Rebuttable presumption of smuggled origin under Customs law falls when lawful purchase evidence outweighs a retracted confession.

Under Section 123 of the Customs Act, 1962, the presumption of smuggled origin for notified goods is rebuttable, and the person from whom the goods are seized must show lawful origin. Here, the retracted confession was treated as insufficient because it was withdrawn at the first opportunity, lacked reliable corroboration, and was surrounded by circumstances casting doubt on voluntariness. The appellant's affidavit and the refiner's statement supported a lawful explanation, while the Department did not adequately disprove it. On those facts, the presumption stood rebutted and the confiscation of the silver bullion, silver jewellery, Indian currency and vehicle, as well as the penalty, were not sustainable.

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Issues: Whether the seized silver bullion and silver jewellery, the Indian currency recovered from the car, the vehicle itself, and the penalty imposed on the appellant were liable to confiscation and penalty in the facts of the case, particularly in the light of the presumption under Section 123 of the Customs Act, 1962 and the evidentiary value of the appellant's retracted confession.

Analysis: The silver bullion was a notified good under Section 123 of the Customs Act, 1962, so the initial burden lay on the appellant to prove lawful origin. The appellant, however, retracted his statement at the first available opportunity and there were surrounding circumstances creating doubt about voluntariness, including material suggesting detention during Customs custody. The alleged confession was also not fully corroborated: the stated stay at a Dharamshala was denied by its manager, the alleged buyers of smuggled silver denied such purchases, and there were no foreign-origin markings on the seized goods. On the other hand, the appellant produced an affidavit claiming lawful purchase and transit for refining, and the statement of the silver refiner supported the version that the appellant had come for refining work but no transaction materialised due to non-settlement of rate. The Department did not conduct adequate inquiry to disprove this explanation. In these circumstances, the retracted confession by itself was not reliable enough to sustain the charge of smuggled origin or the consequential confiscations and penalty.

Conclusion: The presumption under Section 123 stood rebutted on the facts, and the confiscation of the silver bullion, silver jewellery, Indian currency and the car, as well as the penalty, were not sustainable.

Ratio Decidendi: In a case governed by Section 123 of the Customs Act, 1962, the presumption of smuggled origin is rebuttable, and once the person from whose possession the goods were seized produces credible evidence of lawful origin, a retracted and uncorroborated confession cannot by itself sustain confiscation or penalty.

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