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TMI Blog2023 (5) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... DRI officers on the reasonable belief that they were smuggled into India from Bangladesh without any legal documents. 2. Samples of the gold bars/pieces were drawn and sent to CRCL, Kolkata for testing. The test report received from CRCL on 27.01.2020 revealed the purity of the gold as under:- Sl. No. Name of Sample Lab No. & Date Purity 1 SAMPLE-1 3605/SZD (G)-467 dtd15.01.2020 99.6% 2 SAMPLE-2 3606/SZD (G)-468 dtd15.01.2020 99.5% 3 SAMPLE-3 3607/SZD (G)-469 dtd.15.01.2020 99.6% 4 SAMPLE-4 3608/SZD (G)-470 dtd.15.01.2020 99.8% 5 SAMPLE-5 3609/SZD (G)-471 dtd.15.01.2020 99.5% 3. Statements were recorded from Shri Rajesh Kumar Yadav and Shri Umanath on 10.01.2020 wherein they stated that they have been working in a jewellery shop at Jaunpur, U.P. namely M/s. Gandhi & Sons whose proprietor is Shri Manoj Kr. Seth. The Mobile Numbers of Shri Rajesh Kumar Yadav are 9919553261 and 9369919332. They stated that they have received the gold from one Shri Dilip Singh, staff of Shri Anuragji of Kolkata and the gold pieces were carried by them for being handed over to Shri Manoj Kumar Seth and his son Shri Balwant Raj Soni. They have stated that the phone number of Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Shri Rajesh Kumar Yadav, Noticee No.1 and Shri Umanath, Noticee No.2 at Gaya Railway Station and seized on 10.01.2020, under Clauses (b), (d) and (p) of the Customs Act, 1962; (b) Seized pieces of newspaper, rubber, cloth belt [Kamarbandh' and Gamchha used for concealing the smuggled consignment of gold mentioned under preceding Clause, under Section 119 of the Customs Act, 1962; 2. I impose a penalty of Rs.10,00,000/- (Rupees Ten Lakh) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Rajesh Kumar Yadav, Noticee No.1; 3. I impose a penalty of Rs.10,00,000/- (Rupees Ten Lakh) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Umanath, Noticee No.2; 4. I impose a penalty of Rs.50,00,000/- (Rupees Fifty Lakh) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Manoj Kumar Seth, Noticee No.3; 5. I impose a penalty of Rs.50,00,000/- (Rupees Fifty Lakh) only under section 114AA of the Customs Act, 1962 on Shri Manoj Kumar Seth, Noticee No.3; 6. I impose a penalty of Rs.10,00,000/- (Rupees TenLakh)) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Balwant Raj Soni, Noticee No.4; 7. I i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Maharashtra v. Prithviraj Pokhraj Jain reported in 2000 (126) ELT 180 (Bom.) CESTAT, Kolkata in the case of Nitya Gopal Biswas v. Commr. Of Customs (Prev.), Kolkata reported in 2016 (344) ELT 209 (Tri.- Kolkata) CESTAT, Kolkata in the case of Nand Kishore Sumani v. Comm. Of Cus., C.EX. & ST, Siliguri, reported in 2016 (333) ELT 448 (Tri.-Kolkata) Hon'ble Calcutta High Court in the case of Comm. Of Cus., Ex. & ST., Siliguri, reported in 2016 (337) ELT 10 (Cal.) CESTAT, Kolkata in the case of Madhukar Sonaba Bhagat v. Commr. Of Customs (Prev.), West Bengal, reported in 2019 (368) ELT 990 (Tri.-Kolkata). CESTAT, Kolkata in the case of Ram Naresh Chaurasiya v. Comm. Of Customs (Prev.), Patna, reported in 2019 (365) ELT 940 (Tri.- Kolkata) CESTAT, Kolkata in the case of Commr. Of Customs (Preventive), Kolkata v. Ashok Kumar Agarwal, reported in 2017 (348) ELT 555 (Tri.-Kolkata) CESTAT, Kolkata in the case of Goutam Karmokar Vs. Commr. Of Cus. (Prev.), West Bengal, reported in 2010 (261) ELT 812 (Tri.- Kolkata) Hon'ble Calcutta High Court in the case of Rajesh Pawar v. Union of India, reported in 2014 (309) ELT 600 (Cal.) 11. The Ld Departmental Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g it to be not the subjective satisfaction of the officer concerned, for "such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with their strains imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief cannot be investigated. In view of the above, the Appellants stated that to form a 'reasonable belief' that the goods are smuggled from Bangladesh, there must be irrefutable evidence to prove that allegation. In the present case there is no such evidence available to prove that the goods were of foreign origin and smuggled into India from Bangladesh. 17. The Appellants also relied upon the following decisions in support of their argument that the 'reasonable belief' must be supported with other independent corroborative evidences. (i) In Assistant Collector of Customs v. Charan Das Malhotra, 1971 (1) SCC 697, Shelat J., has held r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized and not to a stage subsequent to the act of seizure. (M.G. Abrol v. Amichand, AIR 1961 Bom. 227). The condition precedent that there was such a reasonable belief anterior to the seizure must exist before the presumption under Section 123 can be invoked." 