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TMI Blog2021 (2) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the nature of gold or that the passengers travelled with the gold, etc. All that was said in his letter was that the appellants had travelled in the train from Trissur to Vijayawada on the particular date. This was not his statement as an eye witness but a statement based on official records. There is nothing which the appellants can disprove by cross examination of the Senior DCM - the Learned Commissioner was correct in not allowing cross examination of the Senior DCM. Whether the Department had a reasonable belief as required under Section 123? - HELD THAT:- The statements of the apprehended persons revealed involvement of on Shri Om Prakash Khatri director of M/s Panna Gold Impex Ltd. Apprehended persons indicated that these gold bars and pieces were smuggled into India from Kerala and they were to take them to Mumbai to be hand over to Shri Om Prakash Khatri. They also admitted having collected gold from Kerala on earlier occasions to deliver to Shri Om Prakash Khatri. Further, they said that they did not travel by flights to avoid security checking and customs checking. They further described in detail how they reached Kerala and who handed over the gold bars and piec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard both sides were given additional time to make any written submissions and submit any documents. Accordingly, both sides made additional written submissions which have also been examined by us. 3. The facts of the case are that based on some information, Officers of Customs Preventive Commissionerate, Vijayawada kept surveillance in one town area on 24.06.2016. At about 11 AM, they found a person carrying a big shopper bag moving suspiciously and approached him; he identified himself as Shri Balanagu Naga Venkata Raghavendra. When Officers asked him if he was carrying non-customs duty paid goods, he said that he was carrying gold with him and showed three packets wrapped in newspaper tied with rubber bands. On opening, one packet had one big piece, two small cut pieces and one very small hammered piece of yellow metal in one bag. In another bag were one big piece and one small piece of yellow metal and in a short packet were one big piece, one small piece and one very small piece of yellow metal. The big yellow metal pieces had marks y.999 inscribed on them. On verification of the papers available with Shri B.N.V. Raghavendra they found a letter addressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Pinninti Koti whereas Shri Pinninti Koti in his statement dated 24/06/2016 has categorically stated that he he has not sold any gold to Shri B.N.V. Raghavendra Shri B.N.V. Raghavendra in his statement dated 24/06/2016 has deposed that he has purchased 605 gms of gold from Shri Pinninti Koti. However, when asked about which of the individual pieces will add up to 605 gms of gold, he has deposed that he did not remember how much gold was purchased by him from Pinninti Koti on 23/06/2016 Shri B.V.S. Kanaka Ratnam in his statement dated 27/06/2016 has stated that 1700 gms of gold available in their family and 600 gms of ornaments of his wife were got melted nearly one month back. However, the same is not supported by Shri Jaggavarapu Nageswara Rao who has actually melted the gold for Shri B.V.S. Kanaka Ratnam as he has categorically deposed that he has melted only 600 gms of gold nearly 2 or 3 months back. Shri B.V.S. Kanaka Ratnam Shri B.N.V. Raghavendra have argued that it was their family gold which was shown as asset in their balance sheets and the same was melted for the purpose of selling the same. However, Shri B.V.S. Kanaka Ratnam in his statement dated 28/07/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old from Shri B.N.V. Reghavendra on specific information, recovery of letter dated 22/06/2016 written by Shri B.V.S. Kanaka Ratnam addressed to Vijay in Trissur and confirmation of their journey from Trissur to Vijayawada appears to confirm the smuggled nature of the gold. On the other hand, Shri B.N.V. Raghavendra from whose possession the gold was seized and Shri B.V.S. Kanaka Ratnam who has claimed ownership of the gold have not produced any proof regarding import of the gold through licit channels or purchase of old gold available in India. They have not produced any sale/purchase voucher towards purchase of the said gold. They have also contradicted themselves as detailed ibid at para 16. Thus, it appears that they have failed to discharge the responsibility cast on them under Section 123 of the Customs Act, 1962 to prove that the seized gold is not smuggled into India without payment of duty. Shri B.N.V. Raghavendra is in possession of the gold and Shri B.V.S. Kanaka Ratnam claiming ownership of the gold appears to be knowingly dealing in non customs duty paid gold. They have not provided any proof regarding payment of Customs duty in respect of the said Gold. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y this order, the present appeal is filed on the following grounds:- i) The principles of natural justice is violated as the letter of Senior DCM of Railways confirming the travel of both the appellants was taken into account but they were not allowed to cross examine the Senior DCM. ii) The Commissioner did not study the facts and records the case and came to wrong conclusions. iii) The Commissioner should have given them an option to redeem the confiscated gold under Section 125 of the Customs Act even if the gold was to be confiscated. 