2024 (3) TMI 810 - AT - Customs

Absolute Confiscation - penalty - town seizure - Smuggling - illicit transport of Gold - burden to prove - HELD THAT - Admittedly, the gold bars seized are of irregular shape and size and also of irregular weight other than standard gold bars. Admittedly, there is no marking of any foreign refinery on the gold bars seized. It is further found that the statements recorded by Revenue from both the appellants/staff Mr. VK Kumar and Mr. TP are pari materia and hence, it is apparent that such statements are not freely given but the person deposed have signed on the dotted line. Similarly, the statement of Mr. B. Suresh recorded under Sec 108 also does not inspire confidence - It is also beyond comprehension that a person engaged in gold business for a long time, not usually entertaining cash dealings, will get involved in facilitating the purchase of smuggled gold from unknown person for a paltry commission of Rs.2,000/- per kg. It is further found that the statement of Mr. B. Suresh is not admissible for denial of cross-examination and accordingly, the same is inadmissible in terms of Sec 138B of the Act. The appellant/claimant Mr. PVMJ Rao has lead cogent evidence with regard to availability of stock, evidence of conversion of old gold ornaments to gold bars and pieces through refinery at Narasaraopet and the said refiner has also confirmed melting of old gold jewellery and thereafter, refining the gold and delivering gold bars and pieces to the appellant - further, in view of the evidence led by the appellant, they have discharged the onus under Sec 123 of the Act as to the licit source of the gold in question. The appellant Mr. P.V.M. Jagannadha Rao is held entitled to receive back the gold, and if the same is already disposed of by the department, shall be entitled to receive the sale proceeds of the same with interest as per Rules. All penalties also stand set aside - the impugned order set aside - appeal allowed.

Summary

Issues Involved:
1. Legitimacy of the seized gold.
2. Validity of the statements recorded under Section 108.
3. Compliance with Section 123 of the Customs Act regarding the burden of proof.
4. Admissibility of evidence under Section 138B of the Customs Act.
5. Imposition of penalties.

Summary:

1. Legitimacy of the Seized Gold:
The appellants were intercepted carrying gold without purchase documents. They claimed the gold was purchased in Coimbatore, but later retracted their statements. The owner, Mr. PVM Jagannadha Rao, asserted the gold was from melted old jewelry, supported by stock records, GST returns, and Income Tax returns. The Tribunal found no evidence of smuggled nature, noting the irregular shape and lack of foreign markings on the gold bars.

2. Validity of the Statements Recorded Under Section 108:
The statements of Mr. VK Kumar and Mr. TP were recorded under duress and later retracted. The Tribunal noted these statements were not voluntarily given and were dictated by officers. The statement of Mr. B. Suresh of Kubera Bullion also lacked credibility and was not freely given.

3. Compliance with Section 123 of the Customs Act:
The Tribunal found that the appellants discharged the burden of proof under Section 123 by providing business records, including stock registers, delivery challans, and financial returns, which supported their claim that the gold was part of their stock in trade.

4. Admissibility of Evidence Under Section 138B of the Customs Act:
The Tribunal held that the statements recorded under Section 108 were inadmissible due to the denial of cross-examination, thus rejecting them under Section 138B.

5. Imposition of Penalties:
The Tribunal set aside the penalties imposed on the appellants, finding that the evidence led by the appellants was cogent and not disproven by the Revenue.

Conclusion:
The appeals were allowed, and the impugned orders were set aside. Mr. PVM Jagannadha Rao was entitled to receive back the seized gold or its sale proceeds with interest. All penalties were also set aside.