IMPORTANT POINT
The burden of proof under Section 123 of the Customs Act lies with the accused to prove lawful possession of seized goods, which was not met in this case.

JUDGMENT :

T.S. SIVAGNANAM, C.J.

1. The revenue is on an appeal questioning the correctness of the order passed by the Customs Excise and Service Tax Appellate Tribunal, Kolkata (Tribunal) in Customs Appeals dated 13.03.2023 by which the appeal filed by the respondent along with other connected appeals were allowed holding that the stand taken by the respondent and others that the gold in question was made out of an old jewellery purchased in cash which fact has not been denied by the revenue by cogent reasons and therefore the gold is not liable for confiscation. Further the learned tribunal held that the revenue has failed to establish the fact that the cash recovered from the respondent and others are sale proceeds of the smuggled gold and therefore the cash seized cannot be confiscated and no penalties are imposable.

2. The revenue has raised the following substantial questions of law for consideration:

(a) Whether the Learned Tribunal erred in law in not holding that the statements of the Respondent/Noticee No. 1 i.e. Rajendra Kumar Damani was voluntary, while giving credence to the Noticee's submission that they were retracted. The statements made by Respondent/Noticee No. 1 on 07.08.2018, 08.08.2018, and 25.07.2019 were all in his own handwriting and in his vernacular, which indicates that the statements were all voluntary?

(b) Whether the Learned Tribunal erred in law in not holding that the that the third statement, which is also in his own handwriting and in his vernacular, is after the gap of almost a year, in which he has reiterated his original statements. The attempted retraction was almost a year after the initial statement and the noticee had made no mention of any threat or coercion in the initial bail hearing, and hence has to be construed as an after thought?

(c) Whether the Learned Tribunal was correct in holding Noticees claim that the gold was melted from old jewellery, since this claim was never made at any stage of the investigation, nor any shred of documentary evidence was produced?

(d) Whether the Learned Tribunal erred in law in the holding the claim of the Noticee at face value in the face of overwhelming evidence against the same and not considering Section 123 of the Customs Act, 1956 which places the burden of proof on the Noticees?

(e) Whether the Learned Tribunal erred in law in not holding that mere melting of old jewellery will yield gold of purity of only 9192% and melting of old jewellery into pure gold is a precise chemical process which requires strong chemicals and skilled professionals and cannot, in the normal course, be done at home Noticee No. 1 has produced no evidence or documentary proof of any kind to substantiate engaging any professional to carry out this refining process?

(f) Whether the Learned Tribunal failed to appreciate that Hon'ble Supreme Court in Judgment dated 03.04.1974 passed in Collector of Customs, Madras and Ors. Vs. D. Bhoormul has held that with regard to these specified goods if seized under this Act in the reasonable belief that they are smuggled goods, the burden of proof that they are not such goods shall be on the person from whose possession, they are seized. The prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree?

3. We have heard Mr. Kaushik Dey, learned Senior Standing Counsel for the appellant assisted by Mr. Aishwarya Rajashree, learned Standing Counsel and Mr. Joydip Kar, learned Senior Advocate assisted by Mr. Shovendu Banerjee and Mr. Soumyajit Mishra, learned advocates for the respondents.

4. The DRI, Kolkata conducted search at two premises in Kolkata and during the search operation huge amount of cash of Indian currency of 50 to 2000, nine pieces of yellow metallic coins believed to be gold of foreign origin and a pouch of white colour metallic granules believed to be silver of foreign origin were found. A search list cum inventory was prepared by the DRI of the recovered Indian currency as