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TMI Blog2007 (4) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... the presence of panch witnesses, removed the gravel from surface and took out 24 silver slabs, each wrapped in jute packing. These silver slabs were got weighed on the spot and their purity was ascertained through a goldsmith, Shri Madan Lal. Each of the slabs was found weighing around 33 to 36 kgs. The purity of silver was ascertained to be 99.9%. The total weight of the 24 silver slabs was 851.703 kgs. and it was valued at Rs. 59,57,000/-. These silver slabs were sealed and seized by the Police under a panchnama. During the course of inquiry, the Police found that Shri Basant Raj and Shri Bharat Kumar Jain (the present appellant) were involved in commission of the offences and were, therefore, arrested and remanded to judicial custody. 2.1 On 4-5-1991, on receiving of information from the Superintendent of Police, Pali, the Customs Officers examined the record on 5-5-1991 and the Police Officers were informed that the silver in question was reasonably believed to be liable to confiscation under the provisions of the Customs Act and that the inquiry made till then indicated that Shri Basant Raj was working as an agent of Dawood Ibrahim, an international smuggler based in Dub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 silver bricks on 20-11-1996, and its weight was found to be 852.300 kgs. and the value Rs. 59,66,100/-. The Customs Officers seized the said silver under Section 110 of the Customs Act on the reasonable belief that the same was liable to confiscation under Section 111 of the said Act. 2.4 In the meantime, the Customs Officers had recorded the statements of various persons including Shri Basant Raj and Shri Bharat Kumar Jain (the present appellant) under Section 108 of the Customs Act. The present appellant, in his statement dated 8-7-1992, recorded under Section 108 of the Customs Act, had admitted that he received Rs. 50,000/- for keeping the silver seized from the factory premises of Gajraj Ginning and Oil Mills, Rani. It also transpired, during the inspection by the Customs Officers that, the rent note, said to have been executed by Shri Sagarmal, was a forged one. 2.5 From the material gathered by the Customs Officers during their investigation, it appeared to the Revenue Authorities that, the consignment of 100 slabs of silver, out of which the said 24 silver slabs were initially seized by the Police on 3-5-1991 and subsequently taken over by the Customs Officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. 3.1 It appears that a preliminary objection was made on behalf of the present appellant against the show cause notice dated 12-5-1997, on the ground that seizure was made by the Police Officers and not by the Customs Officers and, therefore, there was no question of any presumption regarding silver being of foreign origin. It was contended that, there was no foreign marking on the silver slabs and no evidence to show that the appellant had any knowledge that the silver was smuggled. It was also contended that, the statements recorded under Section 108 of the Customs Act contained no admission that the appellant had any knowledge of the silver being the smuggled goods. Pursuant to the direction of the Hon'ble High Court of Judicature at Jodhpur in its order dated 10-8-1998, the objections raised by the appellant were decided on 9/10-4-2003, which decision is reproduced in Paragraph 49 of the impugned order. It was held that, the burden of proof was on the appellant under Section 123(2) of the Act; that the date of seizure of these silver slabs by the Customs Department was 20-11-1996 and, therefore, the show cause notice issued on 12-5-1997 was well within six months' per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was abundantly established that, Basant Raj had concerned himself with acquiring, possession, transportation, disposal and otherwise dealing with the impugned silver with the help of Bharat Kumar Jain (the present appellant) and other persons. From the information furnished by him during the inquiry before the Police Officers regarding his dubious character, past history and with the Dubai based international smuggler Dawood Ibrahim and from other corroborative evidence, it stood proved that, he was engaged in the smuggling of silver in the State of Rajasthan at the behest of Dawood Ibrahim and his associates. It was further held that, Shri Kishan Lal gave a corroborative statement to the effect that Basant Raj used to visit his "Bhojanalya" with the appellant Bharat Kumar Jain and other friends and he overheard them talking about a 'Peti' of silver coming from Bombay, Gujarat and Pakistan. The Commissioner found that, silver was duly notified under Section 123 of the said Act, which casts the burden of proof on the person from whose possession the silver was seized or any other person who claimed the ownership of the seized silver under Section 110 of the Act. It was held that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution in the State of Rajasthan and at Palanpur in Gujarat. It was also held that, the appellant, Bharat Kumar Jain, assisted Basant Jain in storage, concealment and further distribution of impugned smuggled silver in consideration of monetary benefit paid to him by Basant Raj, as admitted by the appellant, Bharat Kumar Jain, in his statement under Section 108 of the Customs Act. It was, therefore, held that, there was sufficient evidence to prove that the seized 24 silver slabs were smuggled goods and liable to be confiscated under Section 111 of the said Act. It was held that, Basant Raj and the appellant, Bharat Kumar Jain, were very much concerned with the