2026 (2) TMI 405 - AT - Customs

Smuggling of gold: owner knowledge required for conveyance confiscation; absence of knowledge led to set aside of confiscation and penalty.

Knowledge of the vehicle owner that the conveyance will carry smuggled gold is a precondition for confiscation; because no evidence proved the appellant ... Smuggling gold - Knowledge of owner as precondition for confiscation and penalty - Confiscation of conveyance for removal of prohibited goods u/s 115 - Penalty for abetment of smuggling u/s 117 - Effect of successful challenge to confiscation on consequent penalty - Whether the appellant had knowledge of the fact that his vehicle will used for carrying smuggled gold. - HELD THAT:- In the first instance, Customs Appeal filed by Gourav Jain has been allowed by order of date and confiscation and imposition of penalty upon Gourav Jain has been set aside. This apart, there is no evidence on record which may substantiate the case of the department that the appellant had knowledge of the fact that his car will be being used for the alleged purpose of smuggling of gold bars. Section 115 of the Customs Act that deals with confiscation of conveyance would, therefore, not apply in the present case. In that event, penalty under section 117 of the Customs Act could not have been imposed upon the appellant. The impugned order dated 11.10.2023 passed by the Commissioner (Appeals) in so far as it concerns the appellant is, accordingly, set aside and the appeal is allowed. Issues: whether the appellant had knowledge that his vehicle would be used for carrying smuggled gold, thereby attracting confiscation under Section 115 of the Customs Act, 1962 and liability to penalty under Section 117 of the Customs Act, 1962.Analysis: The Tribunal examined the record for evidence that the appellant knew his vehicle would be used to transport smuggled gold. The Tribunal noted that a related appeal by Gourav Jain (Customs Appeal No. 50647 of 2024) was allowed and confiscation and penalty against him were set aside. The Tribunal found no independent or sufficient evidence on record to establish that the appellant had knowledge of the vehicle's use for smuggling. Applying the statutory scheme, confiscation under Section 115(2) requires the conveyance to have been used for removal of prohibited goods and the owner's knowledge is material to imposing confiscation and consequent penalty under Section 117 when liability is predicated on such use.Conclusion: There is no evidence that the appellant had knowledge that his vehicle would be used for smuggling; accordingly, confiscation under Section 115 does not apply and penalty under Section 117 could not be sustained. The impugned order in so far as it concerns the appellant is set aside and the appeal is allowed in his favour.Ratio Decidendi: Confiscation of a conveyance under Section 115 and imposition of penalty under Section 117 require proof that the owner had knowledge of the conveyance's use for smuggling; absent such knowledge, confiscation and penalty cannot be sustained.