2023 (4) TMI 837 - AT - Customs

Confiscation - penalties - smuggling - crude gold bars of foreign origin / foreign marked gold bars which are smuggled into India from Sri Lanka - Burden to prove - request for cross-examination denied - whether DRI is the proper officer for issuing the Show Cause Notice? Whether the gold is of foreign origin? - HELD THAT - Admittedly, the gold does not have any foreign markings. It is the case of department that the gold assayer Sh. G.K. Shankar has issued certificate that the purity of the gold is 24 karat and of 999.9%. It is contended by department that only foreign gold would have such high purity. It is seen mentioned in the mahazar dated 23.1.2017 that the gold was assayed by the assayer on the same day. However, the said document is not made part of relied upon documents for the purpose of issuing Show Cause Notice. In the case on hand, the certificate does not mention 999.9% as contended by department. It merely says 24 carat. It does not mention the method adopted to test the purity. Further, the certificate is not made part of RUD. The copy of certificate is not given to the respondent. Again, the request to cross-examine the assayer was denied. It is produced belatedly and there is no petition filed by learned AR stating reasons to accept the document at the appellate stage. On the totality of these facts, we have to hold that the certificate of the assayer produced by the learned AR cannot be accepted in evidence. Apart from the certificate, the department relies on the statements given by the respondent on 23/24.1.2017. These statements have been retracted later by the respondent. In such circumstances, the department has to place reliable evidence to prove that the gold is smuggled from Sri Lanka. There is no evidence to prove that the gold is smuggled from Sri Lanka or any connection of the gold with Murugan or Batcha. In the absence of foreign markings, there should be cogent evidence to establish that the gold is of foreign origin. The contention of the learned AR that if gold jewellery when converted into bullion will not have 999.9% purity is without any substance. The statement of respondent which has been retracted cannot be the basis for holding that the gold is smuggled unless corroborated by other evidences. The view arrived by the Commissioner (Appeals) is legal and proper and does not require any interference. The issue on merits is found against the appellant / Revenue and in favour of the respondent. It is made clear that in this appeal we have not addressed the issue as to whether the Show Cause Notice issued by DRI is valid and proper. The appeal is dismissed.

Summary

Issues Involved:
1. Confiscation of goods (gold) and penalties imposed.
2. Evidence supporting the smuggled nature of the gold.
3. Validity of statements and retractions.
4. Procedural fairness and cross-examination rights.
5. Burden of proof under Section 123 of the Customs Act, 1962.

Summary:

Confiscation of Goods and Penalties Imposed:
The appeal was filed by the department against the Commissioner (Appeals) who had set aside the confiscation of gold and penalties imposed by the adjudicating authority. The adjudicating authority had confiscated 3.097 kg of gold under Sections 111(a), 111(d), and 111(i) of the Customs Act, 1962, and imposed penalties on the respondent and others under Section 112 of the Customs Act, 1962.

Evidence Supporting the Smuggled Nature of the Gold:
The department argued that the respondent's voluntary statements admitted to smuggling the gold, and the gold's high purity (24 karat, 999.9) indicated it was of foreign origin. However, the Commissioner (Appeals) found that the department failed to prove the gold was smuggled, noting the absence of foreign markings and the lack of corroborative evidence.

Validity of Statements and Retractions:
The respondent retracted his initial statements, claiming the gold was from his earnings abroad. The Commissioner (Appeals) noted that the department did not provide sufficient evidence to support the initial statements or disprove the retraction. The Tribunal agreed, emphasizing that retracted statements require corroboration.

Procedural Fairness and Cross-Examination Rights:
The respondent's request for cross-examination of the assayer and other witnesses was denied, which the Tribunal found violated principles of natural justice. The assayer's certificate was not part of the relied upon documents (RUDs) and was produced late in the proceedings, raising doubts about its validity.

Burden of Proof Under Section 123 of the Customs Act, 1962:
The Tribunal highlighted that in the absence of foreign markings, the burden of proof to establish the gold as smuggled lay with the department. The department's reliance on the assayer's certificate and the respondent's retracted statements was insufficient. The Tribunal cited similar cases where the burden of proof was not met without concrete evidence of smuggling.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision, finding the department's evidence inadequate to prove the gold was smuggled. The appeal by the department was dismissed, and the issue of the validity of the Show Cause Notice issued by DRI was not addressed in this appeal.