Kamal Kant Kulthia Vs Principal Commissioner of Customs- New Delhi (CESTAT Delhi)
Conclusion: Since there was no infirmity on the behalf of the investigation agencies in invoking confiscation under section 123 of the Customs Act, 1962 in respect of seven gold bars bearing foreign markings out of the ten bars seized. However, the Department’s was unable to prove the alleged foreign origin of the remaining three gold bars, CESTAT set aside the confiscation of 3 gold bars and proceeded to award a reduced penalty to the Appellant.
Held: An intelligence was received by the Zonal Unit Delhi of Directorate of Revenue Intelligence ( DRI ) that a passenger by the name of Shri Dharmender, an employee of ND Diamonds, Karol Bagh to be carrying 10 gold bars of 1 kg each bearing foreign markings, while passing through the domestic terminal of Indira Gandhi International ( IGI ) Airport, Delhi. Numerous articles were seized from Dharmender upon search conducted by the Airport authorities and two independent Punchas, including 10 bars of yellow coloured metal, later proven to be concealed gold bars of .995 purity by the Airport’s Jewellery Appraiser. Seven out of the ten gold bars retrieved from Dharmender carried engravings of ‘VALCAMBI SUISSE’ and logo of ‘PAMPESSAVUER FONDEUR’, but with tampered serial numbers; rest of the three gold bars were plain and lacked any engravings or markings. Upon Dharmender’s admission that the gold was smuggled into India and failure to produce any evidence rebutting the same, the gold was seized under Section 119 of the Customs Act, 1962 and liability was placed on the owners of M/s. ND Diamonds who had failed to prove the licit possession of 10 bars of gold with them. Revenue proceeded to absolutely confiscate the seized goods under Section 112 and 114A of the Customs Act, 1962 which was contested by the Appellant but to no avail, following which the present appeal hasdbeen lodged. Appellant alleged foul play by the Authorities in collusion with each other, and that they had no documentary proof confirming that the seized gold was indeed of foreign origin and smuggled into India illicitly; the gold was claimed to have been purchased locally with the purchase reflected in the books of accounts of the Appellant. AAAR was faced with ascertaining whether the department had rightly invoked Section 123 of the Customs Act, 1962. It was held that there was reasonable belief with the DRI officers about the impugned gold to have been the smuggled one. However, since there were no foreign markings on three out of 10 seized gold bars and Dharmender had stated about those to be melted out of old gold jewellery. The very basis of ‘reasonable belief’ of smuggling i.e. the foreign origin of the 3 bars was missing. There was no infirmity when section 123 had been invoked by the investigation agencies with respect of 7 gold bars having foreign markings for remaining three gold bars the burden was on the department to prove that those were also of foreign origin. Hence there were separate findings for both 7 gold bars of foreign marking and 3 gold bars of nothing engraved (each weighing 1 kg). Resultantly, the department had failed to discharge their burden to prove these three bars to be smuggled gold. Thus, these 3 bars could not be called as smuggled gold.
