2023 (12) TMI 1156 - AT - Customs

Smuggling - Absolute confiscation of the seized gold of foreign marking - penalty under Section 112(b ) of the Customs Act, 1962 - prohibited item or not - denial of proper opportunity to present his case and no opportunity was granted to cross examine the witnesses - violation of principles of natural justice - HELD THAT - The Act does not define the expression restricted goods , but the decisions referred to above, have interpreted the expression prohibited goods under Section 2(33) so as to include restricted goods. In terms of the definition of prohibited goods in Section 2(33) even prohibited goods could be imported or exported, subject to compliance with the terms and conditions as prescribed but if import is not done lawfully as per the procedure prescribed under the Customs Act or any other law for the time being in force, in that event the said goods would fall under the definition of prohibited goods . The necessary corollary is that goods being imported if not subjected to check up at the customs on their arrival and are cleared without payment of customs duty are treated as smuggled goods . Since the conditions for import of gold as per the notification issued by DGFT and the restrictions imposed by RBI have been violated, the gold in question has to be treated as prohibited goods under Section 2(33). Consequently, it would fall within the definition of smuggling under Section 2(39) which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. Having come to the conclusion that the gold seized of which the appellant claimed to be the owner without any valid documents of purchase, has to be treated as prohibited goods and gold falls under the category of dutiable goods but the appellant failed to prove that the liability to pay the customs duty was discharged and by necessary implication the seized gold are smuggled goods , it is held that the seized goods are liable for confiscation under Section 111(d) whereby goods which are imported or attempted to be imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force, would be liable for confiscation. Also absolute confiscation is justified in the facts of the present case where the trail of events show that the appellant is engaged in procuring gold of foreign origin in illegal manner and the multiple stands taken by him on the face of it were false as the alleged supplier M/s. Sai Buillion had denied having supplied any gold to the appellant after 08.12.2014 and also stated that on 29.01.2015, Shri Rahul son of the appellant approached his father for providing a bill for one Kg. gold, but they declined as they had not supplied any gold. The submission of the learned counsel that there was no proposal for absolute confiscation in the show cause notice stands nullified - it is the discretion of the adjudicating authority to decide with reference to the facts and circumstances and based on relevant considerations - the authorities below have rightly exercised the discretion in not granting provisional release of the seized goods in terms of Section 110 A read with Section 125 of the Act. Violation of principles of natural justice - denial of proper opportunity to present his case and no opportunity was granted to cross examine the witnesses - HELD THAT - Despite repeated summons the appellant did not appear before the Investigating Agency and merely sent a letter admitting his statement recorded under section 108, which during his life time (as he expired on 18.08.2018 during the pendency of the appeal) he never retracted the said statement. As per the settled law, the said statement is admissible in evidence and is binding on the appellant. The appellant during his life time had never asked for cross examination and hence no such plea can be raised at this stage. Reliance is placed on the decision of the Supreme Court in COMMISSIONER OF C. EX., MADRAS VERSUS SYSTEMS COMPONENTS PVT. LTD. 2004 (2) TMI 65 - SUPREME COURT , where it has been held that it is a basic and settled law that what has been admitted need not be proved. We therefore reject the contention as raised on behalf of the appellant as frivolous and baseless. Lastly, the learned Counsel for the appellant submitted that request was made for retesting of the seized gold by melting purity because the contents of the Panchnama was not recorded correctly and the purity certificate was also issued without any basis but the same was not allowed - It is found from the records that on 29.01.2015, on the date of search itself, a Certified Jewellery Appraiser was called on spot who tested the recovered gold by touchstone method in the presence of two independent witnesses and certified the recovered gold - reliance placed on the decision of the High Court of Kerala in the case of MAMMU AND ANOTHER VERSUS ASSTT. COLLECTOR OF CENTRAL EXCISE 1981 (1) TMI 79 - HIGH COURT OF KERALA AT ERNAKULAM , where it has been held that, since no definite tests have been prescribed under law, whether an article is gold of particular quality and purity, it has to be borne in mind that the opinion of an expert on this point is relevant under Section 45 of the Evidence Act. The plea is of no significance but an attempt and tactics to delay the adjudication proceedings, particularly in view of the marking on the gold biscuits AL Etihad, Dubai) and the statements recorded under Section 108 of the Act. The issue of confiscation of seized gold under Section 11 upheld - the appellant for his acts of omission and commission have rendered himself liable to penal action under Section 112(b) of the Act - appeal dismissed.

Summary

Issues Involved:
1. Confiscation of seized gold and penalty under Section 112(b) of the Customs Act, 1962.
2. Whether the seized gold was a prohibited item.
3. Opportunity to present the case and cross-examine witnesses.
4. Testing method for the seized gold.
5. Application of Section 110A and Section 125 of the Customs Act regarding provisional release and absolute confiscation.

Summary:

1. Confiscation of Seized Gold and Penalty under Section 112(b):
The appellant challenged the Order-in-Appeal affirming the absolute confiscation of seized foreign-marked gold and the imposition of a penalty under Section 112(b) of the Customs Act, 1962. The seized gold, weighing 1199.550 grams and valued at Rs. 30,90,109/-, was recovered from a smelter's premises without any documents evidencing licit possession, leading to its confiscation under Section 110 of the Customs Act.

2. Whether the Seized Gold was a Prohibited Item:
The appellant argued that the seized gold was not a prohibited item and should not be absolutely confiscated. However, the Tribunal referred to various judgments and statutory definitions, concluding that the seized gold falls under the definition of "prohibited goods" as per Section 2(33) of the Customs Act. The importation of gold is highly regulated, and the appellant failed to prove that the seized gold was validly imported, thus making it liable for confiscation under Section 111 of the Act.

3. Opportunity to Present the Case and Cross-Examine Witnesses:
The appellant contended that he was denied a proper opportunity to present his case and cross-examine witnesses. The Tribunal found no merit in this argument, noting that the appellant did not appear before the Investigating Agency despite repeated summons and admitted his statement recorded under Section 108 of the Customs Act. The statement, being un-retracted, was admissible in evidence, and no further corroboration was required.

4. Testing Method for the Seized Gold:
The appellant requested retesting of the seized gold using the Melting Purity Method, arguing that the initial testing by the Touch Stone Method was inadequate. The Tribunal rejected this plea, stating that the gold was tested by a Certified Jewellery Appraiser in the presence of independent witnesses, and no definite tests are prescribed under law. The marking on the gold biscuits and the statements recorded under Section 108 of the Act further supported the findings.

5. Application of Section 110A and Section 125 Regarding Provisional Release and Absolute Confiscation:
The appellant argued against absolute confiscation and sought provisional release of the seized gold. The Tribunal, referring to various judgments, held that the adjudicating authority has the discretion to decide on absolute confiscation based on the facts and circumstances of each case. The appellant's failure to produce valid documents for the seized gold justified the absolute confiscation and penalty under Section 112(b) of the Act.

Conclusion:
The Tribunal upheld the findings of the authorities below, affirming the confiscation of the seized gold under Section 111(d) and the penalty under Section 112(b) of the Customs Act. The appeal was dismissed.