2026 (1) TMI 537 - AT - Customs

Seized gold jewellery ownership dispute and alleged smuggling u/s112(a)/(b), s.123 burden shift; penalties upheld, appeal dismissed

Whether penalty under s.112(a) and s.112(b) of the Customs Act, 1962 was sustainable in relation to seized gold jewellery alleged to be smuggled was the ... Imposition of penalty under Section 112(a) and 112(b) - smuggling of goods - absolute confiscation - applicability of under Section 123 - failed to produce any corroborative evidence to the effect that they were the real owners of the seized gold jewellery - HELD THAT:- In the facts of the case, by claiming to be the owner of the part of said goods, which ultimately he could not established, it is a clear case of abatement when the goods were already held to be liable for confiscation. It is a case where he actually tried to cover the offering seized goods by claiming it as some other legitimate jewellery items, which however, could not stand to test in view of various contradictions as well as admitted facts by Shri Niazi Pathan Nymatulla Khan, Shri Niazi Pathan Nasarullah Khan and so called supplier. The retraction of statement by Nymatullah Khan also does not help him because of the reasons given in detail by Original Adjudicating Authority. A great deal of argument has been made by the appellant that under Section 123 is not invokable in the facts of the case. In this case, interception was made on specific intelligence, recovery of jewellery was made from concealed compartment, Shri Niazi Pathan Nymatulla Khan could not give any valid answer to the bonafide purchase or source or documents at the time of seizure and the onus to prove thereafter, shifted to Shri Niazi Pathan Nymatulla Khan to prove otherwise that it is neither smuggled good nor made out of smuggled gold. Further, he has chosen not to come in appeal against said decision or confiscation. On the other hand, reliance on certain judgments cited by Learned AR, supra, clearly supports invocation and applicability of under Section 123 of Customs Act, 1962 in the facts of the case. Therefore, in the facts of the case penalty has been rightly imposed on Shri Jacky Kumar Jain under Section 112(a) and 112(b) of the Customs Act, 1962 and therefore, there is no legal infirmity in the impugned order passed by Commissioner (Appeals). Appeal dismissed. Issues: Whether the appellant is liable for penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962 in relation to gold jewellery seized and adjudicated as liable for confiscation.Analysis: Relevant legal framework comprises Section 112(a) and 112(b) which penalise acts or omissions rendering goods liable to confiscation or dealing with goods known or reasonably believed to be liable to confiscation, and Section 123 which shifts the burden to persons in possession or claimants to prove seized goods are not smuggled. The facts established interception on intelligence, recovery of gold from a concealed compartment, inability of the possessor to produce valid purchase documents at seizure, subsequent investigations including supplier inquiries, contradictions in statements and failure of claimants to produce corroborative evidence. The appellant admitted association with the individuals from whose possession the jewellery was seized and admitted making payments to the supplier. The evidence indicated attempts to attribute the seized items to other transactions and the claim of ownership lacked corroboration; the statutory onus under Section 123 therefore remained un discharged. The legal test of reasonable belief for seizure was met on the record and the inquiry into the appellant's role focussed on whether he abetted, dealt with, or had reason to believe the goods were liable to confiscation within the scope of Section 112.Conclusion: The appellant is liable for penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962.