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TMI Blog2024 (4) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel appearing on behalf of the Appellants submits that there are two statements recorded initially by the Appellant Nos. 1 to 4, who have subsequently retracted during the third recorded statement. The Department has proceeded with their subsequent investigation based on the facts coming out of the third recorded statement. The third statement was recorded on 15 & 16 February 2016. In this statement they have stated that one Mr. Rinku Verma is the owner of the gold. Subsequently, Mr. Rinku Verma [Appellant No. 5 herein] has produced documentary evidence to the effect that the gold in question was procured by him from Snehal Gems Pvt Ltd Mumbai. Towards this, he has submitted the invoices raised by the seller. The details of the payment made through banking channel and copy of the ledger account maintained by the seller were submitted. Investigation was carried out at the end of Snehal Gems Pvt Ltd., and their Director Mr Pradeep Kumar Bothra [Appellant No. 6 herein] has recorded his statement, wherein he has confirmed that they have sold the gold in question to Mr Rinku Verma under these invoices. They have also produced documentary evidence towards the purchase of gold. Therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Member (Technical), wherein he has gone into each and every point in a detailed manner and has given findings to come to a conclusion as to why the appellants have not been able to discharge the burden to rebut the allegations. Therefore, he submits that Member (Technical) has correctly affirmed the Order-in-Original. Accordingly, he prays that the Appeals may be dismissed. 6. Heard both sides in detail and perused the documents placed on record in the Appeal paper books and documents submitted by both the sides. 7. On going through the Appeal papers and other documents submitted by both the sides, the facts of the case emerging are as under : 7.1 The four appellants 1-4, namely Rajendra Kumar Dhuria, Saurabh, Golu Verma and Shubham Verma were intercepted by the authorities at Howrah railway station. They were found to be in possession of 6 pieces of 1 kg. gold bar each. The said gold was foreign marked of Swiss origin with 995.0 purity. The gold bars carried the markings "PMAPSUISSE PMAP ESSAYEUR FONDEUR". In the entire proceedings, the foreign origin of the gold is not disputed by any party. 7.2 The chronological details of the proceedings initiated are as per the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the authorities for the first time. He submits that he has sold the 6 kg. gold to Rinku Verma against the 4 bills tendered by him. He states that in the course of their gold trade, they have bought the gold from other Vendors. On a question as to whether the gold seized is the same which has been sold by him, he states that he can only confirm that the Rinku Verma regularly buys the gold and cannot comment as to whether the seized gold is the same or not. 15.2.2016 & 16.02.2016 The appellants 1 to 4 vide their letter dated 15/2 & 16/2/2016 retract their earlier statements and submit that that earlier statements tendered on 19.05.2015 and 28.07.2015 were were given under duress and were not correct 7.3 To summarize the above events : (a) The Appellants 1 to 4 on 19.5.2015 and 28.7.2015, uniformly state that the gold in question was procured for Rinku Verma [Appellant Number 5] from Shashi Kant Patil of Dhanlakshmi Bullion Pvt Ltd on cash payment. (b) The Appellants 1 to 4 vide their letter dated 12.10.2015, submit that the seized gold may be returned to Rinku Verma. On the same day, Rinku Verma stakes his claim as the owner of the seized gold. (c) On 16.10.2015, Shashi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized gold. Thus, it cannot be denied that in any view of the matter, Rinku Verma [Appellant Number 5], is the owner of the gold. 8. At this point, it would be important to go through the provisions of Section 123 of the Customs Act 1962. The relevant portions are extracted below : 123. Burden of proof in certain cases. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be- (a) in a case where such seizure is 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 from 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. 9. The above statutory provision at Section 123 (1) (a) (ii) and (1) (b) clearly states that the burden of proving that they are not smuggled goods shall be on 'the person under whose possession the goods were seized' or 'on the person who claims to be owner thereof'. 10. