Section 123 Customs presumption applies to seized foreign-marked gold; conscious possession remains crucial for penalty liability.

Foreign-marked gold bars actually seized by Customs Officers in a reasonable belief of smuggling attracted the section 123 presumption, shifting the burden to the possessor to disprove smuggling. On the facts, prior handling of the locker key was not seizure, but the seizure recorded on 4-11-1981 was sufficient to trigger the statutory burden. Liability of Mrs. Neena Raina was not sustained because the evidence did not prove conscious possession or knowledge of the contents of the cloth bag. Mrs. Sheela Sumbaly's admission of knowing custody supported confiscation and contravention, but her penalty was reduced on account of age and circumstances.

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Issues: (i) Whether the gold bars were seized by Customs Officers on 4-11-1981 so as to attract the presumption under section 123 of the Customs Act; (ii) whether Mrs. Neena Raina was in conscious possession of the foreign-marked gold bars; and (iii) whether Mrs. Sheela Sumbaly was liable to confiscation and penalty, and if so, whether the penalties required reduction.

Issue (i): Whether the gold bars were seized by Customs Officers on 4-11-1981 so as to attract the presumption under section 123 of the Customs Act.

Analysis: The earlier taking of the locker key by officers did not amount to seizure under the Customs Act. The actual seizure was recorded on 4-11-1981 by officers of the Directorate of Revenue Intelligence, who were Customs Officers. As the gold bars bore foreign markings and were seized by Customs Officers in the reasonable belief that they were smuggled goods, the statutory burden shifted to the appellants to prove otherwise.

Conclusion: The seizure on 4-11-1981 attracted section 123 of the Customs Act and the burden of rebuttal lay on the appellants.

Issue (ii): Whether Mrs. Neena Raina was in conscious possession of the foreign-marked gold bars.

Analysis: The evidence did not establish that Mrs. Raina knew the contents of the cloth bag placed in the locker. Her statement was consistent with her claim that she was unaware of the gold bars until the search, and there was no clinching evidence to show conscious possession on her part.

Conclusion: The finding of liability against Mrs. Neena Raina could not be sustained.

Issue (iii): Whether Mrs. Sheela Sumbaly was liable to confiscation and penalty, and if so, whether the penalties required reduction.

Analysis: Mrs. Sumbaly's own statement the contents of the cloth bag as foreign-marked gold biscuits and explained their custody and placement in the locker. Her later denial was not accepted. The confiscation of the gold and the finding of contravention were therefore upheld, but her age and circumstances justified a lenient approach on penalty.

Conclusion: The confiscation and findings against Mrs. Sheela Sumbaly were upheld, but the penalties were reduced.

Final Conclusion: The appeal of Mrs. Neena Raina succeeded and the penalties imposed on her were set aside, while the appeals of Mrs. Sheela Sumbaly failed on merits except for reduction of the penalties.

Ratio Decidendi: Where foreign-marked goods are actually seized by Customs Officers in a reasonable belief that they are smuggled, section 123 of the Customs Act shifts the burden to the person in possession to disprove smuggling; liability for penalty requires proof of conscious possession, and admissions of knowing custody may sustain confiscation and penalty.

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