Penalty for Gold Smuggling cannot be Valid in Absence of Corroborative Evidence: CESTAT [Read Order]

The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that penalty for gold smuggling is not valid in absence of corroborative evidence.                                     

Based on the intelligence report of the smuggling of gold, a search was carried out towards the respondent Mohammed Ali Jinnah. During the personal search of the respondent, the officers recovered a copy of his Aadhar card, bus ticket and two packets wrapped with blue adhesive tape and kept in a green and blue polythene bag. On cutting open these packets, it contained two crude gold bars total weighing 3097 grams.

It was evident that the respondent did not have any valid document for the possession of the gold and it appeared to the department that these two crude gold bars are smuggled into India from Sri Lanka without declaring it to customs with the intention to evade payment of customs duties and held as the gold bars were liable for confiscation under the provisions of the Customs Act, 1962.

The officers visited the residence and premises of Mohammed Ali Jinnah at Devakottai but did not find any incriminating documents. The travel details of bus tickets recovered from the respondent were obtained from the Tamil Nadu State Transport Corporation Ltd.

In the absence of evidence on the part of the respondent to prove that the gold was legally procured and since the crude gold bars had 999.9 purity, it appeared to be smuggled into India in violation of Foreign Trade Policy 2015 – 2020 read with RBI Regulations and having been found to be concealed in a bag.

After due process of law, the adjudicating authority confiscated the seized 3.097 kg of foreign origin gold bars, totally valued at Rs.91,98,090/- under Section 111 (a), 111 (d) and 111 (i) of the Customs Act, 1962. Further imposed a penalty of Rs.5,00,000/- (Rupees Five Lakhs only) on Shri Mohammed Ali Jinnah under Section 112 of the Customs Act, 1962. On appeal, the Commissioner (Appeals) held that the department has failed to prove that the gold is smuggled into India.

The gold was seized from the respondent at a public place which is a bus stand. At the time of interception, the respondent did not produce any valid documents as to how he has procured the gold. Though in the Show Cause Notice, it was alleged that the respondent deposed that the gold was handed over to him by Murugan who said that it was smuggled from Sri Lanka and asked the respondent to handover to Shri Batcha @ Pitchai, the department has not been able to establish any of this.

In the absence of foreign markings, there should be cogent evidence to establish that the gold is of foreign origin. The statement of the respondent which has been retracted cannot be the basis for holding that the gold is smuggled unless corroborated by other evidence. 

The two-member Coram comprising of Ms Sulekha Beevi C.S (Judicial) and Shri M. Ajit Kumar (Technical) upheld the order of the Commissioner (Appeals) and dismissed the appeal of the revenue.

To Read the full text of the Order CLICK HERE

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