Burden of proof in smuggled goods cases rests on possessor; unsupported possession claims do not defeat confiscation or penalty.

Goods bearing foreign markings and recovered from a person's premises attract the burden under Section 123 of the Customs Act, 1962 to prove lawful import or possession. Unsupported claims of inherited property or lack of conscious possession do not discharge that burden, and in the absence of vouchers, bills, or other reliable proof, confiscation under Section 111 and penalty under Section 112 remain sustainable. For limitation, customs seizure is treated as occurring only when the goods are formally taken over by customs through the panchnama, not from an earlier search or recovery by another authority, so notice issued from the customs seizure date was within time.

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Issues: (i) Whether the show cause notice and seizure proceedings were barred by limitation under the Customs Act, 1962. (ii) Whether the appellants discharged the burden of proving that the gold biscuits were not smuggled goods and whether confiscation and penalty were sustainable.

Issue (i): Whether the show cause notice and seizure proceedings were barred by limitation under the Customs Act, 1962.

Analysis: The seizure for customs purposes was held to have taken place only when the goods were formally taken over and seized by the customs authorities through the panchnama dated 30-7-1986. The earlier recording of statements or the recovery by income-tax authorities did not amount to seizure under the Customs Act. The limitation for issuance of notice therefore ran from the date of customs seizure, not from the earlier search or recovery.

Conclusion: The contention of limitation was rejected and the notice was held to be within time.

Issue (ii): Whether the appellants discharged the burden of proving that the gold biscuits were not smuggled goods and whether confiscation and penalty were sustainable.

Analysis: The gold biscuits bore foreign markings and were recovered from the appellants' premises. In view of Section 123 of the Customs Act, 1962, the burden lay on the appellants to prove lawful import or acquisition. No documentary evidence, vouchers, bills, or other reliable proof of lawful possession was produced. The defence of inherited property and lack of conscious possession was found unsupported on the facts. The precedents relied on by the appellants were distinguished, while the principles governing burden of proof in smuggling matters supported the department's case.

Conclusion: The appellants failed to discharge the statutory burden and the confiscation under Section 111 of the Customs Act, 1962 and penalty under Section 112 of the Customs Act, 1962 were upheld.

Final Conclusion: The appeal failed because the customs authorities were justified in treating the goods as smuggled and in confirming confiscation and penalty, and the connected Gold (Control) appeal did not survive.

Ratio Decidendi: Where goods seized under the Customs Act, 1962 bear foreign markings and are recovered from a person's premises, Section 123 casts the burden on the person in possession or claiming ownership to prove lawful import or possession, and unsupported assertions of inherited or unconscious possession do not discharge that burden.

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