2015 (10) TMI 2329 - AT - Customs

Confiscation of goods and vehicle under Section 111 (b) and (d)- Gold Bars - Appellant contends that seized goods are not having any foreign markings and have purity of less than 99.99% - Gold bars were not of smuggled nature thus case is not covered under Section 123 and once bills are produced by appellant such gold and vehicle are not liable to confiscation - Revenue contends that no document showing licit acquisition of gold bars was produced by appellant at the time of interception and seizure and bills were created after thought - Quantity and purity of seized goods cannot be produced from jewellery thus order passed is correct. Held That - Contention of Revenue that report of chemical examine will prevail over oral statements made but chemical examiner can only give percentage of gold in gold bars but cannot say whether seized goods are of foreign origin and purity of gold has been certified to be 99.92% to 99.96% - Seized goods cannot be considered to be of foreign origin. seized gold bars do not have uniform weight/purity and appellant has shown purchase bills covering gold bars having assorted size weight and purity and person who sold seized goods has also confirmed to have supplied them to appellant - Minor mismatching of difference in weight will not make bills as an after thought - Appeal allowed - Decided in favour of Appellant.

Issues Involved:
1. Whether the 10 gold bars seized are of foreign origin.
2. Applicability of Section 123 of the Customs Act, 1962.
3. Validity of the purchase bills and statements provided by the appellants.
4. Justification for the confiscation and penalties imposed.

Detailed Analysis:

1. Whether the 10 gold bars seized are of foreign origin:
The first issue to be decided is whether the 10 gold bars (1746.580 gms.) seized by the officers on 2/2/12 are of foreign origin. The gold bars were seized on reasonable belief of being smuggled as per the information from DRI and were suspected to be brought from Bangladesh and subjected to some retreatment. However, the weighment sheet showed that the weight of these gold bars ranged from 52.470 gms. to 344.720 gms., and none of the bars had identical weights or markings of foreign origin. No documentary evidence existed to suggest defacing of foreign markings by the appellants. The chemical examiner's report only provided the gold content percentage (99.92% to 99.96%) but did not confirm the origin. The argument that foreign origin gold bars have a purity of 99.99% or above was not rebutted. The adjudicating authority's findings did not establish that the seized gold bars were of foreign origin. Hence, the seized goods cannot be considered to be of foreign origin.

2. Applicability of Section 123 of the Customs Act, 1962:
Section 123 of the Customs Act, 1962 concerns the burden of proof in cases where goods are seized under reasonable belief of being smuggled. The section applies to gold and other specified goods, requiring the person in possession to prove that the goods are not smuggled. Despite the liberalization in import policy allowing foreign marked gold to be imported and sold freely in India, the mere presence of foreign markings does not imply smuggling if bills are produced. The tribunal's previous decisions in similar cases, such as Kapil Deo Prasad Vs. CC (P), Patna, have held that producing purchase bills discharges the onus of proof under Section 123. In this case, the seized gold bars did not have foreign markings, had varied weights and purity, and the appellants provided purchase bills covering the gold bars.

3. Validity of the purchase bills and statements provided by the appellants:
The appellants argued that the seized gold bars were not of smuggled nature and presented purchase bills from M/s. Saraf Jewellers, Kolkata. The proprietor of M/s. Saraf Jewellers confirmed the supply of gold bars to Shri Nand Kishore Somani. The appellant's statements and the purchase bills were consistent, and the person who sold the gold confirmed the transaction. Minor discrepancies in weight noted by the adjudicating authority were not sufficient to invalidate the bills. The tribunal in previous cases has accepted such bills as valid evidence, discharging the onus under Section 123 when the gold is not of foreign origin.

4. Justification for the confiscation and penalties imposed:
The adjudicating authority's order confiscated the gold bars and the vehicle used for transportation and imposed penalties on the appellants under various sections of the Customs Act, 1962. However, the tribunal found that there was no evidence to prove that the seized gold bars were of foreign origin or smuggled into India. The suspicion or presumption of smuggling was not supported by concrete evidence. Therefore, the confiscation of the gold bars and the vehicle, as well as the penalties imposed, were not justified.

Conclusion:
The appeals filed by the appellants were allowed, setting aside the order-in-original dated 6/2/2014 passed by the adjudicating authority. The tribunal concluded that the seized gold bars were not of foreign origin, the appellants had discharged the burden of proof under Section 123 of the Customs Act, 1962 by producing valid purchase bills, and the confiscation and penalties imposed were not warranted. The operative part of the order was already pronounced in court.

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