Licit Possession Of Confisticated Gold Bars Received By Way Of Succession: CESTAT Set Aside Penalty

The two-member bench of Anil Choudhary (Judicial Member) and Raju (Technical Member) has observed that the appellant has reasonably explained the licit possession of the two gold bars, as received by way of succession under the will of his father. But still, the source of licit acquisition by the father of the appellant is not on record, nor is the same mentioned in the will dated 15.02.1999.

During the course of the search in the case of M/s Bright Traders, the follow-up action search was conducted at the residential premises of the appellant, Anand Aggarwal. During the search, two yellow gold bars totaling 2 kg and Indian currency amounting to Rs. 11.31 lakhs were recovered.

Summons were issued to the appellant to appear before the summoning authority. The appellant did not present himself before the summoning authorities. The appellant informed the court that he was busy with family and social matters and, hence, was unable to present himself before the summoning authority and requested an adjournment of the hearing for the next date. Accordingly, the appellant was issued a summons again to appear.

The appellant in his statement dated May 5, 2017 revealed that both the gold bars were gifted by his in-laws, Arvind Jalan and Chandi Prasad Jalan, to his daughter and wife. Therefore, the summons were issued, but neither of them appeared before the summoning authority. The appellant did not submit any documents evidencing the source of two gold bars of foreign origin found in the appellant's possession.

The appellant has changed his stand. He initially stated that the gold bars belonged to his wife and daughter, who had received the same as a gift, but did not produce the documents in support. The appellant at the adjudication stage has come up with another version that he has received the two gold bars from his late father as per the will.

The Additional Commissioner observed that the appellant did not submit the copy of the will at the time of investigation and had subsequently produced a copy of an unregistered will during the adjudication proceedings. The unregistered will was submitted almost nine months from the date of search and recovery. Thus, the genuineness of the will was doubted. It was held that the appellant had failed to discharge the onus under Section 123 of the Customs Act and, accordingly, confiscation of the two gold bars was ordered by the adjudication order under Section 111 (d) and (l). A penalty of Rs. 5 lakh was imposed under Section 112(a) of the Customs Act, and a penalty of Rs. 1 lakh was imposed under Section 114AA.

The appellant preferred to appeal before the Commissioner (Appeals) against the order of the Additional Commissioner. The appellant mentioned that his father had executed a will during his lifetime with regard to immovable and movable properties. By the same will, he had bequeathed his valuables lying in the house, locker, or anywhere else to his younger son, Sandeep, who is the brother of the appellant. The deceased has bequeathed his movable assets, fixtures, furniture, shares, cash, fixed deposits, as well as a residential flat to his wife, Sushila, mother of the appellant. By the same will, he has bequeathed the two gold bars, HERAEUS 9950, to the appellant. Thus, the court below has erred in rejecting the will and/or disbelieving the will.

The department contended that as the seized gold bars have foreign markings, it is on the appellant under Section 123 (i) & (ii) of the Customs Act to explain the licit source of possession of gold. As the appellant has repeatedly changed the stand regarding the source of acquisition, the Court below rightly disbelieved the receipt of the two gold bars under will by the appellant.

The CESTAT noted that there was no record of the appellant having entered into India from any foreign country during the recent past, nor any allegation that he was actively involved in smuggling of gold.

The tribunal determined that during the course of the investigation, the appellant stated that the gold bars were given to him by his late father, as stated in para 17(ii) of the show cause notice.The appellant produced a copy of the will at the time of adjudication proceedings.

The CESTAT observed that documentary evidence is supported by oral evidence, has more weight and legality, and overrides the oral statement with regard to the source of the gold bars, as stated initially.

The CESTAT upheld the confiscation order under Section 111(m), with the option to redeem upon payment of duty and a Rs.1,000,000 redemption fine.

Under Section 111(l), the tribunal barred confiscation. The CESTAT has reduced the Section 112(a) penalty to Rs. 50,000.

Case Title: Anand Aggarwal Versus Commissioner of Customs (Prev.)

Citation: Customs Appeal No. 52607 of 2019

Dated: 16.06.2022

Counsel For Appellant: Advocate Rajesh Rawal

Counsel For Respondent: Authorised Representative Rakesh Kumar

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