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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 ..... carried all add up to give reasonable belief to the officer. The original and duplicate copies of the invoice, unsigned, prepared by Shri Balaji in favour of Shri Manda Ramu do not inspire any confidence because if it was an invoice issued for sale it should have been sent with the goods after signature which is not the case. In fact, the initial statement Shri Balaji clarified that he prepared the invoice after receiving the same information about the seizure of gold. This is nothing but an attempt to cover up. The other invoice showing purchase of 2000 gm of gold also does not support the appellant s case because the purity of the gold was different. Appeal disposed off with following order:- (a) Confiscation of 3.158 kg. of gold valued at ₹ 94,61,368/- under Section 111(a) and (d) read with Section 120 of the Customs Act is upheld. (b) Confiscation of the goods of no commercial value used for concealment the above gold is upheld under Section 119. (c) Confiscation of 173.400 gm of pieces of gold bars is set aside. (d) Confiscation of 70.300 gm. of foreign marked coins under Section 111(a) 111(d) is upheld. (e) Confiscation of Rupees Ninety lakhs under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal 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 Venkateshwara Jewellers, Rajahmundry and had come to Chennai with Rupees Thirty lakhs in cash the previous night, gave it to Shri Balaji of M/s SLN Securities Forex Private Limited, Chennai and received the gold bars which he was carrying concealed in the jacket to take back and give it to Shri Manda Ramu. When asked, he said that he did not receive any invoice from Shri Balaji and had only received two paper chits Nos. 43 and 44, both dated 8.5.2014. As the Railway station was a public place not suitable for examining the gold, officers brought Shri Sathyanarayana and the gold bars to office of DRI where they were examined. Of the eight pieces of gold, two pieces were cut pieces of gold bar and there were varying length and width with markings FINE GOLD 999 NR on the front and marking NBR , 1996 and 1997 on the rear side. The gold was assayed by certified the Assayer who confirmed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold. He receives a monthly salary of ₹ 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 Ramu paid him ₹ 200/- 9. Shri Balaji, Director of M/s SLN Securities Forex Private Limited, in his statement dated 10.5.2014, explained that he and Shri Srinivasulu are the Directors of the Firm and Shri Srinivasulu was inactive and he has lost his mother and therefore, he (Shri Balaji) has been running the business. He learnt about the 3.158 kg of gold seized from Shri Sathyanarayana; he would buy smuggled gold bar of 999 purity from firm such as M/s Surana Corporation, Chennai and sell it to Shri Manda Ramu who would pay partly in cash and partly through RTGS. For this service, he would get ₹ 2000/- per kg. He said that in the night of 8.5.2014 he went to M/s Surana Corporation received 3.158 kg. of smuggled gold bars without any bill and give them to Shri Sathyanarayana at 8.30 AM on 9.5.2014 who then left for the Railway Station immediately. He did not iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onfiscated 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 penalty should not be imposed on them under Section 112 of the Customs Act, 1962 for having dealt with the seized gold in the manner elaborated in the preceding paragraphs and as admitted by the latter two individuals. 41. S/Shri Manda Ramu, V. Sathyanarayana, P. Balaji, K. Srinivasulu, Vijayaraj Surana, J. Thiyagarajan and G. Venkatesh are hereby directed 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 exemplary penalty, equal to the value of the gold bars, successfully received from various smugglers and carriers which is not available for confiscation as the same has been sold out in the local market, as discussed in paragraph 37 supra, should not be imposed on them under Section 112 of the Customs Act, 1962. 10. After following due pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 aside because the confiscation itself is not sustainable. 12. In his Appeal No. 40644 of 2018 Shri V. Sathyanarayana submitted as follows : (i) The learned adjudicating authority failed to consider the submissions of the appellant and he was in no way concerned with any act or omission, which would render such goods liable for confiscation under Section 111(d) and (l) of the Customs Act. (ii) DRI has extracted the statement from him. (iii) He is working only on monthly salary. (iv) Imposing such a huge penalty upon him is unsustainable. (v) A penalty under Section 112(b) is applicable only if the goods are brought from place outside India. Therefore, he is not liable to penalty. 13. In his appeal No. 40646 of 2018 Shri P. Balaji submitted as follows: (i) The adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 partly in his own hand writing. In these circumstances his actual role has not been established. In the SCN no specific charges about his role has been discussed or a case has been made against him except to the fact that he has been a partner in M/s SLN Balaji. From the above, I am of the opinion that Shri K. Srinivasulu was not actively associated and besides his being partner Director of M/s SLN Securities Forex Pvt. Ltd., his role had not come out anywhere in this case. 55. The penalty for each of accused has to be decided based on their role, employee employer relationship, active participation etc. (ii) The learned adjudicating authority has gravely erred in imposing penalty upon him and he is not even visiting his office or doing any work for one year b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long 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 ₹ 2000 per kg. for this service. He had obtained the gold and had given it to Shri Sathyanarayana for carrying it to Shri Manda Ramu. He also explained that he did not issue any invoice at this stage. The two kutcha slips which were found along with the newspaper and which the gold was wrapped tallied in weight found by the expert assayer. These give a reasonable belief, to the officers that the gold pieces were smuggled gold because : (a) The gold was of such purity as is normally found in foreign gold (b) A precious metal like gold is not usually carried in such large quantities concealed in jacket/pouch specially made for the purpose. (c) The payment for the gold was made in cash. (d) Initial statement of Shri Sathyanarayana matched with that of Shri Balaji. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 gold supposedly purchased by Shri Balaji of M/s SLN Security as far as the gold of lower purity. The gold was seized in the morning of 9.5.2014 at about 9.00 AM and the invoice was also dated the same. It is physically impossible for 99.5% gold to instantly correct into in 99.9% gold and cut into pieces and supply to Shri Sathyanarayana and also being carried by him in the same morning before being got it the Railway Station. Therefore, the adjudicating authority was correct in concluding that the invoice of 2 kg of gold supposedly purchased by M/s SLN Securities does not pertain to the seized gold in question. 19. In view of the above, we are no hesitation in concluding that the seized gold is of foreign origin and the DRI officers had a rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted 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 the gold, the lack of invoice, the payment for the gold in cash concealed in a jacket and in which the gold was also being carried all add up to give reasonable belief to the officer. The original and duplicate copies of the invoice, unsigned, prepared by Shri Balaji in favour of Shri Manda Ramu do not inspire any confidence because if it was an invoice issued for sale it should have been sent with the goods after signature which is not the case. In fact, the initial statement Shri Balaji clarified that he prepared the invoice after receiving the same information about the seizure of gold. This is nothing but an attempt to cover up. The other invoice showing purchase of 2000 gm of gold also does not support the appellant s case becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. In view of the above, we dispose of the appeals as follows: (a) Confiscation of 3.158 kg. of gold valued at ₹ 94,61,368/- under Section 111(a) and (d) read with Section 120 of the Customs Act is upheld. (b) Confiscation of the goods of no commercial value used for concealment the above gold is upheld under Section 119. (c) Confiscation of 173.400 gm of pieces of gold bars is set aside. (d) Confiscation of 70.300 gm. of foreign marked coins under Section 111(a) 111(d) is upheld. (e) Confiscation of Rupees Ninety lakhs under Section 121 of the Customs Act is upheld. (f) Penalty upon Shri V. Sathyanarayana under Section 112(b) of the Customs Act is reduced to Rupees One lakh. (g) Penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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