2025 (3) TMI 133 - AT - Customs

Customs authorities failed to prove smuggling allegations against gold possession under Section 128A(4A) time limit violation

M/s. Shri Biplab Karmakar Versus Commr. of Customs (Preventive), Kolkata

CESTAT Kolkata held that customs authorities failed to prove smuggling allegations against appellant who possessed gold bars and ornaments. The ... Time limitation - Smuggling of gold bars and gold ornaments - burden to proof towards the gold being smuggled on the Revenue - delayed passing of the de novo adjudication order - HELD THAT:- Both under the Section 128A (4A) of the Customs Act 1962 as well as under the Customs Manual, it is specified that within the time-frame given to the Commissioner (Appeals), he ‘shall’ and ‘would’ decide the appeal within 6 months. This is subject to the clause ‘wherever possible’. It is to be noted that the word ‘may’ is not used in both the places. This shows that the Commissioner (Appeals) is required to follow the time-frame given to him for passing the OIA. In the present case, it is seen at para 12 above that both Section 128A(4A) and the Customs Manual [Chapter 31], gives the time frame of six months to the Commissioner (Appeals) to pass the Order in Appeal. In the Kopertek Metals Pvt Ltd., decided by the Principal Bench – Delhi Tribunal [2024 (12) TMI 269 - CESTAT NEW DELHI], it has been held that non adjudication of the order, with no reason being given to the effect that the order could not be passed within specified time limit due to circumstance beyond control, would be fatal to the legality of the order. In the present case, it has taken nearly Two years for the Commissioner (Appeals) to even take up the Personal Hearing proceedings on 28.08.2020 for the Appeal filed on 06.09.2018. The appellant has attended the same. Hence, there is no delay on their part. After this, the OIA was passed on 24.09.2020. No reason whatsoever has been given as to what necessitated the Commissioner (Appeals) to wait for nearly two years to grant the Personal Hearing and as to why the OIA could not be passed within the time frame of Six Months. The OIA has been passed after 2 years as against the time-frame of Six months given under Section 128A(4A). The ownership of the gold was being claimed by the Appellant right from the beginning when the first statement was recorded. He also named the persons from whom he had procured the gold. The very fact that these persons are residents of the area gets proven from the Election Records and Gram Panchayat Certificates brought in by the appellant - the initial onus to prove its smuggled nature cast upon the Revenue, has not been discharged by the Revenue as also noted by the first Commissioner (Appeals) while he remanded the matter to the Adjudicating Authority. One glaring visible error on the part of the Revenue is seizure of gold ornaments. The quantity seized is to the tune of 86.230 grams. From the Jewelry, it cannot be ascertained that the same is of foreign origin or not. Admittedly no chemical examination was undertaken either for the gold bars or for the ornaments. But still the appellant was made to run from pillar to post for the next more than 13 years, having to approach CESTAT and having to wait for the adjudication of the de novo proceedings for release of the gold ornaments. The very fact that the Dept did not file any appeal on the gold jewelry released to the appellant shows that it is an admitted error on the part of the Revenue - in spite of the foreign markings in the gold bars, without verifying the claim of the appellant about their purchase from three persons and making a sweeping statement that the licit purchase claim by the appellant is an ‘after thought’, does not carry the case of the Revenue any further, when the appellant has made these claims on the date of seizure itself. Conclusion - i) The delay in adjudication and appeal proceedings, without plausible explanation, invalidated the orders. ii) The Department failed to discharge its burden of proof regarding the smuggling allegations, as the appellant provided credible evidence of licit possession. The impugned Order is not sustainable even on merits - Appeal allowed. ISSUES PRESENTED and CONSIDEREDThe Tribunal considered several core legal issues in this judgment:1. Whether the delay in adjudication and appeal proceedings rendered the orders invalid.2. Whether the Department met the burden of proof to establish that the seized gold was smuggled.3. The legality of the absolute confiscation of gold bars and the imposition of a penalty on the appellant.4. Whether the appellant's possession of gold was licit, based on evidence provided regarding the purchase of gold bars and the nature of his business.ISSUE-WISE DETAILED ANALYSIS1. Delay in Adjudication and Appeal ProceedingsThe appellant argued that the adjudication order was passed 17 years after the seizure, with a 13-year delay following the Tribunal's remand order. The Commissioner (Appeals) also took over two years to decide the appeal, contrary to the statutory timeframe of six months under Section 128A(4A) of the Customs Act, 1962. The Tribunal noted that the statutory language 'where it is possible to do so' does not permit indefinite delays without justification. Citing precedents, the Tribunal emphasized that such delays without plausible reasons render the orders invalid.2. Burden of Proof on Smuggling AllegationsThe appellant contended that the Department failed to discharge its burden under Section 123 of the Customs Act, 1962, to prove that the gold was smuggled. The appellant provided evidence of purchase from local individuals, supported by Gram Panchayat certificates and election card details. The Tribunal observed that the Department did not make efforts to verify these claims or record statements from the named individuals, failing to establish the smuggled nature of the gold.3. Legality of Confiscation and PenaltyThe Tribunal examined the legality of the absolute confiscation of gold bars and the imposition of a penalty. It noted that the appellant consistently claimed ownership and provided evidence of purchase. The Tribunal found that without proper verification of the appellant's claims and given the seizure's location within Indian territory, the Department's actions were not justified.4. Appellant's Possession of GoldThe appellant argued that he was carrying gold ornaments for business purposes, as evidenced by the release of the ornaments after prolonged litigation. The Tribunal noted that the Department's failure to appeal the release of the ornaments indicated an acknowledgment of error. The Tribunal also considered the appellant's business operations and the location of the seizure, concluding that the Department did not sufficiently challenge the appellant's claims.SIGNIFICANT HOLDINGSThe Tribunal held that the delay in adjudication and appeal proceedings, without plausible explanation, invalidated the orders. It emphasized that statutory timeframes must be adhered to unless justified by insurmountable circumstances. The Tribunal also held that the Department failed to discharge its burden of proof regarding the smuggling allegations, as the appellant provided credible evidence of licit possession.The Tribunal set aside the impugned orders, allowing the appeal on both procedural and substantive grounds. It highlighted the importance of timely adjudication and the necessity for the Department to substantiate claims of smuggling with concrete evidence.The Tribunal's decision underscores the principle that procedural delays and inadequate evidence cannot be used to penalize individuals without due process and proper justification.