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

CESTAT Kolkata set aside confiscation of twelve gold biscuits and penalty under Section 112(b)(ii) of Customs Act 1962. The appellant was intercepted carrying gold claimed to be domestically purchased and inherited from father. The tribunal held that reasonable belief regarding smuggled nature was unsupported by corroborative evidence, based only on assumptions without concrete proof. Section 123 burden of proof provisions were inapplicable absent reasonable belief of smuggling. Gold purity below international standards and retracted statements without independent evidence insufficient for confiscation. Investigation failed to counter appellant's inheritance claim, making penalty unimposable.

---

---

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)

---