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanlaxmi Bullion Pvt. Ltd., 43, Nalini Seth Road, 1st Floor, Kolkata-700007 and took the delivery of 3 kg gold from him and after taking delivery they first went to Room No. 306, 67/43, Strand Road, Cross Road No. 08, 2nd Floor, Kolkata where they had stayed. After reaching there, they both found that Subham Verma and Sourabh Kumar were already there with 3 Kg gold. In the afternoon, they all four left with 6 Kg gold to Howrah Station to board the train towards Allahabad to hand over the gold to Rinku Verma (b) In his voluntary statement recorded under Section 108 of the Customs Act, 1962, Sourabh stated that he and Shubham Verma paid Rs. 35 Lakhs and Rs. 48 Lakhs respectively to Shashikant Patil of M/s Dhanlaxmi Bullion Pvt. Ltd., 43, Nalini Seth Road, 1st Floor, Kolkata-700007 and took delivery of 3 kg gold from him and after taking delivery they first went to Room No. 306, 67/43, Strand Road, Cross Road No. 08, 2nd Floor, Kolkata where they had stayed. After reaching there, they both found that Raghendra Kumar Dhuriya and Golu Verma were already there with 3 kg gold. In the afternoon, they all four left with 6 Kg gold to Howrah Station to board the train towards Allahabad to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... til of M/s Dhanlaxmi Bullion Pvt. Ltd., 43, Nalini Seth Road, 1st Floor, Room No. 101, Sonapatty, Kolkata but could not provide any sale-purchase document or any transactional evidence. He also stated that he does the business of sale and purchase of gold and jewellery with Meera Jewellers of Delhi, Snehal Gems Pvt. Ltd. of Mumbai and Shashikant Patil and Pradeep Gupta of Kolkata. He claimed that 6 kg gold recovered from the possession of Rajendra Kumar Dhuriya (2 kg gold of foreign origin), Shubham Verma (02 kg gold of foreign origin), Sourabh (01 kg gold of foreign origin) and Golu Verma (01 kg gold of foreign origin) was purchased by him from Snehal Gems Pvt. Ltd, Bidg. No. 6/127, Mittal Industrial Estate Andheri, Kuria Road, Andheri East, Mumbai-400059 vide:- (i) Bill No. GOLD/MAY/1/2015-16 dated 02/05/2015 (1 kg gold), (ii) Bill No. GOLD/MAY/2/2015-16 dated 05/05/2015 (2 kg gold), (iii) Bill No. GOLD/MAY/3/2015-16 dated 09/05/2015 (2 kg gold). (iv) Bill No. GOLD/MAY/4/2015-16 dated 12/05/2015 (1 kg gold), but all the bills are not supported by any import document neither any payment related documents were submitted by Rinku Verma. He stated that all the required docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... napatty and their statements recorded on 19/05/2015 was not proper, correct or voluntary, hence to verify the genuiness of the claim made by Rinku Verma and to complete the investigation, another summons were served to them for recording before the Superintendent of Customs, P & I Branch, CC(P), W.B., Kolkata. Raghendra Kumar Dhuriya & Sourabh tendered their voluntary statement on 15/02/2016 and Subham Verma & Golu Verma tendered their voluntary statement on 16/02/2016 before the Superintendent of Customs wherein they inter alia stated that they have never heard the name of person namely Pradeep Kumar Bothra and any firm namely M/s. Snehal Gems Pvt. Ltd. When they were asked that why they had mentioned in their letter that their statement recorded on 19/05/2015 and 28/07/2015 that they had procured the seized gold from one Shashikant Patil of Sonapatty, Kolkata, they replied that seized gold were handed over to them by Rinku Verma at Allahabad and their statements recorded on 19/05/2015 and 28/07/2015 are wrong and statements recorded on 15/02/2016 is correct. When they were informed that for giving false and incorrect statement, they can be liable for penalty and punishments, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, 1962. (k) Therefore, (1) Shri Raghendra Kumar Dhuriya, (2) Shri Sourabh, (2) Shri Subham Verma, (4) Shri Golu Verma, (5) Shri Rinku Verma and (6) Shri Pradeep Kumar Bothra are required to show cause before the Commissioner of Customs (Preventive), W.B. Kolkata, having office at Customs House, (3rd Floor), 15/1, Strand Road, Kolkata-700001 within 30 (thirty) days from the date of receipt of this notice 14. The Adjudication process requires the Noticee to make his submissions along with supporting documents in defence of his case. In the present case, it would also be relevant to go through the submissions made by Rinku Verma [Appellant No. 5 - claimant of ownership]. The relevant portions are extracted below : 2. The goods seized in the instant case were lawfully purchased by him and he has also submitted the copies of such legal purchase and procurement of the gold bars. Investigation has been caused with the