2019 (1) TMI 77 - AT - Customs

CESTAT ruling on gold confiscation & penalties for smuggling lacks evidence linking to third country origin

Shri Sanjeeb Kumar @ Pappu Kumar, Shri Ajay Kumar & Shri Umesh Kumar Versus The Joint Commissioner, Customs Commissionerate, Lucknow

The Appellate Tribunal CESTAT ALLAHABAD ruled on an appeal concerning the confiscation of gold and penalties imposed on the appellants for alleged ... Absolute confiscation - imposition of penalty - Smuggling of Gold - restricted item or not? - Held that:- The appellants have failed to prove the source of procurement of Gold, therefore, Gold is smuggled one but on the same time, Revenue is also failed to prove that Gold is of third country origin and smuggled through Nepal. In fact, the Revenue has not adduced any evidence to that effect, whereas on the other side, Shri Sanjeeb Kumar, himself has categorically stated that he is not dealing with the purchase and sale of the Gold. Therefore, the Revenue has failed to prove that the Gold in question is of third country origin and have been imported/smuggled through Nepal. Without evidence, the benefit of presumption under Section 123 of the Customs Act, 1962 is not available to the Revenue - The Gold in question cannot be held as restricted goods and they can be released on payment of redemption fine and penalty as the goods are smuggled in nature. The redemption fine of ₹ 5 lakhs is imposed on the Gold in question which can be redeemed on payment of the said redemption fine - Considering the fact, that appellants are involved in the activity of smuggling of Gold, therefore, penalty of ₹ 1 lakh each is imposed on all the appellants - appeal allowed in part. Issues:- Confiscation of gold recovered from appellants- Imposition of penalties on the appellants- Proof of gold being smuggled and of third country origin- Burden of proof on the appellants- Evidence presented by both parties- Legal precedents and judgments consideredThe judgment by the Appellate Tribunal CESTAT ALLAHABAD involved an appeal against an order confiscating gold and imposing penalties on the appellants. The case revolved around the interception of two individuals at a railway station carrying gold bars of third country origin. The appellants failed to prove the gold was not smuggled, but the Revenue could not establish how the gold entered India through Nepal. The tribunal noted the lack of evidence regarding the gold's origin and the appellants' involvement in smuggling. Citing a Bombay High Court decision, it emphasized the burden of proof on the prosecution to establish smuggling. The tribunal held that without concrete evidence, the gold could not be deemed a restricted item but was smuggled, subject to redemption fine and penalties. It considered the value of the gold and imposed a redemption fine of Rs. 5 lakhs, along with individual penalties of Rs. 1 lakh on the appellants for their involvement in smuggling activities.The key issue was whether the gold recovered from the appellants should be confiscated and penalties imposed. The appellants argued that the Revenue failed to prove the gold was of third country origin and smuggled through Nepal. They relied on the Customs Act, emphasizing the burden of proof on the appellant to show the gold was not smuggled. The tribunal found that while the appellants could not prove the gold's source, the Revenue also lacked evidence linking the gold to third country origin or smuggling through Nepal. It highlighted the importance of concrete evidence in establishing smuggling activities and held that the gold, though smuggled, was not a restricted item. Therefore, it could be redeemed upon payment of a fine.Another critical aspect was the consideration of legal precedents and judgments. The tribunal referred to a decision by the Hon'ble Bombay High Court in a similar case, emphasizing the prosecution's burden to prove smuggling activities. It cited the importance of concrete evidence, as mere markings on goods were not sufficient proof of foreign origin. Relying on these legal principles, the tribunal concluded that without substantial evidence, the benefit of presumption under the Customs Act was not available to the Revenue. This underscored the need for clear proof in cases involving smuggling allegations.In conclusion, the tribunal disposed of all appeals filed by the appellants, emphasizing the lack of concrete evidence regarding the gold's origin and the appellants' involvement in smuggling. It imposed a redemption fine of Rs. 5 lakhs on the gold, considering its value and the margins in the gold trade. Additionally, individual penalties of Rs. 1 lakh were imposed on each appellant due to their involvement in smuggling activities. The judgment highlighted the importance of evidence in establishing smuggling allegations and the burden of proof on the prosecution in such cases.