acquisition, transportation, possession, distribution and sale of the smuggled silver. As recorded in Paragraph 68.9.1 of the impugned order, Basant Raj, had passed away, which fact was confirmed on 25-10-2004 by the Customs Officers and, therefore, no penalty was imposed on him. Twenty-four slabs of smuggled silver valued at Rs. 59,66,100/-were confiscated under Section 111 of the Act along with the packing material which was confiscated under Sections 118 and 119 of the Act. Personal penalty of rupees two lacs was imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his detention under the COFEPOSA was upheld. It was further contended that, the silver slabs, which were initially alleged to be stolen property, did not have any foreign markings and none of the witnesses had testified that the seized silver was imported smuggled silver. It is argued that the Customs Authorities had no jurisdiction over the silver which was in their possession and that it should be returned to the Police authorities for being dealt with by them in terms of the orders of the Magistrate that may be passed. It is submitted that, in the absence of the said seized silver, being proved to be smuggled, the Customs Act was inapplicable. It was also submitted that, no notice could have been issued after more than five years of the initial seizure by the police and, therefore, no penalty was imposable on the appellant. It was further argued that, there being no duty demand raised or permissible under the Customs Act, there can be no question of penalty nor of confiscation of these seized silver slabs. It was submitted that, the Customs Authorities were already aware of the fact that the silver in question was seized by the Police on 3-5-1991 and the show cause notice issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shanti Lal Mehta v. Union of India, 1983 (14) E.L.T. 1715 (Del); (ii) Gian Chand v. State of Punjab, 1983 (13) E.L.T. 1365 (S.C.); (iii) CCE v. D.K. Singh, 2006 (199) E.L.T. 202 (M.P.); (iv) Asstt. Collector of Customs v. Mukhujusein Ibrahim Pirjada, 1970 Cri. LJ 1305 (Guj.); and (v) Asstt. Collector v. Daljit Singh & Ors., 1992 (58) E.L.T. 54 (P&H). 4.3 In support of his submission that, no search or seizure, when the assets and the place of storage are already known to the Revenue, can be made, relied upon the following decisions : (i) CIT v. Tarsem Kumar & Ors., AIR 1986 SC 1477 (From Customs); (ii) Bafna Textiles v. ITO, (1975) 98 ITR 1 (Kar.) (From Excise); (iii) Motilal v. Preventive Intelligence Officer, (1971) 80 ITR 418 (All) (From Customs); (iv) CIT v. Ramesh Chander, (1974) 93 ITR 450 (Punjab) (From Police); (v) Union of India v. Hadi Bandhu Dass, (1973) 91 ITR 156 (Orissa) (From Police); (vi) Tej Pal Oswal v. ITO, (1979) 118 ITR 21 (Pun) (From Police); (vii) Bassel Tool ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced reliance on the decision of the Hon'ble Supreme Court in Harbans Lal v. Collector of Central Excise & Customs reported in 1993 (67) E.L.T. 20 (S.C.), in which it was laid down, in Paragraph 8 of the judgment, that the period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice issued under Section 124 of the Act. He also placed reliance on the decision of this Tribunal in D.S. Srinivas v. Commissioner of Customs, Bangalore reported in 2002 (148) E.L.T. 946 (T), pointing out from Paragraph 3(a) of the judgment that, where the Customs Authorities seized the gold biscuits, which were to be handed over by the Police to the Customs Department, it was held that, since fresh seizure by the Customs Authorities was done after entertaining a belief to seize the gold, the ratio of the decision in Gian Chand v. State of Punjab (supra), could not assist the appellant. He further submitted that, the burden of proof was on the appellant because the goods i.e. Silver was notified under Section 123 of the said Act. He pointed out that 'Silver Bullion' appeared at Item No. 13 of the said Notification issued under Section 123(2) of the Act. He subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt. Going through the relevant material on record, he submitted that, the evidence disclosed that the appellant had actively participated in concealing the silver slabs in the factory premises of Gajraj Ginning and Oil Mills, Rani, which belonged to his family, and that even the rent was fixed for the purpose a Rs. 4,000/- per month and further that the appellant had, admittedly, received Rs. 50,000/- for keeping the silver safe in his custody. 6. In reply, the learned Counsel for the appellant submitted that, the statements recorded before the Police could not be relied upon and that the allegation that rent of Rs. 4,000/- per month was fixed for keeping of the silver by the appellant, was an unsubstantiated allegation. He submitted that, there was no foreign marking on the silver slabs and no circumstantial evidence could be relied upon for holding that the silver was smuggled. In respect of the decision of the Hon'ble Supreme Court in Harbans Lal v. Collector of Central Excise & Customs, (supra), he submitted that, the time limit was not the subject-matter of that case and, therefore, the ratio was not helpful to the Revenue. He further submitted that, the presumption un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted hereinabove. In Gian Chand & Ors., (supra), the Hon'ble Supreme Court was concerned with the provisions of Sections 178A, 178 and 180 of the Sea Customs Act. Under Section 178 of the Sea Customs Act (which was repealed by the Customs Act, 1962), anything liable to confiscation under that Act could be seized in any place in India by any officer of Customs or other person duly employed, for the prevention of smuggling. Section 178A of the Sea Customs Act, which was similar to the provisions of Section 123 of the Customs Act, 1962, provided that, where any goods to which the said provision applied were seized under the Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession, the goods were seized. Sub-section (2) of Section 178A set out the commodities to which the said Section applied. This was similar to the provisions of sub-section (2) of Section 123. There was a specific provision under Section 180 of the Sea Customs Act dealing with the goods seized by the Police as a result of their search and gold coming into the possession of the Customs Authorities. