The burden of proof under Section 123 of the Customs Act rests on the possessor to demonstrate that seized goods were not smuggled, which the appellant failed to do.

JUDGMENT :

G. JAYACHANDRAN, J. 

1. The above Civil Miscellaneous Appeal is directed against the Final Order dated 31.12.2018 passed by the CESTAT, South Zone, Chennai in Appeal No.C/383/2012-SM.

2. One Kilo of gold bar with foreign marking was seized from one Rajan staying in Room No.2, SS Lodge, Karur on 09.08.2010 by the officials of the Customs Department. Harbouring the view that the seized gold was illegally smuggled into India, show cause notice was issued for confiscation proceedings. The explanation, which says that the gold bar was purchased from one S. Balamurgan of M/s Palanimurgan Jewellery, Karur on credit basis and the said Balamurgan purchased the gold bar from M/s Surana Corportion of Chennai under proper documentation and payment was made through Banking channel was cross verified and found that the description found on the gold bar seized from Rajan does not tally with the description or origin of the gold bars supplied to M/s Surana Corporation by the importer M/s MMTC. Hence, the Additional Commissioner of Customs concluded that the gold bar seized were to be confiscated with penalty of Rs 1.50 lakhs. The statutory Appeal under Section 128 of the Customs Act before the Commissioner of Customs (Appeal) came to be disposed on 23.08.2012 confirming the order of confiscation and the imposition of penalty. However gave liberty to redeem the confiscated gold on payment of Rs.5,00,000/- (Rupees five lakhs only) as fine in lieu of confiscated.

3. The appellant after paying the fine of Rs.5,00,000/- (Rupees five lakhs only) in lieu of confiscation along with customs duty of Rs.2,57,960/- and the penalty of Rs.1,50,000/- preferred further appeal before CESTAT. After considering the facts, the appeal was disposed confirming the order of the Commissioner of Customs (Appeals) with modification of the penalty of Rs. 1,50,000/- reduced to Rs.50,000/-.

4. The operative portion of the Final Order which is impugned in this appeal reads as below:-

“6. From the discussions, conclusions herein above, we therefore hold that imposition of penalty under Section 112 of the Customs Act, 1962 on the appellant is very much justified. However, taking into account that the role of hte appellant vis-a-vis the role of the other persons implicated in the case, we hold that there is a case for reduction of personal penalty and the interests of justice would be adequately met by reducing the penalty imposed under Section 112 ibid from Rs.1,50,000/- imposed to Rs.50,000/- (Rupees Fifty thousand only). So ordered. We make it clear that other than modification of penalty as ordered above, no further interference is made with the impugned order. Appeal is partly allowed on above terms.”

5. The appellant contending that, the gold bar was not seized within the customs zone. There is no iota of evidence to suggest or hold that there had been an activity of actual smuggling of the gold bar to invoke Section 123 of the Customs Act. The appellant by statements and documents established was able to show by preponderance of probability that the gold bar seized was acquired legally in the normal course of trade. Having discharged the burden, Section 123 of the Customs Act ought not to have been invoked.

6. The following question of law raised by the appellant in support of his grounds of appeal:

“1. Is the Tribunal correct in confirming the order of hte authorities below holding that the appellant had not discharged the burden cast on him in terms of Section 123 of the Customs Act, in relation to the gold bar under seizure?

2. Has the Tribunal fallen in error in holding that the burden under Section 123 has not been discharged especially when there is no material much less direct material to show that the gold under seizure was smuggled and taken from grey area / unknown sources?

3. Is the Tribunal correct in disbelieving the versions of the appellant regarding licit purchase of the gold bar under seizure from market especially when there are contemporaneous bills/