2024 (5) TMI 19 - AT - Customs

Gold confiscation overturned as inheritance claim upheld without concrete smuggling evidence under Section 112(b)(ii)

Shri R.K. Swami Singh Versus Commissioner of Customs (Preventive), Shillong

CESTAT Kolkata set aside confiscation of twelve gold biscuits and penalty under Section 112(b)(ii) of Customs Act 1962. The appellant was intercepted ... Smuggling - Absolute confiscation of the twelve gold biscuits of foreign origin - No licit document produced in support of acquisition, possession or transportation of the gold - Penalty - retracted statements - 'reasonable belief' - Applicability of sec. 123 - carrying the gold at the time of interception - HELD THAT:- We observe that the ‘reasonable belief’ on which the officers presumed that the gold bars/pieces were of smuggled nature is not supported by any corroborative evidence. There is no document available on record to establish that gold bars/pieces were smuggled into India without payment of customs duty. The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of assumptions and presumptions without any concrete evidence to substantiate this claim. Hence, we hold that material evidence available on record does not establish the ‘reasonable belief’ that the gold bars/pieces were smuggled into India without any valid documents. Applicability of the provisions of Section 123 of Customs Act 1962 in this case, we observe that Section 123 puts the burden of proving that the gold is not smuggled one on the person who claims ownership of the gold. This section is applicable only when there is a ‘reasonable belief’ that that the gold in question are smuggled in nature. In this case, the discussion in the preceding paragraphs has established that there is no ground for holding the reasonable belief that the gold are smuggled in nature. When there is no material evidence available on record to establish that the gold bars/pieces were smuggled into India without any valid documents, the provisions of Section 123 of the Customs Act are not applicable. The purity of the gold is 995.2 mille, 995.1 mille and 995.0 mille which is below the International Standard of Purity. Accordingly, we hold that the Order passed by the Adjudicating Authority confiscating the gold bars/pieces mainly on the basis of the statements, is not sustainable in law. Thus, the gold bars/pieces cannot be confiscated based on the retracted statements without any other independent corroborative evidence. Penalty imposed u/s 112(b)(ii) - Under Section 112(b), penalty is imposable when the person is found to be dealing with goods for which prohibition is in force or the goods are liable for confiscation. The gold bars/pieces found in possession of the appellant were not established as smuggled in nature and hence they are not prohibited goods. The gold bars/pieces were seized at Imphal, away from the Indo-Myanmar international border. The appellant was carrying the gold which he claimed that they were domestically purchased by his father and he inherited the same. We observe that the investigation has not brought in any evidence to counter this claim. Hence, we find merit in the argument of the appellant that penalty is not imposable on him u/s 112(b)(ii) of Customs Act, 1962. Thus, we set aside the impugned order and allow the appeal filed by the appellant. Issues Involved:1. Sufficiency of evidence for 'reasonable belief' that the gold was smuggled.2. Applicability of Section 123 of the Customs Act, 1962.3. Reliance on retracted statements for confiscation.4. Sustainability of penalties imposed u/s 112(b)(ii) of the Customs Act, 1962.Summary:1. Sufficiency of Evidence for 'Reasonable Belief':The Tribunal observed that the gold seized from the appellant did not bear any foreign markings and had a purity below the International Standard. The 'reasonable belief' that the gold was smuggled was not supported by any corroborative evidence. The Hon'ble Supreme Court in Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar [(2015) 11 SCC 628] emphasized that 'reasonable belief' must be based on reasonable grounds and irrefutable evidence. The Tribunal concluded that the material evidence available did not establish the 'reasonable belief' that the gold was smuggled into India.2. Applicability of Section 123 of the Customs Act, 1962:Section 123 puts the burden of proving that the gold is not smuggled on the person claiming ownership, applicable only when there is a 'reasonable belief' of smuggling. The Tribunal found no material evidence to establish that the gold was smuggled, thus rendering Section 123 inapplicable.3. Reliance on Retracted Statements for Confiscation:The appellant retracted his statements made on 20.06.2014 and 21.06.2014, claiming they were not voluntary. The Tribunal noted that the findings in the impugned order were based mainly on these statements without any corroborative evidence. Citing the decision in Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T)], the Tribunal held that the gold could not be confiscated based on retracted statements without independent corroborative evidence.4. Sustainability of Penalties Imposed u/s 112(b)(ii) of the Customs Act, 1962:The Tribunal observed that there was no evidence to show that the gold was of foreign origin and smuggled. The appellant claimed the gold was inherited from his father. In the absence of evidence to counter this claim, the Tribunal found that penalties under Section 112(b)(ii) were not sustainable. The gold was not established as smuggled, and thus, not prohibited goods.Conclusion:The Tribunal set aside the impugned order, allowing the appeal filed by the appellant, concluding:(i) The evidences were insufficient to establish 'reasonable belief' of smuggling.(ii) Section 123 of the Customs Act, 1962, was not applicable.(iii) Retracted statements could not be relied upon for confiscation.(iv) Penalties imposed u/s 112(b)(ii) were not sustainable.(Order pronounced in the open court on 29.04.2024)