2025 (8) TMI 942 - AT - Customs

Tribunal upholds confiscation and sale of smuggled gold and currency; vehicle absolutely confiscated but redeemable on fine

Akash K Ingole, Swapnil Madhukar Mane, NH Rajendra, Sachin Vilas Kadam and Vonamala Anil Kumar Versus Commissioner of Customs Hyderabad

CESTAT upheld confiscation of smuggled gold, its sale proceeds and seized currency; the vehicle was declared liable to absolute confiscation but with ... Absolute confiscation of goods and currency - confiscation of the vehicle with an option to redeem on payment of fine and - levy of penalties on all the appellants - Shifting of burden on appellants - recording of statements of the persons concerned - seizure of goods without following the prescribed procedure - HELD THAT:- The Department had sufficient reasons to believe that the gold were smuggled, whereas the appellants have failed to establish that the seized gold was acquired by them through any legal means. Since, gold were of smuggled nature and were rightly held to be liable to confiscation, the sale’s proceeds thereof is also liable for confiscation and therefore has been rightly confiscated by the Adjudicating Authority. There are no infirmity in the impugned order in this regard - The penalties imposed on the appellants Mr. N.H. Rajendra and Mr. Sachin Vilas kadam are set aside and the remaining order is upheld - appeal allowed in part. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the proper officer had reasonable belief to seize gold bearing foreign marking and Indian currency under Section 110 of the Customs Act, 1962. 2. Whether procedural requirements for seizure (including issuance of a seizure memo/order contemporaneously with panchanama as per administrative directions) and for issuance of show cause notice under Section 124 were complied with. 3. Whether burden under Section 123 shifted to persons from whose possession goods were seized or to those claiming ownership, and whether appellants discharged that burden by production of invoices/other documents. 4. Admissibility and probative value of initial statements recorded under Section 108 and subsequent retractions: whether retractions are credible and whether initial confessions/ statements can ground confiscation and penalties. 5. Whether confiscation of Indian currency as sale proceeds of smuggled gold was legally sustainable when show cause notice was issued to a purchaser rather than the person from whose possession currency was seized. 6. Whether vehicle used in transport, having a concealed compartment, was liable for confiscation under Section 115(2) and whether option to redeem on payment of fine was required/available. 7. Whether penalties imposed on all respondents were sustainable where some alleged suppliers denied involvement and there was no corroborative evidence beyond statements of co-accused. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Reasonable belief for seizure under Section 110 Legal framework: Section 110 empowers seizure where the proper officer has reasonable belief goods are liable for confiscation. Precedent treatment: Authorities emphasize that courts should not substitute their view for the seizing officer if reasonable grounds exist; circumstances should be viewed from the officer's experienced perspective. Interpretation and reasoning: Seized gold comprised 40 bars each bearing explicit foreign markings and a government-registered valuer certified 24-karat purity and recorded the marks. No supporting invoices were produced at seizure. The Court found that these facts, considered by an experienced officer, prima facie justified the reasonable belief of smuggling under Section 110. Ratio vs. Obiter: Ratio - presence of foreign marking plus absence of documents and corroborating admissions can justify reasonable belief for seizure. Conclusion: Seizure of gold and preliminarily treating it as smuggled goods was legally justified. Issue 2 - Compliance with procedural requirements for seizure and seizure memo Legal framework: Administrative circulars/directives require an appropriate order (seizure memo) in addition to panchanama describing reasons for belief; Section 110 procedural norms apply. Precedent treatment: Circular aims to ensure clear recording of reasons contemporaneously. Interpretation and reasoning: A seizure memo dated contemporaneously with the panchanama was placed on record describing required details. The Court examined the documents and held that prescribed procedure was complied with. Ratio vs. Obiter: Ratio - contemporaneous seizure memo/panchanama meeting the circular's descriptive requirements satisfies procedural compliance. Conclusion: Procedural challenge to seizure for lack of seizure memo is rejected. Issue 3 - Burden under Section 123 and proof of non-smuggled origin Legal framework: Section 123 shifts burden to person from whose possession goods were seized (and to any claimant) to prove goods are not smuggled, where goods are seized under reasonable belief. Precedent treatment: Section