2022 (8) TMI 840 - AT - Customs

Tribunal overturns gold confiscation and penalties due to lack of evidence and successful burden of proof

M/s. Hari Manthan Jewellery House Private Limited, Shri Devender Kumar, Shri Vikash Agarwal and Shri Premnath Gupta and Shri Mohan Lal @ Ram Versus Commissioner of Customs (Preventive), Patna

M/s. Hari Manthan Jewellery House Private Limited, Shri Devender Kumar, Shri Vikash Agarwal and Shri Premnath Gupta and Shri Mohan Lal @ Ram Versus ... Issues Involved:1. Confiscation of seized gold under Section 111(d) of the Customs Act, 1962.2. Imposition of penalties under Section 112 of the Customs Act, 1962.3. Discharge of burden of proof under Section 123 of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Confiscation of Seized Gold under Section 111(d) of the Customs Act, 1962:The appellants contested the confiscation of 1958.240 grams of gold valued at Rs. 60,70,540/-, which was seized by the Directorate of Revenue Intelligence (DRI), Patna. The DRI had confiscated the gold on the grounds that it was smuggled from Nepal. The adjudicating authority and the Appellate Commissioner upheld the confiscation based on the initial statement of Sri Mohanlal @ Ram, who admitted the gold was smuggled, and the inconsistent statements of Sri Vikash Agarwal regarding the source of the gold. However, the Tribunal found that the authorities ignored crucial evidence, including a letter from HDFC Bank, Mumbai, confirming the sale of gold to Ambika Jewellers, which was subsequently sold to Agarwal Gold House. The Tribunal concluded that the confiscation was based on suspicion and not on concrete evidence, thus setting aside the confiscation order.2. Imposition of Penalties under Section 112 of the Customs Act, 1962:Penalties were imposed on various appellants, including Sri Vikash Agarwal and his proprietorship firm, M/s. Agarwal Gold House, and other associated entities. The penalties were based on the alleged smuggling of gold. The Tribunal found that the penalties were imposed without proper consideration of the documentary evidence provided by the appellants, which demonstrated legitimate transactions. The Tribunal noted that the authorities failed to disprove the appellants' claims and relied on assumptions rather than solid evidence. Consequently, the penalties imposed under Section 112 were set aside.3. Discharge of Burden of Proof under Section 123 of the Customs Act, 1962:The core issue was whether Sri Vikash Agarwal, the proprietor of M/s. Agarwal Gold House, had discharged the burden of proof regarding the legality of the seized gold. The Tribunal observed that Vikash Agarwal provided comprehensive documentation, including purchase invoices, bank statements, and ledger accounts, to substantiate his claims. The sellers, M/s. Ambika Jewellers and M/s. Harimanthan Jewellery House Pvt. Ltd., confirmed their sales to Agarwal Gold House and provided corresponding purchase invoices from authorized bullion dealers. The Tribunal found that the appellants had successfully discharged their burden of proof under Section 123, and the authorities failed to provide contrary evidence. Therefore, the Tribunal ruled in favor of the appellants, confirming the legality of the gold and dismissing the confiscation and penalties.Conclusion:The Tribunal allowed the appeals, setting aside the confiscation of gold and the imposition of penalties. It concluded that the appellants had provided sufficient evidence to prove the legality of the gold, and the authorities' actions were based on presumptions rather than concrete evidence. The appellants were granted consequential relief, and the order was pronounced in open court on 17 August 2022.