Tribunal overturns penalties in Customs Act case due to lack of evidence on silver chorsas origin

MAHENDRABHAI H. PATEL Versus COMMISSIONER OF CUSTOMS, AHMEDABAD

MAHENDRABHAI H. PATEL Versus COMMISSIONER OF CUSTOMS, AHMEDABAD - 2004 (164) E.L.T. 35 (Tri. - Mumbai) Issues:
- Seizure and confiscation of silver chorsas believed to be converted from smuggled silver bars
- Knowledge or reasonable belief of the appellants regarding the confiscated chorsas
- Imposition of penalties under Section 112 of the Customs Act

The judgment pertains to the seizure and confiscation of silver chorsas believed to be converted from smuggled silver bars. DRI officers searched the premises of M/s. Kamal Refinery and recovered silver pieces, out of which 702 bore marking "electro refined silver - 999." The total weight of the chorsas was found to be 357.146 kgs with a value of Rs. 22,85,734. Shri Ajaybhai Parekh, associated with the Refinery, explained the process of converting the silver bars into chorsas without producing any documents for the purchase or import of the silver bars. The Customs Act provisions were invoked for confiscation due to the belief that the chorsas were made from smuggled silver bars.

Regarding the knowledge or reasonable belief of the appellants, the Tribunal found no material on record to suggest that any of the appellants had such knowledge or belief that the chorsas were liable to confiscation. Even though the chorsas were intended for specific individuals, including Mahendrabhai H. Patel and Natwarbhai P. Patel, the appellants were not proven to be aware that the chorsas were made from smuggled silver. The workers at the Refinery also did not demonstrate knowledge of the origin of the silver bars. The burden of proof, as per Section 123 of the Customs Act, to establish that the workers knew the silver bars were smuggled was not met by the Revenue. Similarly, the department failed to show that the alleged recipients of the chorsas were aware of the silver's smuggled origin. Consequently, the penalties imposed on the appellants under Section 112 were deemed unsustainable and were set aside by the Tribunal.

In conclusion, the appeals were allowed, and the penalties imposed on the appellants were overturned due to the lack of evidence demonstrating their knowledge or reasonable belief regarding the confiscated chorsas' origin from smuggled silver bars. The Tribunal found that the burden of proof had not been discharged by the Revenue, leading to the reversal of the penalties under Section 112 of the Customs Act.

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