2025 (5) TMI 1152 - AT - Customs

Levy of penalty - possession of the seized gold bars without valid licit documents - onus u/s 123 of the Customs Act upon the appellant to prove legality of the goods - HELD THAT - The appellant has not mentioned anything about the recording of the statement under duress before the Magistrate or in the bail applications filed by him. He was released on bail w.e.f 12.12.2018 however he has not retracted his statement till 26.06.2019. Thus we observe that the retraction was only an afterthought which need not be taken cognizance. Accordingly the statements given by the appellant can be relied upon against him to establish his role in the offence. Section 112(b)(i) of the Customs Act of 1962 states that someone who acquires possession of goods that they know or believe are liable to confiscation is liable to a penalty. In view of the above findings the Appellant had knowingly or consciously involved himself in the alleged act of carrying gold without any valid documents. As the role of the appellant in the offence committed has been established based on his own admission the appellant is liable for penalty as per section 112 (b)(i) of the Customs Act 1962. Accordingly the ld. adjudicating authority has rightly imposed penalty on the Appellant under Section 112(b)(i) of the Customs Act 1962. The appellant is an intermediary and he was not the ultimate beneficiary of the smuggled gold. Thus the penalty imposed on him is very high and it can be reduced to commensurate with the role played by him in the offence. Accordingly the penalty imposed on the appellant in the impugned order reduced from Rs.52, 55, 000/- to Rs.10, 00, 000/-. Conclusion - The confiscation of the gold bars and the imposition of penalty on the appellant under the Customs Act affirmed holding that the seizure was lawful the onus was rightly cast on the appellant who failed to discharge it the statement recorded under Section 108 was admissible and the penalty was justified though reduced in amount to reflect the appellant s intermediary role. Appeal disposed off.

The core legal questions considered by the Tribunal in this appeal include:

1. Whether the seizure of the gold bars from the appellant was lawful and complied with statutory procedural requirements under the Customs Act, 1962 and related provisions.

2. Whether the appellant was in possession of the seized gold bars without valid licit documents and whether the onus under Section 123 of the Customs Act was rightly cast upon the appellant to prove legality of the goods.

3. Whether the appellant's statement recorded under Section 108 of the Customs Act could be relied upon, despite his subsequent retraction.

4. Whether the penalty imposed under Section 112(b)(i) of the Customs Act on the appellant was justified and commensurate with his role in the offence.

5. Whether the appellant's contentions regarding the inland transportation of gold, absence of foreign markings, and procedural irregularities in search and seizure were sustainable.

Issue-wise Detailed Analysis

1. Legality and Procedure of Seizure

The seizure was effected by the Government Railway Police (GRP) on 22.10.2018 from the appellant traveling by train. The seized goods were handed over to the Customs authorities for action under the Customs Act. The appellant contended that no sample or preliminary test was conducted before seizure, violating Section 100 of the CrPC, and that the search was not conducted as per Section 102 of the Customs Act, lacking presence of a Gazetted Officer or production before a Magistrate. Reliance was placed on precedents emphasizing procedural safeguards in search and seizure.

The Tribunal observed that the seizure list was prepared in presence of witnesses and that the gold was recovered from the appellant's possession. The appellant failed to produce any licit documents at the time of seizure. The Tribunal held that the seizure was lawful and that the procedural objections raised were without merit. The contention that the seizure was effected inland and not near the international border was rejected, noting Guwahati's status as a gateway to the North East and a transit point for imported goods.

2. Onus to Prove Legality of Goods under Section 123 of the Customs Act

Section 123 casts the onus on the person in possession of notified goods to prove that the goods are not smuggled. The appellant argued that the gold bars were being transported inland with licit documents and that he was unaware of any smuggling. He relied on case law to argue that since the gold was transported from one state to another and not directly from foreign soil, the onus was not on him.

The Tribunal rejected this argument, holding that since gold is a notified item under Section 123, the Customs officer had reasonable belief that the gold was smuggled based on the appellant's initial inability to explain possession, absence of licit documents, and the circumstances of interception. The appellant failed to discharge the onus to prove the legality of the gold bars. The Tribunal thus upheld the confiscation and penalty imposed.

