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Issues: (i) Whether possession of gold bars with foreign markings attracted the presumption under Section 123(1) of the Customs Act, 1962 and sustained conviction under Section 135 of that Act. (ii) Whether the prosecution proved that the seized gold was gold within the meaning of Section 2(j) of the Gold (Control) Act, 1968 so as to sustain conviction under Section 85 of that Act.
Issue (i): Whether possession of gold bars with foreign markings attracted the presumption under Section 123(1) of the Customs Act, 1962 and sustained conviction under Section 135 of that Act.
Analysis: The respondent was found in possession of 20 gold bars bearing foreign markings. The presumption under Section 123(1) was held to arise from possession of contraband gold, and the explanation that the gold had been innocently entrusted by an unknown person was found wholly unbelievable. The circumstance that the respondent was first apprehended by the police and not by a customs officer did not defeat the statutory presumption.
Conclusion: The presumption applied and conviction under Section 135 of the Customs Act, 1962 was upheld in favour of Revenue.
Issue (ii): Whether the prosecution proved that the seized gold was gold within the meaning of Section 2(j) of the Gold (Control) Act, 1968 so as to sustain conviction under Section 85 of that Act.
Analysis: The prosecution adduced evidence of a goldsmith who assayed the bars and found them to be pure gold of 999.0 touch. Although the Mint Master was not examined, the Court accepted the evidence as sufficient on the facts, especially since the purity of the bars was not genuinely disputed. The contrary view treating foreign markings as hearsay proof of foreign origin was overruled.
Conclusion: The prosecution proved the nature of the seized gold and conviction under Section 85 of the Gold (Control) Act, 1968 was sustained in favour of Revenue.
Final Conclusion: The acquittal was set aside, the respondent was convicted on both counts, the sentences were directed to run concurrently, and the seized gold bars were ordered to be confiscated.
Ratio Decidendi: Possession of contraband gold bearing foreign markings raises the statutory presumption under Section 123(1) of the Customs Act, 1962, and the prosecution may establish the character of the seized article as gold by reliable evidence even without a Mint Master's certificate where the facts so justify.
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