19.2 Smuggled goods - Reasonable belief cannot be based on presumption. "58. The second reason for entertaining a reasonable belief is that the seized goods were not accounted for by the petitioner on 15-2-1967 when the officer seized the goods from his possession. The seized goods consisted of 20 items of ornaments and diamonds. Out of these six items were released before the show cause notice was issued. One item was released at the adjudication stage. Six items were released by the Board on appeal. Only 7 items have been confiscated. These consist of 2 packets of diamonds and 5 ornaments. The petitioner claimed that they belonged to the queen mother of Nepal. A letter was written to queen mother. On her behalf a reply was received that she had given certain ornaments to the petitioner for polishing, remaking etc., though not for sale. But this was done later on. The letter was written on 3-7-1967. The reply was receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th foreign markings was found hidden in the trousers of the accused as happened in Hukma v. State of Rajasthan, AIR 1965 S.C. 476. 61. In fact there is a finding by the Board in favour of the petitioner supporting his contention that there could be no reasonable belief in the mind of the officer when he seized the goods. On the penalty of Rs. 25,000/- imposed on the petitioner the Board observed : "there is no definite evidence to show that the appellant knew or had reason to believe that those items were smuggled. In the absence of this evidence the penalty imposed is not justified. The Board accordingly remits the personal penalty in full". If the petitioner did not know that the goods were smuggled, how could the customs officer reasonably believe that the goods were smuggled. The petitioner knew better. 62. The customs officer merely thought that as the goods had not been accounted for these are smuggled goods. At the time of seizure what happened was this. The petitioner was present at the shop. He told the customs officer that they were duly entered in his account books but his accountant had gone to the income tax officer. The officer did not wait for the man to arrive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made from the possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person form 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 of goods which the Central Government may be notification in the Official Gazette specify 22.2 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 bars/pieces were not of smuggled in nature, lies on the Noticees from whose possession the impugned goods were seized. The Revenue contended that both Rajesh Kumar Yadav and Umanath did not produce any document for their lawful possession of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Revenue has failed to prove that the gold in question is of third country origin and have been imported/smuggled through Nepal. In that circumstances, the gold in question cannot be held as restricted goods and they can be released on payment of redemption fine and penalty as the goods are smuggled in nature. We also gone through the case law relied upon by the Learned Counsel for the appellants in the case of Prithviraj Pokhraj Jain (supra) wherein in Para 19 which is extracted below wherein the Hon'ble High Court observed as under - "19. The burden was, therefore, on the prosecution to prove that the goods were smuggled. For this the prosecution relied upon the evidence of Hebbar who stated that he believed the goods to be smuggled, because watches and watch straps were of foreign origin, the import of which was heavily restricted and prohibited and they were found in huge quantity. The foreign origin of the watches is tried to be shown from the foreign markings on the watches. The question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the appellants had travelled from Trissur to Vijayawada by train. However, we note that Trissur is not even a port in itself. The gold was apparently collected from one Shri Vijay in Trissur. There were also several contradictions between different statements as recorded in para 16 of the show cause notice. All these would show that Shri Kanaka Ratnam (Appellant in Appeal No. 30496 of 2017) wrote a letter to Shri Vijay of Trissur to hand over gold to the bearer of the letter and both the letter and the gold were recovered from his son Shri Naga Venkata Raghavendra (Appellant in Appeal No. 30495 of 2017). Both the appellants had travelled by train from Trissur to Vijayawada. Naga Venkata Raghavendra was acting suspiciously when the Officers approached him. Subsequent statements were contradictory to each other. These factors by themselves cannot, in our considered opinion, constitute the basis for forming a reasonable belief that the seized gold was smuggled. Therefore, the Officers did not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rprises. Delhi. The investigation has not verified the documents submitted by them in support their claim of domestic purchase of the gold bars/pieces. They brushed aside the evidences submitted by the Appellants by citing some mismatch in the dates. One of the reasons cited for ignoring the invoice was that the invoices were not carried along with them by the persons who carried the gold. Not having the invoices at the time of seizure cannot be areason to ignore their claim. The documents produced could have been verified to find out the veracity of their claim. On the contrary, the investigation could not provide any evidence to establish the smuggled nature of the gold. In the absence of any such evidence, the burden of proving that the gold bars/pieces were not smuggled one cannot be thrust upon the Appellants. 