Conscious possession of gold disputed, so pre-deposit waiver and stay of penalty recovery were justified.

Waiver of pre-deposit and stay of recovery were granted where the penalty under the Customs Act depended on a prima facie finding of conscious possession of gold. The record showed competing materials: another person claimed the gold on the basis of a will, and a criminal court had found that the accused could not be held to be in possession of the gold. Because possession of contraband gold was the foundation for penalty under Section 112(b), the uncertainty on possession made the impugned finding insufficiently firm at the interim stage, justifying relief.

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Issues: Whether the applicants were entitled to waiver of pre-deposit and stay of recovery of the penalties imposed under the Customs Act and the Gold (Control) Act in view of the prima facie dispute regarding conscious possession of the gold.

Analysis: Penalty under Section 112(b) of the Customs Act was founded on a finding of conscious possession of gold recovered from the applicants' residential premises. The record contained competing materials: the gold had been claimed by another person on the strength of a will, and a criminal court had recorded a finding that the accused could not be held to be in possession of the gold. In these circumstances, the finding of conscious possession in the impugned order was not considered to be prima facie firm. Since possession of contraband gold is the basis for penalty under Section 112(b), the weakness in the possession finding justified interim relief.

Conclusion: The applicants were entitled to waiver of pre-deposit and stay of recovery.

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