2025 (1) TMI 1464 - AT - Customs

Gold bars confiscation overturned as documentary evidence proves legitimate ownership despite passenger's oral statements

CESTAT Kolkata allowed the appeal and set aside confiscation of 1999 grams gold bars recovered from a train passenger who claimed to be delivering them ... Absolute confiscation of the gold recovered from Shri Firoze Sekh - imposition of penalty on the appellants - smuggling of foreign origin gold bars - Admissible evidences - HELD THAT:- In this case, two gold bars totally weighing 1999.000 grams were recovered from the possession of one Shri Firoze Sekh on 26.06.2018 when he was travelling by a Sealdah bound Train No. 12378. In his statement, Shri Firoze Sekh has stated that the gold had been handed over to him by Shri Durlav Paul (appellant no. 1 herein) for delivering the same to M/s.H.K. Jewellers, Kolkata (appellant no. 2) - when the appellants came to know about the seizure of the gold, they came forward and produced all the documents regarding ownership of the said gold. The invoices are G.S.T. paid invoices. The appellants have also produced the certificate showing the payment of appropriate Tax / G.S.T. on the said invoices. Further, Form GSTR-2A is also placed on record. Further, Form GSTR 1 submitted by the appellants also shows that the said transactions had been recorded by the appellants and reported to the G.S.T. Department. As the claim made by the appellants with regard to ownership of the gold in question is supported by documentary evidence, in these circumstances, oral evidences will not prevail over the documentary evidence available on record. Therefore, the statements recorded during the course of investigation are not admissible evidence. Moreover, it is observed that the purity of the gold was found to be only 99.6% by weight of gold (as recorded at paragraph 37.1, page 38 of the Order-in-Original dated 08.07.2020). It is also not a case of seizure of gold from Port, Airport or International Border and the gold does not bear any marking of foreign origin. The gold in question cannot be confiscated. Consequently, the confiscation of the gold in question is set aside - no penalty is imposable on the appellants. Conclusion - i) As the claim made by the appellants with regard to ownership of the gold in question is supported by documentary evidence, in these circumstances, oral evidences will not prevail over the documentary evidence available on record. Therefore, the statements recorded during the course of investigation are not admissible evidence. ii) It is also not a case of seizure of gold from Port, Airport or International Border and the gold does not bear any marking of foreign origin. iii) The gold in question cannot be confiscated. iv) No penalty is imposable on the appellants. Appeal allowed. The judgment in question involves an appeal against the absolute confiscation of gold bars and the imposition of penalties under the Customs Act, 1962. The appellants challenged the order of confiscation and penalties imposed by the adjudicating authority, arguing that the order was passed without proper consideration of evidence and violated principles of natural justice.1. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this case were:Whether the confiscation of the gold bars under Section 111(b) and 111(d) of the Customs Act, 1962, was justified.Whether the penalties imposed under Sections 112(b) and 114AA of the Customs Act, 1962, were appropriate.Whether the appellants were denied the opportunity of cross-examination, thus violating principles of natural justice.Whether the documentary evidence provided by the appellants was sufficient to counter the allegations of smuggling.2. ISSUE-WISE DETAILED ANALYSISConfiscation of Gold BarsLegal Framework and Precedents: The confiscation was based on Sections 111(b) and 111(d) of the Customs Act, which pertain to goods imported or attempted to be imported contrary to prohibitions imposed by law.Court's Interpretation and Reasoning: The Tribunal examined whether the gold bars were indeed smuggled and whether the confiscation was justified. The Tribunal noted that the purity of the gold was 99.6% and lacked any foreign markings, which did not conclusively prove foreign origin.Key Evidence and Findings: The appellants presented GST-paid invoices and tax documents indicating legitimate transactions. The Tribunal found these documents credible and noted the absence of any markings or evidence suggesting the gold was smuggled.Application of Law to Facts: The Tribunal applied the principle that documentary evidence should prevail over oral statements when the former is credible. The appellants' documents were found to be in order, undermining the smuggling allegations.Treatment of Competing Arguments: The Tribunal considered the Revenue's reliance on inculpatory statements, which were retracted and unsupported by tangible evidence.Conclusions: The Tribunal concluded that the confiscation was not justified and set aside the order for confiscation.Imposition of PenaltiesLegal Framework and Precedents: Penalties were imposed under Sections 112(b) and 114AA for acts of omission and commission related to the alleged smuggling.Court's Interpretation and Reasoning: The Tribunal emphasized the need for concrete evidence to impose penalties. The reliance on retracted statements without corroborative evidence was deemed insufficient.Key Evidence and Findings: The Tribunal noted the lack of evidence supporting the Revenue's case and the presence of legitimate business records provided by the appellants.Application of Law to Facts: The Tribunal held that penalties could not be imposed based on assumptions and unsupported statements, especially when contradicted by documentary evidence.Treatment of Competing Arguments: The Tribunal acknowledged the appellants' arguments regarding the procedural unfairness and lack of cross-examination.Conclusions: The Tribunal set aside the penalties imposed on the appellants.3. SIGNIFICANT HOLDINGSCore Principles Established: The Tribunal reinforced the principle that documentary evidence should take precedence over oral statements, especially when the latter are retracted and lack corroboration.Final Determinations on Each Issue: The Tribunal determined that the confiscation of the gold was unjustified and that penalties were improperly imposed. The appeals were allowed, and the confiscation and penalties were set aside.Verbatim Quotes of Crucial Legal Reasoning: 'As the claim made by the appellants with regard to ownership of the gold in question is supported by documentary evidence, in these circumstances, oral evidences will not prevail over the documentary evidence available on record.'The Tribunal's decision underscores the importance of adhering to principles of natural justice and the need for concrete evidence in adjudicating cases of alleged smuggling under the Customs Act. The judgment highlights the necessity of providing opportunities for cross-examination and the reliance on documentary evidence in determining the legitimacy of goods in question.