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2021 (12) TMI 291 - AT - CustomsLevy of penalty u/s 112(b) of the Customs Act - Smuggling - Gold Bars - foreign origin goods or not - un-reliable and inadmissible evidence or not - case of town seizure - absolute confiscation - HELD THAT - The appellant is not at all involved in the smuggling in gold, and therefore, penalty against the appellant under Section 112(b) of the Customs Act, 1962 has been wrongly imposed by the learned Commissioner (Appeals) Customs, Lucknow. The learned Commissioner (Appeals) Customs, GST Central Excise, Lucknow, has also failed to appreciate that there is not a single piece of evidence to establish that the Gold was smuggled on the behest of the appellant, and the appellant is actively involved in the smuggling of aforesaid Gold bars. The order of the Adjudicating Authority as well as Commissioner (Appeals), is totally based on assumptions and presumptions and hence liable to be set aside. It is well settled principle of law that only on the basis of the statement of co-accused penal provision of under Section 112(b) of the Customs Act cannot be held sustainable in eyes of law. No evidence whatsoever has been brought on the record to prove that the appellant is somehow concerned with the said smuggled gold, in keeping, transporting or having possession of said smuggled gold. The Learned Commissioner (Appeals) Customs, Lucknow without considering the said facts imposed a heavy penalty against the appellant under Section 112(b) of the Customs Act, 1962. Penalty cannot be imposed against the appellant without any concrete evidence to prove indulgence of the appellant in smuggling of the gold - the provisions of Section 112(b) of the Customs Act are not applicable on the appellant, since the gold was neither found in the possession of the appellant nor was the appellant found to have been carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing of the alleged smuggled gold. It is an admitted fact that nothing incriminating was recovered from the appellant or from his business and residential premises. Following facts have been established in the case (i) Admittedly, it is a case of town seizure; (ii) In view of foreign markings on 11 out of 13 gold bars seized, the appellant M.K. Bajpai failed to discharge the onus under Section 123. (iii) The allegation of smuggling through Bangaladesh border is only presumption by Revenue, not established. (iv) Mr. Bajpai admittedly received delivery at Kolkata, which is not disputed. (v) Appellant Mr. Bajpai remained in jail for about 18 months (From 1 February 2018 to July 2019). The order in original was passed on 29.3.2019, thus Mr. Bajpai did not have proper opportunity to defend himself. (vi) Two of the gold bars (as per seizure list, and show cause notice paras 2 and 4) are of Indian Brand MMTC, total weight 1999.100 gms, valued at ₹ 61,37,237/-. (vii) Mr. Bajpai is a person of small means, and was only a carrier. (viii) The reliability of statement of Mr. Bajpai recorded during investigation is doubtful, as he has alleged coercion and duress. (ix) The complicity of Mr. G. Agarwal is not established. Only evidence brought on record is the evidence of frequent calls (as per CDR) between the appellants, and the statement of co-accused, which cannot form the sole basis of imposing penalty. (x) Mr. G. Agarwal has disowned the seized goods at the first instance, and also denied any connection of employer-employee or Principal Agent with Mr. M.K. Bajpai. (xi) Nothing incriminating was found from Mr. G. Agarwal in the follow up search at his residence and business premises. (xii) only Oppo Mobile phone was recovered by GRP at Mughalsarai Jn., Panchnama of Customs, showing recovery of two mobile phones (Oppo Samsung), raises doubt as to the genuineness of Samsung mobile phone. (xii) Although the CDR raises a strong suspicion, but in absence of details of conversation, no allegation is established against Mr. G. Agarwal. (xiv) No case of penalty under Section 112(b) is made out against Mr. G. Agarwal. (xv) Section 111(d) is not attracted on the facts herein. The absolute confiscation of 11 gold bars (excluding the two with MMTC markings), is upheld under Section 111(b) of the Act - Penalty under Section 112(b) on Mr. Girish Agarwal is set aside - penalty under Section 112(b) on Mr. M.K. Bajpai is reduced to ₹ 2,50,000/-, as he is only a carrier, and a person of small means - confiscation of two gold bars-MMTC marking/brand, weighing 1999.100 gms, valued at ₹ 61,37,237/- is set aside. Revenue is directed to return these two gold bars or the sale value (if disposed of) to Mr. M.K. Bajpai (from whose possession these were seized). Appeal allowed in part.
Issues Involved:
1. Confiscation of gold bars. 2. Penalty under Section 112(b) of the Customs Act. 3. Onus of proving licit possession under Section 123 of the Customs Act. 4. Reliability of statements and evidence. 5. Allegation of smuggling and involvement of the appellants. Detailed Analysis: 1. Confiscation of Gold Bars: The appellants were challenging the order confirming the absolute confiscation of 13 pieces of gold bars weighing 12,993.30 grams, valued at ?3,98,89,431/-. The Customs Officers seized the gold under Section 110 of the Customs Act, suspecting it to be smuggled from Bangladesh. The gold bars bore foreign markings, and two were marked MMTC. The Tribunal upheld the confiscation of 11 gold bars under Section 111(b) of the Act but set aside the confiscation of the two MMTC-marked gold bars, directing their return to Mr. M.K. Bajpai. 2. Penalty under Section 112(b) of the Customs Act: Penalties were imposed on Shri Mahendra Kumar Bajpai and Shri Girish Agrawal under Section 112(b) of the Act. The Tribunal found that the complicity of Mr. G. Agarwal was not established beyond the frequent calls and the statement of the co-accused, which alone could not justify the penalty. Consequently, the penalty on Mr. Girish Agrawal was set aside. For Mr. M.K. Bajpai, the penalty was reduced to ?2,50,000/- considering his role as a carrier and his small means. 3. Onus of Proving Licit Possession under Section 123 of the Customs Act: The Tribunal noted that under Section 123, the burden of proving that the seized gold was not smuggled lay on the appellants. Mr. Bajpai failed to produce any documents to prove the licit possession of the gold. The Tribunal upheld that Mr. Bajpai did not discharge this onus for the 11 foreign-marked gold bars. 4. Reliability of Statements and Evidence: The Tribunal questioned the reliability of Mr. Bajpai’s statement, noting allegations of coercion and duress. Furthermore, discrepancies in the recovery of mobile phones (Oppo and Samsung) raised doubts about the evidence's genuineness. The Tribunal found that the call detail records (CDRs) alone, without details of conversations, were insufficient to establish Mr. G. Agarwal’s involvement. 5. Allegation of Smuggling and Involvement of the Appellants: The Tribunal observed that the Revenue's allegation of smuggling through the Bangladesh border was based on presumption and not established. The Tribunal also noted that Mr. Bajpai admitted to receiving the gold in Kolkata, which was not disputed. However, no incriminating evidence was found against Mr. G. Agarwal during searches, and he disowned any connection with Mr. Bajpai. The Tribunal concluded that the evidence provided did not substantiate the smuggling charges against Mr. G. Agarwal. Conclusion: The Tribunal modified the impugned order, upholding the confiscation of 11 foreign-marked gold bars, setting aside the penalty on Mr. Girish Agrawal, reducing the penalty on Mr. M.K. Bajpai, and directing the return of two MMTC-marked gold bars to Mr. Bajpai. The appeals were allowed in these terms.
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