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TMI Blog2008 (5) TMI 466X X X X Extracts X X X X X X X X Extracts X X X X ..... et, we observe that gold was notified under Section 123 of the Customs Act, 1962. 2.(a) The impugned goods were seized from the deceased Suresh Mehta at the domestic airport on 19-2-1992 at 11.00 AM when he was about to leave for Coimbatore by the Indian Airlines flight IC-956. A suitcase bag carried by him was searched in the presence of the panchas and the search revealed the disputed gold kept in the suitcase. (b) The allegation made in the Show cause notice was that the seized gold was nothing but 25 foreign marked gold bars melted into the above form to avoid detection. (c) In adjudication proceedings, the Commissioner, vide his impugned order, examined the various contentions raised by the Respondent before him in regard to the origin of the impugned goods, and finally concluded that the impugned goods were not smuggled goods and the Respondents have discharged the burden cast on them under Section 123 ibid to prove that they are not smuggled. The Commissioner dealt with each and every contention both on facts as well on law put before him during the adjudication proceedings and held that the seized goods were liable to be released back to M/s. R M Jewellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the gold in question which the Respondents were attempting to correlate with the gold in question. (e) The gold was tested by the Government mint for assay purpose and found to be of purity 919.9 and 918.9. 4. In the matter remanded by the Tribunal, the Commissioner based upon the replies submitted by the Respondents, set aside the show cause notice on the grounds as below : (a) Statements were retracted within 2 days almost as soon as the persons were released by the Magistrate; (b) Packet of 25 gold bars being exchanged by Mehta with Pankaj in a busy street is affront to common sense as it is impossible to verify the contents; (c) Packet was not opened and delivered by Mehta to Pankaj as it is which means that Mehta had no clue of the contents; (d) Contradiction in the exact place, where the gold was delivered. Is it at Nakoda Street, at Malad or anywhere else? (e) It is impossible to melt 25 gold bars within 2 hours and turn them into bangles and rods; (f) Suresh Mehta at the time of interception was found to carry p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mehta v. UOI [1983 (14) E.L.T. 1715 (Del.)], wherein it was held that reasonable belief is a condition precedent to the seizure and if this condition is not verified, then Section 123 ibid cannot be invoked and the onus of proof is on the Customs. In Venugopalan v. Unni [1977 GLJ 1862], it was held that the appearance of the article and the inscription therein have something to do in deciding the question of origin. In the present case, the seized gold was of 22 carat purity which by themselves cannot be termed as smuggled, since there were neither any markings nor any foreign label but were ordinary ornaments as worn in this country. Hence, Section 123 ibid was not applicable. 5. Aggrieved by the Order passed, the Revenue has filed the appeals on the following grounds : (a) The Commissioner has erred in his observation that the operation of converting the 25 gold bars into crude bangles and rods (of uneven shapes, and sizes) of 22 carats would not be possible within 2 hours. This can be easily achieved within less than 2 hours by putting the 25 FM gold bars in furnaces/ovens and converting the molten mass into crude bangles and rods of 22 carats, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of statement. We have gone through the records of the case and the rival submissions. (b) At the very beginning, we are constrained to observe that there is a missing link in the investigation, which is very crucial to the whole case. We find that all along there is an allegation that the 25 FM gold bars were melted and then converted into 108 pcs of gold, which in turn were further converted into bangles and rods. We find that while doing so, the name of the person and the place, where the alleged melting of the gold took place is not forthcoming in the body of the Show cause notice. Nor any investigations were conducted by the DRI in order to go to the root to determine the place of such happening. How such a crucial point such as the one observed by us came to be missed is surprising. (c) Further, assuming that melting was done and carrying the arguments a little further, the Revenue has contended that the melting of 25 FM gold bars could be undertaken in a matter of two hours with the use of ovens furnaces etc. No material is brought on record in this Appeal to substantiate this. No investigations have been done by the DRI to atleast trace out the person or the je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that the Revenue could not establish any connection with the gold found and correlation with the allegations that these were, in fact, made from 25 FM gold bars and neither has the Revenue been able to break the nexus between the receipts under which they were claimed to have been sent on job work basis. In order to undertake this exercise, we find that all that the DRI have done is to seek denial from the persons, who were named by the Respondents and no investigations were done with regard to the records maintained by them i.e. M/s. Tikamdas & Sons etc. We find that the gold receipts have been considered by the Commissioner in his findings and he has also considered the fact that the manner of accountal has been duly supported by means of sworn affidavit of one Dilip Shah, which proves the origin of the gold in question. On facts, we find that there is no infirmity in the order of the Commissioner, when he held that the gold in question was not smuggled into the country. The calculation done by the Commissioner is correct and we find no reasons to hold it otherwise. 8. We agree with the findings of the Commissioner that Section 123 ibid cannot be invoked in thus cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tendered by Tikamdas are his version and mere hearsay especially since the very same documents of Tikamdas have been relied upon by the Respondents to clear their name. The learned Counsel for the Respondents had thus rightly contended that the accounts provided by the Respondents are, therefore, correct and represent the correct facts. 13. The Department has thus not succeeded in proving that the impugned goods were of foreign origin. If the impugned goods are not proved to be of foreign origin, their confiscation under Section 111(d) of the Customs Act cannot be upheld. 14. The Commissioner has accepted the retraction of the statements as relevant from the facts of the case and as such not placing reliance of the statements of the Respondents, which had been retracted by them at the first opportunity available to them, is in line with what we have already staged above. Hence, the case laws cited in the Appeal as also by the ld JDR would not be of much help given the nature of the case before us and which would warrant us to make do with the statements recorded as on the date of seizure of the bangles and rods of gold in question. We find that in their retraction, Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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