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TMI Blog2023 (5) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... US THE COMMISSIONER OF CUSTOMS, CHENNAI II COMMISSIONERATE, CHENNAI [ 2022 (6) TMI 723 - MADRAS HIGH COURT ] wherein the Hon ble Madras High Court has held that officers of the DRI were competent to issue Show Cause Notice under Customs Act 1962 after the amendments to Section 3 of Customs Act 1962, by Finance Act, 2022 - Thus, there is no substance in the argument of the Appellant and the Notice issued by DRI in this case is valid and legally sustainable. Time Limitation for issuance of SCN - HELD THAT:- Section 110(2) read with Section 124 stipulates that if no Show Cause Notice issued within 6 months of seizure of goods, the goods shall be returned to the person from whose possession the goods were seized. In the present case, the Adjudicating Authority has given a clear findings on this issue in the Order-in-Original. In the said Order, it is stated the investigation could not be completed within six months as it involved analysis of voluminous records related to smuggling of gold. It was not possible to issue the Show Cause Notice as stipulated under Section 110(2) of the Customs Act, 1962 i.e. within a period of six months from the date of seizure of the goods i.e. 90 Gold pi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gold jewellery sent after job work on earlier occasions were also made out of smuggled gold. The present consignment covered by Invoice no. J 0037 dated 17/05/2019 was part of the gold received earlier and returned back now after job work. The documents submitted by the Appellants clearly indicate that the gold were purchased from indigenous sources. The provisions of section 123 are not applicable to indigenously procured gold. The Appellants also relied upon the decision in the case of Balanagu Naga Venkata Raghavendra vs CC Vijayawada [ 2021 (2) TMI 612 - CESTAT HYDERABAD ] , where in it has been held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. Thus, the burden under Section 123 of Customs Act, to prove that the gold is not smuggled one, does not lie on the Appellants, in this case. Denial of right to cross examine the Expert who has given the certificate - HELD THAT:- The purity of silver cannot be the basis to construe that the gold is of foreign origin. The claim of the Appellants is agreed upon. The purity of the gold alone cannot be a determining factor whether the gold is of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty provisions invoked against M/s. KSTE and its proprietor M/s. Karan Sehdev is legally not sustainable, as they have established that the gold sent by them to STM for job work was purchased from indigenous sources. There is no documentary evidence available on record to establish the role of Daleep Kumar Verma - penalty is not imposable on them under section 1129B)(i) of Customs Act, 1962. Since, the violations as alleged in the Show Cause Notice are not established, the confiscation of the above said items are not sustainable - the confiscation of 90 gold strips and silver bar are not sustainable. The confiscation of TVS Scooter, one lap top and some other items as mentioned in Sl. No 34,35 and 36 of the OIO, not sustainable. The penalties imposed on the Appellants as mentioned in Sl No 38, 39,40 and 41 of the OIO, not sustainable. Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s also seized by DRI, under section 110(1) of Customs Act, 1962, as there was no document available with them for its legal importation. Both of them were arrested on 17.05.2019, under section 104 of Customs Act, 1962. 5. Mr. Karan Sehdev, Proprietor of KSTE in his statement dated 22.10.2019 admitted that they have sent 30194.2 grams of gold to STM, Imphal and received back 25234.11 grams gold after job work and 4956.41 grams of gold jewellery after the job work is held with Imphal Customs, since 17.05.19. Thus Mr. Karan Sehdev, proprietor KSTE has owned the ownership of the gold sent for job work and accepted that the gold bangles seized by DRI, Imphal was part of the gold sent by him for job work to STM, Imphal. 