2023 (3) TMI 1084 - AT - Customs

Confiscation - penalty - Smuggling - Foreign marked gold bars - gold ornaments - cash - burden to prove - retraction of statements - cross examination on whose statements the whole case is based, were not provided - HELD THAT - It is inconceivable that the officer recording the statement had these details. It suggests that the statements were voluntary. These statements also indicate the appellant s relationship with Deepak Handa and that the appellant would sell gold to Deepak. The retraction does not indicate what part of the statement recorded by the officers was incorrect and what the truth is- his personal details, the fact that he would sell gold to Deepak or the nature of the seized gold. If officers had compelled him to write incorrect facts, the retraction should have brought out the correct facts - If one has legitimately bought foreign marked gold and is accused by DRI officers of possessing smuggled gold, it is inconceivable that when one is produced before the learned CMM that one would NOT say that he had actually bought duty paid gold and produce the documents. It needs to be reiterated that no duty paid documents have been produced till date even before us. Therefore, these submissions of the learned counsel will not carry the case of the appellant any further. Section 111(d) nowhere indicates whether it applies to town seizures or seizures at the ports and airports. All that it states is that any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable for confiscation. Gold is not freely importable. Import of gold in any form, is prohibited except by nominated agencies as per the Foreign Trade Policy notification above issued under the Foreign Trade (Development and Regulation) Act, 1992. Unless this condition of the import (only by a notified agency) is fulfilled, gold is a prohibited good. The appellant also does not dispute that the gold can be imported only by the nominated agencies. If gold is imported by anyone else, it will be prohibited goods. The gold bars and piece of gold were correctly held liable for confiscation under section 111(d) by the adjudicating authority and such confiscation was correctly upheld in the impugned order. Confiscation under sections 111(i) and (p) need to be set aside. Gold jewellery weighing 581.71 grams seized from the appellant - HELD THAT - It is not in dispute that the gold jewellery was not smuggled but is made in India. If it was established with some evidence that the jewellery was manufactured out of smuggled gold, then such smuggled gold would have been covered under Section 123 and by virtue of section 120, would have been liable for confiscation notwithstanding the change in its form into jewellery. However, there is no such evidence on record - therefore, the jewellery is not liable to confiscation in the absence of any evidence that it is smuggled or it has been made by converting smuggled gold. The mere fact that the jewellery was found along with the smuggled gold bars makes no difference. Confiscation of the gold jewellery cannot be sustained and needs to be set aside. Indian currency amounting to Rs. 8,86,500 seized from the appellant - HELD THAT - It is for the Revenue to establish that the cash which has been seized are (a) the sale proceeds; (b) the goods that were sold were smuggled goods; and (c) the person who has so sold the goods had either the knowledge or had reason to believe that the goods were smuggled. Merely because some unaccounted cash is lying, it cannot be confiscated unless the three conditions in Section 121 are fulfilled - It is not found that the Revenue has established any of these factors or even identified which were the smuggled goods which were sold by the person from whom the cash is seized. Confiscation of this cash is therefore, liable to be set aside. Penalty of Rs. 25,00,000 imposed on the appellant under Section 112 - HELD THAT - The penalties imposed on Shri Deepak Handa and Shri Ravi Handa reduced - confiscation of the cash and jewellery seized from the appellant set aside - it is deemed fit to reduce the penalty imposed on the appellant also to Rs. 5,00,000/-. Appeal allowed in part.

Summary

Issues Involved:
1. Confiscation of foreign marked gold bars and a cut piece of gold.
2. Confiscation of gold jewelry.
3. Confiscation of Indian currency.
4. Imposition of penalty under Section 112.

Summary:

A. Confiscation of Foreign Marked Gold Bars and Cut Piece of Gold:
The appellant was found in possession of two gold bars and a cut piece of gold with foreign markings and high purity. The gold was seized under the reasonable belief that it was smuggled, shifting the burden of proof to the appellant under Section 123 of the Customs Act. The appellant failed to provide duty-paid documents or any evidence to prove the gold was legally imported. The Tribunal upheld the confiscation under Section 111(d) but set aside confiscation under Sections 111(i) and 111(p), stating that these sections did not apply to the case.

B. Confiscation of Gold Jewelry:
The gold jewelry weighing 581.71 grams was confiscated under Sections 111(d), (i), and (p) read with Section 120 of the Customs Act. The Tribunal found no evidence that the jewelry was made from smuggled gold or that it was smuggled itself. The confiscation of the jewelry was set aside, aligning with the Tribunal's earlier decision in a related case.

C. Confiscation of Indian Currency:
The Indian currency amounting to Rs. 8,86,500 was seized under Section 121 as alleged sale proceeds of smuggled goods. The Tribunal held that the burden of proof rested on the Revenue to establish that the cash was indeed the sale proceeds of smuggled goods. The Revenue failed to meet this burden, and the confiscation of the cash was set aside.

D. Imposition of Penalty under Section 112:
The penalty of Rs. 25,00,000 imposed on the appellant was reviewed. Considering the Tribunal's earlier decision to reduce penalties for co-accused, the penalty on the appellant was reduced to Rs. 5,00,000.

Conclusion:
The appeal was partly allowed, and the impugned order was modified as follows:
a) Confiscation of foreign marked gold bars and cut piece of gold under Section 111(d) was upheld; confiscation under Sections 111(i) and (p) was set aside.
b) Confiscation of gold jewelry was set aside.
c) Confiscation of Indian currency was set aside.
d) Penalty under Section 112 was reduced to Rs. 5,00,000.