2022 (3) TMI 367 - AT - Customs

Smuggling - Gold Bars - Gold Biscuits - allegations in the SCN are only based on the statement - reliable statements or not - foreign origin of the seized gold proved or not - burden to prove - confiscation - penalty - HELD THAT - It is found that other than the incriminating statement of Mr. Sanjay Soni there is no other worthwhile evidence against these appellants. These appellants and Mr. Vishwanath Soni have given cogent explanation they being related and known to each other and being in the same line of business had been talking regarding rates etc. with each other. Thus the call details records relied upon by the Revenue does not support the allegations of Revenue in absence of transcription of the conversation between these persons. So far the WhatsApp message is concerned which is retrieved from the phone of Mr. Sanjay Soni alleged to have been received from Mr. Ashok Soni the same is not reliable for non-compliance of the provisions of Section 138C of the Customs Act. Further the message is also vague and incomplete. Penalty u/s 112 of Customs Act - HELD THAT - It is found that these appellants have not violated any of the provisions of the Customs Act including Section 111 and thus I hold that penalty under Section 112 of the Act is not attracted. Penalty cannot be imposed only on the basis of heresay evidence or the incriminating statement of one of the co-accused in absence of other corroborative evidence as has been held by Hon ble Supreme Court in the case of VINOD SOLANKI VERSUS UNION OF INDIA ANR. 2008 (12) TMI 31 - SUPREME COURT - penalty imposed on all the three appellants are set aside. Admittedly it is a case of town seizure. Out of the 5 gold bars and 1 cut piece seized from Mr. Sanjay Soni there is foreign marking rand refinery only on one gold bar. There is no such foreign marking admittedly on the other pieces recovered and seized. Thus in absence of any evidence brought on record as to the allegation of smuggling the provisions of Section 123 of the Act are not attracted in the case of other 4 pieces and the cut piece of the gold bar seized - Section 123 is attracted only in the case of one gold bar having foreign marking as the person- Mr. Sanjay Soni from whom the foreign marked gold was recovered have not been able to explain the licit source and have also stated that this gold may have arisen by way of smuggling into India through Bangladesh. Accordingly modifying the order of Commissioner (Appeals) the absolute confiscation is upheld with respect to one piece of gold having the marking rand refinery weighing 998.600 gram valued at Rs. 31, 95, 520/- as per the valuation report. Four pieces of gold bars having no foreign marking weighing 998.700 grams (3 bars) and 1 bar weighing 998.600 grams and the cut piece weighing 200.900 gms - Penalty u/s 112(b) of Customs Act - HELD THAT - These are not liable to confiscation as admittedly it is the case of town seizure. It is further held that the provisions of Section 123 of the Customs Act are not attracted. Accordingly the order of confiscation is set aside with respect to these four gold bars and the cut piece and further order that the same is to be released to the person from whom they were recovered Mr. Sanjay Soni. The penalty imposed under Section 112(b) is reduced to Rs. 5, 00, 000/-. Revenue has not been able to substantiate the charge of smuggling save and accept the statement under Section 108 recorded from Mr. Sanjay Soni. Such statement also loses its evidentiary value as Revenue has failed to examine Mr. Sanjay Sony in the course of adjudication proceedings - appeal disposed off.

Summary

Issues Involved:
1. Confiscation of seized gold.
2. Imposition of penalties under Section 112 of the Customs Act.
3. Admissibility and reliability of evidence, including statements and electronic evidence.
4. Jurisdiction of the Additional Director of DRI to issue show-cause notices.

Detailed Analysis:

1. Confiscation of Seized Gold:
The case involves the seizure of gold bars from an individual, Mr. Sanjay Soni, who was intercepted by DRI officers while traveling by train. The gold bars were suspected to be smuggled into India from Bangladesh. The adjudicating authority initially ordered the absolute confiscation of the gold under Section 111(b) & (d) of the Customs Act. However, the Commissioner (Appeals) modified this order, allowing the release of the gold on payment of redemption fine and duty. The Tribunal further modified this order, upholding the absolute confiscation of one gold bar with foreign marking ('rand refinery') and releasing the other four gold bars and one cut piece, as they lacked foreign markings and it was a case of town seizure.

2. Imposition of Penalties under Section 112 of the Customs Act:
Penalties were imposed on Mr. Sanjay Soni and other co-noticees (Mr. Ashok Soni, Mr. Abhishek Soni, Mr. Vishwanath Soni, and Mr. Sandeep Gupta) under Section 112 of the Customs Act. The Tribunal found that the penalties on Mr. Ashok Soni, Mr. Abhishek Soni, and Mr. Sandeep Gupta were not justified as there was no corroborative evidence against them apart from the statement of Mr. Sanjay Soni. The Tribunal set aside the penalties on these individuals. However, the penalty on Mr. Sanjay Soni was reduced to Rs. 5,00,000, considering the lack of substantial evidence of smuggling for the gold bars without foreign markings.

3. Admissibility and Reliability of Evidence:
The Tribunal scrutinized the admissibility and reliability of evidence, including the statement of Mr. Sanjay Soni and WhatsApp messages retrieved from his phone. The Tribunal noted that the statement of a co-accused alone, without corroborative evidence, is insufficient to impose penalties. The WhatsApp messages were deemed unreliable due to non-compliance with Section 138C of the Customs Act, which prescribes conditions for admitting electronic evidence.

4. Jurisdiction of the Additional Director of DRI to Issue Show-Cause Notices:
The appellants challenged the jurisdiction of the Additional Director of DRI to issue show-cause notices. They cited a ruling from the Calcutta High Court that held the Additional Director of DRI is not entitled to invoke Section 124 of the Customs Act. The Tribunal did not explicitly address this jurisdictional issue in its final judgment but focused on the lack of substantial evidence and procedural lapses in the investigation and adjudication process.

Conclusion:
The Tribunal allowed the appeals of Mr. Ashok Soni, Mr. Abhishek Soni, and Mr. Sandeep Gupta, setting aside the penalties imposed on them. The appeal of Revenue against Mr. Sanjay Soni was partly allowed, with the Tribunal upholding the absolute confiscation of one gold bar with foreign marking and ordering the release of the other gold bars and cut piece. The penalty on Mr. Sanjay Soni was reduced, and the Tribunal emphasized the need for corroborative evidence and adherence to procedural requirements for electronic evidence.