The Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) upheld the penalty of 50 lakhs u/s 112(b)(i) on the import of gold bars.
Shri Gaurav Prakash appeared for the Appellant and Shri Rakesh Kumar appeared for the Respondent.
Shri Sunny Kakkar, the appellant challenged the order passed by the Principal Commissioner of Customs (Preventive), New Delhi whereby he confiscated 8 gold bars of 1 kg. each of foreign origin valued at Rs. 1,84,16,505.68 under Section 111(d) of the Customs Act 1962 which were seized from the possession of the appellant.
He also confiscated the Mercedes car bearing registration No. DL ICQ 7525 seized from the appellant under Section 115(2) which was registered in the name of M/s PRK Diamonds Pvt. Ltd and allowed it redemption on payment of a fine of Rs.10,00,000/-. The penalty of Rs. 50,00,000/- was imposed on the appellant under Section 112(b) (i) and a penalty of Rs.15,00,000/- on Shri Ahadees under Section 112(a)(i).
The Directorate of Revenue Intelligence received intelligence and found the smuggled gold bars of foreign origin and would hand them over in a white Mercedes car bearing registration No. DL ICQ 7525 near Gate No. 3 of Rajeev Chowk Metro Station on 07.12.2015 around 16.00 hours.
Under the belief that the car, the gold and the cash were liable for confiscation, they were seized. Based on investigations it appeared that the 8 kg of gold seized on 7.12.2015 was of foreign origin, smuggled into India and gold is not freely importable. It also appeared that as per Section 123 of the Customs Act, the burden of proving that the gold was not smuggled rested on the person from whom it was seized.
Section 111 provides for confiscation of the goods which are improperly imported into the country. Clause (b) and (d) of which states that any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods and any goods which are imported or attempted to be imported or are brought within the Indian customs waters to be imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force.
As per Section 2(39) “smuggling”, about any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113. Therefore, if the gold bars in dispute are held liable for confiscation under Section 111 they will fall under the category of smuggled gold as per Section 2(39).
A Coram comprising Justice Dilip Gupta, President and P V Subba Rao, Member (Technical) observed that there was no documents have been produced to date to show that the gold was legally imported. The circumstances under which the transaction took place in a car without any bills at the gate of the Metro Station further buttress the view that the gold was not legally imported.
The Tribunal found that the undisputed gold is of a foreign origin and was reasonably believed to be smuggled by the officers and was seized and the appellant had not discharged his burden to show that it was not smuggled gold. The absolute confiscation of the disputed gold was upheld and the penalty imposed of Rs. 50 lakhs were upheld.
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