. As such, he observed that the case is not based merely on statement of the appellant but is corroborated in intimate details by the statement of Shri Karan Soni from whose possession the gold was seized - the Adjudicating Authority has not referred to any of the evidence corroborating the said statement. It is merely an observation simplicitor without any reference on record. Apart from the fact that gold in question was not carrying any marking of foreign origin, it is also seen that there is virtually no evidence of smuggled nature of said gold in question, except for the retracted statement of Shri Karan Soni. Gold can be imported on payment of duty and is not prohibited item. Even if it is assumed that for a second, that gold in question was of foreign origin, same could have been imported on payment of duty. Shri Karan Soni, in his statement has no where revealed as to how the gold in question was smuggled and by whom. In these circumstances, to conclude against the appellants is neither justified nor warranted. Further, admittedly the gold in question was seized by the Police Officer, in which case the presumption under section 123 of the Customs Act, 1962 is not available to the Customs Authorities - It was also observed that when the goods are not totally prohibited from importation and can be imported, the seizure of the same on the ground that they were smuggled cannot be upheld. It may not be out of place to observe that in that case, the seized watches were having foreign marking on them whereas in the present case, there was no foreign marking on the gold bars. It is also surprising that even though the Revenue is believing and relying upon the initial statement of Shri Karan Soni, detailing the name and address of the persons at Kolkata from whom the gold in question was received by him, they have not bothered to make any investigation at their end. There is no explanation coming from the Revenue for the said lapse on their part. Once Shri Soni discloses the names of the alleged supplier of the goods, it was the duty of the Department to approach them and to investigate at their end so as to collect the evidence and to corroborate the statement of Shri Karan Soni. Such non-action on the part of the Revenue, creates doubt against them and compels one to conclude that such an effort might have been done by Revenue and found to be untrue, thus making the statement unworthy of reliance. Appeal allowed - decided in favor of appellant.

Issues:
1. Confiscation of gold alleged to be of foreign origin and smuggled.
2. Imposition of penalties on the appellants.
3. Conversion of absolute confiscation into an option for redemption.
4. Reliance on retracted statements as evidence.
5. Burden of proof on the prosecution in smuggling cases.
6. Lack of corroborative evidence.
7. Legal significance of seized invoice and lack of foreign markings on gold bars.

Issue 1: Confiscation of gold alleged to be of foreign origin and smuggled:
The case involved the interception of an individual carrying gold bars, suspected to be smuggled from Bangladesh. The Customs officers seized the gold based on initial statements, but the Tribunal found insufficient evidence to establish the gold as of foreign origin. The absence of foreign markings and lack of concrete proof led to the dismissal of the smuggling charges.

Issue 2: Imposition of penalties on the appellants:
Penalties were imposed on the appellants based on retracted statements and insufficient evidence. The Tribunal highlighted the contradictions in the adjudicating authority's findings, emphasizing the need for concrete evidence to justify penalties. The lack of substantial proof against the appellants resulted in the penalties being set aside.

Issue 3: Conversion of absolute confiscation into an option for redemption:
The Commissioner (Appeals) converted the absolute confiscation of gold into a redemption option for one of the appellants. However, the Tribunal deemed this conversion legally questionable and set aside the decision, emphasizing the need for clear legal grounds for such conversions.

Issue 4: Reliance on retracted statements as evidence:
The Tribunal scrutinized the reliance on retracted statements by the adjudicating authority, emphasizing the legal requirement for corroborative evidence in smuggling cases. The retracted statements of the individuals were not deemed sufficient to establish the gold as smuggled, highlighting the importance of concrete and consistent evidence.

Issue 5: Burden of proof on the prosecution in smuggling cases:
The burden of proof in smuggling cases lies with the prosecution to establish the foreign origin and smuggled nature of seized goods. The Tribunal emphasized the necessity of concrete evidence beyond retracted statements to uphold smuggling charges, highlighting the legal standards required for such allegations.

Issue 6: Lack of corroborative evidence:
The Tribunal noted the absence of corroborative evidence supporting the smuggling allegations. The reliance solely on initial statements without further substantiation raised doubts about the validity of the charges. The lack of concrete proof undermined the prosecution's case against the appellants.

Issue 7: Legal significance of seized invoice and lack of foreign markings on gold bars:
The presence of a legitimate invoice and absence of foreign markings on the gold bars raised questions about the alleged smuggling. The Tribunal highlighted the legal weight of such evidence, emphasizing that the seized goods did not exhibit characteristics typical of smuggled items. The invoice and lack of foreign markings contradicted the smuggling allegations, leading to the dismissal of the charges.

This detailed analysis of the judgment covers all the issues involved comprehensively, highlighting the legal intricacies and evidentiary requirements essential for establishing smuggling charges and imposing penalties.

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