7. In the additional written submissions made after the hearing the appellants again asserted that they should have been allowed to cross-examine the Senior DCM who confirmed their travel from Trissur to Vijayawada. They also further contested that the Department has failed to discharge the obligation cast upon it. It is the case of Department that the gold is smuggled one. To prove the same to be smuggled, the Department has not extended the investigation to reach to the root of the matter. The Department has completely failed to go into the root of the matter as to how the goods were smuggled in nature nor has it based any ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the gold carried by intercepted persons - Burden of proof under Section 123 of Customs Act, 1962 being only of a reasonable belief, effectively discharged by Department - Mere fact that interception and seizure not affected in an international border or near an airport or seaport irrelevant - Onus to prove that the gold was not smuggled, so as to upset the reasonable belief entertained by Department shifted and squarely rested on owner - Gold bars and pieces found to be of 99.8% purity but this fact ignored by Tribunal - Registers produced and the transactions alleged as well as the quantity seized and that seen from the alleged Travel Authorisation Vouchers not tallying - Therefore, appellants clearly failed to discharge the onus of proof cast on them by Section 123 ibid - Tribunal not justified in upsetting the findings of the first appellate authority - Confiscation upheld - Sections 111(a), (d) and (m) read with Section 120(1) of Customs Act, 1962. This judgment was upheld by the Hon ble Supreme Court. iv) On the question of the gold being not allowed for redemption after confiscation, he relies on the judgment of the Hon ble Supreme Court in the case of Shri Om Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner was correct in not allowing cross examination of the Senior DCM. 11. The next issue (ii) to be decided is whether the Department had a reasonable belief as required under Section 123.This Section reads as follows:- A Section 123 (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the possession of any person,.- (i) on the person from whose possession of the goods were seized, and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold, and manufactures thereof, watches, and any other class or good which the Central Government may by notification in the Official Gazette, specify According to the Show Cause Notice the reasonable belief that the seized gold was smuggled gold has come from the following:- i) Specific information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old was sufficient to have a reasonable belief that the gold is smuggled. The two persons who were carrying the gold had nothing in their possession to prove the legitimacy of the gold they carried. The fact that the gold bars and pieces did not have any marking on them is suspicious and it points to a concerted effort to erase the markings on them. The burden under Section 123 which is only of a reasonable belief; is effectively discharged by the Department who initiated action on the basis of the seizure and the recorded statements of the detained persons. The mere fact that the interception and seizure was not affected in an international border or near an airport or seaport is irrelevant, since the statements of the intercepted persons clearly indicate that they were asked to avoid such means of transport and stick to the normal modes of public transport. There can also be no presumption drawn that the carriers of smuggled gold after the gold reaches the country would only resort to commutation by air or sea. The persons from whom the gold was seized disowned the same and said that they were mere carriers of Om Prakash Khatri, who accepted that the gold seized belonged to his C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s did not have a reasonable belief in the first place to assert that the seized primary gold was smuggled gold which is essential to shift the burden on to the accused under Section 123. The case of Om Prakash Khatri (supra) was different inasmuch as in that case while the foreign markings were missing on the gold in that case the carriers had admitted that they were carrying smuggled gold for Shri Khatri and that it was smuggled through Kerala and they were carrying it to Bombay and marks and numbers have been deleted to avoid being caught. They also admitted that they avoid air travel as there is a high risk of being caught. Coupled with these statements was the fact the gold of very high purity. The ratio of this judgment does not apply to the present case and the facts are quite different. 15. In view of the above, we find that the officers of the Department had no reasonable belief that the gold was smuggled and therefore they have not discharged their responsibility of forming reasonable belief under Section 123 without which the burden of proof will not shift to the person from whom the gold is seized. The impugned order and show cause notice suffer from this infir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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