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2021 (9) TMI 75 - AT - CustomsSmuggling - Gold of Foreign Origin - illicit import into India - contradictions in statements of Jeweller, Sri Prabhash Chandra Jalan proprietor of M/s Jalan Jewellers - jeweller id Bullion Merchant or not - mismatch in Gold Ledger - mismatch of invoices for sale of bullion - huge amount of ₹ 78,00,000/- was recovered from the rented premises of M/s JalanJewellers - Indian Currency. Contradictions in statements of Jeweller, Sri Prabhash Chandra Jalan proprietor of M/s Jalan Jewellers - jeweller id Bullion Merchant or not - HELD THAT - There is no mention of the statement dated 07/08/2018 of the respondent Sri Prabhash Kumar Jalan in the list of Relied Upon Documents enclosed with the Show Cause Notice and that the respondent in his reply to the Show Cause Notice requested for providing the RUDs. It is also found that the name of Respondent has been wrongly mentioned as Prabhash Chandra Jalan. However no copy of the said statement or any other statement of the Respondent has been produced during the hearing by the Revenue. However there is mention of two statements of Sri Prabhash Chandra Jalan in Para 16/E and Para 22/C of the Show Cause notice. It is apparent that the name of the Respondent has been wrongly mentioned in all these places - there is nothing contrary to the statement of the Respondent. Mismatch in Gold Ledger - Gold is clearly not mentioned in their stock register - burden of proof that the same is not smuggled is on the person from whose possession the gold is seized, is not discharged - HELD THAT - In the instant case it is found that the documents i.e Purchase Register, Sales Register, Balance Sheet, Bank Account details etc submitted by the respondent during investigation which were examined/scrutinized by the department and it was revealed as mentioned in Para 18 and 30 of the Show Cause Notice and the Order In Original, respectively, that all purchases and sales were under proper tax invoices - Considering the fact that the respondent submitted all documents which were asked for by the department during investigation and no discrepancy being found on examination of them, we feel inclined to hold that the gold bars were domestically purchased under legal documents and the respondent has discharged the burden U/s 123 of the Customs Act 1962 to prove that the gold bars were not smuggled. Mismatch of invoices for sale of bullion - modus operandi followed goes against the principle of business practice - seized cash, sale proceeds of the smuggled gold and liable to confiscation or not - HELD THAT - It is an admitted position that the respondent submitted all the documents as and when asked for by the Department. It is also an admitted position that those documents were examined and scrutinized by the department, which revealed that the purchases and sales were under proper tax invoices. It therefore leads us to believe that the Gold bars were not smuggled into the country. It is not established that there were sales of smuggled Gold. The identity of seller and purchaser is also not established by evidence. The respondent has duly accounted for the claimed amount of cash of ₹ 3,31,50,000 by submitting documents including GST Sales Invoices of gold which were examined and scrutinized during investigation and found to be under proper tax invoices reflected in the Cash book showing a closing balance of ₹ 3,35,76,215.85 as on 04/06/2018 - no violation of Section 121 of the Customs Act 1962 has been laid out. Huge amount of ₹ 78,00,000/- was recovered from the rented premises of M/s JalanJewellers - on-going illegal business transaction between Sri PrabhasJalan and Sri Dhuriya of Allahabad - HELD THAT - The department has failed to prove in the first place that there were valid grounds for presumption at the time of seizure that the seized 6000 gms gold was of foreign origin and smuggled into India. Evidently the seized 6kgs of gold did not bear any foreign markings. No evidence could be adduced by the department in its subsequent investigation that the seized gold was of foreign origin and smuggled into the country. But the respondent Sri Prabhash Kumar Jalan has submitted all relevant documents including GST purchase and sales invoices and GST returns, Purchase and Sales registers etc covering both the Gold and Indian Currency, which have been admittedly examined by the department revealing no discrepancies as in Para 18 of the SCN, corresponding to Para 30 of the OIO. There were no grounds for reasonable belief at the time of seizure that the gold bars were of foreign origin and smuggled. Subsequent investigation has also not established that the gold bars were smuggled and therefore the provisions of Sec 123 of the Customs Act is not invocable - the respondent has submitted all relevant documents in support of his domestic licit acquisition supported by GST Purchase Invoices. Indian Currency - HELD THAT - It is found that the ingredients to invoke Sec 121 of the Customs Act is not established to prove that the Indian Currency is the sale proceeds of smuggled goods. The findings of the Commissioner (Appeals) that the confiscated gold was not of Foreign origin and smuggled into India, is agreed upon - the findings of the Commissioner (Appeals) that the confiscated Indian Currency amounting to ₹ 3,31,50,000 which has been claimed by the respondent is not established or proved to be the sale proceeds of smuggled Gold, is also agreed upon, is agreed upon - there is no justification for imposition of penalty on the Respondent u/s 112(b) and 114AA of the Customs Act 1962. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Presumption under Section 123 of the Customs Act, 1962. 2. Timing and validity of the claim petition for seized gold and currency. 3. Discrepancies in the gold ledger and stock register. 4. Legitimacy of the seized cash as sale proceeds of smuggled gold. Issue-wise Detailed Analysis: 1. Presumption under Section 123 of the Customs Act, 1962: The Revenue contended that the seized gold was presumed to be smuggled under Section 123 of the Customs Act, 1962, which places the burden of proof on the respondent. However, the respondent provided comprehensive documentation, including GST returns, stock ledgers, and purchase and sales registers, to substantiate the legal acquisition of the gold. The Tribunal found that the respondent had adequately discharged the burden of proof, demonstrating that the gold was domestically purchased and not smuggled. 2. Timing and Validity of the Claim Petition: The Revenue argued that the claim petition for the seized gold and currency was filed two months after the seizure. The respondent submitted that the claim petition and supporting documents were received by Customs shortly after the seizure, which was acknowledged by the department. The Tribunal found that the submission of documents was timely and adequately supported the respondent’s claim. 3. Discrepancies in the Gold Ledger and Stock Register: The Revenue claimed discrepancies in the gold ledger, noting that the closing balance was recorded as pure silver instead of pure gold. The respondent clarified that the ledger showed a small quantity of silver mixed with gold, which was a standard business practice. The Tribunal verified the records and found no evidence to support the Revenue's claim of discrepancies, concluding that the gold was properly documented in the stock register. 4. Legitimacy of the Seized Cash as Sale Proceeds of Smuggled Gold: The Revenue alleged that the seized cash was the sale proceeds of smuggled gold. The respondent provided detailed financial records, including sales invoices and cash books, which were scrutinized by the department and found to be in order. The Tribunal noted that the closing cash balance exceeded the seized amount, and there was no evidence to suggest that the cash was derived from smuggled gold. The Tribunal cited precedents requiring the establishment of a sale of smuggled goods, knowledge of their smuggled nature, and identification of the seller and purchaser, which the Revenue failed to prove. Conclusion: The Tribunal upheld the Commissioner (Appeals)'s decision, finding no justification for the absolute confiscation of the gold and Indian currency. The Tribunal directed the release of the seized gold and currency to the respondent, dismissing the Revenue's appeal. The Tribunal emphasized that the department failed to prove the smuggled nature of the gold and the illicit origin of the currency, and the respondent had provided sufficient documentation to support the legality of the goods and currency.
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