6. A show cause notice was issued on 04.09.2020 to the Appellant and to other co-noticees by the DRI, Guwahati. The Ld. Adjudicating authority passed the Order-in-Original dated 16.03.2021 confiscating the Gold and silver bar. He also imposed penalties on the Appellants. The Appellants filed Appeal before the Commissioner of Central Excise & Customs (Appeals), Guwahati and the said Appeals were rejected by the Ld. Commissioner(Appeals) vide order dated 30.11.2021. Hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re - Thus, officers from Group-B who are already from Customs Department can be appointed as "Officers of Customs" - Similarly, Officers of Directorate of Revenue Intelligence (DRI) are appointed as "Officers of Customs" under notification issued under Section 4(1) of Customs Act, 1962 - Officers from Directorate of Revenue Intelligence (DRI) having been appointed as "Officers of Customs" under Section 4 ibid are "Proper Officer" for purpose of Section 2(34) ibid. [paras 207, 208, 217, 240, 242] Precedent - Judicial Discipline - W.e.f. 8-4-2011, self-assessment is done by importer/exporter and only re-assessment done by 'proper officer' appointed under Section 2(34) of Customs Act, 1962 - Apparently, fundamental changes brought to manner of assessment under Section 17 ibid by Section 38 of Finance Act, 2011 with effect from 8-4-2011 not brought to attention of Supreme Court and therefore assumption in paragraph Nos. 12 to 15 in case of Canon India Private Limited [2021 (376) E.L.T. 3 (S.C.)] may require re-consideration insofar as pending cases before Supreme Court and other Courts - Law laid down by Supreme Court in Canon India Private Limited's case being declaration of law und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue the Show Cause Notice as stipulated under Section 110(2) of the Customs Act, 1962 i.e. within a period of six months from the date of seizure of the goods i.e. 90 Gold pieces of foreign origin and silver bar. Therefore, extension of time by another six months was sought from Commissioner, Customs (Preventive), NER, Shillong vide letter dated 09.11.2019. The Commissioner of Customs (Prev.), NER, Shillong, Customs House, M.G. Road, Shillong vide order in C.No. VIII(10)163/CUS/SH/2019/12051(A) dated 13.11.2019 extended the period for issuing Show Cause Notice by a further period of Six (6) months under the proviso to Section 110(2) of the Customs Act, 1962, i.e, till 16.05.2020 with intimation to both the arrested accused. 12. From the above, we find that the Commissioner of Customs (Prev) NER, Shillong has granted extension of time for issue of the Show Cause Notice for a period of six months from 16/11/2019. The Show Cause Notice in this case was issued on 04.09.2020 . Further, we find that in view of COVID-19, Hon'ble Supreme Court has allowed exclusion of the period from 15/03/2020 to 02/10/21 for computation of the period of limitation for any proceedings, which is applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts contended that the silver bar was having the marking of MMTC. They stated that MMTC is a Central Govt. refinery and it was purchased from India. The notice of DRI alleges that the silver bar was also of foreign origin, without any evidence to substantiate this claim. 13.3 Accordingly, the Appellants contended that there is no substance in the claim of the Department that the bangles and the silver bar were made from foreign origin gold. Hence, they contended that the confiscation of the gold bangles and silver bar are not sustainable. 13.4 In support of their claim, they have relied upon the decision of the Tribunal in the case of Commissioner of Customs (Preventive), Shillong v. Manisha Devi Jain [2019 (370) E.LT. 401 (Tri.-Kolkata)].The gist of the order is reproduced below: Confiscation - Gold carried by passenger travelling from Imphal to Kolkata confiscated on suspicion of being of foreign origin - Indian Origin remolten gold/gold ornaments could not be legally confiscated as its possession not prohibited under any provision of law - Seized gold not bearing foreign markings and did not have uniform weight/purity - Respondent belonging to respectable well to do family and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gold biscuits/bars and the silver bar of foreign origin are not smuggled in nature lies on Shri Rohit Kumar Suri and Shri Harshit Gakhar from whose possession, the impugned goods were seized. However, Mr. Karan Sehdev, Prop. of M/s. KSTE, Delhi in his statement dated 22.10.2019 inter alia stated that he is holding GSTIN 07CNSPS5929M1ZV and they sent gold for job-work to M/s. STM, Imphal. He further, deposed that they sent 30194.200 grams of gold to M/s. STM, Imphal for job-work and they have received back 25234.110 grams gold from the job-worker - M/s. STM. The gold of 4956.41 grams dispatched by M/s. STM, Imphal vide their invoice No.J-00037 dt. 17.05.2019 was seized by DRI, Imphal on 17.05.2019. 14.2 The Appellants stated that M/s. KSTE, Delhi received gold from M/s. V.K. Ornaments, Sirhind and M/s. Naresh Jeweller, Khanna. They submitted affidavits from Sh. Charanjit Singh - Prop. M/.s V.K. Ornaments, Sirhind and from Sh. Naresh Kumar, Prop. M/s. Naresh Jeweller, Khanna affirming that they supplied the said gold to the Noticee for job-work . 