seller of the gold bars and from Show Cause Notice, it is also evident that the seller has accepted such sale in my favour. The Show Cause Notice nowhere adduced any evidence denying such lawful purchase by him. In such circumstance, question of illegal importation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation by way of adequate, proper and legal documents before the investigating authority. The seller of the gold had also acknowledged & corroborated such fact and produced documents to substantiate his source of gold and stock as on date of sale in favour of the present noticee no. 5. (iii) That in the present Show Cause Notice, nowhere such documents produced by the present noticee as well as M/s. SGPL have been alleged or established on evidence as false, incorrect or forged in nature. (iv) That surprisingly, at para 27 of the Show Cause Notice it is alleged that the present noticee in connivance with the Director of M/s. SGPL had tried to legalize his unauthorized and illegal transaction by submitting 'non-relevance' documents. However, how the documents produced by the present noticee and/or M/s. SGPL are of no relevance, has not been illustrated in the Show Cause Notice. Thus the allegation is absolutely vague in nature. The investigating authority could not point out that any of the documents produced during the course of investigation by noticee no. 5 and/or 6, are false, incorrect or forged in nature. In absence of such allegation that the documents are false, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Snehal Gems Pvt. Ltd. 5. xxxxxxxxxxx I find that the aforesaid 06 (Six) pieces of gold bars of foreign origin were seized under Section 110 of the Customs Act, 1962 on the reasonable belief that they were smuggled into India through unauthorized route and are liable for confiscation under Section 11(b) and Section 111(d) of the Customs Act, 1962. In terms of section 123 of the Customs Act, 1962, the onus in the subject case for proving that the seized 06(six) pieces of gold bars of foreign origin, totally weighing 6.00 kgs valued at Rs. 1,68,58,500/- are not smuggled gold shall be on Shri Raghendra Kumar Dhuriya, Shri Sourabh, Shir Subham Verma, Shri Golu Verma from whose possession the aforesaid 06 (six) pieces of gold bars were seized and the claimant of the seized gold Shri Rinku Verma. The notices, in this case, were required to substantiate and discharge the burden of proof under Section 123 of the Customs Act, 1962. I find from the facts of the case discussed hereinbefore, that the conditions stipulated in Section 123 of the Customs Act, 1962 were in no manner complied with by the apprehended and accused persons Shri Raghendra Kumar Dhuriya, Shri Sourabh, Shri Subham Ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Verma and Golu Verma at the final stage of investigation as detailed above is a desperate attempt by Rinku Verma to avoid the legal consequences of being involved in gold smuggling activities and is also a futile attempt to claim that the seized smuggled gold was legally sourced. I find that to substantiate the claim made by the Rinku Verma that the 06 (six) kgs. Of gold had allegedly been purchased by him from Snehal Gems Pvt. Ltd., the 04 (four) apprehended persons have totally contradicted their earlier statements dated 19.5.2015 and 28.7.2015 wherein they had indisputably admitted that they had obtained the gold from the shop of Shashikant Patil and had claimed on 15.2.2016 and 16.2.2016 that the gold seized from their possession was given to them by Rinku Verma of Allahabad for the purpose of getting gold jewellery in exchange of the same from Sonapatty, Kolkata and their statements recorded on 19/05/2015 were not proper, correct or voluntary. This implies admission on the part of the 04 (Four) apprehended persons i.e. Raghendra Kumar Dhuriya, Sourabh, Subham Verma and Golu Verma that they gave false statements to the investigating authorities. In this matter their contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling activities and the seized smuggled gold was also claimed by him (Rinku Verma) on the basis of unsubstantiated gold purchase documents. I find Rinku Verma has knowingly, willingly and voluntarily involved himself in the nefarious activity of smuggling of gold. I find all efforts were made by Rinku Verma in a futile attempt to prove that the smuggled gold was legally obtained. The gold purchase documents furnished by him were not corroborated by him or by Pradeep Kumar Bothra who claimed without any supporting documents to have sold the gold to Rinku Verma. I find Rinku Verma has actively, consciously and deliberately involved himself in the gold smuggling activities and has claimed the seized gold on the basis of purported uncorroborated gold purchase documents and is thus liable to be penalized under Section 112 of the Customs Act, 1962 and Section 114AA of the Customs Act, 1962. 