Gold seizure overturned as claimant proves legitimate purchase with invoices and bank records under Section 123

CESTAT Kolkata ruled that the burden of proof under Section 123 of the Customs Act was discharged by the ownership claimant who produced invoices, transaction details, and bank records for gold purchase from a legitimate supplier. Revenue failed to disprove the claimant's evidence or prove alternative cash procurement theory. The tribunal held that only the ownership claimant needed to discharge the burden, not co-appellants, and that seized gold was not liable for confiscation due to Revenue's failure to establish smuggling with proper evidence.

---

---

Issues Involved:
1. Whether the appellants have discharged their burden under Section 123 of the Customs Act, 1962, making the goods not liable for confiscation.
2. Whether the appellants have failed to discharge their burden under Section 123 of the Customs Act, 1962, making the goods liable for confiscation.

Summary:

Issue 1: Discharge of Burden under Section 123 of the Customs Act, 1962
The appellants argued that they had provided sufficient documentary evidence to prove the licit purchase of the gold from Snehal Gems Pvt Ltd. This included invoices, payment details through banking channels, and the ledger account maintained by the seller. The Department, however, focused on the third statement where the appellants retracted their earlier statements and claimed the gold belonged to Rinku Verma, who also provided supporting documents. The investigation confirmed the transactions between Rinku Verma and Snehal Gems Pvt Ltd. The Tribunal noted that the burden of proof lies with the person claiming ownership (Rinku Verma) and not with the carriers (Appellants 1 to 4).

Issue 2: Failure to Discharge Burden under Section 123 of the Customs Act, 1962
The Department argued that the initial statements made by the appellants indicated that the gold was procured from Shashi Kant Patil on a cash basis, which was later denied by Shashi Kant Patil. The Department did not pursue this lead further and instead focused on the retracted statements and the transactions with Snehal Gems Pvt Ltd. The Tribunal observed that the Department failed to conduct a thorough investigation to disprove the claims made by Rinku Verma and Snehal Gems Pvt Ltd. The Tribunal criticized the Department for abandoning the initial lead and not verifying the documents provided by the appellants adequately.

Tribunal's Conclusion:
The Tribunal concluded that the burden of proof under Section 123 was solely on Rinku Verma, who had provided sufficient evidence to prove the licit purchase of the gold. The Department's failure to disprove these claims and the lack of a thorough investigation led the Tribunal to hold that the appellants had discharged their burden of proof. Consequently, the seized goods were not liable for confiscation. The Tribunal agreed with the Member (Judicial) and resolved the difference of opinion in favor of the appellants.

---