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TMI Blog2021 (12) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... ri P. Balaji seeking setting aside the order of confiscation of deposit of Rupees Ninety lakhs available as fixed deposit of Bank of Baroda, T. Nagar Branch, Chennai and also setting aside the penalty imposed upon him. Application No. 40264 of 2018 in this appeal is filed seeking the Tribunal to direct the respondent/Revenue to not part with the amount deposited in the Bank of Baroda. 5. Appeal No. 40647 of 2018 is filed by Shri K. Srinivasulu praying that the penalty imposed on him in the impugned order may be set aside. 6. We have heard both sides and perused the records. Facts of the case, after filtering out unnecessary details, are that the Directorate of Revenue, Intelligence [DRI], Chennai received information from the Railway Protection Force of Central Railway Station, Chennai that they had intercepted a passenger Shri V. Sathyanarayana while he was passing through the door frame metal detector at 9.20 AM on 9.5.2014 and he was found to carry pieces of gold in a jacket tied around his waist. On receiving this information, officers of DRI proceeded to the Railway Station and questioned Shri Sathyanarayana who said that he worked for Shri Manda Ramu of M/s Om Lakshmi Venka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding the gold seized from Shri Sathyanarayana, Shri Balaji stated that he received 3.158 kg. of gold bars from M/s Surana Corporation without any bill, and these were of foreign origin and smuggled into the country and he handed them over to Shri Sathyanarayana. With the help of a Certified Assayer the purity of the cut pieces of gold and the gold coins were checked and the two gold coins were of 24 carat purity and one gold coin was of 22 carat purity and they were also seized along with some documents. 8. In his statement on 9.5.2014, Shri Sathyanarayana said that he collected Rupees Thirty lakhs from Shri Manda Ramu, brought it concealed in his jacket, handed it to Shri Balaji and received the gold pieces which he again concealed in the jacket and was stopped by RPF officers at the Railway station. The two kutcha paper chits No. 43 & 44 were already the newspaper packing of gold. He receives a monthly salary of Rs. 8000/- and that he would come to Chennai twice a week at the behest of Shri Manda Ramu to pay cash to Shri Balaji and take back gold to Shri Manda Ramu. He never receives any invoice or bill for the gold bars. For each trip, in addition to the expenses, Shri Manda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962. 39. Now, therefore, S/Shri P. Balaji and K. Srinivasulu are hereby, jointly and/or severally, called upon to show cause to the Commissioner of Customs (Chennai-III), Custom House No. 60, Rajaji Salai, Chennai-1 within 30 days of receipt of this notice, as to why: (i) the seized 173.400 gm of cut pieces of gold bars and 70.300 gm of foreign marked coins, totally valued at Rs. 7,29,053/-, should not be confiscated under Section 111(a), 111(d) or 111(d), 111(l) & 111(m), as the case may be, whether or not there is any change in their form, in terms of section 120 of the Customs Act, 1962 as may be applicable; (ii) penalty should not be imposed on each of them under Section 112 of the Customs Act, 1962. (iii) the amount of Rs. 90,00,000/-, presently deposited as fixed deposit in the Bank of Baroda, T. Nagar Branch, Chennai should not be confiscated under Section 121 of the Customs Act, 1962 and appropriated to Government Account. 40. S/Shri Vijayaraj Surana, J. Thiyagarajan and G. Venkatesh are hereby called upon to show cause to the Commissioner of Customs (Chennai-III), Custom House No. 60, Rajah Salai, Chennai-1 within 30 days of receipt of this notice, as to why pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Act, 1962. (xi) Imposition of penalty of Rs. 45,00,000/- (Rupees Forth five lakhs only) on Shri Vijayaraj Surana under Section 112(b) of the Customs Act, 1962." 11. Aggrieved by the impugned order, these appeals have been filed. In his Appeal No. 42254 of 2017 Shri Manda Ramu submitted as follows: (i) The seized gold bars do not have any foreign markings as can be seen from the order passed by Hon'ble Additional Chief Commissioner Metropolitan Magistrate (EOI) in Crl. M.P. No. 3501/2016, an application filed by DRI for taking inventory of the seized gold under Section 110(1B) of the Customs Act; (ii) Payment for the gold bars was made through RTGS; (iii) Statements recorded by the DRI were retracted. The outcome of the cross examination was in favour of the appellant. (iv) Since there are no foreign markings, the gold bars are not liable for confiscation. (v) Section 123 would apply only if there is a reasonable belief that the goods are smuggled and are seized in such belief; (vi) Since there are no foreign markings of the gold bars, DRI officers had no such belief in the present case; (vii) The penalty imposed under Section 112(b) needs to be set as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posable upon them. 14. In his appeal C/40647 of 2018 Shri K. Srinivasulu submitted as follows: (i) After the demise of his mother, he was not at all involved in the affairs of his business and this has been recorded categorically in paragraph 51 & 55 of the impugned order as follows : "51. It is seen from the case record that Shri K. Srinivasulu is partner of Shri P. Balaji in running SLN Securities & Forex Pvt. Ltd. I have seen his submissions along with Balaji and also