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and consequently that provision cannot be availed of to throw the burden of proving that the gold was not smuggled, on the accused." [Emphasis Added] Thus, in the context of the provisions of Section 180, it was held in Paragraph 11 of the judgment in Gian Chand (supra), that the delivery to the Customs Authorities under Section 180 was not a seizure under the Act within S. 178A under the Sea Customs Act. There was thus a special provision by which the Police Officer seizing the goods on a suspicion that they were stolen, was required to inform the nearest Customs House and cause the things to be conveyed to and deposited at the nearest Customs House for being proceeded against in accordance with law. Such delivery of goods to the Customs Authorities under the latter part of Section 180, was held by the Hon'ble Supreme Court to be not a seizure under the Sea Customs Act within the meaning of Section 178A thereof. In the absence of any provision corresponding to Section 180 in the Customs Act, 1962, the ratio of Gian Chand & Ors. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soon thereafter, even the Customs Department started their investigation and tried to get the silver. However, ultimately, by magisterial orders, the matter was required to be dealt with by the Customs Department. On intimation, the Customs Officers seized the said 24 silver bars under a panchnama. In the panchnama, which was elaborately drawn in the presence of two independent panch witnesses on 20-11-1996, it was recorded that, the officials of the Customs had informed the panch witnesses that the silver was procured by violating the provisions of Customs Act, 1962 and that on the basis of recovered silver, weight of each silver slabs, the purity of silver, and on the facts discovered during the police investigation, it could be confirmed that the silver was smuggled and brought in through illegal route to India and that, therefore, the Officers of Customs, on the basis of this reasonable belief that the said 24 slabs of silver weighing 852.300 kgs. were liable to be confiscation under Section 111 of the Act and the packing material including gunny bags were also liable to be confiscated under Section 118, seized the goods under Section 110(1) of the said Act. It is thus clear th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 132 of the Income Tax Act, which is evident from the expression, "seize any such books of account...........or thing, found as a result of such search" occurring in clause (iii) of Section 132( 1)(B) of that Act. The power of seizure under Section 110(1) is not necessarily confined to the premises in respect of which the power of search may be exercised under Section 105 of the Customs Act. While authorization is required for search under Section 105(1), on the basis of which any officer of Customs may search for goods, documents or things, a proper officer can effect seizure on the reasonable belief that goods are liable to confiscation under Section 110(1) without any pre-requisite of authorization, which is not required in view of the statutory authorization contained in Section 110(1) of the Act. It will also be seen from the provisions of Section 106 that a proper Officer, when he has reason to believe that any aircraft, vehicle etc. is being or about to be used in the smuggling, he may stop it and rummage, examine and search or even break open the lock etc., as provided therein, and also use necessary force as contemplated. Thus, under the scheme of Customs Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination and testing them for the purpose of assessing duty under sub-section (2) of Section 17, the proper officer may inquire, as contemplated therein. Under Section 46(1), the importer of any goods other than those intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. It is on such entry of goods, on importation being made under Section 46, that the assessment of duty proceedings contemplated by Section 17 has to be undertaken by the proper officer, when the duty is not levied or is short levied or is erroneously refunded, the provisions of Section 28 are attracted. 12. The provisions regarding confiscation of goods and conveyances and imposition of penalties are contained in Chapter XIV of the said Act. Section 111 enumerates the goods that shall be liable to confiscation, while Section 112 enumerates penalty for improper importation of goods which are liable to confiscation. Under Section 112(b) any person, who acquires possession of or is in any way concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guage of Section 110(2) which may restrict the power of the competent authority to initiate proceedings under Section 124 up to a certain time limit. In the present case, the show cause notice was issued under Section 124. The High Court of Bombay in Mohan Lal Devdanbhai Choksey v. M.P. Mondkar reported in 1988 (37) E.L.T. 528, held in Para 13, while referring to the decision of J.K. Bardolia Mills v. M.L. Khunoer, Deputy Collector of Central Excise and Customs reported in 1975 (16) Gujarat Law Reporter 