2023 (5) TMI 940 - AT - Customs

Smuggling - seizure of gold bars/pieces weighing 3999.590 gms - smuggled into India from Bangladesh without any legal documents - benefit of presumption under section 123 of Customs Act 1962 - Burden to prove - reliability of retracted statements of the co-accused to establish the guilt of the Appellants when the procedure prescribed under section 138B of the Customs Act was not followed - penalty u/s 112(a) and(b) and 114 AA of the Customs Act 1962. Whether evidences available on record prove that the gold bars/pieces were smuggled into India from Bangladesh without any legal documents? - HELD THAT - The Appellant stated that the gold pieces/bars were seized on the reasonable belief that they were smuggled into India from Bangladesh. The Adjudicating authority has relied upon the decision of the Hon ble Supreme Court in the case of GOPALDAS UDHAVDAS AHUJA AND ANOTHER VERSUS UNION OF INDIA AND OTHERS 2004 (7) TMI 10 - SUPREME COURT for effecting the seizure on the ground of reasonable belief . However the said case is distinguishable on the ground firstly that the subjected case was during the breathing period of Gold Control Act wherein possession of primary gold even unmarked had a thrust of burden upon the Assessee. When the Gold Control Act was repealed without a saving clause the said decision under the Gold Control Act has no relevancy under the Customs Act Currently under the Customs Law the burden has been thrust upon the Department and the presumption under Section 123 of the Customs Act has no application in the present case as the gold seized is of Indian origin - the Appellants stated that to form a reasonable belief that the goods are smuggled from Bangladesh there must be irrefutable evidence to prove that allegation. In the present case there is no such evidence available to prove that the goods were of foreign origin and smuggled into India from Bangladesh. The reasonable belief on which the DRI officers presumed that the gold bars/pieces were of smuggled nature is not supported by any corroborative evidence. There is no document available on record to establish that gold bars/pieces were smuggled into India from Bangladesh. The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of assumptions and presumptions without any concrete evidence to substantiate this claim. Hence the material evidence available on record does not establish that the gold bars/pieces were smuggled into India without any valid documents. Accordingly answer to this question is negative. Under the facts and circumstances of this case whether the benefit of presumption under section 123 of Customs Act 1962 goes in favour of Revenue? - HELD THAT - It is observed from the Test report that the gold bars/pieces were of purity 99.5 99.6 and 99.8 only. Normally foreign origin/foreign marked gold will be of purity 99.99. There is no foreign mark available on the gold seized. They were seized from Shri Rajesh Kumar Yadav and Shri Umanath at the Gaya railway station. The Appellants claimed that the gold bars/pieces were purchased domestically from M/s Chandan Enterprises Delhi under Invoices 3 and 5 dated 01/01/20 and 03/01/20. The Appellants stated that the the gold bars/pieces in question were sent to Kolkata to the goldsmiths for making of jewellery. The investigation ignored their claim and charged that the Appellants failed to give name addresses contact number of the persons/goldsmiths to whom the said goods were sent for exchanging the same into gold jewellery. The Appellants claimed that the gold bars/pieces were purchased from M/s Chandan Enterprises. Delhi. The investigation has not verified the documents submitted by them in support their claim of domestic purchase of the gold bars/pieces. They brushed aside the evidences submitted by the Appellants by citing some mismatch in the dates. One of the reasons cited for ignoring the invoice was that the invoices were not carried along with them by the persons who carried the gold. Not having the invoices at the time of seizure cannot be areason to ignore their claim. The documents produced could have been verified to find out the veracity of their claim. On the contrary the investigation could not provide any evidence to establish the smuggled nature of the gold - In the absence of any such evidence the burden of proving that the gold bars/pieces were not smuggled one cannot be thrust upon the Appellants. The burden under Section 123 of Customs Act to prove that the gold is not smuggled one does not lie on the Appellants in this case. Accordingly answer to the question is negative. Whether the retracted statements of the co-accused can be relied upon to establish the guilt of the Appellants when the procedure prescribed under section 138B of the Customs Act was not followed? - HELD THAT - The Impugned Order mainly relied upon the statements of the Noticees 1 to 5 to establish the foreign origin nature of the gold. Other than the statements there is no other evidence available on record to show that the gold were smuggled into the country from Bangladesh. It is incorrect to rely only on the statements of the co-accused without any corroboration to prove the smuggled nature of the gold. It is a settled law that the statement of the coaccused cannot be relied without any independent corroboration. The Tribunal in the cases of PR. COMMISSIONER OF CUSTOMS (PREV.) DELHI VERSUS SH. AHAMED MUJJABA KHALEEFA 2018 (5) TMI 1681 - CESTAT NEW DELHI dismissed the appeal of Revenue holding that jewellery not bearing any foreign marking other than statement of passenger no other proof produced by Revenue to substantiate the claim that jewellery were smuggled into India - the gold bars/pieces cannot be confiscated based on the retracted statements alone. Accordingly answer is negative. Whether penalties imposed on the Appellants under section 112(a) and(b) and 114 AA of the Customs Act 1962 are sustainable in this case? - HELD THAT - Under section 112 (a) and (b) penalty is imposable when the person is found to be dealing with goods for which prohibition is in force or the goods are liable for confiscation. The gold bars/pieces dealt by the Appellants were established to be of Indian origin and hence not prohibited goods. The gold bars/pieces were seized at Gaya railway station fromShri Rajesh Kumar Yadav and Shri. Umanathwho were carrying the gold and are employees of Manoj Kumar Seth and Balwant Raj Soni. They were carrying the gold which were domestically purchased and hence there is no offence established against them.Manoj Kumar Seth and Balwant Raj Somi are the partners of the jewellery shop Gandhi and Sons and they claimed the ownership of the seized gold vide their letter dated 21/01/20 - The investigation has not brought in any evidence to counter this claim. Hence there are merit in the argument of the Appellants that penalty is not imposable on them under section 112(a)and(b) of Customs Act 1962. Under section 114 AA of Customs Act 1962 penalty is imposable when a person makes false or incorrect statement or declaration. The investigation has not brought in any evidence to establish that Manoj Kumar Seth has intentionally made false statement or declaration warranting penalty under section 114AA of Customs Act 1962. Hence penalties under sections 112(a) and (b) and 114 AA of the Customs Act 1962 are not imposable in this case. Accordingly answer is negative. Appeal allowed.

