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2025 Supreme(Online)(Mad) 23225
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.Suresh Kumar, C.Saravanan, JJ
THE COMMISSIONER OF CUSTOMS – Appellant
Versus
SHRI MOHAMMED ALI JINNAH – Respondent
C.M.A.No.2685 of 2023 and C.M.P.No.24899 of 2023
Mr.Sai Srujan Tayi Senior Standing Counsel, Mr.B.Kumar Senior Counsel for Mr.T.Sudhanraj
The burden of proof under Section 123 of the Customs Act lies with the person from whose possession goods are seized, and failure to establish the source of income for the gold bars led to their confiscation.
Headnote:(A) Customs Act, 1962 - Sections 111(a), 111(d), 111(i), 112, and 123 - Appeal against confiscation of gold bars - The Appellant challenged the dismissal of their appeal by CESTAT regarding the confiscation of gold bars valued at Rs.91,98,090/- and penalties imposed on the Respondent - The Appellate Commissioner found the investigation incomplete and insufficient to prove smuggling. (Paras 6, 7, 26, 102)
(B) Burden of Proof - Under Section 123, the burden of proof lies on the person from whose possession goods are seized to prove they are not smuggled - The Respondent failed to establish the source of income for the gold bars. (Paras 71, 79)
(C) Investigation Standards - The court noted deficiencies in the investigation by the Directorate of Revenue Intelligence, which failed to trace key individuals involved in the smuggling operation. (Paras 84, 97)
Facts of the case:
The Respondent was intercepted while carrying two crude gold bars suspected to be smuggled from Sri Lanka. The gold was seized, and penalties were imposed based on the belief of smuggling. The Respondent later retracted his confession, claiming the gold was acquired legally.
Findings of Court:
The court found that the Respondent did not satisfactorily discharge the burden of proof regarding the source of the gold and upheld the confiscation while reducing the penalty to Rs.1,00,000/-.
Issues: The main issues included whether the gold bars were of foreign origin, the legality of the confiscation, and the adequacy of the investigation.
Ratio Decidendi: The court ruled that the Respondent failed to prove the gold was not smuggled, emphasizing the burden of proof under Section 123 and the inadequacies in the investigation.
Result: Appeal allowed; penalty modified.
JUDGMENT
(Judgment of the Court was delivered by C.SARAVANAN, J.
This Civil Miscellaneous Appeal has been filed by the Appellant, the Commissioner of Customs, Chennai II Commissionerate, Chennai against the Final Order No.40289 of 2023 dated 20.04.2023 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai in Customs Appeal No.40099 of 2020 under Section 130 of the Customs Act, 1962 (hereinafter referred to as the 'Impugned Order').
2. By the Impugned Order, the aforesaid appeal filed by the Appellant/Customs Department before CESTAT, Chennai against the Order-in-Appeal bearing reference Seaport C.Cus.II No.550 of 2019 dated 14.11.2019 has been dismissed. By the Order-in-Appeal Seaport C.Cus.II No.550 of 2019 dated 14.11.2019, the Appellate Commissioner allowed the appeal filed by the Respondent against Order-in-Original No.65168 of 2018 dated 10.09.2018 passed by the Additional Commissioner of Customs, (Chennai-III) Commissionerate, Chennai.
3. The Respondent had earlier suffered an adverse order in Order- in-Original No.65168 of 2018 dated 10.09.2018 from the File No.OS.No.08/2017-PAU/DRI/CZU/VIII/48/ENQ-1/INT-01/2017 in the hands of the Additional Commissioner of Customs, (Chennai-III) Commissionerate, Chennai.
4. By the aforesaid Order-in-Original No.65168 of 2018 dated 10.09.2018, the Additional Commissioner of Customs, (Chennai-III) Commissionerate, had passed the following Order:-
i. I confiscate the seized 3.097 kg of foreign origin gold bars, totally valued at Rs.91,98,090/- under Section 111 (a), 111(d) and 111(i) of the Customs Act, 1962 .
ii. I confiscate the packing materials with no commercial value used for concealing the smuggled gold bars under Section 119 of the Customs Act, 1962 .
iii.I impose penalty of Rs.5,00,000/- (Rupees Five Lakhs Only) on Shri Mohammed Ali Jinnah under Section 112 of the Customs Act, 1962 .
iv. I impose a penalty of Rs.10,00,000/- (Rupees Ten Lakhs Only) on Shri Murugan under Section 112 of the Customs Act, 1962 .
v. I impose a penalty of Rs.10,00,000/- (Rupees Ten Lakhs Only) on Shri Batcha @ Pitchai under Section 112 of the Customs Act, 1962 .
5. The Additional Commissioner of Customs, Chennai-III Commissionerate has also imposed a personal penalty on the Respondent for sum of Rs.5,00,000/- and Rs.10,00,000/- each on the said Murugan and Batcha alias Pitchai under Section 112 of the Customs Act, 1962 .
6. The above decision was reversed by the Appellate Commissioner vide Order-in-Appeal Seaport C.Cus.II No.550 of 2019 dated 14.11.2019 after framing the following issues:-
(a)Whether the Gold bars are of foreign origin?
(b)Whether they are of standard size?
(c)Whether the case was proved by DRI with cogent evidences?
(d)Whether the smuggling was corroborated with evidences?
(e)Whether the confiscation was legal?
(f) Whether penalty is liable to be imposed?
7. The Appellate Commissioner concluded that the investigation was incomplete so as to conclude that the seized crude gold bars were smuggled or whether the crude gold bars are of standard size of foreign origin with foreign marking and therefore no penalty can be imposed.
8. On a specific intelligence that a person, who was said to be travelling from Devakottai and was carrying 2 smuggled crude gold bars of foreign origin/foreign marked weighing 1720 grams and 1377 grams in a black colour backpack, the Directorate of Revenue Intelligence (DRI) intercepted the Respondent when the Respondent reached the Pallavaram Bus Stand. The Respondent was arrested on 23.01.2017 and was later released on a personal bond.
9. On the date of arrest of the Respondent i.e., on 23.01.2017, a mahazar was drawn and the two crude gold bars were seized from the Respondent. At the time of arrest and during the interrogation, the Respondent had initially denied possessing the smuggled gold bars of foreign origin with foreign mark in person or in his luggage.
10. However, on a persistent enquiry by the officers of the Directorate of Revenue Inte
