2023 (10) TMI 827 - AT - Customs

Tribunal Overturns Gold and Currency Confiscation; Finds No Evidence of Smuggling, Invalidates Penalty Under Customs Act Sections 121, 112(b)

The tribunal set aside the order confiscating a 1 kg gold bar and currency of Rs. 41,75,000/- under Section 121 of the Customs Act and the penalty of Rs. ... Confiscation of Gold bar with an option to pay redemption fine - absolute confiscation of currency - levy of penalty under Section 112(b) Customs Act - misuse of EOU Scheme by mis-declaring export jewellery in terms of purity of the gold - burden to prove - HELD THAT:- There are force in the contention of the learned Counsel for the Appellant that the entire case is built on assumptions and presumptions against the appellant. In the very first instance on the next day after DRIs search and seizure of gold bar and cash, the Appellant gave documentary evidence like Purchase Invoice of M/s Somya Bullion & Jewellers, Cash Ledger, Stock Ledger, Balance Sheet and Trial Balance showing legal acquisition and ownership of the gold and cash. The Appellant’s Stock Ledger clearly showed that he had 1218.255 grams of gold on 19.12.2016 from which DRI seized 1kg gold bar. There are force in the arguments of the learned Counsel for the Appellant that the marking on the gold bar seized from the appellant’s premises matches neither with the gold imported by M/s Mahalaxmi Jewel Exports by Bs/E No 8974 dated 2.10.2016 and 10240 dated 1.12.2016, nor the gold recovered from the residential and factory premises of Shri Prem Sagar Arora. This also points to the fact that the gold bar seized from the appellant is not diverted duty free gold by M/s Mahalaxmi Jewel Exports - also no link has been found between the gold imported by M/s Mahalaxmi Jewel Exports and the 1kg gold bar seized by DRI from the appellant’s shop. Since documentary evidence has been presented in favour of the gold showing the Appellant’s legal ownership and acquisition, it is held that tenets of Section 123 Customs Act are satisfied and the Appellant has discharged the burden of proof. The Appellant’s statement also reiterates the same - the appellant’s submission agreed upon that the Department has not shown any proof that the seized cash was sale proceeds of smuggled gold and thus confiscation under Section 121 Customs Act is unsustainable, more so since the appellant’s Books of Accounts clearly reflect that this was part of his Cash in Hand and had been received from legitimate sources. There can be no confiscation of the seized gold bar and currency under the Customs Act, 1962 and it is accordingly quashed. Imposition of penalty on the Appellant is also untenable and is set aside. Since the impugned order qua the Appellant cannot be sustained, it is set aside - Appeal allowed. Issues Involved:1. Confiscation of 1 kg gold bar and currency under Section 121 of the Customs Act.2. Imposition of penalty under Section 112(b) of the Customs Act.3. Admissibility and reliance on statements under Section 138B of the Customs Act.4. Legitimacy of the seized gold and currency.5. Burden of proof under Section 123 of the Customs Act.Summary:Confiscation of 1 kg Gold Bar and Currency:The appeal challenges the adjudicating authority's order confiscating a 1 kg gold bar and currency of Rs. 41,75,000/- under Section 121 of the Customs Act, alleging the items were smuggled and proceeds of smuggled gold. The appellant provided documentary evidence (Purchase Invoices, Books of Accounts, Cash Ledger, Gold Stock Ledger, Balance Sheet, and Trial Balance) to prove legal ownership and acquisition of the seized items.Imposition of Penalty:The penalty of Rs. 25,00,000/- imposed under Section 112(b) of the Customs Act was contested. The appellant argued that the case against him was built on assumptions and presumptions without substantial evidence linking him to the alleged illegal activities of M/s Mahalaxmi Jewel Exports and Shri Prem Sagar Arora.Admissibility and Reliance on Statements:The appellant contended that the statement of Prem Sagar Arora, which implicated him, was not admissible as per Section 138B of the Customs Act. The adjudicating authority did not examine Prem Sagar Arora, and the appellant was denied the opportunity for cross-examination, making the statement unreliable. Citing precedents like G-Tech Industries vs Union of India, the appellant argued that the statement could not be the sole basis for the impugned order.Legitimacy of the Seized Gold and Currency:The appellant demonstrated that the seized gold bar marked 'VALCAMBI SUISSE 995' did not match the gold imported by M/s Mahalaxmi Jewel Exports. The appellant's documentary evidence showed that the gold and cash were part of his legitimate business transactions and duly accounted for in his records. The tribunal found that the appellant's documentation and statements satisfied the requirements of Section 123 of the Customs Act, shifting the burden of proof to the Department, which failed to provide evidence of smuggling.Burden of Proof:The tribunal held that the appellant had discharged the burden of proof under Section 123 by providing legitimate documentation. The Department did not produce any evidence to prove that the seized gold was smuggled or that the currency was proceeds of smuggled gold. The tribunal found no corroborative evidence or proof linking the appellant to the alleged smuggling activities.Conclusion:The tribunal concluded that the confiscation of the seized gold bar and currency was unsustainable, and the imposition of the penalty was untenable. The impugned order against the appellant was set aside, and the appeal was allowed with consequential benefits as per law. The tribunal emphasized that assumptions and presumptions without substantial evidence could not form the basis for such severe actions under the Customs Act.