22.8 In view of the above discussions and the decisions cited above, we hold that 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. Accordingly answer to question no (ii) in para 13 above, is negative. 23. The next question to be answered is whether the retracted statements of the co-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the statement of the Driver which is in the nature of uncorroborated statement of a co-accused and cannot be made the sole-basis for penalizing the appellant. v) Jahed Mondal Vs. Commissioner of Customs (Prev.), West Bengal- 2002 (149) ELT 319 (Tri.-Kol.) Para 8 & 11.). Penalty has been imposed upon Shri Jahed Mondal based upon the statement of Bablu Biswas who was intercepted by the Customs Officer from whose possession one gold biscuit has been recovered. Penalty cannot be imposed on the basis of confession of co-accused unless corroborated by other evidences. Non-appearance in response to Summons cannot be a factor or criteria in determining the guilty conduct of the appellant. vi) Narayan Das Vs. Commissioner of Customs, Patna- 2004 (178) ELT 554 (Tri.-Kolkata) Para-6. Mere inculpatory statement of the co-acused about the purchase of gold from the appellant cannot be the basis of imposing penalty under Section 112(b) of the Customs Act, 1962 in the absence of any other corroborative evidence. 25. The Appellants further submits that the statement of the coaccused in this case cannot be considered as relevant in view of noncompliance of the mandate under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority, therefore, should follow the procedure to rely on the statement as relevant for proving the truth of the contents of the statement, to admit the statement in evidence. In this case, the said mandate has not been followed and hence the statement of the co-accused in this case cannot be said to be voluntary and his statement also cannot be said to be true and correct and shall not be taken as evidence. 28. The Appellants submits that after examination by the Adjudicating Authority the question of cross-examination would arise as has been held in Prakash Raghunath Autade- Vs. Union of India - 2022 (380) ELT 264 (Bom.). 29. The Appellants further relied upon the decision of the Tribunal in the case of S. Mohanalal reported in 1987 (29) ELT 63 (Tri-Madras) wherein the Tribunal held that "it will be unfair to fasten the appellant with penal consequences merely on the basis of a statement recorded from a third party to the effect that Gold Pellets under seizure were eventually intended to deliver to the Appellant". In the case of Sourav Goyal reported in 2020 (373) ELT 676 (Tri.-Del.), it was held by the Tribunal that the statement of the co-noticees unless corroborated by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused persons were not sustainable - It was contrary to settled legal position, illegal, arbitrary and liable to be set aside - Sections 108, 111, 112 and 123 of Customs Act, 1962. [paras 22, 25, 26] Evidence - Confessional statement of co-accused - It is not substantive evidence against another co-accused - It can at best be used for assurance to Court - In absence of any substantive evidence, it was inappropriate to base conviction of accused on statements of co-accused - Section 108 of Customs Act, 1962. [para 25] 31.2 The Tribunal in the cases 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. 31.3 In view of the above discussion and relying upon the the decisions cited above, we hold that the gold bars/pieces cannot be confiscated based on the retracted statements alone. Accordingly answer to question no (iii) is negative. 32. Regarding penalty imposed under section 112(a) and (b)and 114AA of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest.] 33. From the Order-in-Original, we find that personal penalty under section 112 (a) and(b)of Customs Act,!962 has been imposed on the following persons. (i) Shri. Rajesh Kumar Yadav - Rs 10,00,000 (ii) Shri.Umanath - Rs 10,00,000 (iii) Shri. Manoj Kumar Seth - Rs 50,00,000 (iv) Shri. Balwant Raj Soni - Rs 10,00,000 (v) Shri. Anurag Jalan - Rs 10,00,000 Shri. Manoj Kumar Seth has also been imposed a penalty of Rs 50,00,000 under section 114 AA of Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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