The Customs, Excises, and Service Taxes Appellate Tribunal (CESTAT), Delhi Bench ruled that the onus to prove non-smuggled nature of the seized gold lies on the possessor.
The jewellery was recovered from the bags of the appellants, Deepak Handa and Ravi Handa, four of the foreign marked gold bars were recovered from the shoes of Deepak in which they were concealed. The remaining five gold bars and the gold coins were wrapped in brown colour tape and concealed in the specially designed secret pockets in the back pack.
The total gold weighing 15.389 kg estimated to be worth about Rs. 4.6 crores was seized under the Customs Act as Deepak did not have any bills for the gold nor any documents to show that the foreign marked gold was legally imported into India.
In his statements, Deepak said that he got the jewellery manufactured at Delhi supplying gold of foreign origin. Therefore, it appeared to the revenue that the seized 5.429 kg of gold jewellery was manufactured by them using illegally imported foreign origin gold and was being carried without any invoice or proper documents. Deepak could not produce any valid document to support their legal possession.
The department submitted that the seized jewellery was made out of smuggled gold and not that it itself was smuggled. There were also no foreign markings on them to show that the jewellery was smuggled. Deepak had no bills or invoices to show legitimate purchase of these ornaments.
The coram headed by the President Justice Dilip Gupta ruled that the confiscated gold was covered by Section 123 of the Customs Act and so the burden of proving the non-smuggled nature of the seized goods shifts to the appellants.
The Tribunal further said that the gold jewellery confiscated was not covered by section 123 of the Customs Act because it has not even been alleged that it was smuggled. It is alleged to have been converted from smuggled gold which is not established in this case.
“Currency is goods as per Customs Act but it is not covered by section 123 and there is also no allegation that it is smuggled. The allegation is that it is sale proceeds of smuggled goods and has been confiscated under section 121 but the Revenue could not prove that the cash was sale proceeds of smuggled goods,” the CESTAT observed.
The Tribunal noted that the appellants could not discharge their responsibility of proving non-smuggled nature of the seized foreign marked gold. The confiscation of the gold bars, gold coins and small pieces of gold under section 111(d) and section 111(i) is correct. Confiscation under section 111(p) is not correct since gold is not a notified good under Chapter IVA of the Customs Act.
The tribunal while partly allowing the appeal said that of the goods seized from Deepak Handa in the train, confiscation of gold jewellery weighing 4.687 kg and miscellaneous items of gold weighing 0.742 kg is set aside and the confiscation of the remaining goods is upheld. Confiscation of the Indian currency (cash) seized in Jammu is set aside. The penalty imposed on Deepak Handa is reduced to Rs. 20,00,000/- and the penalty imposed on Ravi Handa is reduced to Rs. 2,00,000/-.
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