16. I have carefully gone through the Show Cause Notice, the reply thereto and the discussions and findings by the Adjudicating Authority in the Order in original. 17. From the above relevant extracts of Show Cause Notice, it is observed that from Para (a) to (b), vivid details have emerged to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated and sham, he cannot be made a co-noticee on mere assumptions. However, he has been made a co-noticee with no in-depth investigation. (iii) After taking a clear view that Rinku Verma is the mastermind and Appellant No. 1 to 4 acting on his behest, still the Appellant 1 to 4 have been treated as the main accused [usage of this word itself is not correct since this is not a prosecution proceeding]. (iv) Section 123 very clearly states that the burden of proof lies with the person claiming the ownership. The Appellant No. 1 to 4 have been claiming that they have bought the gold for Rinku Verma. Subsequently he has claimed the ownership stating that he has bought from Snehal Gems Pvt Ltd. Therefore, the issue of ownership was never in doubt. Accordingly, the only person responsible to discharge the burden of proof could be only Rinku Verma. However, the SCN states that Appellant No. 1 to 4 and Rinku Verma were not able to discharge the burden of proof. This shows that the Dept itself was not sure as to who should be discharging the burden of proof. 22. Coming to the reply filed by the Appellant No. 5 [claimant of ownership], the most relevant issues raised by him are : (i) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f natural justice requires him to address all the issues and give a proper finding as to why the submissions are not acceptable for the conclusions arrived at by him, which has not been done in this case. 24. In his reply to SCN, Noticee No. 5 submitted that Noticee 6 had duly produced his purchase documents along with stock, sale, purchase registers as well as Ledger Account maintained with respect to sale in favour of Shri Rinku Verma. Such documents are duly enclosed as relied upon documents under covering letter dated 18.05.2017 issued by the Ld. Superintendent of Customs (Preventive), Adjudication Branch, CC(P), WB. However, the Adjudicating authority at Para 7 holds "I find that all the above mentioned bills are not supported by any import documents.". There is no mention as to whether the documents placed by the Noticee 5 [Rinku Verma] and Noticee 6 [Pradeep Kumar Bothra], were put to verification and what kind of verification was done, as to who undertook this exercise, to come this conclusion. Without such specifics, his bland standalone statement does not withstand legal scrutiny. 25. Since the Dept had received an earlier lead about procurement of the seized gold on ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper answer was required to be found by the Revenue. The delays caused due to non-appearance for the Summons issued, non-production of the Invoices even when the Appellants 1 to 4 were jailed, producing of the Invoices after many months, retraction of statement by the Appellants 1 to 4 after many months etc, gives enough cause to raise many queries. But these are the cues to be taken for an in-depth and exhaustive investigation to arrive at a clear conclusion about the role played by each of the noticee while issuing the Show Cause Notice. Once this exercise is done, it is for the Noticees to make their submissions and after this, it is for the Adjudicating authority to consider the allegations vis-à-vis the submissions/documentary evidence on record to come to proper conclusion. From the Order in Original, which completely takes the support from Show Cause Notice, it emerges that none of the issues raised by the appellants have been properly addressed before coming to a conclusion. 