applied to gold; lack of documentary proof supports sustaining burden on seized-person. Interpretation and reasoning: No invoices/documents were recovered at time of seizure; alleged suppliers denied supplying the goods; claim of later-produced invoice from a supplier was received long after seizure and not contemporaneous. Appellants failed to prove legitimate acquisition. Ratio vs. Obiter: Ratio - once reasonable belief and seizure exist, absence of contemporaneous documentary proof means burden remains unmet and confiscation follows. Conclusion: Burden under Section 123 shifted and appellants failed to discharge it; goods liable to confiscation. Issue 4 - Statements under Section 108 and later retractions Legal framework: Statements under Section 108 are admissible and form part of evidence; retractions are evaluable for credibility. Precedent treatment: Courts treat retractions with caution; retractions closer in time and free from taint may be considered; coordinated or delayed retractions may be held to be afterthoughts. Interpretation and reasoning: Initial statements implicated certain persons and described mechanisms (conveyance, secret cavity, cash). Subsequent retractions occurred months after release from custody, letters bore similar font/content and admissions suggested signing under insistence. The Tribunal found retractions to be manufactured/afterthoughts and relied on initial statements corroborated by surrounding facts (marks on gold, cash in hidden compartment, valuer report). Ratio vs. Obiter: Ratio - retractions made significantly after release, with indicia of orchestration, may be rejected and initial statements relied upon. Conclusion: Initial confessional statements were accorded probative value; retractions were not accepted. Issue 5 - Confiscation of currency and issuance of show cause notice under Section 124 Legal framework: Currency is 'goods' under the Act; Section 124 mandates notice to the owner or person claiming ownership before confiscation. Precedent treatment: Notice requirement is to owner/claimant; timing for notice is not statutorily fixed separate from seizure timelines. Interpretation and reasoning: Currency recovered included sums from nephew (found on person) and from vehicle cavity. Purchaser claimed to have paid the larger sum and asserted ownership. No other person claimed ownership at adjudication; alleged supplier claim was considered but not contemporaneous. As purchaser claimed ownership at show-cause stage and no other owner came forward, issuance of show cause to purchaser satisfied Section 124 for part of currency (and specifically for the cash found on nephew). However, for the larger sum, the Court reasoned the purchaser had handed over cash and thus ceased to be owner of sale proceeds but, since no other claimant existed, procedural notice to the purchaser was acceptable and confiscation of cash upheld. Ratio vs. Obiter: Ratio - where no other claimant appears, notice to a person who claims or is shown to be owner/purchaser suffices; confiscation of currency as sale proceeds can be sustained when tied to smuggled goods. Conclusion: Confiscation of currency upheld; show cause issuance to purchaser was treated as proper in circumstances. Issue 6 - Confiscation of vehicle and option to redeem Legal framework: Section 115(2) allows confiscation of conveyance used for smuggling; option to redeem on payment of fine may be provided by authority. Interpretation and reasoning: Vehicle had a specially constructed concealed cavity used for concealment of gold and cash; it was used as a means of transport in smuggling. Adjudicating Authority provided option to redeem on payment of fine. Ratio vs. Obiter: Ratio - conveyance used in smuggling with concealment features is liable to confiscation; redemption option may be granted. Conclusion: Confiscation of vehicle upheld; option to redeem properly provided. Issue 7 - Imposition of penalties where suppliers deny involvement and corroboration is limited Legal framework: Penalty provisions may be invoked where evidence establishes involvement. Convincing corroboration is required when blaming parties on sole statements of co-accused. Precedent treatment: Sole statement of co-accused requires corroboration to impose penalty on another. Interpretation and reasoning: For two alleged suppliers who denied involvement and where only incriminating statements against them were those of co-accused without independent corroboration, the Tribunal found penalties unsustainable. For other accused whose own statements and corroborating facts (possession, concealment, cash handling) supported involvement, penalties were maintainable. Ratio vs. Obiter: Ratio - penalties cannot be upheld against persons solely on basis of co-accused statements without corroborative evidence; penalties sustainable against those whose statements and facts corroborate involvement. Conclusion: Penalties set aside for those lacking corroborative evidence; remaining penalties upheld. Appeals partly allowed accordingly.