Police seizure and retracted statements cannot sustain customs penalty when Section 123 burden shifting does not apply.

Penalty under Section 112(b) of the Customs Act, 1962 was held unsustainable where the seizure was made by police, the appellant's statements were recorded while under police control, and those statements were later retracted. The burden-shifting rule under Section 123 was treated as inapplicable because a police seizure does not attract that statutory presumption in the same manner. The record also lacked any voluntary admission that the currency represented proceeds of smuggled gold, and the appellant had not asserted ownership over the seized articles. On those facts, the penalty was quashed.

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Issues: Whether penalty under Section 112(b) of the Customs Act, 1962 could be sustained on the basis of statements recorded while the appellant was in police custody and on a seizure made by the police, in the face of retraction and absence of any independent claim of ownership over the gold or currency.

Analysis: The seizure was found to have been effected by the police, and the statements recorded by the Customs officers were obtained when the appellant remained under police control. Those statements were later retracted. In such circumstances, the burden-shifting rule under Section 123 of the Customs Act, 1962 was held inapplicable, following the principle that a seizure by police does not attract the statutory burden of proof in the same manner. The reliance placed on the inculpatory statements was rejected, and the record did not show any voluntary admission by the appellant that the currency represented proceeds of smuggled gold. The circumstances also showed that the appellant had not asserted ownership of the seized articles.

Conclusion: Penalty under Section 112(b) of the Customs Act, 1962 was unsustainable and was quashed.

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