2025 (1) TMI 748 - AT - Customs

Town seizure - Absolute confiscation of gold seized from the possession of the appellant - levy of penalty - gold of foreign origin and smuggled or not - HELD THAT - It is found that it is a case of town seizure wherein the purity of gold was found 99.30% to 99.39 % and having no foreign marking thereon and are of irregular shape, size and weight. In that circumstances, can there be a reasonable believe to confiscate that the gold in question or not. The said issue has been dealt by this Tribunal in the case of COMMISSIONER OF CUSTOMS (PREVENTIVE) , KOLKATA VERSUS SHRI BAJRANG INGOLE AND COMMISSIONER OF CUSTOMS (PREVENTIVE) , KOLKATA VERSUS SHRI SACHIN GUPTA (DIRECTOR OF M/S. AKRITI GUPTA JEWELLERS PVT. LTD. 2023 (11) TMI 423 - CESTAT KOLKATA wherein this Tribunal has observed ' It is apparent from the records itself that it is a case of town seizure. The purity of gold is 99.5% and having no embossing of foreign mark, in that circumstances, Revenue has failed to prove reasonable belief that being the gold in question is smuggled one. In the absence of that the impugned gold cannot be seized under section 110 of the Customs Act, 1962 and therefore the gold in question is not liable for confiscation and no penalty is imposable on the appellant.' Admittedly the facts of the case are similar to the case of and Bajrang Ingole. Conclusion - As it is a case of town seizure having no foreign marking on the gold and gold is of different shape, size and weight and purity of 99.30% to 99.39%, in that circumstances, the gold in question cannot be absolutely confiscated. Therefore, the conditions of Section 110 for seizure of gold are not complied with as there is no reasonable believe that the gold in question is of foreign origin. The impugned gold is not liable for confiscation and is to be released to the appellant and no penalty is imposable on the appellant - Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the seizure of gold from the appellant by the Customs authorities was justified under the Customs Act, 1962, given the circumstances of the seizure.
Whether the gold in question could be reasonably believed to be of foreign origin and smuggled, thereby justifying its confiscation and the imposition of a penalty on the appellant.
Whether the procedure followed by the Customs authorities in seizing the gold was in compliance with the legal requirements, particularly concerning the concept of "reasonable belief."

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Gold Seizure

Relevant Legal Framework and Precedents: The Customs Act, 1962, specifically Sections 7(1)(C), 11, and 110, provides the legal framework for the seizure of goods believed to be smuggled. The precedents considered include the cases of Bajrang Ingole and R.K. Swami Singh, which discuss the requirements for a "reasonable belief" in town seizures.
Court's Interpretation and Reasoning: The court examined whether there was a reasonable belief that the gold was smuggled. The lack of foreign markings and the irregular shape and size of the gold pieces were critical in determining the absence of reasonable belief.
Key Evidence and Findings: The gold had a purity of 99.30% to 99.39% and lacked foreign markings, which are typically present on smuggled gold. The appellant also failed to provide licit documents for the gold's origin.
Application of Law to Facts: The court applied the principles from previous cases, emphasizing that reasonable belief must be based on concrete evidence rather than assumptions or presumptions.
Treatment of Competing Arguments: The appellant argued that the seizure was unjustified due to the absence of foreign markings and the irregular shape of the gold. The respondent contended that the lack of documentation suggested foreign origin. The court favored the appellant's argument, citing insufficient evidence for reasonable belief.
Conclusions: The court concluded that the seizure was unjustified as the conditions for reasonable belief under Section 110 of the Customs Act were not met.

Issue 2: Compliance with Legal Requirements

Relevant Legal Framework and Precedents: The requirement for "reasonable belief" as a prerequisite for seizure under Section 110 was central. The court referenced the Supreme Court's interpretation in Tata Chemicals Ltd. v. Commissioner of Customs (Preventive).
Court's Interpretation and Reasoning: The court reiterated that reasonable belief must exist at the time of seizure and be based on objective evidence. The absence of foreign markings and the nature of the gold pieces did not support such belief.
Key Evidence and Findings: The court noted the lack of evidence indicating the gold's foreign origin or smuggling, such as foreign markings or standardized shapes and weights.
Application of Law to Facts: The court applied the legal standard for reasonable belief, finding that the Customs authorities acted on suspicion rather than evidence.
Treatment of Competing Arguments: The appellant's argument that the seizure was based on speculation was upheld, while the respondent's reliance on the absence of documentation was deemed insufficient.
Conclusions: The court found that the seizure did not comply with the legal requirements, as the necessary reasonable belief was not established.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The belief must be such as any reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing."
Core Principles Established: The judgment reinforced the principle that reasonable belief for seizure must be based on concrete evidence rather than assumptions or lack of documentation. It emphasized the necessity of foreign markings or other indicators of smuggling for such belief.
Final Determinations on Each Issue: The court determined that the gold was not liable for confiscation due to the lack of reasonable belief in its smuggled nature. Consequently, the penalty imposed on the appellant was deemed unjustified, and the gold was ordered to be released.

The judgment thus sets a precedent for the requirement of concrete evidence in cases of seizure under the Customs Act, emphasizing the importance of reasonable belief based on objective criteria.

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