TaxTMI 
TaxTMI 
2026 (9) TMI 898
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....et, a GST registered concern owned by his late wife. According to the respondent, he travelled to Bangalore and purchased 2062 gm of re-melted gold bullion of 24 carat purity on credit from M/s Aryan Gold under Tax Invoice No. 194 dt.20.03.2023. The respondent, thereafter, proceeded to Coimbatore for conversion of the bullion into ornaments. As job work terms could not be finalized, he commenced his return journey to Narasaraopet in Hyundai Verna car bearing Registration No. AP26BR5060, driven by Shri K. Bala Murali Krishna. 3. The Customs Officers intercepted the vehicle during the night intervening 20/21.03.2023 and recovered two pieces of re-melted gold weighing 1285 gm and 796 gm, aggregating to 2081 gm. The department alleged that the vehicle was intercepted at Tanguturu toll plaza at about 05:30 hrs on 21.03.2023 and that the gold was of smuggled foreign-origin. 4. The statements of the respondent and the driver were recorded under section 108 of the Customs Act. The respondent retracted his statement on 28.03.2023, while the driver retracted his statement on 13.04.2023. The respondent also produced invoice No. 194 dt.20.03.2023 in support of the domestic purchase. 5....
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....y, by itself, cannot establish foreign-origin or illegal importation. 10. 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. 11. The FASTag records allegedly demonstrate that the vehicle crossed Pallikonda toll plaza at 21:17 hrs on 20.03.2023 and reached Gadanki toll plaza at 00:51 hrs on 21.03.2023. It is, therefore, submitted that the vehicle has been intercepted near the AP-TN border and earlier than the time and place recorded in the Panchanama. 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. Crossexamination of the suppliers and material witnesses was also denied. 12. 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 ....
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....levant evidence. The ratio of Naresh J. Sukhawani Vs UOI (supra) cannot, however, be understood as laying down that every statement recorded under section 108 must be accepted as conclusive, irrespective of its subsequent retraction, surrounding circumstances and absence of corroboration. In the case of Vinod Solanki Vs 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....
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....ified in treating the unexplained time and location contradiction as a material circumstance affecting the reliability of the department's case. 21. The respondent produced tax invoice No. 194 dt.20.03.2023 issued by M/s Aryan Gold, Bangalore, covering 2062 gm of gold. The invoice predates the seizure. The supplier confirmed the transaction, though questions were raised concerning the appearance of the gold. The difference of 19 gm between the invoice quantity of 2062 gm and the seized quantity of 2081 gm requires explanation. However, that difference, by itself, does not prove that the entire quantity of 2081 gm was smuggled. The principal quantity stands supported by a contemporaneous invoice and a confirmed commercial transaction. The department has not established that the invoice was fabricated, that the supplier was not existent or that the invoice was subsequently inserted into the supplier's records. 22. Thus, even assuming that section 123 stood attracted, the respondent discharged the burden on the standard of preponderance of probabilities by producing contemporaneous tax invoices, supplier confirmation and banking evidence. The department failed to rebut this evid....
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.... 24. The principle is not confined to statement of dealers. Its application depends upon whether the statements of the person concerned are relied upon to establish a disputed material fact. While the department relied on the statement of a supplier to challenge the identity of goods or on Panch witnesses to prove a disputed Panchanama, cross-examination cannot be rejected merely by describing the request as a delaying tactic. 25. Section 138B of the Customs Act also prescribes the conditions subject to which a statement made before a gazetted customs officer may be treated as relevant for proving the truth of its contents. Unless the statutory exceptional circumstances exist, a person's statement is relied upon must ordinarily be examined in the adjudication proceedings and made available for cross-examination. 26. In the present case, the disputed statement material to the conclusions concerning foreign-origin, ownership and identity of the gold and the denial of cross-examination materially prejudiced the respondent and diminished the evidentiary value of those statements. 27. The decision in the case of Naresh J. Sukhawani Vs UOI (supra), turns upon its own evidentia....