119, in the context of the provisions of Section 124 of the Act, that there is nothing in the provisions of Section 111, 112 and 124 of the Act to indicate that the goods, in respect of which an order of confiscation or penalty can be passed under Sections 111 and 112 of the Act, must be goods seized under the provisions of Section 110. The period of six months mentioned in Section 110 relates only to the seizure of the goods and not to validity of the notice under Section 124 of the Act. Section 124 does not lay down any period within which the notice required by it has to be given. There is, therefore, no substance in the contention raised on behalf of the appellant that the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h provided for the Police Officer seizing the things to convey to and deposit such things at the nearest Customs House. It was held that, the seizure from the owner of the property under Section 180 by the Police was not a seizure under the Act, as contemplated by Section 178A. As discussed above, there is no provision corresponding to Section 180 of the Sea Customs Act in the Customs Act of 1962 and, therefore, the seizure made by the Customs Authorities under Section 110(1), after having reason to believe that the goods were liable to confiscation, occurred for the first time, when the seizure panchnama was drawn by the Customs Officers on 20-11-1996, which also records their "reason to believe" as contemplated by Section 110(1) when the goods were seized before independent panch witnesses under the said detailed panchnama, which is on record. Since the goods were seized under Section 110(1) by the Customs Officers, which power they could have exercised for seizing the goods from anywhere, the burden of proof that they are not smuggled goods would ordinarily be on the noticee under Section 123 of the said Act. When the goods were seized by the Police from the possession of the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises of Gajraj Ginning and Oil Mills, Rani, and they found that Basant Raj and the appellant, Bharat Kumar Jain, were present in the factory. When the Police party asked for searching the premises, Basant Raj and the appellant, Bharat Kumar Jain, took them to the spot where 24 slabs of smuggled silver were burried under the gravel in the factory premises and after removing the gravel/sand, they produced the 24 slabs of silver. On being asked to submit the bijl or any document in their possession, they could not produce the same. As per the FIR, Basant Raj and the present appellant were arrested in the factory premises on 3-5-1991. The fact that these 24 sliver slabs were recovered from the premises belonging to the family of the appellant, Bharat Kumar Jain, is clearly established and is not disputed. These silver slabs were concealed beneath the gravel in the premises of the appellant's family. The appellant had made an application before the Magistrate requesting not to handover the said silver slabs to the Customs Department and applied for time to prove ownership. A copy of this application is on record. The appellant had charged rent of Rs. 4,000/- per month for keeping the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in his statement categorically denied that, his father, Shri Sagarmal, had executed such a note. He stated that, the father of the appellant, Shri Bakhatawar, had offered him gratification to wrongly confirm the existence of such document. He stated that the said document, if presented by Bharat Kumar Jain, was a concocted and forged document, because his father did not give any such document. His father did not have the means to purchase 24 slabs of silver, worth approximately Rs. 60 lacs. Realizing that his brother's father-in-law, Shri Ratan Chand, was not supporting his design, the appellant, for obvious reasons, disowned silver slabs; and even before this Tribunal, the learned Counsel, on being asked, made it clear that the appellant was not claiming to be the owner of the silver slabs. The appellant in his statement recorded on 8-7-1992 had in terms admitted that, for the work of keeping the silver, he had received a sum of Rs. 50,000/-. The appellant took up a false plea that silver slabs were given by Shri Sagarmal to him. Shri Sagarmal passed away on 17-4-1991. He created a forged rent note in the name of Shri Sagarmal. Such a false defence was itself an important circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggled silver boxes, clearly show the involvement of the present appellant. On the cross-examination, this witness, Shri Kishan, was asked, whether Bharat used to come alone and sometimes Bharat used to come along with other friends, to which he answered in the affirmative. Immediately thereafter he was asked, "when Bharat Jain used to come to your hotel, did you hear anything about the discussions he had with his companions". To that he answered, he did not hear anything as they used to sit at a distance. He was asked the question in the sequence of the earlier question, where he was asked, whether it was a fact that some time, Bharat used to come alone and some times Bharat used to come along with other friends. Obviously, therefore, the witness gave an answer that he did not hear anything when Bharat Jain came with his other friends and had discussions with those companions. This crude attempt on the part of the cross-examiner does not at all affect the veracity of the statement recorded under Section 108 in the year 1991 in which he had stated that Basant Raj, the appellant, Bharat Kumar Jain, and others used to talk about silver coming from Pakistan and the boxes of silver. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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