2026 (3) TMI 1091 - AT - Customs

Possession of notified goods shifts evidential burden to possessor; unrebutted recovery and assay upheld confiscation and penalty.

Search and seizure at airport interception were within Customs jurisdiction and legally valid; outcome: seizure upheld. Denial of cross-examination of ... Legality and jurisdiction of search and seizure at the point of interception within airport premises - seizure of gold recovered from the passenger after arrival - presumption of smuggling - Burden of proof in respect of notified goods under Section 123 of the Customs Act - denial of cross-examination of panch witnesses - principles of natural justice in customs adjudication - Admissibility and evidentiary value of statements recorded under Section 108 of the Customs Act. Power to search suspected persons under Sections 100 and 101 of the Customs Act - HELD THAT:- The Tribunal held that once a passenger arrives from a foreign country carrying goods liable for declaration, liability under the Customs Act arises irrespective of the precise point of interception. The statutory scheme in Sections 100 and 101 empowers proper officers to search persons arriving from abroad and specific classes of goods (including gold), and the facts showing concealment on the person and subsequent handing over to Customs established a reasonable belief justifying search and seizure. [Paras 18, 21, 33] The contention that interception outside the customs area vitiated search and seizure is rejected; officers had jurisdiction and acted on reasonable belief. Denial of cross-examination and principles of natural justice in customs adjudication - HELD THAT:- The Hon’ble supreme Court in Kanungo & company Vs Collector of Customs [1972 (2) TMI 35 - SUPREME COURT] has held that adjudication proceedings in the Customs Act are not strictly governed by the rules of evidence applicable to criminal trials, and therefore reliance upon documentary and circumstantial evidence is permissible. The Co-ordinate Bench Mumbai in the case of Mukhtar Umar Gojana [2008 (5) TMI 251 - CESTAT, MUMBAI] held that no hard and fast rule that in each case cross-examination is must, even case depends upon its own peculiar facts. Hon’ble Supreme Court in the case of Shri Romesh Chandra Mehta [1968 (10) TMI 50 - SUPREME COURT], where in it was held that statements made before the Customs officers under Section 108 of the Customs Act, 1962 are admissible evidence. Applying settled authorities, the Tribunal observed that adjudication under the Customs Act is not governed by the strict rules of criminal evidence and that the right to cross-examine is not unfettered. Because the case rested on physical recovery, panchanama proceedings and an un-retracted statement of the appellant, the denial of cross-examination caused no demonstrable prejudice and did not amount to a breach of natural justice in the circumstances. [Paras 23, 28, 35] Denial of the appellant's request to cross-examine panch witnesses does not invalidate the adjudication in the present facts. Admissibility and evidentiary value of statements recorded under Section 108 of the Customs Act - HELD THAT: - The Tribunal relied on authorities holding that statements recorded under Section 108 are admissible. The appellant's un-retracted admission that he attempted to smuggle gold, along with the melting/processing of the recovered paste into bars and the assayer's certification of purity and weight, furnished corroborative primary evidence sufficient to support confiscation and penalty. [Paras 2, 23, 29] The Section 108 statement and corroborative recovery evidence are admissible and support the finding that the seized material was gold. Burden of proof in respect of notified goods under Section 123 of the Customs Act - Once possession of notified goods (gold) is established, the statutory burden under Section 123 shifts to the person from whose possession the goods were seized to prove lawful acquisition; the appellant failed to discharge that burden. - HELD THAT:- Hon’ble Kerala High Court in the case of Om Prakash Khatri [2019 (3) TMI 457 - KERALA HIGH COURT] which is affirmed by Hon’ble Supreme Court [2019 (11) TMI 796 - SC ORDER], wherein, it was held that unmarked gold recovered from the possession of person and their statement as to the source of gold is sufficient to have a reasonable belief that gold is smuggled. No any satisfactory explanation given to prove the legitimacy of the gold carried b intercepted person, burden of proof under Section 123 of the Customs Act, being only a reasonable belief, effectively discharged by the Department. Mere fact that interception and seizure not affected in an international border or near an airport or seaport, it is an irrelevant, onus to prove that the gold was not smuggled, squarely rested on, who claims otherwise. The Tribunal applied Section 123 and relevant precedents to conclude that possession of unmarked gold, coupled with the appellant's admission and lack of documentary proof of lawful import, sustains a reasonable belief of smuggling. The presumption under Section 123 thus remained unrebutted, and the Department's burden of reasonable belief was satisfied by seizure, statements and chemical/assayer reports. [Paras 30, 31, 34] The appellant did not discharge the statutory burden to prove licit origin; the presumption of smuggling stands. Final Conclusion: The Tribunal found no infirmity in the impugned order: customs officers had jurisdiction to make the search and seizure, the recovered material was established as gold, the appellant's Section 108 statement and recovery corroborated the case, the burden under Section 123 remained unrebutted, and denial of cross-examination did not vitiate the proceedings; the appeal is dismissed. Issues: (i) Whether the search, interception and seizure of gold (recovered from the passenger after arrival) was within the jurisdiction of Customs and legally valid; (ii) Whether denial of cross-examination of panch witnesses vitiated the adjudication proceedings; (iii) Whether the recovered material (gold paste processed into bars) and the appellant's statements suffice to invoke the statutory presumption and justify confiscation and penalty.Issue (i): Legality and jurisdiction of search and seizure at the point of interception within airport premises.Analysis: The Tribunal examined statutory powers authorising search of persons arriving by aircraft and powers to search persons in specified cases, the factual sequence of interception by security personnel and subsequent handing over to Customs, and the presence of recovery and processing of material into gold bars by Customs in a customs-controlled procedure.Conclusion: The search and seizure were within the jurisdiction of Customs and legally valid in favour of the Revenue.Issue (ii): Whether denial of opportunity to cross-examine panch witnesses amounted to violation of principles of natural justice invalidating the proceedings.Analysis: The Tribunal considered precedents limiting the right to cross-examination in Customs adjudications, the nature and quality of evidence (physical recovery, panchanama, assayer certificate, and appellant's own statement), and whether any prejudice resulted from refusal to permit cross-examination.Conclusion: Denial of cross-examination did not vitiate the proceedings; the appellant suffered no prejudice and the conclusion is against the appellant.Issue (iii): Whether processing of recovered paste into bars and the appellant's recorded statement established notified goods and justified shifting of burden to the appellant to prove licit origin.Analysis: The Tribunal relied on physical recovery, chemical/assayer certification confirming purity and weight, and the appellant's un-retracted admission. It applied the statutory rule that possession of notified goods coupled with recovery and admissible statements raises a reasonable belief of smuggling and shifts the evidentiary burden to the person in possession to prove lawful origin.Conclusion: The statutory presumption of smuggling was properly invoked and remained unrebutted; confiscation and penalty are upheld in favour of the Revenue.Final Conclusion: On the issues decided, the Tribunal finds no infirmity in the impugned order and dismisses the appeal, thereby sustaining absolute confiscation of the seized gold and the imposed penalty in favour of the Revenue.Ratio Decidendi: Possession of notified goods coupled with corroborative physical recovery and admissible statements gives rise to a reasonable belief of smuggling, shifting the burden to the possessor to prove licit origin; where that burden is not discharged, confiscation and penalty follow.