29. Now coming to the point raised by the Revenue in their arguments about non-addressing of the retraction by the Member Judicial while coming to his conclusion. As observed by me in the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are smuggled gold bars. These may lead to proceedings for breaches of other Acts but it does not follow from it that the gold bars are smuggled goods. In fact, if a person in possession of the stolen gold is able to establish that it had come into India after a proper declaration and compliance of the Act, no confiscation under the Act, can arise. Proceedings under the Indian Penal Code may be initiated by the police for theft, but it would not by reason of theft become smuggled goods. Moreover, smuggling as defined under Section 2(39) of the Act, is an act or omission which will render goods liable to confiscation under Section 111 of the Act for import and 113 of the Act for exports. On reading of Sections 111 and 113 of the Act, not keeping proper books of account or not being registered with the income-tax and/or Sales Tax Authorities, is not an omission which renders the goods liable for confiscation i.e. smuggled goods. (iii) At this, the Learned Additional Solicitor General emphasized the fact that the 575 seized gold bars were secreted in a specifically made cavity in jeep. This, according to him, would be done only in case the gold so secreted, was smuggled gold. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication on 10th March, 2000 filed by respondent No. 1; (x) Further, Mr. Bhupendra Thakkar, in his statement has also explained the source of the gold in possession of [M/s. Paras Bullion and M/s. Pavan Jewellers] namely-purchase from companies and firms who in turn had purchased the same from the Banks. The purchase and sale of gold by [M/s. Paras Bullion and M/s. Pavan Jewellers] were reflected in their separate books of account which were also produced before Officers of DRI. Nothing adverse is shown to us which would justify ignoring the same; (xi) It is noteworthy that the Officers of DRI did not pursue investigation further with [M/s. Paras Bullion and M/s. Pavan Jewellers] and the other concerned entities. Thus, not pursuing the further investigation, would imply that the Officers of the DRI were satisfied with the explanation given by respondent No. 1 and that of Mr. Bhupendra Thakkar on behalf of [M/s. Paras Bullion and M/s. Pavan Jewellers]. The impugned order, particularly, records the fact that the discrepancies were noted by Commissioner with regard to the bill book. However, it holds that it is not of much consequence in view of the fact that these discrepancies w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court discussed above would be squarely be applicable in the present Appeals. 33. Out of my detailed observations on the investigation and Show Cause Notice, some observations are also echoed from the Interim Order No. 1 to 6/2023 dated 29.08.2023, passed by this Bench. The Hon'ble Member (Technical) has found some glaring lapses in the Show Causes Notice, which he has elaborated at Para 58 of the Order. For the sake of brevity, I am refraining from reproducing the same, but confining myself to some of the points getting highlighted therein : * The investigations undertaken by the department in the matter have been done in a very shoddy and unprofessional manner. * There has been no serious attempt to conduct wholesome enquiries into the case. * The general approach of the department is very casual and callous. * The seriousness of investigations as required to be conducted in a case of this nature is not evident from the approach of the investigating officers. * A reading of the show cause notice suggests minimal action undertaken. * That nothing can be worse than this that the CDR data of the prime accused, Rinku Verma appears to have not been investigated at all. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rived at by Revenue to disprove the claims of Rinku Verma and Snehal Gems Pvt Ltd. The issues raised in the reply to Show Cause Notice have not been properly addressed. While certain discrepancies might have been observed when the documents were examined by the Bench, but on their own, it cannot be conclusively concluded that the documents were fabricated / forged in the absence of any specifics coming in, in the Show Cause Notice. (b) The Revenue had an original lead about the procurement of the gold in question by way of cash transaction between Shashi Kant Patil and Rinku Verma. Even as it was important for the Revenue to prove the gold in question was not procured from Snehal, in view of clear lead, the Revenue was also required to prove that the gold in question was procured way of cash transactions from Shashi Kant Patil. This lead has been completely abandoned without any proper reason. This is a serious lapse on the part of the Revenue. (c) In this case, since there were contrary claims, the onus was on the Revenue was on two folds. Firstly, to disprove the claim of Rinku Verma that the gold was procured through proper Invoices, secondly to prove that the gold was in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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