14.3 The Appellants claimed that the foregoing factual position prima facie discharged the onus under section 123 of Customs Act, 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment of India owned company inter-alia dealing in metals. As to how the silver bar bearing marking of Indian company (owned by Government of India) can be of foreign origin has not been given in the certificate. They argued that Sh. Akshay Kumar Paul is not an expert to tender opinion in the case under reference. The purity of silver cannot be the basis to construe that the Gold and silver bar were of foreign origin. 15.2 The gold bangles seized has been certified to be of foreign origin based upon purity. Further, Sh. Akshay Kumar Paul is aged 24 years, neither his qualification nor experience in the line has been given. Hence, they contended that the expert opinion is prima-facie incorrect. They stated that their request for cross examination of Sh. Akshay Kumar Paul was not allowed by the Adjudicating Authority, to bring on the factual position. 16. Statement of co-accused cannot be relied upon :- 16.1 Shri Rohit Kumar Suri has studied only upto 10th class and Sh. Harshit Gakhar has studied upto 12th standard in government schools. They do not know English much. A typed statement dt. 17.05.2019 in English was got signed from Sh. Rohit Kumar Suri and Sh. Harshit Gakhar. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, neither the gold bangles nor the silver bar bears any foreign markings. There is no evidence on record to show that the goods were smuggled into India from Myanmar. It is only an assumption of DRI that the gold bars of foreign origin were smuggled into India and later converted into gold bangles, without any supporting evidence. There is no evidence other than the statements of the Co Noticees, which were also retracted later. In view of the above, they contended that the gold bangles and silver bar, not having any foreign markings were not liable for confiscation. They have relied upon many decisions to support their argument. We find the following case laws squarely covers the case on hand. 18.2 The Tribunal in the cases of :- (i) Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T) dismissed the appeal of Revenue holding that jewellery not bearing any foreign marking - other than statement of passenger no other proof produced by Revenue to substantiate claim that jewellery was smuggled into India. (ii) Commissioner of Customs (Prev), Shillong Vs. Manisha Devi Jain [2019 (370) ELT 401 (T) held that Indian origin remelted gol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ette specify 19.3 We find that Section 123 applies inter-alia to gold/silver bullion seized on the reasonable belief that they are smuggled goods . The burden of proving that they are not smuggled goods shall be on the person, who claims to be the owner of the goods so seized or from whose possession the goods are seized. The contention of the Department is that in the instant case, the onus of proving that the gold biscuit/bars and the Silver bar were not of smuggled in nature, lies on Shri Rohit Kumar Suri and Shri Harshit Gakhar from whose possession the impugned goods were seized. The Department contended that both Shri Rohit Kumar Suri and Shri Harshit Gakhar did not produce any document for their lawful possession of the recovered gold and silver bar. They themselves admitted that the seized gold has actually been smuggled into India from Myanmar without any legal documents in biscuit form and they have melted and made it in strip form in the guise of crude ornament (bangles). 19.4. The contention of the Appellant is that the gold bangles and silver bar were not of foreign origin. Section 123 of Customs Act is applicable only to foreign marked gold and silver. Since, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also relied on the decision of the Hon'ble Bombay High Court in the case of State of Maharashtra v. Prithviraj Pokhraj Jain reported as 2000 (126) E.L.T. 180 (Bom.). 4. On the other hand Learned AR appearing on behalf of the Revenue submits that in this case Shri Umesh Kumar in his statement has admitted that gold is being smuggled from Nepal by Shri Sanjeeb Kumar, therefore, Revenue has established that gold in question is smuggled one and is of third country origin. The appellants have failed to prove that the gold in question is not smuggled one. In that circumstances, the Revenue has rightly absolute confiscated the Gold in question. 5. Heard the parties. 6. Considering the submissions made by both the sides, we find that the appellants have failed to prove the source of procurement of gold, therefore, we hold that gold is smuggled one but on the same time, Revenue is also failed to prove that gold is of third country origin and smuggled through Nepal. In fact, the Revenue has not adduced any evidence to that effect, whereas on the other side, Shri Sanjeeb Kumar, himself has categorically stated that he is not dealing with the purchase and sale of the gold. