2022 (8) TMI 840 - AT - Customs

Confiscation of seized goods - levy of penalty - 3 pieces of gold bars - discharge of burden of proof under section 123 of the Customs Act, 1962 - HELD THAT - Mere mentioning during investigation on 28.02.2014 by Vikash Agarwal that the purchase was from Jalan Co. of Kolkata, cannot be even a circumstance to discredit the documentary evidences produced before the investigating authority and subjected to vivid investigation by DRI. It is apparent that DRI has also recorded subsequent statements of Vikash Agarwal and followed the trail of his purchase from Harimanthan Jewellery House Pvt. Ltd. and being unsuccessful in disproving such transaction between the parties, an effort has been made to raise doubts only upon suspicion, which cannot sustain in law. In such a circumstance, the genuity of transaction between Agarwal Gold House and Harimanthan Jewellery House Pvt. Ltd. under Invoice dated 15.02.2014 for purchase/ sale of 1000 gms. of pure gold is well established upon documents. There is nothing on-record from the investigating authority to deny the stock of pure gold available with Agarwal Gold House as on 01.04.2013 and as such, there is no evidence on-record to doubt that the seized gold was not from the said stock and subsequent purchases of Agarwal Gold House, which were handed over to Mohanlal @ Ram by Vikash Agarwal. The only question, thus, remains whether the appellants, specially Sri Vikash Agarwal, Proprietor of M/s. Agarwal Gold House has been able to discharge his burden of proof u/s. 123 of the Customs Act, 1962 in the facts of the present case. There is nothing on-record from the investigating and/or adjudicating authority to controvert the evidences produced by the Appellants in the present case. In such a circumstance, the order of confiscation of the seized gold weighing 1958.240 gms. under section 111(d) of the Customs Act, 1962 only on suspicion and presumption, is bad in law and cannot sustain and hence, we set aside the same with consequential relief to the claimant/ Appellant Sri Vikash Agarwal, Proprietor of M/s. Agrawal Gold House - penalties imposed upon the Appellants under section 112 of the Customs Act, 1962, are also set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Confiscation of seized gold under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties under Section 112 of the Customs Act, 1962.
3. Discharge of burden of proof under Section 123 of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Confiscation of Seized Gold under Section 111(d) of the Customs Act, 1962:
The appellants contested the confiscation of 1958.240 grams of gold valued at Rs. 60,70,540/-, which was seized by the Directorate of Revenue Intelligence (DRI), Patna. The DRI had confiscated the gold on the grounds that it was smuggled from Nepal. The adjudicating authority and the Appellate Commissioner upheld the confiscation based on the initial statement of Sri Mohanlal @ Ram, who admitted the gold was smuggled, and the inconsistent statements of Sri Vikash Agarwal regarding the source of the gold. However, the Tribunal found that the authorities ignored crucial evidence, including a letter from HDFC Bank, Mumbai, confirming the sale of gold to Ambika Jewellers, which was subsequently sold to Agarwal Gold House. The Tribunal concluded that the confiscation was based on suspicion and not on concrete evidence, thus setting aside the confiscation order.

2. Imposition of Penalties under Section 112 of the Customs Act, 1962:
Penalties were imposed on various appellants, including Sri Vikash Agarwal and his proprietorship firm, M/s. Agarwal Gold House, and other associated entities. The penalties were based on the alleged smuggling of gold. The Tribunal found that the penalties were imposed without proper consideration of the documentary evidence provided by the appellants, which demonstrated legitimate transactions. The Tribunal noted that the authorities failed to disprove the appellants' claims and relied on assumptions rather than solid evidence. Consequently, the penalties imposed under Section 112 were set aside.

3. Discharge of Burden of Proof under Section 123 of the Customs Act, 1962:
The core issue was whether Sri Vikash Agarwal, the proprietor of M/s. Agarwal Gold House, had discharged the burden of proof regarding the legality of the seized gold. The Tribunal observed that Vikash Agarwal provided comprehensive documentation, including purchase invoices, bank statements, and ledger accounts, to substantiate his claims. The sellers, M/s. Ambika Jewellers and M/s. Harimanthan Jewellery House Pvt. Ltd., confirmed their sales to Agarwal Gold House and provided corresponding purchase invoices from authorized bullion dealers. The Tribunal found that the appellants had successfully discharged their burden of proof under Section 123, and the authorities failed to provide contrary evidence. Therefore, the Tribunal ruled in favor of the appellants, confirming the legality of the gold and dismissing the confiscation and penalties.

Conclusion:
The Tribunal allowed the appeals, setting aside the confiscation of gold and the imposition of penalties. It concluded that the appellants had provided sufficient evidence to prove the legality of the gold, and the authorities' actions were based on presumptions rather than concrete evidence. The appellants were granted consequential relief, and the order was pronounced in open court on 17 August 2022.