2020 (10) TMI 783 - AT - Customs

Tribunal rules in favor of appellant due to lack of proof, procedural lapses

M/s Ankit Agarwal Versus Commr. of Customs (Preventive), Kolkata

The Tribunal ruled in favor of the appellant, finding that the Department failed to prove the reasonable belief of smuggling or the foreign origin of the ... Validity of Search and Seizure - Smuggling - Gold - cross examination of the panch witnesses - Whether the Revenue establish the existence of reasons to believe that the impugned gold was smuggled? - HELD THAT:- It was incumbent upon the Department to prove the smuggled nature of the gold also. The only effort revenue seems to have made is to mention in the show-cause notice that as no valid import documents could be produced by the person carrying the gold, the same are deemed to be smuggled goods. Show cause mentions that ‘it seems settled fact that the seized gold were illegally brought into India from abroad by any route other than the route specified under Clause (c) of Section 7 of Customs Act, 1962. No meaningful inquiry and investigation appear to have undertaken to prove the smuggled nature of the gold; it is also not mentioned at least from which foreign country, the impugned golds have been illegally imported. Whether the impugned gold is liable to be categorized as gold of foreign origin? - HELD THAT:- There is no whisper in the entire show cause notice about the origin of the gold bars seized from the appellant. It is not mentioned as to where, how and by whom the said gold was smuggled into India. Therefore, the smuggled nature of the impugned gold is far from established. In such circumstances, the department appears to have attempted to cover up the inadequacies in the investigation with not so convincing reasons. No reference was made to experts in the field. Though Chemical examiners report indicated the purity of the Gold, it did not conclude that the impugned gold was of foreign origin - Department has not established that the seized gold is of foreign origin and has also not established that the same was smuggled in to India. As the reasons to believe that the impugned Gold is of foreign origin and is smuggled, benefit of doubt or benefit of any shortcomings in the investigation should accrue to the appellant and not to the Revenue. Whether the Customs have followed correct procedure vis-à-vis search and seizure of the gold? - HELD THAT:- It is found that no proper search of the appellant was conducted at the Railway station. As per the show cause notice, pieces of gold were found with the appellant at the Railway station as well as the Customs House. The reasons for summoning a person, instead of searching and seizing on the same spot and taking him to the Customs House for detailed search etc. has not been properly explained in the show cause notice and in the order-in-original. The Revenue did not establish that the impugned gold was of foreign origin and was smuggled. Therefore, the seizure of the impugned gold is not maintainable - Appeal allowed - decided in favor of appellant. Issues Involved:1. Reasonable belief of smuggling.2. Foreign origin of the gold.3. Correct procedure for search and seizure.Detailed Analysis:1. Reasonable Belief of Smuggling:The Department apprehended the appellant at Howrah Railway Station, suspecting him of carrying foreign-origin gold. The appellant could not produce any documents for the gold, leading to its seizure. The Department relied on the markings on the gold bars and the absence of documents to assert that the gold was smuggled. However, the appellant claimed the gold was inherited and melted from old family jewelry, which he brought to Kolkata for better pricing. The Department did not pursue a thorough investigation to verify the appellant's claims, nor did they establish the smuggled nature of the gold conclusively. The Tribunal found that the Department's reliance solely on foreign markings without further investigation was insufficient to prove smuggling.2. Foreign Origin of the Gold:The appellant contested that the gold bars were not of foreign origin, citing discrepancies in the markings and lack of unique serial numbers, which are standard for genuine foreign gold bars. The Department dismissed these claims without proper investigation. The Tribunal noted that the Department failed to counter the appellant's evidence or provide expert opinions to substantiate the foreign origin of the gold. The Tribunal concluded that the Department did not establish that the gold was of foreign origin and smuggled, as required under Section 123 of the Customs Act.3. Correct Procedure for Search and Seizure:The appellant argued that the search and seizure procedures were not followed as per the Customs Act. He claimed that he was not informed of his rights under Section 102 of the Customs Act, and no Panchnama was drawn during the search. The Department countered that the appellant did not raise these issues at the adjudicating stage. However, the Tribunal held that the procedural lapses, such as the absence of a Panchnama and lack of witness details, cast doubt on the reliability of the investigation. The Tribunal emphasized the importance of following proper procedures to ensure the credibility of the evidence derived from the search.Conclusion:The Tribunal found that the Department did not establish the reasonable belief of smuggling or the foreign origin of the gold. The procedural lapses during the search and seizure further weakened the Department's case. Consequently, the Tribunal allowed the appeal, setting aside the seizure of the gold and granting consequential relief to the appellant.