Summary

Issues Involved:
1. Whether the gold bars/pieces were smuggled into India from Bangladesh without any legal documents.
2. Whether the burden of proving that the gold was not smuggled rests with the Appellants under Section 123 of the Customs Act, 1962.
3. Whether the retracted statements of the co-accused can be relied upon to establish the guilt of the Appellants.
4. Whether penalties imposed on the Appellants under Section 112(a) and (b) and 114AA of the Customs Act, 1962 are sustainable.

Summary:

Issue 1: Whether the gold bars/pieces were smuggled into India from Bangladesh without any legal documents.

The Appellants argued that the gold bars were seized on the reasonable belief that they were smuggled into India from Bangladesh. The Adjudicating authority relied on the Supreme Court decision in Gopal Das Uddhav Das Ahuja v. UOI. However, the Tribunal found that the presumption under Section 123 of the Customs Act has no application in this case, as the gold seized is of Indian origin. The Tribunal concluded that there was no irrefutable evidence to prove that the gold was smuggled from Bangladesh. Therefore, the answer to this issue is negative.

Issue 2: Whether the burden of proving that the gold was not smuggled rests with the Appellants under Section 123 of the Customs Act, 1962.

The Appellants claimed that the gold was purchased domestically from M/s Chandan Enterprises, Delhi, and provided invoices to support their claim. The Tribunal observed that the investigation did not verify the documents submitted by the Appellants and failed to provide any evidence to establish the smuggled nature of the gold. Consequently, the burden of proving that the gold was not smuggled cannot be thrust upon the Appellants. The answer to this issue is negative.

Issue 3: Whether the retracted statements of the co-accused can be relied upon to establish the guilt of the Appellants.

The Tribunal noted that the findings in the impugned order were based mainly on the statements of the co-accused, without any independent, corroborative evidence. The Tribunal cited several decisions, including Mohtesham Mohd. Ismail Vs. Special Director, Enforcement Directorate and Prakash Kumar Vs. State of Gujarat, to support the argument that the statement of a co-accused cannot be relied upon without corroboration. The Tribunal concluded that the gold bars/pieces cannot be confiscated based on the retracted statements alone. The answer to this issue is negative.

Issue 4: Whether penalties imposed on the Appellants under Section 112(a) and (b) and 114AA of the Customs Act, 1962 are sustainable.

The Tribunal found that the gold bars/pieces were established to be of Indian origin and hence not prohibited goods. The investigation did not provide any evidence to counter the Appellants' claim of domestic purchase. The Tribunal held that penalties under Sections 112(a) and (b) and 114AA of the Customs Act, 1962 are not imposable in this case. The answer to this issue is negative.

Conclusion:

The Tribunal set aside the impugned order and allowed the appeals filed by the Appellants with consequential relief as per law.