DRI officers competent under Customs Act. COVID-19 extension valid. Confiscation overturned. Right to cross-examine upheld. Penalties unjustified.

The tribunal held that the DRI officers are competent to initiate proceedings under Section 124 of the Customs Act, 1962. The Show Cause Notice issued beyond the prescribed time limit was deemed valid due to an extension granted by the Commissioner of Customs and the exclusion of time during the COVID-19 period. The confiscation of gold bangles and silver bar was deemed illegal as they were of Indian origin and lacked evidence of smuggling. The burden of proof regarding the goods' origin was discharged by the appellants. The denial of the right to cross-examine the expert was found unjustified, and reliance on retracted statements was deemed insufficient. Penalties imposed under Section 112 were not justified, leading to the tribunal setting aside the Impugned Order and allowing the appeals.

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Issues Involved:
1. Competence of DRI officers to initiate proceedings under Section 124 of Customs Act, 1962.
2. Validity of the Show Cause Notice issued beyond the prescribed time limit.
3. Legality of confiscation of gold bangles and silver bar.
4. Burden of proof under Section 123 of Customs Act, 1962.
5. Right to cross-examine the expert who provided the opinion on the gold's origin.
6. Reliance on retracted statements of co-accused.
7. Imposition of penalties under Section 112 of the Customs Act, 1962.

Summary:

Competence of DRI Officers:
The appellants argued that DRI officers are not competent to initiate proceedings under Section 124 of the Customs Act, 1962. They cited the case of Canon India Pvt. Ltd. v. Commissioner of Customs. However, the tribunal referred to the decision of the Hon'ble Madras High Court in N. C. Alexender Vs Commissioner of Customs, which held that DRI officers are recognized as Officers of Customs post the amendments to Section 3 of the Customs Act, 1962 by the Finance Act, 2022. Thus, the tribunal held that the Notice issued by DRI is valid and legally sustainable.

Validity of Show Cause Notice:
The appellants contended that the Show Cause Notice was issued beyond the six-month period stipulated under Section 110 of the Customs Act, 1962. The tribunal found that the Commissioner of Customs (Prev) NER, Shillong had granted an extension for issuing the Show Cause Notice. Additionally, the Supreme Court allowed the exclusion of the period from 15/03/2020 to 02/10/21 for computation of the limitation period due to COVID-19. Therefore, the notice issued on 04/09/2020 was not hit by limitation.

Legality of Confiscation:
The appellants argued that the seized gold bangles and silver bar had no foreign markings and were of Indian origin. They provided evidence that the gold was sent for job work and purchased from the Indian market. The tribunal found merit in this argument, noting that there was no evidence to prove the gold was smuggled from Myanmar. The tribunal relied on precedents which held that Indian origin gold cannot be confiscated without proof of smuggling. Thus, the confiscation of the gold bangles and silver bar was not sustainable.

Burden of Proof:
Under Section 123 of the Customs Act, the burden of proving that the goods are not smuggled lies on the person from whose possession the goods were seized. The appellants provided evidence that the gold was procured from indigenous sources. The tribunal held that the burden of proof under Section 123 does not apply to indigenously procured gold, and thus, the appellants had discharged their burden.

Right to Cross-Examine:
The appellants were denied the right to cross-examine the expert who certified the gold as of foreign origin based on its purity. The tribunal agreed with the appellants that purity alone cannot determine the foreign origin of gold. The tribunal held that the expert's certificate did not hold weight in establishing the gold's foreign origin.

Reliance on Retracted Statements:
The tribunal noted that the retracted statements of the co-accused were the primary evidence relied upon by the department to prove the foreign origin of the gold. The tribunal held that retracted statements without independent corroboration cannot be relied upon. Therefore, the confiscation based on these statements was not sustainable.

Imposition of Penalties:
The appellants argued that penalties under Section 112 of the Customs Act were not justified as the gold was of Indian origin. The tribunal found no evidence to establish that the gold and silver bar were smuggled. Thus, penalties imposed under Section 112 were not sustainable.

Conclusion:
The tribunal set aside the Impugned Order passed by the Commissioner (Appeals) and allowed the appeals filed by the appellants, holding that the confiscation of the gold bangles and silver bar, as well as the penalties imposed, were not sustainable.

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