Dinesh Prasad Vs Commissioner of Customs (CESTAT Kolkata)
Conclusion: Where the Revenue failed to establish the foreign origin or smuggled nature of seized gold through independent, scientific, or legally admissible evidence, the statutory presumption under Section 123 could not be invoked solely on suspicion. Untested statements recorded during investigation could not override contemporaneous documentary evidence in the absence of compliance with Section 138B of the Customs Act. Accordingly, confiscation of the gold and consequential penalties under Sections 112 and 114AA were set aside.
Held: Appellants challenged an order directing the absolute confiscation of two gold bars weighing 1,758.390 grams under Sections 111(b) and 111(d) of the Customs Act, 1962, along with penalties under Sections 112 and 114AA. Revenue alleged that the gold was of smuggled origin and relied primarily on statements recorded during investigation under Section 108 of the Customs Act, contending that the supporting purchase and melting invoices produced by appellants were fabricated. Appellants, however, produced contemporaneous purchase invoices, melting invoices, stock registers, and stock summaries evidencing lawful procurement and subsequent melting of the gold. They further contended that the seized gold bore no foreign markings, was intercepted during local transportation, and that the Department had failed to conduct any scientific, forensic, or metallurgical examination linking the seized gold to foreign origin or establishing forgery of the documents. Appellants submitted that the statutory presumption under Section 123 of the Customs Act could not be invoked merely on suspicion when the seizure was unsupported by evidence indicating foreign origin. They argued that their documentary evidence established a complete chain of lawful acquisition and that the Department had neither disproved the authenticity of the records through forensic investigation nor complied with the mandatory safeguards under Section 138B before relying upon third-party statements. They also contended that the alleged confessional statement of the carrier was disputed and lacked independent corroboration. Revenue contended that the seized gold was smuggled and that the statements recorded during investigation established fabrication of the purchase and melting invoices. It argued that the documentary evidence produced by the appellants was unreliable due to discrepancies in purity and that the statutory presumption under Section 123 shifted the burden upon the appellants to prove lawful possession. Tribunal held that the absence of foreign markings, the local nature of the interception, contemporaneous commercial records evidencing lawful procurement, and the absence of any scientific or forensic material linking the gold to foreign origin collectively created substantial doubt regarding the very foundation for invoking Section 123 of the Customs Act. Revenue failed to establish that the statutory presumption could be validly invoked merely on suspicion. Tribunal further held that the Department’s reliance on statements recorded during investigation was legally unsustainable as the mandatory safeguards under Section 138B had not been followed. Allegations of forgery were unsupported by handwriting examination, forensic analysis, expert opinion, or any other independent evidence. Mere untested statements could not displace contemporaneous documentary records. Since Revenue failed to establish the smuggled character of the gold through legally admissible and cogent evidence, the order of confiscation was unsustainable. Consequently, the penalties under Sections 112 and 114AA, being consequential in nature, also could not survive.
