2022 (9) TMI 1226 - AT - Customs

Smuggling - 3 Kgs of smuggled Gold Bars - foreign origin goods or not - reliability of statements - whether the compliance of 138 B of the Customs Act, 1962 was mandatory and that as to whether the non-compliance thereof amounts to no evidence on record to disprove the allegations of show cause notice? - HELD THAT - Perusal of Section 138B of Customs Act makes it clear that it is mandatory on the adjudicating authority to examine the witnesses before itself prior relying upon the statement irrespective it has not been so asked by the party whose statement has been recorded or who is relying upon the said statement - These are the observations of this Tribunal in the case of M/S. ANIL GADODIA VERSUS C. C-NEW DELHI (PREV) 2020 (4) TMI 82 - CESTAT NEW DELHI . No doubt department has also relied upon a decision of Kerala High Court where denial of cross examination of witnesses was upheld. But perusal reveals that in that case the cross examination of departmental officers was denied on the ground that those are the officers who assessed, audited and examined the import consignment and on the ground that show cause notice has not relied upon any of those statements but has been issued on the basis of the documents. Hence the said decision do not appear to squarely cover the present case. There are no reason to differ from the decision in the case of M/s. Anil Gadodia. As the result thereof it is held that statement of Shri Ankit Bansal cannot be read into evidence. For the same reason the statements even of Shri Pankaj Tayal and Shri Vivek Aggarwal as relied upon by the learned Counsel for the appellant are held not to be admissible into evidence. From the Panchnama, it is clearly apparent that three gold bars were seized being packed in the paper having marking KOLHAPUR GOLD LAB by the Customs Preventive Officers from Shri Ankit Bansal having inscription RAND REFINERY LTD, SOUTH AFRICA . This perusal is sufficient to hold that no error has been committed by the department by reasonably believing the seized good to be the gold of foreign origin. Such an inscription has otherwise not been disputed by the appellant even at the stage of making final submissions - Mere production of delivery challan on the record at subsequent stage is highly insufficient to prove that the said delivery challan was in possession of Shri Ankit Bansal at the time he was intercepted with three gold bars. It was purely for the appellant to prove that the gold was not smuggled and that Shri Ankit Bansal was legitimately possessing the said gold which otherwise was not of foreign origin. The invoices, purchase register, stock register, delivery challan have failed to prove that the gold in question was lawfully purchased by the appellant that too of such a purity which was more than 995. The possibility of all these documents to be subsequently created cannot be ruled out. This inference gets support from the fact that the delivery challan as is mentioned to have been given to Shri Ankit Bansal was not found during his personal search, nothing cogent has been brought on record to prove that the said challan was with Shri Ankit Bansal at the time of search and the seizrue of the gold. In the light of above discussion, even if the statements of the witnesses are not looked into due to the non-compliance of Section 138 B of Customs Act, 1962 but the documents on record are held insufficient to prove the appellant s case. The onus of appellant to prove that the goods were not smuggled goods stands un-discharged. The allegations in the show cause notice are held to have rightly been accepted by the adjudicating authorities below. The confiscation of 3 gold bars is held to have rightly been confirmed - there are no infirmity with the order of imposition of penalty upon Shri Mukul Aggarwal. As far as Shri Ankit Bansal is concerned, he being the possessor of the gold was equally responsible, in terms of the provisions of Customs Act, to have all genuine documents proving the valid possession of the gold having foreign mark with him. There are no infirmity in the order imposing penalty even on Shri Ankit Bansal. Appeal dismissed.

Issues Involved:
1. Legitimacy of the seized gold bars.
2. Compliance with Section 138B of the Customs Act, 1962.
3. Burden of proof under Section 123 of the Customs Act, 1962.
4. Admissibility of statements and documentary evidence.
5. Imposition of penalties on the appellants.

Detailed Analysis:

1. Legitimacy of the Seized Gold Bars:
The Customs Preventive, New Delhi intercepted a person carrying three gold bars inscribed with "Rand Refinery Ltd, South Africa, 1000g GOLD 9950 FINENESS 2017." The person identified himself as an employee of M/s. Kalindi Traders, Mathura, and claimed the gold was legally purchased. However, the investigation revealed inconsistencies, including the absence of a delivery challan during the initial search, which was later produced. The Tribunal found the appellant's defense contradictory, particularly regarding the purity of the gold, which remained 995 even after alleged impurities were added. The Tribunal concluded that the seized gold was reasonably believed to be of foreign origin and smuggled.

2. Compliance with Section 138B of the Customs Act, 1962:
The Tribunal examined whether the compliance with Section 138B was mandatory and whether non-compliance amounted to no evidence. Section 138B requires the adjudicating authority to examine witnesses before relying on their statements. The Tribunal held that the statements of Shri Ankit Bansal and other witnesses were inadmissible due to non-compliance with Section 138B. This decision was supported by precedent cases, including M/s. Anil Gadodia vs. C.C, New Delhi (Prev.).

3. Burden of Proof under Section 123 of the Customs Act, 1962:
The Tribunal noted that under Section 123, once goods are seized under the reasonable belief of being smuggled, the burden shifts to the possessor or owner to prove otherwise. The appellant failed to provide sufficient evidence to discharge this burden. The Tribunal cited cases such as Indru Ramchand Vs. Union of India and Santosh Gupta Vs. Union of India to support its conclusion that the appellant did not prove the gold was legally acquired.

4. Admissibility of Statements and Documentary Evidence:
The Tribunal held that the statements of Shri Ankit Bansal, Shri Pankaj Tayal, and Shri Vivek Aggarwal were inadmissible due to non-compliance with Section 138B. The documentary evidence, including the Panchnama, jewelry appraiser's report, tax invoices, purchase register, and bank statements, was scrutinized. The Tribunal found discrepancies in the appellant's defense, particularly the delayed submission of the delivery challan and the implausibility of the gold's purity remaining 995 after adding impurities. The Tribunal concluded that the documentary evidence was insufficient to prove the gold was not smuggled.

5. Imposition of Penalties on the Appellants:
The Tribunal upheld the penalties imposed on Shri Mukul Aggarwal and Shri Ankit Bansal. It found that the appellant's conduct during the investigation and the absence of genuine documents to prove the legitimate possession of the gold justified the penalties. The Tribunal emphasized that Shri Ankit Bansal, as the possessor of the gold, was equally responsible for proving its valid possession.

Conclusion:
The Tribunal upheld the confiscation of the three gold bars and the imposition of penalties on the appellants. It dismissed both appeals, concluding that the appellants failed to prove the gold was legally acquired and not smuggled. The Tribunal's decision was based on the reasonable belief that the seized gold was of foreign origin, the non-compliance with Section 138B, and the insufficiency of the documentary evidence provided by the appellants.

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