TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 980
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.... 05/2022 dated 21.01.2022 passed by the Commissioner of Customs (Appeals), Kolkata, wherein the Ld. Commissioner (Appeals) had set aside the penalty imposed on the Respondent under Section 112(b) of the Customs Act, 1962. As both the appeals mate from the same Order-in- Appeal, both are taken up together for decision by a common order. 2. The brief facts of the case are that on the basis of specific information, the officer of Customs (P&I Branch, CCP,WB) Kolkata, iintercepted Shri Prashant Mishra, (the Respondent herein) who was about to travel by 12321 Howrah-Mumbai mail on 25.05.2018. On personal search of Shri Prashant Mishra, Officers of Customs recovered one piece of gold bar and six cut pieces of gold, collectively weighing 1856.070 grams valued at Rs 59,57,985/ On asking, Shri Prashant Mishra was not able to produce any licit document in support of legal possession/transporting/carrying of the said gold . Accordingly, the said gold was seized on the reasonable belief that the said gold were smuggled into India through unauthorized route violating provisions of Customs Act 1962. 2.1. On 26.06.2018, prayer for release of the seized gold was submitted by a person by n....
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.... Penalty imposed on Shri Laxmi Prasad in terms of Section 112(b) of the Customs Act'1962 was set aside with consequential benefits. 2.5. Aggrieved against the imposition of penalties on both the Respondents herein, Revenue has filed these appeals. 3. In their Grounds of Appeal, Revenue has made the following submissions: A. The Commissioner of Customs (Appeal), Kolkata has failed to appreciate the fact that the one piece of gold bar and six cut pieces of gold collectively weighing 1856.070 grams valued at Rs. 59,57,985/- were seized on reasonable belief that the gold believed to be foreign origin, had been smuggled into India through unauthorized route and also failed to appreciate the fact that the offence was committed in violation of Section 7 (C) of the Customs Act 1962 read with section 11 of the Customs Act 1962 i.e. possession and transport of foreign origin gold without any documents. B. The commissioner of Customs (Appeal), Kolkata has failed to appreciate the fact that the statement given before the Customs is legal and valid as per the Customs Act 1962. As per statement of Sri Prashant Mishra u/s 108 of the Customs Act 1962, the said seized go....
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....f gold and silver is to an extent a prohibition and any documents could be produce by the person possessing that gold and also by the claimant in support of legal importation/possession/transportation of the same. Hence, it seems a settled fact that the seized gold were illegally brought into India from abroad by any route other than the route, specified in a notification issued under clause (c) of Section 7 for the import of such goods, which rendered the said seized gold liable for confiscation under Section 111(b) and 111(d) of the Customs Act, 1962. F. In view of the above mentioned facts, Revenue prayed for setting aside the Order No. KOL/CUS/CCP/AKR/04-05/2022 dated 21.01.2022. 4. The Respondents herein submits that gold belonged to Shri Laxmi Prasad of Mohalla kabir gunj, P.O. Sasaram, Bihar-8211152. It is their submission that his deceased son Shri Aniket Kumar Soni used to run a shop named M/s Alankar Jewellers at Sasaram. On 05.04.2017, the said shop was closed with the closing stock of gold as 1183.529 grams. Another 500.00 grams of old and used gold ornaments were given by him to the widow, Smt. Monica Soni for settling down. All the ornaments were con....
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....d. The seizure inventory fails to disclose any material evidence justifying a 'reasonable belief' for seizure of the gold. In this regard, we observe that mere finding of gold does not render it liable for seizure unless there is cogent and positive evidence proving its foreign origin as the first condition, as precursor to seizure. 7.2. The Hon'ble Supreme Court in the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628 = 2015 (320) E.L.T. 45 (S.C.), explained the meaning of the phrase 'reason to believe' as under:- "reason to believe" by opining it to be not the subjective satisfaction of the officer concerned, for "such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with their strains imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief canno....
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.... that in the absence of markings or material evidence proving foreign origin, confiscation is not sustainable. 7.5. Thus, we are of the considered opinion that the evidences available on record do not indicate that the Respondents were involved in the alleged offence of smuggling of gold bars. Accordingly, we hold that the evidences available on record does not indicate that the Respondents were involved in the alleged offence of smuggling of gold. Thus, we answer to the question (i) framed at paragraph 6.1 supra, in the negative. 8. Issue (ii): Whether the burden of proof under Section 123 of the Customs Act, 1962, can be shifted to the appellants in the absence of any conclusive evidence proving the foreign origin of the gold, or not. 8.1. Section 123 of Customs Act, 1962, prescribes that the burden of proving that goods which have been seized under the Act are not smuggled in nature is on the person who claims the ownership of the goods. For the sake of ready reference, the said Section is extracted below: - "SECTION 123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that....
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....roof under Section 123 of the Customs Act does not shift on the Respondents herein. The Customs authorities must first establish the foreign origin before invoking the presumption of smuggling. So, we are of the view that in this case, the responsibility is on the Department to show that the gold in question was smuggled into the country without payment of appropriate duties of Customs thereon, which the Department has failed to discharge in this case. 8.5. Thus, we hold that the burden of proof under Section 123 of the Customs Act does not shift to the Respondents herein. Accordingly, we answer the issue (ii) framed at paragraph 6.1 supra, in the negative. 9. Issue (iii): Whether the dropping of the penalties against the respondents in the impugned order is legally justified, or not. 9.1. We observe that the penalties imposed on the appellants under Section 112(b) of the Customs Act 1962 have been set aside by the Ld. Commissioner (Appeals). We find that there is no evidence available on record to show that the gold bars were of foreign origin and smuggled into the country. In the absence of any evidence to establish that the gold bars were smuggled ones, penalty un....