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TMI Blog2023 (3) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments. It needs to be reiterated that no duty paid documents have been produced till date even before us. Therefore, these submissions of the learned counsel will not carry the case of the appellant any further. Section 111(d) nowhere indicates whether it applies to town seizures or seizures at the ports and airports. All that it states is that any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable for confiscation. Gold is not freely importable. Import of gold in any form, is prohibited except by nominated agencies as per the Foreign Trade Policy notification above issued under the Foreign Trade (Development and Regulation) Act, 1992. Unless this condition of the import (only by a notified agency) is fulfilled, gold is a prohibited good. The appellant also does not dispute that the gold can be imported only by the nominated agencies. If gold is imported by anyone else, it will be prohibited goods. The gold bars and piece of gold were correctly held liable for confiscation und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Kashi Kumar Agarwal [ Appellant ] filed this appeal to assail order-in-appeal [ Impugned order ] dated 10.12.2021 passed by the Commissioner of Customs (Appeals), New Custom House, New Delhi upholding the order-in-original [OIO] dated 20.3.2019 passed by the Additional Commissioner of Customs deciding on a Show Cause [SCN] Notice dated 21.2.2018 issued by the Additional Director, Directorate of Revenue Intelligence [DRI], New Delhi insofar as it relates to the appellant. It needs to be pointed out that against the same order-in-original, in addition to the appellant, two other persons- Shri Deepak Handa and Shri Ravi Handa- had filed appeals before the Commissioner (Appeals) who decided the three appeals separately. Against the orders of the Commissioner (Appeals), Shri Deepak Handa filed appeal C/52922 of 2016 and Shri Ravi Handa filed C/52923 of 2016. Both these appeals have been disposed of by Final Order No. 51520-51521/2021 dated 25.5.2021. The order, in a nutshell, upheld the confiscation of the primary gold with foreign markings but set aside the confiscation of the gold ornaments and the cash. Consequently, the penalties were also reduced. 2. After the above orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Act as Deepak did not have any bills for the gold nor any documents to show that the foreign marked gold was legally imported into India. 6. During investigation, Deepak said that the gold bars were purchased from one, Shri Kashi Kumar Aggarwal, the appellant. Investigations were conducted and the SCN was issued and adjudication order was passed which was partly set aside by Final Order dated 25.5.2021 insofar as Shri Deepak Handa and Shri Ravi Handa were concerned. 7. In the follow up operations, gold bars with foreign markings weighing 2000 grams, one cut piece of gold of 995 purity weighing 195 grams, gold ornaments weighing 246.37 grams in a plastic box and ornaments weighing 334.34 grams in a plastic pouch and cash of Rs. 8,86,500 were seized from the shop of the appellant in Delhi which are the subject matter of this appeal and the impugned order. 8. Investigations were completed and the SCN was issued and it was adjudicated by the Additional Commissioner of Customs who passed the OIO as follows: i. I confiscate the seized gold weighing 15.3890 kg (recovered from Shri Deepak Handa) valued at Rs. 4,60,02,337, seized vide panchnama dated 23/24-8-2017 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellant and Deeepak Handa had retracted their statements at the first available opportunity on 28.8.2017 and 24.9.2017 which was recorded by the learned Chief Metropolitan Magistrate when the appellant was produced after arrest. c) The gold ornaments weighing 246.37 grams (10 necklaces and 4 sets of earrings) belong to M/s. Jeet Jewellers of Mumbai which were kept with the appellant to take care of them. They do not belong to the appellant. d) Ornaments weighing 335.34 grams belong to M/s. Raghav Jewellers, Saharanpur, UP which they purchased from M/s. Heera Jewellers of Chadni Chowk which was also kept with the appellant. e) The two gold bars weighing 1000 grams each having purity of 995 and foreign markings were purchased by M/s. Easy Trading from M/s. Pinki Chains. The appellant produced invoice dated 19.8.2017 and a copy of ledger account, copy of Form DVAT-56, copy of GST R2A of M/s. Pinki Chains along with other supporting documents and evidences. f) Revenue has not adduced any evidence to show that the seized gold was smuggled. g) The bills produced show that the gold was legally purchased from the local market. The appellant was only a broker and was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deepak Handa and Surinder Singh. b) The appellant could not produce any valid documents regarding the two pieces of foreign origin gold bars of one kg each seized from his shop along with the gold ornaments and cash. c) In his statement dated 24.8.2017, the appellant confirmed that the 9 gold bars seized from Deepak with foreign markings were sold through him and further confirmed that he would sell gold bars to Deepak at least 2 to 3 times a month. In follow up investigation, he was found to have two gold bars with foreign markings and he was unable to produce any document to prove their licit possession although he claimed to have purchased them from M/s. Uma Traders. d) No prejudice is caused to the appellant from not allowing cross examination of the co-accused as they were in cahoots. The appellant also confessed to having dealt with the seized smuggled gold to Deepak. What is admitted need not be proved. Reliance is placed on Mohammed Muzzamil vs CBIC [2021(376) ELT 46 (Telangana)]. e) In case of gold notified under section 123 which is seized under reasonable belief that it is smuggled, the burden of proving that it is not rests on the person from who it is seiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater; . SECTION 120. Confiscation of smuggled goods notwithstanding any change in form, etc. - (1) Smuggled goods may be confiscated notwithstanding 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 value of the smuggled goods shall be liable to confiscation. SECTION 121. Confiscation of sale-proceeds of smuggled goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods, as any act or omission which will render such goods liable to confiscation under section 111 or section 113. Thus, the definition of smuggling under the Customs Act is very wide and any act or omission which renders the goods liable to confiscation under section 111 or section 113 falls within its ambit. For the purpose of this case, only section 111 is relevant. 