Gold smuggling case: Statement not voluntary, seizure notice invalid under Section 110(2) limitation period

CESTAT Hyderabad allowed the appeal in a gold smuggling case involving seizure of 1000 gms of foreign origin gold. The tribunal found the appellant's statement admitting to purchasing smuggled gold was not voluntary, with Revenue failing to prove its voluntary nature as required by SC precedent. The show cause notice was deemed invalid due to limitation, being issued beyond the six-month period under Section 110(2). The impugned order was set aside, directing immediate release of the seized gold or return of sale proceeds with interest if already sold.

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Issues Involved:

1. Voluntariness of the appellant's statement.
2. Validity of the seizure and confiscation under the Customs Act.
3. Issuance of Show Cause Notice (SCN) beyond the prescribed period.
4. Burden of proof regarding the licit acquisition of gold.

Summary:

1. Voluntariness of the appellant's statement:
The appellant contested the SCN, disputing the voluntariness of his statement recorded at the time of seizure, alleging it was given under undue influence and duress. The Tribunal found the statement's voluntary nature doubtful, stating, "no person of ordinary prudence will state that the gold he is possessing is of smuggled in nature." The Tribunal referenced the Supreme Court's ruling in Vinod Solanki vs UOI, emphasizing that the onus is on Revenue to prove the voluntary nature of the statement when disputed.

2. Validity of the seizure and confiscation under the Customs Act:
The appellant argued that the seizure was not valid as there was no proper seizure order/memo issued, and the act of taking possession of gold by the Customs officers u/s 110 does not amount to seizure. The Tribunal noted that the case was a "town seizure" as the appellant was intercepted at the domestic terminal. The only evidence of the smuggled nature of the gold was the foreign markings and the appellant's statement, which was found not to be voluntary. The Tribunal held that the statement recorded on 01.02.2020 was not reliable for the purpose of confiscation proceedings.

3. Issuance of Show Cause Notice (SCN) beyond the prescribed period:
The appellant argued that the SCN was issued beyond the period of six months from the date of seizure, violating Sec 110(2) of the Act. The Tribunal found that the SCN was indeed issued after more than six months from the date of seizure, making it "bad and hit by limitation." The Tribunal referenced the ruling in Ulla Baig vs CC, Bangalore, where it was held that SCN must be served within six months from the date of seizure.

4. Burden of proof regarding the licit acquisition of gold:
The appellant stated that he had purchased the gold pieces in question at Hyderabad for selling in Mumbai at a profit and that gold is freely available in India. The Tribunal noted that the Revenue had not brought any evidence on record as to the smuggled nature of the gold in question. The Tribunal held that the burden of proof under Sec 123 of the Act lies on the person from whose possession the goods are seized or the person who claims ownership, not on the department.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order. It directed that the gold in question be released to the appellant forthwith, or if already sold, the sale proceeds be returned with interest as per Rules. The appeal was allowed on the grounds that the SCN was issued beyond the prescribed period, and the statement recorded was not voluntary.

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