2024 (11) TMI 1085 - AT - Customs

Gold seizure illegal due to improper seizure memo lacking reasonable belief statement under Section 110(1) Customs Act

CESTAT Kolkata held that gold seizure at railway station was illegal. The gold lacked foreign markings, had purity below 99.9%, and seizure memo failed to ... Seizure of gold at Railway Station - show cause notice was issued based upon the statement of the co-noticee that the goods so seized were of foreign origin and are being illegally imported into the country - HELD THAT:- It is an admitted fact that this gold was having no foreign inscription or embossment or marking and were not having purity of 99.9% and were sized vide seizure memo. Thereafter, the Panchnama was also drawn in the presence of Panchayat and the statement of co-noticee/Shri Rajendra Mishra was recorded, who stated that the gold does not belong to him and the same belong to M/s Ashish Ornaments House. Shri Ashish Kumar Agarwal and Shri Pradumanji Agarwal, the owner of M/s Ashish Ornaments House. In terms of Section 110 (1) of the Customs Act, 1962, the gold can be seized if the proper officer have reasoned to believe that the gold are liable for confiscation under the Customs Act, he may seize the gold, but in the seizure memo, nowhere it is mentioned that he has a reasonable belief that the gold seized in question on reasonable belief is liable for confiscation. We rely on the Board’s Circular No.1/2017-Cus dated 08.02.2017, which prescribed that whenever the goods are being seized in addition to Panchnama, the proper officer must also pass an appropriate order (seizure memo/order/etc.) clearly mentioning the reasons to believe that the goods are liable for confiscation. In the seizure memo, nowhere it is mentioned that the proper officer is having reasoned to believe that the seized gold with reasonable belief is liable for confiscation. In that circumstances, the seizure is not legal. In Panchnama also, the gold has been seized, but nowhere it is mentioned that the proper officer is having with reasonable belief that the gold in question is liable to confiscation. In that circumstances, the gold cannot be seized. It is not a case of seizure of gold at Port, Airport or International Border having any inscription/marking or embossment to believe that it is of foreign made and the purity is also less than 99.9%. In that circumstances, the benefit of doubt goes in favour of the appellants and the gold in question cannot he seized. Thus, the appellant who claimed the owner of the gold, has produced the documents of procurement thereof and those documents are found to be genuine. Revenue has not adduced any documentary evidences that the gold in question has been illegally imported. Thus, the gold in question cannot be held liable for confiscation. Accordingly, the same is to be released., no penalties are imposed on the appellants. Issues Involved:1. Legality of the seizure of gold by the customs authorities.2. Whether the seized gold is of foreign origin and liable to confiscation under the Customs Act, 1962.3. Validity of the penalties imposed on the appellants under Sections 112 and 114AA of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Legality of the Seizure of Gold:The primary issue revolves around the legality of the seizure of 1299.850 grams of gold from an individual at Gaya Railway Station. The customs authorities seized the gold based on the suspicion that it was of foreign origin and illegally imported. However, the Tribunal found that the seizure was not conducted in accordance with the provisions of Section 110 of the Customs Act, 1962, which requires a 'reasonable belief' that the goods are liable for confiscation. The seizure memo did not mention any reasonable belief, nor did it comply with the Board's Circular No.1/2017-Cus, which mandates that reasons for belief must be clearly stated. Consequently, the Tribunal held that the seizure was not legal.2. Whether the Seized Gold is of Foreign Origin and Liable to Confiscation:The Tribunal examined whether the seized gold was of foreign origin and thus liable for confiscation under Section 123 of the Customs Act, 1962. The gold in question had no foreign inscription or embossment, and its purity was less than 99.9%, which are typical indicators of foreign origin. Furthermore, the appellants provided documentation, including purchase invoices and melting invoices, which were verified and found genuine. The Tribunal noted that the burden of proof under Section 123, which shifts to the department in the absence of reasonable belief, was not met by the Revenue. The Tribunal concluded that there was no evidence to substantiate the claim that the gold was smuggled, and thus, it could not be held liable for confiscation.3. Validity of the Penalties Imposed:The penalties imposed on the appellants under Sections 112(a), 112(b), and 114AA of the Customs Act, 1962, were also scrutinized. The Tribunal found that the penalties were based on the presumption of smuggling, which was not supported by evidence. The Tribunal emphasized that the involvement and knowledge of the appellants in any act of smuggling were not established, and the mere possession of gold without evidence of smuggling does not warrant penalties. Consequently, the penalties were deemed unwarranted and were set aside.Conclusion:In conclusion, the Tribunal set aside the impugned order, holding that the seizure was illegal, the gold was not liable for confiscation, and the penalties were not justified. The appeals were allowed with consequential relief, and the gold was ordered to be released.