Legal principle

Gold cannot be confiscated as smuggled goods on the basis of uncorroborated or retracted statements alone; absent foreign markings or independent evidence of foreign origin, the burden of proof under Section 123 remains on the Revenue.

Court decision

The Tribunal upheld the Commissioner (Appeals) and rejected the Revenue's appeals: the absolute confiscation of the gold and diamond jewellery does not sustain, the cash of Rs. 11,65,250/- was rightly ordered to be released, and the penalties on the respondents were rightly vacated. The Tribunal expressly clarified that it had not addressed whether the Show Cause Notice issued by DRI was valid and proper.

Facts

DRI officers (SRU-Varanasi) intercepted passenger Vinay Kumar Tiwari on a train at Pt. Deen Dayal Upadhyay Junction on 07.06.2023 and recovered gold pieces weighing 1164.950 g valued at Rs. 69,43,102/-, which he admitted in his Section 108 statement was foreign-origin gold smuggled from Dubai to Kolkata with foreign marks erased by remoulding. Acting on his statement, DRI searched the office of Bright Logistics Services at Lucknow and seized 3633.98 g of gold/gold jewellery valued Rs. 1,93,01,590/-, diamond jewellery valued Rs. 49,45,676/-, and Indian currency of Rs. 11,65,250/- as alleged sale proceeds. Adjudication by Order-in-Original dated 28.12.2023 ordered absolute confiscation of 4798.930 g of gold and diamond jewellery under Section 111(a),(b),(d)&(h) read with Section 120, confiscation of the cash under Section 121, and penalties of Rs. 10 lakh and Rs. 5 lakh under Section 112 on several persons including the respondents. The Commissioner (Appeals) set aside the confiscation, ordered release of the cash and vacated the penalties, and the Revenue appealed to the CESTAT.

Key provisions

• Section 123, Customs Act, 1962 — Burden of proof in certain cases
• Section 108, Customs Act, 1962 — Power to summon persons to give evidence and produce documents
• Section 110, Customs Act, 1962 — Seizure of goods, documents and things
• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 138B, Customs Act, 1962 — Relevancy of statements under certain circumstances
• Section 121, Customs Act, 1962 — Confiscation of sale-proceeds of smuggled goods
• Section 34, Customs Act, 1962 — Goods not to be unloaded or loaded except under supervision of customs officer
• Section 7, Customs Act, 1962 — Appointment of customs ports, airports
• Section 46, Customs Act, 1962 — Entry of goods on importation
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 47, Customs Act, 1962 — Clearance of goods for home consumption
• Section 33, Customs Act, 1962 — Unloading and loading of goods at approved places only