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. The relevant portion of the order is reproduced below. 14. The confiscation of the gold by the adjudicating authority was set aside by the Tribunal and on appeal by the Revenue the Hon'ble High Court of Kerala, in the above factual matrix, has overturned the decision of the Tribunal. Therefore, it was not merely the purity of the gold in question but also the statements made during the investigation which formed the basis of the reasonable belief of the officers. In the present case, none of the statements recorded by the Department admit to or even suggest that the gold was smuggled gold. It has also not been brought out in the show cause notice that the purity of the seized gold is such that it could only have been of foreign origin. It is true that the conduct of the appellants was suspicious inasmuch as the gold pieces were being carried in newspapers and a letter was found written to one Shri Vijay in Trissur for requesting the gold to be handed over to the bearer of the letter. It is also confirmed by the DCM, Railways that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have been denied the right to cross examine the Expert who has given the certificate. The Appellants stated that Shri Akshay Kumar Paul, Goldsmith has given a Certificate dated 17.05.2019 certifying that the 90 pieces of gold were of foreign origin in strip form, based on its purity. They argued that Sh. Akshay Kumar Paul has no expertise to give that opinion. The purity of silver cannot be the basis to construe that the gold is of foreign origin. We agree with the claim of the Appellants. The purity of the gold alone cannot be a determining factor whether the gold is of foreign origin or not. As discussed in para 19 above, the Appellant has produced evidence to the effect that the gold were procured from domestic sources. Hence, we hold that no weightage can be given for the certificate of purity issued by the Expert, to establish its foreign origin. 21.1 The next ground raised by the Appellants is that the Appellant Rohit Kumar Suri and the Noticee Harshit Gatkhar have retracted their statements and hence the Department cannot rely on the retracted statements to prove that the gold were of foreign origin. They also stated that the retracted statements does not have higher evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T) dismissed the appeal of Revenue holding that jewellery not bearing any foreign marking - other than statement of passenger no other proof produced by Revenue to substantiate the claim that jewellery were smuggled into India. 21.5 In view of the above discussion and relying upon the the decisions cited above, we hold that the gold and silver bar cannot be confiscated based on the retracted statements alone. 22. Regarding penalty imposed under section 112 of the Customs Act 1962 , the Appellants stated that the gold was purchased from indigenous sources against statutory invoices. There is no evidence on record to show that the 90 gold bangles and silver bar were of foreign origin and smuggled into the country. In the absence of any evidence to establish that the gold and silver bar were smuggled ones, no penalty is imposable under Section 112 of the Customs Act 1962. They relied upon many decisions of the Tribunals and High Courts to support their claim. We find merit in the argument of the Appellants. Section 112 of the Customs Act 1962, details the circumstances under which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d value and the value thereof or five thousand rupees], whichever is the highest.] 23. From the OIO, we find that personal penalty under section 112(b)(i) of Customs Act, 1962 has been imposed on the following persons. (i) Rohit Kumar Suri - Rs 5,00,000 (ii) Harshit Gatkhar - Rs 5,00,000 (iii) Daleep Kumar Verma Rs 15,00,000 (iv) Karan Sehdev Rs 15,00,000 Under section 112(b)(i) penalty is imposable when the person is found to be dealing with goods for which prohibition is in force. The gold bangles and the silver bar dealt by the Appellants were established to be of Indian origin and hence not prohibited goods. Rohit Kumar Suri and Harshit Gatkhar are employees of the Appellant STM. They have carried out the job work as directed by their employer Daleep Kumar Verma. The penalty provisions invoked against M/s. KSTE and its proprietor M/s. Karan Sehdev is legally not sustainable, as they have established that the gold sent by them to STM for job work was purchased from indigenous sources. There is no documentary evidence available on record to establish the role of Daleep Kumar Verma. Hence, we find merit in the argument of the Appellants that penalty is not imposable on them ..... X X X X Extracts X X X X X X X X Extracts X X X X
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