3. Reliance on the Appellant's Statement and Retraction

The appellant's statement recorded under Section 108 of the Customs Act on the day of seizure implicated him in the offence. He later retracted this statement by affidavit dated 26.06.2019, claiming he had licit documents for transporting the gold.

The Tribunal noted that the retraction came several months after the statement and after bail was granted. There was no claim of duress or coercion at the time of recording the statement or in bail applications. The Tribunal held that the retraction was an afterthought and did not detract from the reliability of the original statement. Therefore, the statement was admissible and could be relied upon to establish the appellant's role.

4. Validity of Documents Claimed by the Appellant

The appellant claimed possession of a Transfer Voucher dated 20.10.2018 from M/s Kalpadruma Gems & Jewels India Ltd., Ahmednagar, Maharashtra, to substantiate licit possession. The Tribunal examined the timeline and found contradictions and improbabilities: the appellant had left Ahmednagar on 12.10.2018 but the voucher was dated 20.10.2018; the voucher was not mentioned in any earlier statements or bail applications; the appellant's affidavit did not specify these documents; and the address on the voucher did not match the appellant's residence.

The Tribunal concluded that the voucher was fabricated after the seizure in connivance with the company, constituting manipulation of evidence. The company's claim of ownership was similarly rejected for lack of merit and evidence of collusion.

5. Nature and Origin of the Gold Bars

The appellant argued the gold bars were indigenously procured, lacked foreign markings, and had a purity of 99.51% (not the 99.9% typical of imported gold), implying they were not smuggled. The Tribunal rejected this argument, holding that absence of foreign markings does not negate smuggling. The reasonable belief of the Customs officers about smuggling arose from the circumstances of interception, lack of licit documents, and the appellant's conduct. The purity percentage alone was insufficient to disprove smuggling.

6. Penalty under Section 112(b)(i) of the Customs Act

Section 112(b)(i) provides for penalty on any person who knowingly or consciously acquires possession of goods liable to confiscation. The Tribunal found that the appellant had knowingly involved himself in carrying gold without valid documents, as established by his own statement and conduct.

However, the Tribunal recognized that the appellant was an intermediary and not the ultimate beneficiary of the smuggled goods. Therefore, while upholding the penalty, the Tribunal reduced the quantum from Rs. 52,55,000/- to Rs. 10,00,000/- to align with the appellant's role.

7. Treatment of Competing Arguments

The appellant's procedural objections, contentions about the inland nature of transportation, and claims of licit possession were examined but found unsubstantiated by documentary or oral evidence. The Tribunal gave greater weight to contemporaneous statements, seizure records, and the conduct of the appellant. The belated retraction and afterthought documents were treated as manipulative and unreliable.

Significant Holdings

"The only conclusion that can be drawn regarding the said Transfer Voucher dated 20.10.2018 was an afterthought by Shri Kiran Vishwanath Patil. This is nothing but a manipulation and fabrication of documents by Shri Kiran Vishwanath Patil."

"It is undisputed that Shri Kiran Vishwanath Patil was carrying the five gold bars under seizure without any licit document."

"Since gold is a notified item under Section 123 of the Customs Act, 1962... the Customs officers had reasonable belief that the gold bars are of smuggled nature and therefore the same were seized under Section 110 of the Customs Act."

"The appellant has not retracted his statement till 26.06.2019. Thus, we observe that the retraction was only an afterthought, which need not be taken cognizance."

"In view of the above findings, we hold that the Appellant had knowingly or consciously involved himself in the alleged act of carrying gold without any valid documents... the adjudicating authority has rightly imposed penalty on the Appellant under Section 112(b)(i) of the Customs Act, 1962."

"However, regarding the quantum of penalty imposed, we observe that the appellant is an intermediary and he was not the ultimate beneficiary of the smuggled gold... Accordingly, we reduce the penalty imposed on the appellant in the impugned order from Rs.52,55,000/- to Rs.10,00,000/-."

The Tribunal thus affirmed the confiscation of the gold bars and the imposition of penalty on the appellant under the Customs Act, holding that the seizure was lawful, the onus was rightly cast on the appellant who failed to discharge it, the statement recorded under Section 108 was admissible, and the penalty was justified though reduced in amount to reflect the appellant's intermediary role.

← Previous Next →