Foreign markings and burden of proof under customs law sustain seizure, while composite penalty fails in part after repeal.

An earlier remand on natural justice prevented reopening of the Additional Collector's jurisdiction under the Gold (Control) Act, so that challenge failed. Possession of the seized gold was sufficient on the material available; the claim that it belonged to the appellant's father-in-law was not proved, and no separate notice issue displaced that inference. Foreign markings created reasonable belief of foreign origin, attracting Section 123 of the Customs Act and shifting the burden to the appellant to prove lawful import, which he did not discharge. The composite penalty was partly unsustainable after repeal of the Gold (Control) Act, so only the Customs Act penalty was retained.

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Issues: (i) Whether the Additional Collector lacked jurisdiction to adjudicate under the Gold (Control) Act. (ii) Whether the gold seized from the appellant could be treated as belonging to him and whether notice to the alleged owner was required. (iii) Whether the burden under Section 123 of the Customs Act, 1962 was validly attracted on the basis of foreign markings. (iv) Whether the penalty imposed was composite and therefore impermissible.

Issue (i): Whether the Additional Collector lacked jurisdiction to adjudicate under the Gold (Control) Act.

Analysis: The adjudication order had earlier been carried in remand by the Tribunal on the ground of breach of natural justice, and that remand order had not been challenged. In that situation, the jurisdictional objection could not be reopened against the subsequent order passed in pursuance of the Tribunal's direction.

Conclusion: The jurisdictional challenge was rejected and was against the assessee.

Issue (ii): Whether the gold seized from the appellant could be treated as belonging to him and whether notice to the alleged owner was required.

Analysis: The material on record did not satisfactorily establish that the gold belonged to the father-in-law. The persons said to be connected with him disclaimed knowledge of any such handing over, and there was no sufficient basis to displace the inference arising from the appellant's possession.

Conclusion: The contention that the gold did not belong to the appellant failed and was against the assessee.

Issue (iii): Whether the burden under Section 123 of the Customs Act, 1962 was validly attracted on the basis of foreign markings.

Analysis: The foreign markings on the gold furnished reasonable belief for seizure as goods of foreign origin. Once that foundation existed, Section 123 operated and the burden shifted to the appellant to prove lawful origin and that the goods were not smuggled. That burden was not discharged.

Conclusion: The invocation of Section 123 and the finding of foreign origin were upheld and were against the assessee.

Issue (iv): Whether the penalty imposed was composite and therefore impermissible.

Analysis: The penalty had been imposed in a composite manner with reference to both enactments. Since the Gold (Control) Act had been repealed, the penalty under that Act could not be sustained, though the penalty relatable to the Customs Act could survive.

Conclusion: The penalty under the Gold (Control) Act was set aside, while the penalty of Rs. 5,000 under the Customs Act was sustained, in part favouring the assessee.

Final Conclusion: The confiscation findings were maintained, but the composite penalty was corrected by deleting the Gold (Control) Act component and sustaining only the Customs Act penalty.

Ratio Decidendi: Once a seizure is supported by reasonable belief that goods are of foreign origin, Section 123 of the Customs Act, 1962 shifts the burden to the possessor to prove lawful origin, and a composite penalty cannot be sustained where one statutory component has ceased to exist.

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