individually through his Counsel vide letter dated 20.4.2017. It is also observed from the voluntary statement of Shri P. Balaji dated 10.5.2014 that at question No. 8 regarding role of Shri K. Srinivasulu, Shri P. Balaji stated that Shri K. Srinivasulu's mother expired one year ago and his father is a heart patient, recently he is not coming to office regularly; but he knew about the dealing of Shri Balaji with Shri Manda Ramu of Rajahmundry. Further scrutiny of the records of the case it has been noticed that no statement has been recorded from Shri K. Srinivasulu by investigating Agency although he was very much available for questioning as he only wrote the statement of Shri P. Balaji dated 10.5.2014 partl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is undisputed that the gold was found concealed in the jacket of Shri V. Sathyanarayana and was detected as he was passing through the door frame metal detector at the Railway Station. On receiving information from the Railway Protection Force officers, the officers of DRI intercepted and questioned him and he explained that he works for Shri Manda Ramu of M/s Om Lakshmi Venkateshwara Jewellers, Rajahmundry and had brought Rupees Thirty lakhs in cash, gave it to Shri Balaji of M/s SLN Securities, Chennai and received gold pieces as per instructions from Shri Manda Ramu and was carrying them back concealed the same jacket when he was stopped by the RPF. He did not have any invoice or document for the purchase of gold. He only had two small kutcha slips along with the newspaper in which the gold was wrapped. The pieces of gold were assayed and they were found to be 99.9% purity which is the purity of smuggled gold usually found. It is true that they were no foreign markings on the pieces of gold. When questioned Shri Balaji of M/s SLN Security confirmed that he obtains smuggled gold from M/s Surana Corporation and sell it to Shri Manda Ramu and gets paid Rs. 2000 per kg. for this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, this invoice cannot support the appellant that the seized gold was purchased from M/s Khazanchi Jewellers. Further, Shri Balaji could not submit any evidence for purchase of or legal import of 243.7 gm. of gold including foreign marked gold coins which were found in his office at the time of search. The appellant sought to plead that the statements were retracted during cross examination and, therefore, they cannot be relied upon. It is worth noting that personal hearings were held and cross examination were allowed in all cases where they were sought. Simply because the person making the statement retracts his earlier statement during cross examination, it does not mean that the adjudicating authority must hold that the original statement was wrong and the subsequent statement during the cross examination itself was correct. What needs to be seen by the adjudicating authority is whether the original statement or the subsequent retractions substantiate the undisputed facts on record. In this case, the purity of the gold being 99.9% is undisputed. This was found during the assay. The ledger stock of the gold in question as on 8.5.2014 is undisputed. The invoice for 2 kg of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hstanding any change in their form. (2) Where smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation: Provided that where the owner of such goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the values of the smuggled goods shall be liable to confiscation. 20. What is significant in this case is that the gold was of 99.9% purity which is the purity of the foreign gold. 21. It has also been argued that the in addition to import of gold by nominated agencies such as banks, etc. gold can also be imported by passengers who fulfill certain requirements. We agree. However, as long as the gold is covered by Section 123 and there is a reasonable belief of the officers that it is smuggled, the burden of proof shifts on to the person from whom it is seized to prove that it is not smuggled. If it is bought from passengers, such documents can be shown. The reasonable belief has to be examined in the factual matrix of each case. In this case, the purity of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, he has rendered himself liable for penalty under Section 112(b). However, considering that he was only a courier carrying the gold reduced to penalty on him to Rupees One lakh. 26. As far as the penalty of Rupees Twenty lakhs upon Shri Manda Ramu is concerned, we find that he was the buyer of the smuggled gold which has been confiscated and therefore, we find no interference is required with the penalty imposed upon him. 27. Similarly, we find no reason to interfere with the penalty of Rupees Twenty lakhs imposed upon Shri Balaji under Section 112(b) of the Customs Act, 1962. 28. Regarding penalty of Rupees Five lakhs imposed upon Shri K. Srinivasulu, we find that the impugned order itself notes that he is just another Director of M/s SLN Security & Forex Private Limited and had no active role in this entire operation except that he is a partner/Director of the company. In fact, due to demise of his mother he was not taking any active interest in the business at all. Having come to such a conclusion, we find that the learned adjudicating authority has wrongly imposed penalty of Rupees Five lakhs upon him. We therefore, find that this penalty needs to be set aside. 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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