2002 (7) TMI 150 - AT - Customs

Tribunal overturns penalty and confiscation in Customs Act case, citing lack of evidence and procedural errors

RAM LUBHAYA Versus COMMISSIONER OF CUSTOMS, NEW DELHI

The Tribunal ruled in favor of the appellant in a case concerning the imposition of a penalty and confiscation of gold under the Customs Act. The ... Seizure - Gold - Burden of proof - Confiscation and penalty Issues:1. Imposition of penalty and confiscation of gold under Customs Act.2. Evidence of smuggling and legality of confiscation.3. Legitimacy of the appellant's purchase of gold biscuits.4. Validity of the show cause notice and time limitation.Analysis:1. The appeal was filed against an order imposing a penalty of Rs. 3,50,000 and confiscating gold under Sections 112(a & b) and 111(d & o) of the Customs Act. The appellant was intercepted with 29 gold biscuits at a railway station, leading to investigations by Customs Authorities.2. The main dispute was over the presumption of smuggling under Section 123 of the Customs Act. The appellant argued that there was no evidence to prove the gold biscuits were smuggled. Referring to a Supreme Court judgment, the appellant contended that the initial seizure by Railway Police did not warrant the presumption of smuggling without further proof by Customs Authorities.3. The appellant claimed to be a bona fide purchaser of the gold biscuits from a seller who had legally acquired them. Evidence from statements and invoices supported the appellant's purchase from a legitimate source, M/s. New Kailash Jewellery House. The appellant argued that no confiscation was justified based on the proven legal purchase.4. The issue of the show cause notice's validity was raised due to the time limitation under Section 110 of the Customs Act. The notice was issued after the statutory six-month period from the date of seizure, raising concerns about the legality of the proceedings initiated against the appellant based on the delayed notice.5. The Tribunal found no evidence of smuggling and upheld the appellant's claim of legal purchase. The Customs Authorities failed to prove illegal importation, as the appellant provided documentation supporting the purchase from a legitimate source. Consequently, the confiscation of gold and penalty imposition were deemed unjustified.6. Additionally, the delayed issuance of the show cause notice rendered the proceedings illegal. The notice was issued beyond the statutory time limit, leading to the invalidity of actions taken based on that notice. As a result, the Tribunal set aside the Commissioner's order and granted relief to the appellant in accordance with the law.