Gold confiscation overturned after serial numbers prove legitimate purchase from MMTC-PAMP India

CESTAT Hyderabad allowed the appeal in a smuggling case involving absolute confiscation of 22 gold bars and penalty under Section 112(b)(i) of the Customs Act. The tribunal found that serial numbers on the gold biscuits matched those of 40 kg gold legitimately purchased by a company from MMTC-PAMP India and subsequently sold to dealers/jewellers. The allegation of smuggled gold was rejected as the gold's legitimate origin was established. Since the gold had been sent to government authority for resale/melting, Revenue was directed to either return the gold to appellant or pay its value with interest.

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Issues Involved:
1. Justification of absolute confiscation of 22 gold bars.
2. Imposition of penalties on the appellants under Section 112(b)(i) of the Customs Act.

Summary:

Issue 1: Justification of Absolute Confiscation of 22 Gold Bars

The primary issue in this appeal is whether the absolute confiscation of 22 gold bars, each weighing 100 grams and totaling 2200 grams valued at Rs. 71,44,968/-, is justified. The gold was seized under Mahajar dated 27.05.2019. Mitta Sunil Kumar, engaged in the jewelry business, claimed ownership of the seized gold and provided an invoice dated 20.04.2019 as proof of legitimate purchase. The gold was assayed by an approved gold appraiser, confirming its purity and market value. The carrier, Mr. P V Nageswara Rao, confirmed in his voluntary statement that the gold belonged to his employer, M Sunil Kumar.

Despite the presentation of purchase invoices and payment details, the Additional Commissioner ordered the absolute confiscation of the gold, considering it smuggled under Section 111(d) and 111(l) of the Customs Act. However, upon appeal, it was found that the serial numbers of the seized gold biscuits matched those purchased by DP Gold Pvt Ltd from MMTC-PAMP India Pvt Ltd. This evidence refuted the allegation of smuggled gold, leading to the conclusion that the gold was not smuggled in nature. Consequently, the tribunal set aside the confiscation order and directed the Revenue to either return the gold to M Sunil Kumar or pay the value of the gold as on the date of sale/melting with interest.

Issue 2: Imposition of Penalties on the Appellants

The second issue pertains to the imposition of penalties of Rs. 15 lakhs each on appellants M Sunil Kumar and M R Prakash under Section 112(b)(i) of the Customs Act. The Additional Commissioner had imposed these penalties based on the initial finding of smuggled gold. However, since the tribunal determined that the gold was not smuggled, the basis for the penalties was invalidated. The tribunal, therefore, set aside the penalties imposed on both appellants.

Conclusion:

The tribunal allowed the appeals, set aside the confiscation and penalties, and directed the Revenue to either return the gold to M Sunil Kumar or compensate him with the gold's value as on the date of sale/melting with interest. The judgment underscores that the gold in question was not smuggled, and the appellants were entitled to relief.

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