2025 (1) TMI 1267 - AT - Customs

Absolute confiscation - penalties - smuggling of 2 kgs. of gold - discharge of burden of proof under Section 123 of the Customs Act 1962 - HELD THAT - The gold recovered from Md.Sajid Kamal Mondal has been absolutely confiscated on the premises that the invoices produced by the appellant Rahul Harichandra Pawar are found to be correct since the goods were handed over to Md.Sajid Kamal Mondal without any documents and the same casts serious doubt about legality of the same. Upon presumption that a genuine businessman could have issued proper challan for interstate movement of such high value goods. Therefore he has held that as the person who has apprehended that the appellant has failed to discharge his burden of proof under Section 123 of the Customs Act 1962 and ordered for absolutely confiscation of the gold in question. Admittedly in this case there is no marking of foreign origin on the gold nor it is the case of interception at Port or Airport or any International Border. Further the purity of seized gold is found between 994.2 to 996.9. In that circumstances the appellants are able to discharge his burden of proof under Section 123 of the Customs Act 1962 for acquisition of the said gold in question. Further the Revenue has failed to discharge their onus of reasons to believe that the gold in question is smuggled in nature. Conclusion - The appellants are able to discharge his burden of proof under Section 123 of the Customs Act 1962 for acquisition of the said gold in question. 2 kgs. gold recovered from Md.Sajid Kamal Mondal belongs to Rahul Harichandra Pawar cannot be absolutely confiscated. Accordingly the absolute confiscation of the gold is set aside. Consequently no penalties are imposed on both the appellants. Appeal disposed off.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the appellants successfully discharged the burden of proof under Section 123 of the Customs Act, 1962, regarding the legality of the gold in question.

2. Whether the absolute confiscation of 2 kgs. of gold and the imposition of penalties on the appellants were justified under the circumstances.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Discharge of Burden of Proof under Section 123 of the Customs Act, 1962

- Relevant Legal Framework and Precedents: Section 123 of the Customs Act, 1962, places the burden of proof on the person from whom goods are seized to prove that they are not smuggled. The appellants relied on several judicial precedents to argue that they had met this burden.

- Court's Interpretation and Reasoning: The Tribunal noted that the appellant, Rahul Harichandra Pawar, produced relevant documentation, including tax invoices from M/s. Manappuram Finance Limited and a gold purification voucher, to substantiate the purchase and lawful possession of the gold. The Tribunal observed that the absence of foreign markings and the high purity of the gold (994.2 to 996.9 p.p.t.) further supported the appellant's claim.

- Key Evidence and Findings: The evidence presented included tax invoices, a gold purification voucher, and confirmations of payment through banking channels. The Tribunal found these documents credible and sufficient to demonstrate the legality of the gold's acquisition.

- Application of Law to Facts: The Tribunal applied Section 123, concluding that the appellants had successfully discharged their burden of proof by providing credible documentation and evidence of lawful acquisition.

- Treatment of Competing Arguments: The Tribunal rejected the adjudicating authority's presumption that the absence of a challan for interstate movement indicated illegality. It emphasized that the documentation provided was adequate to establish the legitimacy of the gold.

- Conclusions: The Tribunal concluded that the appellants had met the burden of proof required under Section 123 of the Customs Act, 1962, and that the gold could not be deemed smuggled.

Issue 2: Justification of Absolute Confiscation and Penalties

- Relevant Legal Framework and Precedents: The Customs Act, 1962, provides for the confiscation of goods and imposition of penalties if goods are found to be smuggled. The Tribunal considered whether these actions were justified based on the evidence.

- Court's Interpretation and Reasoning: The Tribunal found that the adjudicating authority's decision to confiscate the gold and impose penalties was based on presumptions rather than concrete evidence. It noted that the invoices and other documents provided by the appellants were verified and found to be correct.

- Key Evidence and Findings: The Tribunal highlighted the lack of any contrary evidence from the Revenue to substantiate claims of smuggling. The gold's purity and the absence of foreign markings were significant factors in its decision.

- Application of Law to Facts: The Tribunal applied the relevant provisions of the Customs Act, determining that the absolute confiscation and penalties were not justified given the evidence of lawful acquisition.

- Treatment of Competing Arguments: The Tribunal dismissed the Revenue's argument that the absence of a challan indicated illegality, emphasizing the sufficiency of the documentation provided by the appellants.

- Conclusions: The Tribunal concluded that the absolute confiscation of the gold and the imposition of penalties were not justified and should be set aside.

SIGNIFICANT HOLDINGS

- Verbatim Quotes of Crucial Legal Reasoning: "In that circumstances, the appellants are able to discharge his burden of proof under Section 123 of the Customs Act, 1962 for acquisition of the said gold in question."

- Core Principles Established: The Tribunal affirmed that credible documentation and evidence of lawful acquisition are sufficient to discharge the burden of proof under Section 123 of the Customs Act, 1962, and that presumptions without evidence cannot justify confiscation and penalties.

- Final Determinations on Each Issue: The Tribunal set aside the absolute confiscation of the 2 kgs. of gold and the penalties imposed on the appellants, concluding that the appellants had successfully demonstrated the legality of the gold's acquisition.