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2022 (11) TMI 1012 - AT - CustomsConfiscation - Smuggling - Gold Bars - town seizure - presumption as to reasonable belief - burden to prove - HELD THAT - Admittedly it is a case of town seizure and admittedly there is no foreign marking on the seized gold. Further admittedly the said person Mr. T. Nandu who sold the gold to this appellant, has procured the gold from Chennai - open market and thus was not involved in any alleged smuggling of gold. In such facts and circumstances, thus no presumption is available to Revenue to form a reasonable belief of the gold in question being of smuggled nature. Thus, the burden of proof under Section 123 of the Act is not shifted on the appellant. Revenue has not been able to establish the smuggled nature of gold in question. In this view of the matter, the impugned order is set aside so far this appellant is concerned. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Confiscation of gold bar under Section 111(a), (b), (d), and (l) of the Customs Act, 1962. 2. Confiscation of cash under Section 121 of the Customs Act. 3. Imposition of penalty under Section 112(a) and 112(b)(i) of the Customs Act. 4. Validity of statements and retractions by the appellant and Mr. T. Nandu. 5. Burden of proof under Section 123 of the Customs Act. Issue-wise Detailed Analysis: 1. Confiscation of Gold Bar: The appellant challenged the confiscation of a gold bar weighing 476.640 gms valued at Rs. 15,63,790/-. The gold was confiscated under Section 111(a), (b), (d), and (l) of the Customs Act, 1962. The appellant argued that the gold did not have any foreign markings, and there was no evidence to support that it was smuggled. The Tribunal found that the gold was procured from the open market in Chennai and had no foreign markings, thus no reasonable basis existed for the Revenue to presume it was smuggled. Consequently, the confiscation order was set aside. 2. Confiscation of Cash: The appellant contested the confiscation of Rs. 14,44,000/- under Section 121 of the Customs Act. The cash was seized on the presumption that it was the sale proceeds of smuggled gold. The Tribunal held that the Revenue failed to establish that the gold was smuggled, and thus the confiscation of the cash was also set aside. 3. Imposition of Penalty: A consolidated penalty of Rs. 10 lakhs was imposed under Section 112(a) and 112(b)(i) of the Customs Act, which was later reduced to Rs. 6 lakhs by the Commissioner (Appeals). The Tribunal found that since the Revenue could not prove the smuggled nature of the gold, the basis for the penalty was invalid. Therefore, the penalty was also set aside. 4. Validity of Statements and Retractions: Both the appellant and Mr. T. Nandu retracted their statements soon after they were recorded. The Tribunal noted that the retracted statements were the primary evidence relied upon by the Revenue. In the absence of corroborative evidence, the Tribunal found that the retracted statements could not be the sole basis for confiscation and penalties. 5. Burden of Proof under Section 123: The Tribunal emphasized that under Section 123 of the Customs Act, the burden of proving that the goods are not smuggled lies on the person from whose possession the goods are seized. However, in this case, the Tribunal held that the burden did not shift to the appellant because the Revenue failed to establish a reasonable belief that the gold was smuggled. The lack of foreign markings and the procurement of the gold from the open market in Chennai were significant factors in this determination. Conclusion: The Tribunal concluded that the Revenue failed to establish the smuggled nature of the gold and the cash seized. Consequently, the confiscation orders and penalties imposed were set aside. The appellant was entitled to the release of the seized gold and cash. The appeal was allowed with consequential benefits. (Pronounced on 16.11.2022).
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