AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 954
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....nder Section 112 (b) of the Customs Act, 1962. 2. Brief facts of the case are such that on specific intelligence that the present Appellant was carrying foreign origin gold smuggled into India and travelling in Jodhpur Express train from Howrah to Jaipur, a team of DRI officers apprehended the Appellant, whereupon the Appellant admitted to carry gold with him. The Appellant was then deboarded from the train and was subjected to search, during which 04 bars & 01 small piece of yellow coloured metal was found in his possession. On making further investigation, the Appellant informed that on the instructions of one Mr. Shri Prakash, he was carrying the gold from Kolkata to Jaipur, in lieu of which he would get Rs.20,000/- along with travelling expenses. The said 04 gold bars. & 01 piece of gold was then seized under Section 110 of the Act on reasonable belief that the same are smuggled into India and therefore liable to confiscation. 3. Statement of the Appellant was then recorded on 13.01.2023 whereby he stated that he is a resident of Nagaur, Rajasthan, where he has a shop of silver & artificial jewellery, Mr. Shri Prakash is the owner of recovered gold and on his instructions....
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....ment of Mr. Sri Prakash Toshwar to support the charge made in the SCN, there was no foreign markings on the recovered gold and purity was also found to be 99.78% and not 99.99%. 8. The SCN was adjudicated by Order-in-Original dated 15.02.2024, wherein it was held that the foreign origin of seized gold has been accepted by the Appellant in his voluntary statement dated 13.01.2023 and it was also accepted that the supplier namely Mr. Shri Prakash told him that the seized gold was smuggled into India from Bangladesh. The Adjudicating Authority therefore held that the statement recorded under Section 108 are admissible in evidence and therefore, in absence of any valid document, the recovered gold would be considered as 'foreign origin smuggled gold' in terms of Section 123 and further be considered as 'prohibited goods' in terms of Section 2(33) & Section 11 of the Act. The Adjudicating Authority thus ordered for absolute confiscation of gold with imposition of penalty of Rs.5,00,000/- on the Appellant. 9. On further appeal, the adjudication order has been upheld by the impugned Order-in-Appeal, which is the subject matter of challenge in the present appeal. 10. Shri Kartikey....
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....Hon'ble Supreme Court in Commr. of Customs vs. Ganpati Overseas (2023) 10 SCC 484, held that the object underlying Section 108 is to ascertain the truth and therefore, it is for the Adjudicating Authority to find out whether there was any duress or coercion in the recording of statement since the Adjudicating Authority exercises quasi-judicial power. From the perusal of the adjudication order, it transpires that the exercise contemplated by Ganpati Overseas (supra) has not been conducted by the Adjudicating Authority in the present case and the Adjudicating Authority proceeded to adjudicate the SCN by treating the statement as a voluntary statement. Thus, it will not be safe to uphold the impugned order solely on the basis of statement recorded under Section 108. 15. This takes me to the statement of the Appellant, reproduced in the SCN and also enclosed with the appeal memo. On going through the statement regarding foreign origin and smuggling of subject gold, I find that statement is not on the basis of personal knowledge of the Appellant but on the basis of knowledge of Mr. Shri Prakash, who told him that the subject gold was brought to Kolkata through smuggling from Banglade....
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....d therefore, hearsay evidence is inadmissible except when it is corroborated by substantive evidence. In the present case, since the seizure, that subject gold is of foreign origin and was from Bangladesh, is not based on the personal knowledge of the Appellant but what was told to him by Shri Prakash, hence statement of Appellant is inadmissible in evidence unless corroborated by substantive evidence. 18. To corroborate the statement of the Appellant, the Revenue relies upon the call records of the Appellant, Mr. Shri Prakash and Shri Laxmi Narain to demonstrate that they were having regular phone calls between 02.01.2023 to 13.01.2023 and therefore, all the three persons were actively involved in the smuggling of foreign origin gold bars. In my opinion, the call records do not corroborate the case of the Revenue. The call records only demonstrates that the three persons talked with each other a number of times during the period 02.01.2023 to 13.01.2023, but on the basis of the same it cannot be concluded that the subject gold is of foreign origin and was smuggled into India by the three persons, unless the subject matter of conversation in call records is brought on record, wh....
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....t gold was smuggled into India from Bangladesh, however the investigation failed to find out either Mr. Shri Prakash or his father Shri Laxmi Narain and therefore, this event chain starts with a loose link and nothing can be concluded against Mr. Shri Prakash or Shri Laxmi Narain. 20. Even the C.R.C.L. report does not advance the case of the Revenue of foreign origin gold as the report states 99.78% gold content by weight and not 99.99%. 21. Thus, I find that apart from the statement of the Appellant, there is no corroborative evidence on record to suggest that the subject gold was of foreign origin and was smuggled into India. The Revenue has not brought any evidence on record to corroborate the statement of the Appellant. Thus, in absence of any corroborative evidence, the hearsay evidence in the form of statement of the Appellant, is not admissible in evidence and cannot be relied upon to prove foreign origin and smuggled nature of subject gold. 22. At this stage, Ld. Authorized Representative has relied upon judgment dated 12th March, 2026 of Hon'ble Delhi High Court in W.P.(C) No.15864/2022 in Sh. Gautam Jain vs. Union of India & Ors to contend that the statement of A....
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....ein the only evidence relied by the revenue was the statement of Shri Kishan Kumar Dhuria. The gold in that case did not have any foreign markings and it was held by the Tribunal that the onus would be on the Department to prove the smuggled nature of the goods. The Tribunal observed as under:- "15. Further, the only evidence relied upon by the Revenue is the statement of Shri Kishan Kumar Dhuria, wherein he stated that the gold may be of foreign origin, as according to his knowledge gold is smuggled through Bangladesh into India, which he received at Kolkata. We find that other then the statement of Shri Kishan Kumar Dhuria, no evidence is brought forth by Revenue to conclude that the impugned gold has been smuggled. We have perused the statement of Shri Dhuria and find that the information about the gold being smuggled from Bangladesh is very general in nature. We find that nowhere Shri Dhuria has confessed that the impugned Gold is smuggled from Bangladesh. It is not open for the department to draw conclusions from a general statement to particularise about the impugned goods. As admittedly, the gold having no foreign markings, the onus would be on department to prove t....
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....ly on the so called specific information and the said information has no evidentiary value unless established with evidence. Thus, burden is on the person from whose possession goods are seized only when the revenue, at least prima-facie, proves that the goods were of foreign origin. In the present case, the Revenue has failed to prove the same and therefore Section 123 cannot be applied. 27. At this stage, it is necessary to consider that the Appellant has put forward the contention that the seized gold belongs to his cousin brother Mr. Shri Prakash, who obtained the same after melting of old and ancestral jewellery, which contention has not been discarded in the impugned order and has been tested only against the statement dated 13.01.2023, which is clearly hearsay. Having not found any foreign markings and allegation of foreign origin being only hearsay, not admissible as evidence, I find that the revenue ought to have considered the explanation of the Appellant instead of brushing it aside, by relying on the statement. 28. After examining the facts and evidence discussed above, I am of the view that the conclusion arrived and reasoning given in the impugned order cannot b....