2024 (3) TMI 703 - AT - Customs

Gold confiscation overturned after appellants prove legitimate purchase with proper documentation and banking records under Section 123

Aravapalli Varalakshmi, Aravapalli Praveen Kumar and Aravapalli Srinivasa Rao Versus Commissioner of Central Tax Vijayawada

CESTAT Hyderabad allowed appeals in gold confiscation case, setting aside impugned orders. Revenue's statement recorded during panchanama proceedings ... Confiscation of the gold bars - remelted gold of foreign origin or not - Penalty - Seizure of gold - irregular weight and size - scope of Sec 123 - proof of bonafide purchase - validity of the retracted statement - HELD THAT:- The statement recorded by Revenue at the time of panchanama proceedings cannot be said to be freely given as Mr. A. Praveen Kumar was travelling with his wife and sister and was under fear that his wife and sister may also be arrested. Evidently, all were detained and brought to DRI office. The statement being not free is also evident from the fact that the appellant, at the first opportunity in his bail application, has denied his statement recorded on 10.03.2020 and had also stated that they have purchased gold on proper invoice. Further, the statement of Mr. V.B. Vimal of Srinidhi Gold, Coimbatore does not inspire confidence, as he stated that he does not transact in gold other than by way of banking channel. Further, he stated that he sometimes facilitates purchase from the open market, if required by customer on payment of cash, for which he charges nominal commission of Rs.2000/- per kg. The statement is self contradictory and evidently, he was under pressure when the statement was recorded as on the said date, his shop was searched and records were examined and there was shortage of gold as per stock register. Further, Smt. A. Varalakshmi, in her very first statement (on summons), has stated the fact that they had negotiated purchase of gold from M/s Aryan Gold, Bangalore and had accordingly, gone there with her son – Mr. A. Praveen Kumar who assists her in the family business and they had taken delivery on credit basis. Further, she had stated that the payment for the same has been made through banking channel. From the perusal of the copy of invoice produced, it is evident that M/s Aryan Gold are registered with GST department and have also charged GST on the transaction. Further, Mr. Somanath of M/s Aryan Gold, who was also examined by the officers, has supported the transaction of sale of subject gold in question, to the appellants on credit basis and subsequently, received the payment through banking channel and in support thereof, had produced both the copy of invoice as well as copy of his bank statement. Thus, there is independent external evidence available in the facts of this case and the genuinity of the transaction is evident from the bank statement, wherein payment has been received by the seller from the buyer in due course within a period of about 15 days from the date of sale. As the transaction is through banking channel, thus, prima facie is evidence of its genuineness. Thus, appellants have discharged the onus u/s 123 on them and they have explained the source with certainty. Accordingly, allow these appeals and set aside the impugned orders. The appellants Smt. A. Varalakshmi or Mr. A. Praveen Kumar are held entitled to receive back the gold, and if the same is already disposed of by the department, are held entitled to receive the sale proceeds of the same with interest as per Rules. All penalties also stand set aside. Appeals allowed. Issues Involved:1. Confiscation of Gold Bars: Whether the gold bars seized from the appellants were of foreign origin and liable to confiscation under the Customs Act.2. Validity of Statements: Whether the statements made by the appellants during the investigation were voluntary and reliable.3. Burden of Proof under Sec 123: Whether the appellants have discharged the burden of proof under Sec 123 of the Customs Act regarding the lawful acquisition of the gold.Summary of Judgment:1. Confiscation of Gold Bars:The appellants challenged the order of absolute confiscation of 14 gold bars and two small pieces of gold weighing 3304.56gms, which were seized by the Revenue on the grounds of being remelted gold of foreign origin. The gold was seized from Mr. A. Praveen Kumar during his travel from Coimbatore to Narsaraopeta. The Revenue treated the gold as smuggled due to the absence of standard size, weight, and markings indicating the country of origin.2. Validity of Statements:The appellants argued that the statements made by Mr. A. Praveen Kumar on 10.03.2020 and Mr. V.B. Vimal on 12.03.2020 were not voluntary. Mr. A. Praveen Kumar retracted his statement at the first opportunity, claiming it was made under duress due to the threat of arrest and harassment of his wife and sister. The Tribunal found that the statement recorded during the panchanama proceedings was not freely given and noted the contradictions in Mr. V.B. Vimal's statements, which were deemed unreliable.3. Burden of Proof under Sec 123:The appellants provided evidence of the purchase of the gold from M/s Aryan Gold, Bangalore, including a GST invoice and proof of payment through banking channels. The Tribunal found that the appellants had discharged the onus under Sec 123 of the Customs Act by providing legitimate documentation and payment evidence, establishing the genuineness of the transaction.Conclusion:The Tribunal allowed the appeals, setting aside the impugned orders of confiscation and penalties. The appellants were entitled to receive back the seized gold or the sale proceeds with interest if the gold had been disposed of by the department. The Tribunal emphasized the lack of credible evidence from the Revenue to substantiate the claim of the gold being of foreign origin and smuggled. Appeals allowed.