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2025 (3) TMI 280 - HC - CustomsSmuggling of Gold Bar - discharge of burden of prove - Section 123 of the Customs Act - HELD THAT - Chapter 14 of the Customs Act deals with confiscation of goods and conveyance and imposition of penalties. Before proceeding with confiscation of goods the Officer of Customs not below the rank of an Assistant Commissioner of Customs shall cause notice informing the grounds on which he proposed to confiscate the goods or to impose penalty after affording reasonable opportunity goods improperly imported can be confiscated under Section 111 and penalty can be imposed under Section 112 of the Customs Act. Gold with foreign marking is a dutiable goods which requires valid import document under law. The statement of M/s Surana Corporation Limited and their purchase documents reveals that M/s Surana Corporation importing gold from (1)NATAXIZ (2) Bank of Novascotia (3) Standard Bank through M/s.MMTC Ltd. whereas gold bar seized have the marking of Commerz Bank Switzerland. Further enquiry with M/s Surana Corporation in respect of the said discrepancies certain documents were produced by M/s Surana Corporation. None of these documents correlate the gold bar with marking of Commerz Bank seized from Rajan with the invoices and bill of entry packing list furnished by M/s Surana Corporation. Hence it is apparent that when the statute under Section 123 cost burden the possessor of the goods reasonably believed to be a smuggled goods to distract the burden. In this case the appellant had miserably failed to distract the said burden. The order in original as well as the order in appeal had disclosed this fact in detail. It has been concluded that the gold bar seized does not supported by valid import documents either at the time of seizure or later. Conclusion - The imposition of the penalty on the appellant was justified but the penalty amount was reduced considering the appellant s role. The Court found no error in the CESTAT s decision. Appeal dismissed.
The issues presented and considered in the judgment are as follows:1. Whether the appellant had discharged the burden cast on him under Section 123 of the Customs Act in relation to the seized gold bar.2. Whether the Tribunal erred in holding that the burden under Section 123 had not been discharged, especially in the absence of material showing smuggling of the gold bar.3. Whether the Tribunal was correct in disbelieving the appellant's versions regarding the licit purchase of the gold bar.4. Whether the Tribunal erred in overlooking substantive material in arriving at its findings on the burden under Section 123.5. Whether the Tribunal was right in distinguishing previous case laws on the burden under Section 123.6. Whether the marking differences on the seized gold bar compared to the imported gold bars were sufficient grounds for invoking Section 123.The detailed analysis of the issues is as follows:The Customs Department seized one kilo of gold bar with foreign markings from a person named Rajan. The Department alleged that the gold was illegally smuggled into India. The appellant claimed that the gold was purchased from a jewelry store on credit and that the store had acquired it from a corporation in Chennai through proper channels. However, discrepancies were found between the seized gold bar and the ones supplied by the importer. The Additional Commissioner of Customs ordered the confiscation of the gold bar with a penalty of Rs 1.50 lakhs. The Commissioner of Customs (Appeal) upheld this decision but allowed redemption of the gold on payment of a fine. The appellant paid the fine and customs duty but appealed to the CESTAT, which confirmed the order but reduced the penalty to Rs. 50,000.The Tribunal held that the penalty imposed on the appellant was justified but reduced it considering the appellant's role compared to others involved. The appellant argued that the gold bar was not seized within the customs zone and that there was no evidence of actual smuggling. The appellant contended that he had legally acquired the gold bar through normal trade. The appellant raised several questions of law challenging the Tribunal's findings on the burden under Section 123.The appellant argued that the order of confiscation was fundamentally flawed and that the Tribunal's decision was perverse. The appellant cited judgments in support of his arguments. The Department contended that the gold bar was smuggled based on discrepancies in markings and documents. The Department relied on the Customs Act provisions regarding confiscation and penalties.The Court upheld the CESTAT's decision, finding no error in its reasoning. The Court dismissed the appeal and confirmed the CESTAT's order.The significant holdings of the judgment are that the imposition of the penalty on the appellant was justified, but the penalty amount was reduced considering the appellant's role. The Court found no error in the CESTAT's decision and upheld the order confirming the penalty reduction.This judgment establishes the principles of burden of proof under Section 123 of the Customs Act and the consequences of failing to discharge that burden. The final determination was to dismiss the appeal and uphold the CESTAT's decision.
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