Appeal allowed as Revenue failed to prove gold smuggling under Section 123 without corroborative evidence

CESTAT Kolkata allowed the appeal and set aside the confiscation order of seized gold bars. The tribunal found that Revenue failed to establish reasonable belief that gold was smuggled, as 99.5% purity gold with foreign markings did not prove foreign origin, and one bar marked "MMTC PAMP" indicated Indian origin. Section 123 provisions were held inapplicable. The case relied solely on appellant's statement without corroborative evidence, making it inadmissible. Consequently, gold confiscation was set aside and penalties on appellants were removed.

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Issues Involved:
1. Legality of the confiscation of gold under Section 110 of the Customs Act, 1962.
2. Admissibility and genuineness of the invoices provided by the appellants.
3. Applicability of Section 123 of the Customs Act, 1962 regarding the burden of proof.
4. Validity of the statements made by the appellants under duress.

Summary:

1. Legality of the confiscation of gold under Section 110 of the Customs Act, 1962:
The appellants argued that the gold was seized u/s 110 of the Customs Act, 1962 on 18.06.2016, and the show-cause notice was not communicated within the stipulated six months, rendering the confiscation illegal. The Tribunal noted that the extension order was passed on 15.12.2016 but was received by the appellants only on 17.01.2017, beyond the six-month period. Thus, the confiscation was deemed illegal as per Section 110 (2) of the Act.

2. Admissibility and genuineness of the invoices provided by the appellants:
The appellants provided photocopies of invoices to establish licit possession of the gold. The Tribunal observed that during the Panchanama, some papers were recovered but not detailed or recorded in the relied-upon documents. The Tribunal accepted the invoices as valid evidence since the seller (Appellant No.1) admitted to issuing them, and no contrary evidence was provided by the Revenue.

3. Applicability of Section 123 of the Customs Act, 1962 regarding the burden of proof:
The Tribunal emphasized that the burden of proof u/s 123 of the Customs Act shifts to the Revenue once the appellants provide prima facie evidence of licit possession. The CRCL report indicated the gold's purity as 99.5%, which does not align with foreign-origin gold typically having 99.9% purity. Hence, the Revenue failed to establish the gold as smuggled.

4. Validity of the statements made by the appellants under duress:
The Tribunal found that the Revenue's case relied heavily on the statements made by Appellant No.(2) during interrogation, which were later retracted, citing duress. Without corroborative evidence, these statements were deemed inadmissible. The Tribunal ruled that the statements alone could not substantiate the allegation of the gold being of foreign origin or smuggled.

Conclusion:
The Tribunal set aside the order of confiscation and penalties, ruling that the gold in question is not liable for confiscation and the appellants are entitled to consequential relief. The appeals were allowed.

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