Burden of proof for seized foreign-marked gold coins upheld, while absolute confiscation was softened by a redemption option.

A notification under Section 13(1) of the Foreign Exchange Regulations Act, 1973 was held inapplicable to seized foreign-marked gold coins because it concerned foreign exchange instruments, not non-legal-tender coins. Section 123 of the Customs Act, 1962 continued to apply to the gold coins, and the omission to cite that provision in the show cause notice or adjudication order caused no prejudice; the possessor remained bound to prove lawful possession. Absolute confiscation was nevertheless modified because the facts justified an option of redemption on payment of fine and compliance with conditions.

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Issues: (i) whether the notification issued under Section 13(1) of the Foreign Exchange Regulations Act, 1973 applied to gold coins with foreign markings seized from the appellant; (ii) whether non-mention of Section 123 of the Customs Act, 1962 in the show cause notice or adjudication order invalidated reliance on that provision; and (iii) whether absolute confiscation of the seized gold coins should be modified by granting an option of redemption.

Issue (i): whether the notification issued under Section 13(1) of the Foreign Exchange Regulations Act, 1973 applied to gold coins with foreign markings seized from the appellant.

Analysis: The notification was held to concern foreign exchange in the sense of currency instruments and not gold coins which were not legal tender. Since the seized articles were gold coins with foreign markings, the notification was found inapplicable to the case.

Conclusion: The notification did not apply, and the appellant could not derive any benefit from it.

Issue (ii): whether non-mention of Section 123 of the Customs Act, 1962 in the show cause notice or adjudication order invalidated reliance on that provision.

Analysis: The seized gold coins with foreign markings were admitted to have been found in the appellant's possession. As gold coins are goods to which Section 123 applies, the burden of proving that they were not smuggled lay on the appellant. The omission to specifically cite the provision in the notice or order was treated as causing no prejudice and did not affect validity.

Conclusion: Reliance on Section 123 was upheld, and the appellant failed to displace the statutory burden.

Issue (iii): whether absolute confiscation of the seized gold coins should be modified by granting an option of redemption.

Analysis: The coins were of 22 carats and the Tribunal followed its earlier approach in similar gold control matters that redemption may be allowed depending on the facts and circumstances. The facts were considered suitable for such relief.

Conclusion: The order of absolute confiscation was modified to permit redemption on payment of fine and compliance with the stated conditions.

Final Conclusion: The confiscability of the seized gold coins was sustained, but the appellant was granted a limited redemption option, so the appeal succeeded only to that extent.

Ratio Decidendi: In cases of seized gold coins with foreign markings, Section 123 of the Customs Act, 1962 applies to cast the burden on the possessor to prove they are not smuggled, and where the facts justify it, absolute confiscation may be modified by allowing redemption on payment of fine.

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