https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=769059 https://www.taxtmi.com/caselaws?id=769059 Smuggling of Gold of foreign origin - existence of reasonable belief/evidence that the said goods have been smuggled into the country or not - shifting the onus to prove to the person from whose possession the goods were seized - levy of penalty on appellant - HELD THAT:- Board, vide its Circular No. 01/2017 dated 08.02.2017, has instructed to pass a specific order depicting the reasonable belief of the officer concerned while seizing the goods. Therefore, deviation thereof, clearly depicts that the seizure so made is illegal and hence, the goods are liable to be released and in corollary thereof, confiscation under Section 111 of the Customs Act 1962 is not at all warranted. Thus, when preliminary seizure of goods is in dispute, the SCN proceedings become vitiated in nature thereby making the impugned order liable to be quashed. Section 123 of the Customs Act clearly stipulates that a 'reasonable belief' that the gold is of smuggled in nature is mandatory for invocation of the said provision; However, in the present case no reasonable belief has been formed by the officers that the gold is of smuggled in nature and hence the provisions of Section 123 are not applicable in this case and the burden lies on the Department to prove that seized gold is of smuggled in nature. The Appellants contend that no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature. No reasonable belief has been formed by the officers that the gold is of smuggled in nature. It is also found that no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature. It is observed that the seizure of the gold without following the 'reasonable belief' that the gold is of smuggled in nature, is not sustainable. The only ground in which the gold was seized by the officers was that the appellant was not having any document for licit purchase of the same at the time when they were intercepted. It is observed that failure to produce documents in respect of the goods carried by a person does not ipso facto prove that the goods are contraband in nature. The allegation of smuggling needs to be proved with cogent reasoning and corroborative evidence thereof. Subsequently, if the appellant could produce documents for its legal purchase, the same cannot be ignored to conclude that the gold is of smuggled in nature. The burden under Section 123 of Customs Act, to prove that the gold is not smuggled in nature, does not lie on the Appellants, in this case. The onus is on the Departmental officers that the gold is of smuggled in nature. However, it is observed that the officers of the Department could not establish that the gold is of smuggled in nature. The documents submitted by the Appellant have not been proved to be false. However, despite having found that the documentary evidence submitted by the Appellants was genuine, the ld. adjudicating authority has held that the goods are liable for confiscation vide the Order-in-Original dated 30.03.2022. Considering the documentary evidence submitted by the appellants, there are no reason to reject the evidence of legal procurement of the gold produced by the Appellants. Consequently, the provisions of Section 123 of the Customs Act, 1962 are not applicable to this case - the confiscation of the gold under Section 111 of the Customs Act, 1962 is not sustainable. Penalties imposed on the Appellants - HELD THAT:- The ld. adjudicating authority has imposed the penalties under Section 112 of the Customs Act, 1962. As the gold is not liable for confiscation, there is no offence committed by the Appellants warranting imposition of penalty under Section 112 ibid. Accordingly, the penalties imposed on the Appellants under Section 112 of the Customs Act are set aside. Conclusion - i) The seizure of gold was invalid due to non-formation of reasonable belief. ii) Section 123 was not attracted; burden of proof did not shift to appellants. iii) Documentary evidence of indigenous procurement was accepted, negating smuggling allegations. iv) Confiscation order was set aside. v) Penalties imposed under Section 112 were quashed. Appeal allowed. Case-Laws Customs Wed, 16 Apr 2025 00:00:00 +0530