2024 (12) TMI 234 - AT - Customs

Gold bars with foreign markings confiscated under Sections 111(b), 111(d), 111(f) as appellants failed burden of proof under Section 123

Shri Ashish Kumar Dutta, Shri Goutam Saha, Shri Ranjit Das, Shri Partha Ranjan Saha Versus Commissioner of Customs (Preventive), Kolkata

CESTAT Kolkata upheld confiscation of gold bars bearing foreign markings with 99.90% purity under Sections 111(b), 111(d) and 111(f) of Customs Act, 1962. ... Challenge to confiscation of the gold - smuggling - carrying gold bar/biscuits of foreign origin - prayer for waiver of the penalties imposed - burden to prove - HELD THAT:- It is observed that the seized goods were bearing foreign markings and having a purity of 99.90%. Gold with a foreign marking and having 99.90% purity, is a notified item listed under Section 123 of the Customs Act and accordingly, the burden of proving that it is not smuggled gold lies on the person who claims ownership of the gold. In this case, it is found that the Appellant Nos. 1, 2 and 3 have claimed ownership of the gold and hence, it is their responsibility to establish that the gold was not smuggled into India. For this purpose, these Appellants have been asked to produce documents in their possession which indicate licit procurement of the said gold. However, the Appellants have categorically admitted that they were not in possession of any such documents. Therefore, the Appellant Nos. 1 to 3 have not discharged their onus of proving the ownership of the gold in question in terms of Section 123 of the Customs Act. Thus, the adjudicating authority has rightly confiscated the gold under Section 111(b), 111(d) and 111(f) of the Customs Act, 1962. The gold is not a prohibited item. However, its ownership needs to be established by the claimants for seeking release of the gold. In this case, the persons from whom the gold was seized are not having any documents in their possession to claim ownership of the gold and accordingly, the gold cannot be released to them - Regarding the prayer of the appellant for release of the gold on payment of redemption fine, it is observed that the ownership of the gold has not been established. Thus, the gold cannot be released to the appellants. Levy of penalties - HELD THAT:- As the gold in question has been absolutely confiscated, the penalties imposed on these Appellants is high as compared to the value of gold involved and the nature of offence committed in this case. Therefore, considering the roles played by the Appellants, it is observed that the penalties imposed on them are on the higher side and it can be reduced. The penalty imposed on Shri Ashish Kumar Dutta is reduced from Rs.6,25,000/- to Rs.3,50,000/- under Section 112 of the Customs Act, 1962 - penalty imposed on Shri Goutam Saha is reduced from Rs.6,50,000/- to Rs.4,00,000/- under Section 112 of the Customs Act, 1962 - penalty imposed on Shri Ranjit Das is reduced from Rs.5,80,000/- to Rs.2,00,000/-. Appeal disposed off. Issues Involved:1. Confiscation of gold under Sections 111(b), 111(d), and 111(f) of the Customs Act, 1962.2. Imposition of penalties under Section 112 of the Customs Act, 1962.3. Validity of retracted statements and their impact on the adjudication.4. Applicability of Section 123 of the Customs Act regarding the burden of proof.5. Right to cross-examination and its denial.6. Possibility of releasing confiscated goods on payment of redemption fine.Detailed Analysis:1. Confiscation of Gold:The case involved the seizure of 36 pieces of gold weighing 5965.76 grams from three individuals, identified as Appellant Nos. 1, 2, and 3. The gold was confiscated under Sections 111(b), 111(d), and 111(f) of the Customs Act, 1962, due to the lack of any licit documentation proving its lawful possession. The gold bore foreign markings and had a purity of 99.90%, which led to the conclusion that it was smuggled into India. The tribunal upheld the confiscation, emphasizing that the appellants failed to discharge their burden of proof under Section 123 of the Customs Act, which requires claimants to establish that the gold was not smuggled.2. Imposition of Penalties:Penalties were imposed on the appellants under Section 112 of the Customs Act. The penalties were initially set at Rs.6,25,000 for Appellant No. 1, Rs.6,50,000 for Appellant No. 2, and Rs.5,80,000 for Appellant No. 3. However, considering the nature of the offense and the value of the gold, the tribunal found the penalties to be excessive and reduced them to Rs.3,50,000, Rs.4,00,000, and Rs.2,00,000, respectively.3. Validity of Retracted Statements:The appellants argued that the penalties were based on statements recorded on 19.03.2014, which were later retracted. They contended that the adjudicating authority should not have relied on these statements without corroborative evidence. The tribunal noted that the initial statements were indeed retracted and emphasized the lack of corroborative evidence to substantiate the claims made in those statements. Consequently, the tribunal found the reliance on these retracted statements insufficient to justify the penalties.4. Applicability of Section 123 of the Customs Act:Section 123 of the Customs Act places the burden of proof on the person claiming ownership of gold with foreign markings to prove it was not smuggled. The tribunal highlighted that Appellant Nos. 1, 2, and 3 failed to provide any documentation to establish the licit procurement of the gold, thereby failing to discharge their burden under Section 123. This failure justified the confiscation of the gold.5. Right to Cross-Examination:Appellant No. 4, implicated by the co-accused, was denied the opportunity to cross-examine the individuals whose statements were used against him. The tribunal found this denial significant, as the statements were retracted and lacked corroborative evidence. Without the opportunity for cross-examination, the tribunal concluded that the penalty imposed on Appellant No. 4 was not sustainable and set it aside.6. Possibility of Releasing Confiscated Goods:The appellants argued that the gold should be released on payment of a redemption fine under Section 125 of the Customs Act. However, the tribunal held that since the ownership of the gold was not established, it could not be released to the appellants. This decision was supported by precedents that emphasized the strict regulation of gold importation and the necessity of proving ownership for the release of confiscated goods.Conclusion:The tribunal upheld the confiscation of the gold and reduced the penalties imposed on Appellant Nos. 1, 2, and 3. The penalty on Appellant No. 4 was set aside due to the lack of corroborative evidence and the denial of cross-examination. The gold could not be released on payment of redemption fine due to the appellants' failure to establish ownership. The appeals were disposed of accordingly.