2022 (6) TMI 785 - AT - Customs

Smuggling - Gold Bars - Indian Currency - town seizure - non-submission of legal documents evidencing the legal possession of the said goods as required under Section 123 of the Customs Act, 1962 - HELD THAT - Admittedly it is a case of town seizure. Further, neither there is any record of the appellant having entered into India from any foreign country during the recent past, nor any allegation that he was actively involved in smuggling of gold. Admittedly, it is a town seizure from the residence where the two gold bars in question were lying in the cupboard in the bedroom. As the two gold bars are having foreign marking, the onus is on the appellant to prove the licit source of acquisition. Admittedly, the appellant has produced the copy of will at the time of adjudication proceedings. Under such facts and circumstances, it s found that the Court below have erred in rejecting the will arbitrarily. It is found that the cogent explanation given by the appellant as regards receipt of the two gold bars by way of inheritance under will, have not been found to be untrue. As under the same will, late father of the appellant has also bequeathed immovable property to the mother of the appellant, thus there is hardly doubt as regards the will being not genuine. The documentary evidence is supported by oral evidence, have more weight and legality and overrides the oral statement with regard to source of the gold bars, stated initially. The appellant have reasonably explained the licit possession of the two gold bars, as received by way of succession under the will of his father. But still the source of licit acquisition by father of appellant is not on record, neither the same is mentioned in the will dated 15.02.1999 - the order of confiscation is upheld under Section 111(m) with option to redeem on payment of duty and redemption fine of Rs.1,00,000/- - Confiscation under Section 111(l) is set aside - penalty under Section 112(a) is reduced to Rs. 50,000/- - penalty under Section 114AA is set aside. Appeal allowed in part.

Summary

Issues Involved:
1. Legitimacy of the possession of two gold bars.
2. Compliance with summons by the appellant and his in-laws.
3. Validity of the appellant's explanation and supporting documents for the gold bars.
4. Confiscation and penalties imposed under the Customs Act, 1962.

Detailed Analysis:

1. Legitimacy of the possession of two gold bars:
During a search at the appellant's residence, two gold bars weighing 2 kg and Indian currency amounting to Rs. 11.31 lakhs were recovered and appraised at Rs. 59,10,000/-. The appellant initially claimed the gold bars were gifts from his in-laws during his daughter's marriage. Later, he stated that the gold bars were inherited from his father as per a will dated 15.02.1999. The appellant failed to provide legal documents to prove the licit possession of the gold bars, which led to their seizure under Section 110 of the Customs Act, 1962, on the belief that they were smuggled.

2. Compliance with summons by the appellant and his in-laws:
The appellant and his in-laws were repeatedly summoned to provide evidence regarding the gold bars. The appellant appeared and provided statements, but his in-laws failed to comply with the summons multiple times. This non-compliance led to the presumption that the gold bars were smuggled.

3. Validity of the appellant's explanation and supporting documents for the gold bars:
The appellant's explanations varied over time. Initially, he claimed the gold bars were gifts, then stated they were inherited, and finally mentioned they were purchased from the open market without any purchase bills. The adjudicating authority found these changing statements unreliable. The appellant later produced a will during the adjudication proceedings, which was doubted due to its late submission and being unregistered. The Additional Commissioner rejected the will and ordered the confiscation of the gold bars under Section 111(d) and (l) of the Customs Act, 1962, and imposed penalties.

4. Confiscation and penalties imposed under the Customs Act, 1962:
The Additional Commissioner confiscated the gold bars and imposed penalties of Rs. 5 lakhs under Section 112(a) and Rs. 1 lakh under Section 114AA of the Customs Act. The appellant contested this decision, arguing the gold bars were inherited and provided a will as evidence. The Commissioner (Appeals) upheld the confiscation and penalties, leading the appellant to appeal to the Tribunal.

Tribunal's Judgment:
The Tribunal considered the appellant's explanation and the will produced during adjudication. It found that the appellant had reasonably explained the licit possession of the gold bars as inherited under the will. However, the source of the gold bars' acquisition by the appellant's father was not on record. Consequently, the Tribunal modified the impugned order as follows:
- Upheld the confiscation under Section 111(m) with an option to redeem the gold bars on payment of duty and a redemption fine of Rs. 1,00,000/-.
- Set aside the confiscation under Section 111(l).
- Reduced the penalty under Section 112(a) to Rs. 50,000/-.
- Set aside the penalty under Section 114AA.

Conclusion:
The appeal was allowed in part, with the Tribunal recognizing the appellant's explanation for the gold bars' possession but modifying the penalties and the terms of confiscation.