Burden of proof in gold smuggling cases: uncorroborated Section 108 statement and no foreign markings cannot sustain confiscation.
In a town seizure of gold without foreign markings, the burden under Section 123 of the Customs Act did not shift to the assessee because the Revenue did not produce independent or corroborative evidence of smuggled foreign origin. A statement recorded under Section 108, standing alone and not shown to satisfy Section 138B, was treated as insufficient to prove smuggling, especially where the statement was general and not a clear confession about the seized gold. On that reasoning, confiscation and penalty were set aside, with consequential relief including return of the gold or sale proceeds.
Issues: (i) Whether the customs authorities discharged the burden of proving that the seized gold was of smuggled foreign origin so as to justify confiscation and penalty. (ii) Whether the statement recorded under Section 108 of the Customs Act, 1962 could by itself sustain the finding of smuggling in the absence of compliance with Section 138B of the Customs Act, 1962.
Issue (i): Whether the customs authorities discharged the burden of proving that the seized gold was of smuggled foreign origin so as to justify confiscation and penalty.
Analysis: The seizure was treated as a town seizure, with the gold first taken into possession by the police and thereafter handed over to customs. The gold did not bear any foreign marking, and the record did not establish a legally sustainable basis for shifting the burden onto the appellants under Section 123 of the Customs Act, 1962. The alleged smuggled nature of the gold was not proved by independent or corroborative material.
Conclusion: The Revenue failed to establish that the gold was smuggled, and confiscation and penalty could not be sustained.
Issue (ii): Whether the statement recorded under Section 108 of the Customs Act, 1962 could by itself sustain the finding of smuggling in the absence of compliance with Section 138B of the Customs Act, 1962.
Analysis: The finding of smuggling rested mainly on the statement of one appellant, but the statement was only general in nature and did not amount to a clear confession regarding the impugned gold. In the absence of compliance with Section 138B of the Customs Act, 1962, the statement could not be treated as conclusive evidence. The supporting circumstances, including valuation and the invoice explanation, did not independently prove foreign origin or smuggling.
Conclusion: The statement under Section 108 of the Customs Act, 1962 was insufficient by itself to uphold the charge of smuggling.
Final Conclusion: The confiscation and penalty were set aside, and the appellants were granted the relief flowing from that decision, including return of the gold or sale proceeds.
Ratio Decidendi: Where gold seized in a town seizure has no foreign markings and the Revenue relies mainly on an uncorroborated statement under Section 108 of the Customs Act, 1962 without compliance with Section 138B of the Customs Act, 1962, the burden under Section 123 does not shift to the assessee and confiscation or penalty cannot be sustained.
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