Appellant proves gold legitimacy through trade records, gets seized 1431.61 gms released under section 123

CESTAT Hyderabad allowed the appeal regarding seizure of 1431.61 gms gold. The appellant successfully proved the gold was from legitimate stock through trade records, balance sheets, and GST returns. Key witnesses retracted their statements without cross-examination by authorities. The tribunal found no foreign origin markings on irregular-shaped bars, unlike standard foreign gold. Revenue failed to prove voluntary statements were given without duress. The onus under section 123 Customs Act was discharged by appellant. SCN issued beyond six months from seizure date vitiated proceedings. Order set aside; gold or sale proceeds with interest ordered to be released.

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Issues Involved:
1. Legitimacy of the confiscation of gold.
2. Validity of the statements recorded by the DRI.
3. Compliance with legal procedures and timelines.
4. Burden of proof under section 123 of the Customs Act.

Summary:

1. Legitimacy of the confiscation of gold:
The Appellant, Mr. TPK, a partner in M/s Annapoorna Gold Smiths, sent 1431.699 gms of gold with Mr. CNR to Coimbatore for purchasing ornaments. The gold was seized by DRI officers on 25.08.2020, suspecting it to be smuggled. The Additional Commissioner ordered the confiscation of the gold and imposed penalties on the appellants. The Tribunal found that the gold in question was part of the stock in trade of M/s Annapoorna Gold Smiths, which was duly accounted for in their books and supported by documents like balance sheets, profit & loss accounts, and GST returns. Thus, the confiscation of the gold was not justified.

2. Validity of the statements recorded by the DRI:
The statements of Mr. CNR and Smt. Padma Priya were retracted, and the Tribunal noted that these statements were not corroborated by any material evidence. The Tribunal emphasized that the statements were recorded under duress, violating the Apex Court's instructions. The retraction of statements was not rebutted by the Revenue, and the Tribunal held that the statements lacked evidentiary value.

3. Compliance with legal procedures and timelines:
The Tribunal observed that the SCN was issued after more than 6 months from the date of seizure, without any extension granted by the competent authority. This delay rendered the SCN invalid, and the entire proceedings were vitiated.

4. Burden of proof under section 123 of the Customs Act:
The Tribunal held that the appellants had discharged the onus under section 123 of the Customs Act by providing cogent evidence that the seized gold was part of their stock in trade. The Revenue failed to bring any evidence to support their allegation that the gold was smuggled.

Conclusion:
The appeals were allowed, and the impugned orders were set aside. The appellant, Mr. TPK, was entitled to the release of the seized gold or its sale proceeds with interest, and Mr. T. Rama Krishna Rao was entitled to the release of the vehicle or its sale proceeds with interest.

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