TaxTMI 
TaxTMI 
2026 (9) TMI 899
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....gistered concern engaged in trading in gold bullion. According to the respondent, he purchased 2 kgs of re-melted gold bullion on credit from M/s SRR Traders, Sow-carpet, Chennai under two tax invoices of Rs.60,00,000/- each. The respondent entrusted approximately 500 gm each to four persons viz., Shri C. Venkatesh, Shri M. Naveen Kumar, Shri Sk. Mastanvali and Shri B. Venkata Durga Prasad for transportation to Guntur. The four carriers were intercepted by the customs officers at Sullurpeta and Bollapalli toll plazas and 1998.780 gm of re-melted gold was recovered under two Panchanamas. 3. The statements of the carriers were recorded under section 108 of the Customs Act, wherein, they allegedly admitted that the gold was of smuggled foreign-origin. The statements were retracted through written representations dt.07.04.2023 and 08.04.2023 alleging that signatures had been obtained under coercion on pre-typed documents. The respondent claimed ownership of the seized gold and produced the two tax invoices issued by M/s SRR Traders. It is also stated that payment was subsequently made through RTGS in the ordinary course of the credit transaction. The supplier confirmed sale during t....
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.... number. Purity, by itself, cannot establish foreign-origin or illegal importation. 9. It has been contended that the condition precedent for applying section 123 is valid seizure based upon objectively existing reasonable belief that the goods are smuggled. A mechanical recital in the Panchanama is insufficient to shift the statutory burden. 10. It has been further submitted that the statements relied upon by the department were promptly retracted and were not corroborated by any evidence of illegal importation, border crossing, foreign supplier, hawala payment or smuggling network. Cross-examination of the suppliers and material witnesses was also denied. 11. The respondent maintained that they discharged even the burden contemplated under section 123 by producing contemporaneous tax invoices, confirmation from the supplier, GST particulars and evidence of payment through banking channels. 12. We have heard and considered the submissions of both parties and perused the records. 13. The following issues arise for determination and adjudication: a) Whether the seizure was founded on a reasonable belief that the gold was smuggled; b) Whether the burd....
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....s UOI [2009 (233) ELT 157 (SC)], the Hon'ble Supreme Court held that while confession is retracted, the adjudicating authority must examine its voluntariness and seek assurance from independent circumstances. The burden of proving that a statement was obtained by coercion cannot be treated as impossible to discharge, particularly where the surrounding record itself raises doubt concerning the investigation. Similarly, the decision in the case of CC, Madras Vs D. Bhoormull (supra), relaxes the degree of proof in matters involving clandestine activity; it does not permit confiscation on conjecture. The principle of preponderance of probabilities still requires existence of proved facts from which an inference of smuggling reasonably follows. In this case, the statements were retracted within a reasonable proximate period. More importantly, the department has not brought on record any independent evidence regarding the point or mode of illegal importation, foreign seller, smuggling carrier, border movement, financial trail or source of foreign-origin gold. There is also no recovery of the alleged cash said to have been carried for purchasing the gold. The allegations regarding very su....
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....e. The relevant paras are reproduced below: "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brough....