Burden of proving smuggled gold remained on Revenue, and confiscation failed for want of positive evidence.

The Tribunal held that, where gold was first seized by the Anti-Corruption Bureau and then handed to customs, Section 123 was not attracted in the manner urged by Revenue. The department was still required to produce positive evidence proving the illicit origin of the goods and their smuggled character. The appellants gave an explanation for possession and filed supporting documents, while the department failed to disprove that explanation or establish smuggling. Confiscation therefore could not be sustained, and the confiscation order and penalties were set aside.

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Issues: Whether the department had discharged the burden of proving that the seized gold was smuggled goods so as to sustain confiscation and penalties.

Analysis: The goods were initially seized by the Anti-Corruption Bureau and later handed over to customs. The Tribunal noted that in such a situation, Section 123 was not attracted in the manner contended by the department, and the Revenue was required to produce positive evidence establishing the illicit origin of the gold. The appellants offered an explanation for possession and produced supporting documents, but the department did not adduce sufficient material to disprove that explanation or to prove smuggled character of the goods. On that footing, the confiscation order could not be sustained.

Conclusion: The issue was answered in favour of the appellants. The confiscation and penalties were set aside.

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