2024 (7) TMI 563 - AT - Customs

Confiscation of seized gold - penalty u/s 112(b) of the Customs Act, 1962 - entire case of the revenue is based on the fact of recovery of subject gold bars from the Appellant, the statements and the call record details of the Appellant - HELD THAT - The statement regarding smuggling of subject gold bars from Bangladesh to India and foreign markings being erased at Kolkata, was not based on the personal knowledge of the Appellant but clearly based on what was told to the Appellant by Sri Bablu. Therefore, the evidence sought to be relied upon by the Revenue to sustain the charge of smuggling is clearly a hearsay evidence. Now, it is well settled that a hearsay evidence is inadmissible to prove a fact unless corroborated by substantive piece of evidence, as held in Neeraj Dutta vs. State (NCT of Delhi) 2022 (12) TMI 1490 - SUPREME COURT (LB) . As regards corroborative substantive evidence, it is found that let alone any corroborative substantive evidence, the Revenue has not brought on record any evidence to show that the subject gold bars were actually smuggled from Bangladesh into India. The Revenue has also failed to procure and bring the testimony of Sri Bablu on record, who as per Revenue, specifically knew the fact of smuggling and erasing of foreign markings. The mere fact that the summon issued to Sri Bablu remained undelivered, never precluded the Revenue from taking custody of Sri Bablu and procure his testimony, in the manner known to law. The Appellant clearly proved ownership of same quantity of gold against consideration on the strength of valid invoices. By bringing the two invoices on record, the Appellant discharged his initial onus and thereafter it was for the Revenue to establish that the two invoices does not relate to the subject gold bars. However, this onus has not been discharged by the Revenue in the present case as no enquiry has been made regarding consideration paid by the Appellant and its source etc. to prove that the two invoices are not related to the subject gold bars. It is found that neither the foreign origin of the gold nor the nature of the same being smuggled is conclusively established other than merely relying on the conclusions drawn from the statements of the Appellant - entire case of the Revenue appears to be based on presumptions and assumption, which however strong, cannot take place of substantive evidence. Once it is held that the subject gold bars are not liable for confiscation, the question of penalty under Section 112(b) on the Appellant does not arise and therefore the penalty imposed on the Appellant is set aside. Appeal allowed.

Summary

Issues:
1. Confiscation of seized gold bars under Section 112(b) of the Customs Act, 1962.
2. Imposition of penalty of Rs.25,00,000 under Section 112(b) of the Customs Act, 1962.
3. Allegations of smuggling of gold bars.
4. Validity of statements recorded from the Appellant.
5. Ownership and legal possession of the gold bars.
6. Reliability of evidence and corroborative substantive evidence.
7. Failure to establish foreign origin and smuggling of the gold bars.
8. Justification for penalty imposition.

Analysis:
1. The Appellant challenged the Order-in-Appeal upholding the confiscation of seized gold bars weighing 1599.200 grams and the penalty of Rs.25,00,000 under Section 112(b) of the Customs Act, 1962. The facts revealed that the Appellant was apprehended with gold bars while traveling by train, leading to the seizure of the gold. The Adjudicating Authority held the gold to be prohibited goods and imposed the penalty based on the Appellant's statements and lack of documentation regarding the gold's origin.

2. The Adjudicating Authority found the Appellant's statements incriminating, leading to the confiscation and penalty. The Appellant contended that the statements were obtained under duress and coercion, and the gold was purchased domestically, supported by invoices and bank statements. The Appellant argued that the burden of proving smuggling rested with the Department, which failed to produce substantive evidence linking the gold to illegal activities.

3. The Tribunal analyzed the contradictory statements of the Appellant and the lack of corroborative evidence to support the smuggling allegations. The Tribunal emphasized that hearsay evidence alone is insufficient, citing legal precedent. The Revenue's failure to produce key witnesses, like the alleged supplier and recipient of the gold bars, weakened the case against the Appellant.

4. The Tribunal highlighted the genuineness of the invoices provided by the Appellant as evidence of legal ownership of the gold bars. The Revenue's argument that the gold remained unused for an extended period was insufficient to discredit the ownership claim. The Tribunal found that the Revenue's reliance on the Appellant's travel records to Delhi and Kolkata did not establish smuggling or foreign origin of the gold bars.

5. Ultimately, the Tribunal concluded that the Revenue's case relied on presumptions and assumptions rather than substantive evidence. As the foreign origin and smuggling of the gold bars were not conclusively proven, the confiscation and penalty were deemed unjustified. The Tribunal set aside the penalty imposed on the Appellant, allowing the appeal with consequential relief.

6. The Tribunal's decision, delivered on 9th July 2024, emphasized the importance of substantive evidence in establishing allegations of smuggling and upheld the Appellant's claim of legal ownership of the gold bars based on valid invoices.