2022 (2) TMI 1134 - HC - Customs

Smuggling - Gold Biscuits of Foreign Origin - production of evidence evidencing the legal import of gold or not - statements given under Section 108 of the Customs Act, 1962 not considered - Revenue has not established that the seized goods were smuggled ones and illicitly imported into India - burden of proof - seizure was made by Police without any evidence - HELD THAT - This Court finds that as regards Mr. R. Kailash, though he has given a statement under Section 108 of the Customs Act, admitting that he has no duty paid receipts for the gold biscuits found in his possession, he rebutted the same by producing baggage receipts to prove that the gold biscuits and ingots seized from him have been brought into the country by paying respective charges. Though under Section 123 of the Customs Act the initial burden to prove that the gold seized from the possession of the accused was not smuggled goods lies on the person in whose possession the gold was seized, but once the accused produces the receipts for the import of gold, then the burden shifts to the Department and the Department will have to prove that the baggage receipts do not pertain to the gold which was found in possession of the accused. Since no such evidence has been produced before the Tribunal or before this Court, this Court does not deem it fit and proper to interfere with the findings of the CESTAT in the case of Mr. R. Kailash in giving him relief and setting aside the order of penalty confirmed by the Commissioner. The Special Court has gone into the evidence produced by the petitioners and has acquitted them by holding that they were not holding illicit gold in their hands. Since the gold found in possession of Mr. C. Srinivas was not found to be not of Indian origin, it cannot be said that he has committed any offence. Therefore, the decision given by the Tribunal setting aside the penalty order against Mr. C. Srinivas is upheld. The Appeals filed by the Department are accordingly dismissed.

Summary

Issues:
1. Appeal against Final Orders of Customs, Excise and Service Tax Appellate Tribunal.
2. Seizure of gold biscuits of foreign origin without proper documentation.
3. Imposition of penalty on accused for violation of customs laws.
4. Acquittal of accused by Economic Offences Court.
5. Challenges raised by the Department before the High Court.
6. Burden of proof under Section 123 of the Customs Act.
7. Admissibility of statements recorded under Section 108 of the Customs Act.
8. Decision on setting aside penalties imposed on accused.

Analysis:

1. The case involved appeals filed by the Department against Final Orders of the Customs, Excise and Service Tax Appellate Tribunal related to the seizure of gold biscuits of foreign origin without proper documentation. The accused individuals, Mr. C. Srinivas and Mr. R. Kailash, were found in possession of gold without valid import evidence, leading to penalties imposed on them for violating customs laws.

2. The Commissioner imposed penalties on Mr. Kailash and Mr. Srinivas for their involvement in possessing gold without proper documentation. However, the Economic Offences Court later acquitted all accused individuals, stating that the goods were duty paid and not of foreign origin. This led to the Department filing an appeal before the High Court, challenging the decision of the Economic Offences Court.

3. The Department raised substantial questions of law before the High Court, questioning the Tribunal's decisions based on the Economic Offences Court's judgment. The burden of proof under Section 123 of the Customs Act was a crucial point of contention, with the Department arguing that the accused failed to prove the legality of the seized gold.

4. The Department contended that the statements recorded under Section 108 of the Customs Act were crucial evidence and should not be ignored. They argued that the burden of proof lay on the accused to demonstrate that the seized gold was not smuggled. The Department further highlighted discrepancies in the accused's explanations regarding the origin and purchase of the gold.

5. The High Court analyzed the evidence and contentions presented by both parties. In the case of Mr. R. Kailash, the Court found that he provided valid baggage receipts to prove the legal import of the gold seized from him, shifting the burden of proof to the Department. As the Department failed to refute this evidence, the Court upheld the Tribunal's decision to set aside the penalties imposed on Mr. Kailash.

6. Regarding Mr. C. Srinivas, the Court noted his submissions regarding the origin and purity of the gold seized from him. Scientific analysis confirmed the gold's Indian origin, leading the Court to uphold the Tribunal's decision to set aside the penalty against Mr. Srinivas. The Court dismissed the Department's appeals and upheld the decisions in favor of the accused individuals.