16. Thus, to sum up, if any goods including cash, are liable to confiscation under section 111, they constitute smuggled goods and if they are seized under the reasonable belief that they are smuggled goods and if such goods are also notified under section 123, the burden of proving that they are not smuggled rests on the person from who the goods are seized. Otherwise it rests on the Revenue. It is undisputed that gold is covered under section 123 and cash is not. Therefore, the burden of proof insofar as the cash is concerned, rests on the Revenue. The burden of proof shifts to the appellant with respect to gold depending on whether it was seized under the reasonable belief that it was smuggled goods . If so, the burden shifts to the appellant and not otherwise. 17. The next important section is 121 which pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confiscation of any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof . 22. As far as section 111(p) is concerned, it provides for confiscation of any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened . Issues in this case 23. We proceed to examine the submissions by both sides with respect to each of the issues in this case and decide. A. Foreign marked gold bars, two, weighing 2 kg in total and having a purity of 99.5%, one cut piece of yellow metal of the same purity weighing 195.23 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in Original) 24. These two gold bars and the cut gold piece had extremely high levels of purity and were in primary form and the gold bars had foreign markings. They were seized from the appellant in a follow up operation to the seizure of foreign marked gold bars from Deepak and Surinder. They were found in the premises of the appellant. When the officers questioned the appellant on 25.8.2017, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished that the seized gold was not smuggled. 26. Learned counsel submitted that the adjudicating authority did not consider the appellant s request for summoning as witnesses Deepak Handa and Ravi Handa for cross examination on whose statements the whole case is based. He further submitted that the appellant had retracted their statements at the first available opportunity which was recorded by the learned Chief Metropolitan Magistrate when the appellant was produced after arrest. We find while the case emanated from the seizure of gold bars from Shri Deepak Handa and follow up investigation was conducted based on the statements of Deepak and Ravi, insofar as this gold is concerned, it stands on its own footing. Even if the statements of Deepak and Ravi are ignored, the fact that the gold bars were seized from the appellant is not in dispute. It is also not in dispute that they are of foreign origin and had foreign markings and were of very high purity is not in dispute. It is also not in dispute that no duty paid documents in the form of Bill of Entry (whether the duty is paid by the appellant or the importer from whom the appellant claims to have purchased) is available. No s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at one needs to get a copy of the duty paid document such as Bill of Entry and the relevant documents to show that the gold bar which one is in possession of was duty paid. It is as simple as that. 28. Learned counsel for the appellant further submitted that in this case, there was no reasonable belief for seizing the gold. Therefore, it is for the department to prove that they were smuggled goods and the department has not discharged this burden. We disagree. The appellant was in possession of foreign marked gold and had no documents to show that duty was paid on it. This gave the department reasonable belief to seize. The burden of proof is on the appellant. If one has duty paid gold bars which are seized and confiscated, it will not be unreasonable to expect that one would obtain the duty paid documents and produce instead of letting the gold be confiscated and getting oneself arrested. If the gold which the appellant was in possession was, indeed, duty paid, the documents to show that must be with the appellant and in his exclusive knowledge which he must produce, however no such documents have been produced not only before the investigating officers or the adjudicating auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiya [2003 (155) ELT 423 (SC)] and Sheikh Mohd. Omer [1983(13)ELT 1439 (SC)] has held that Sec 2(33) of the Customs Act has wider connotations than Sec 11 of the Act. Even if gold is not notified separately under Sec 11 of the Act, the prohibition flows from the statue i.e., Sec 123 of the Act. Further, in Sheikh Mohd Omer it is held that any prohibition referred in Sec 111 applies to every type of prohibition and that may be partial or complete. Any restriction to import or Export is to an extent a prohibition. We, therefore, find section 111(d) applies to this case. 31. We, however, agree with the submission of the appellant that section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant. Section 111(p) applies only to goods notified under Chapter IVA of the Act and that gold is not notified under this Chapter is not in dispute. Therefore, confiscation under sections 111(i) and (p) are not sustainable. 32. To sum up, we find that the gold bars and piece of gold were correctly held liable for confiscation under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation . This section does not shift the burden of proof to the person(s) from whom the cash is seized. It is for the Revenue to establish that the cash which has been seized are (a) the sale proceeds; (b) the goods that were sold were smuggled goods; and (c) the person who has so sold the goods had either the knowledge or had reason to believe that the goods were smuggled. Merely because some unaccounted cash is lying, it cannot be confiscated unless the three conditions in Section 121 are fulfilled. From the records of this case, we do not find that the Revenue has established any of these factors or even identified which were the smuggled goods which were sold by the person from whom the cash is seized. Confiscation of this cash is therefore, liable to be set aside and we do so. It also needs to be noted that an identical view was taken with respect to the cash seized from Baibhav Ornaments and Radhika Jewellers in this Tribunal s Final Order dated 25.5.2021. D. Penalty of Rs. 25,00,000 imposed on the appellant under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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