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TMI Blog2024 (4) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respondent. So, the question arises that in the absence of any seizure of Port or Airport or not having any foreign markings on the goods seized from the respondent, how the officers came to the conclusion that the goods are third country origin goods. Therefore, first, onus on the Revenue is to make a reasonable belief that the goods are of third country. Admittedly, no such evidence has been produced by the Revenue to allege that to make a reasonable belief, the goods are of third country origin. In the absence of that, the goods in question cannot be confiscated. Furthermore, the confiscation of Indian Currency recovered from the respondent was not proved by the Revenue that the same is sale proceed of the goods of third country origin. In that circumstances, the Indian Currency cannot be seized or confiscated. We do agree with the observations made by the Ld. Commissioner (Appeals). Thus, we do not find any infirmity in the order passed by the Ld. Commissioner (Appeals) and do agree with the same. Hence, we do not find any merit in the appeal filed by the Revenue. Accordingly, the same is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... t produce documents in support of possession of huge amount of cash. The officer, after thorough examination and in absence of any satisfactory reply/documents and after recovery of 3rd country ornaments, Silver Boondi and Cash (in INR) effected the seizure of recovered goods of third country along with the recovered Indian Currency of Rs. 79,00,000/- in presence of the independent witnesses and the said Noticee under proper Panchnama under Unit Case No. 4/2019-20, dated 22-10-2019. The recovered Indian Currency of Rs. 79,00,000/- was also seized under Section 110 of the Customs Act, 1962 on reasonable belief that the huge Indian Currency is the sale proceed of the smuggled goods and illegal trade of the said Noticee. 2.3 Thereafter, a show cause notice dated 21-7-2020 was issued to the respondent for absolute confiscation of Silver Jewellery, Silver Boondi & Indian Currency and to impose penalty on the respondent. 2.4 The Adjudication took place and the goods recovered was absolutely confiscated and the Indian Currency was also confiscated and penalty of Rs. 20.00 lakhs was also imposed. 2.5 Against the said order, the respondent filed an appeal before the Ld. Commissioner (App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecords, grounds of appeal, order-in-original, written submission of the Appellant as well as submission made during personal hearing. It is noticed that following issues require determination in the instant case; (i) Whether the presumption under Section 123 of the Customs Act, 1962 goes in favour of the revenue or not; and whether confiscation of the Silver Boondi and silver jewellery under Sections 111 of the Customs Act, 1962 is as per law or not? (ii) Whether confiscation of the Indian currency as sale proceeds of smuggled goods under Section 121 of the Customs Act, 1962 is proper or not? (iii) Whether penalty on the appellant under the provisions of Section 112 of the Customs Act, 1962 is proper or not? 14. As per the case records it is noticed that main dispute in the case is implication of 'Burden of Proof' as defined under Section 123 of the Customs Act, 1962 read with important clause 'reasonable belief' used in this section in the facts and circumstances of the case. As regards confiscation of Silver Boondi and silver jewellery under Section 111 of the Customs Act, 1962 I find that on 21-10-2019 the unmarked Silver Boondi & silver jewellery were recovered from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that is to say that the goods were imported into the country and imported at a time and place when they were restricted or prohibited from being imported. 15.2 In the case of Babulal Amthalal v. Collector of Customs, Calcutta [AIR 1957 S.C. 877], the Hon'ble Supreme Court considered the questions of reasonable belief that the goods were smuggled goods as prescribed by Section 178A(1) of the Sea Customs Act, 1878 equally applied in Section 110(1) of the Customs Act, 1962 and it was held as follows :- "No doubt the content and import of the section are very wide. It applies not only to the actual smuggler from whose possession the goods are seized but also to those who came into possession of the goods after having purchased the same after the same has passed through many hands or agencies. For example, if the Customs authorities have a reasonable belief that certain goods in the possession of an innocent party are smuggled goods and the same is seized under the provisions of this Act, then the person from whose possession the goods were seized, however innocent he may be, has to prove that the goods are not smuggled articles. This is no doubt a very heavy and onerous duty cast o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the restraints imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. (iv) Hukma v. The State of Rajasthan, AIR 1965 SC 476 :- The burden of proof postulated upon the private party is based on the existence of the satisfaction of 'reason to believe'. (v) Aslam Mohammad Merchant v. Competent Authority and Others, (2008) 14 SCC 186 : - "It is now a trite law that whenever a statute provides for "reason to believe", either the reasons should appear on the face of the notice or they must be available on the materials which had been placed before him." (vi) Bar Council of Maharashtra v. M.V. Dabholkar and Others, (1976) 2 SCC 291 : - 'Reason to believe' cannot be converted into a formalized procedural roadblock, it being essentially a barrier against frivolous enquiries. 15.4 I further observe that the Hon'ble CESTAT, Allahabad Bench in the case of Shri Lokesh Kumar Choudhary v. Commissioner of Customs, Lucknow has allowed the appeals fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the explanation of the person is not found to be correct. 15.7 Such views have been taken by the Courts in (i) Angou Golmei v. Smti Vizovolie Chakhsang and Another reported in 1994 (1) PLJR 800; (ii) Bawa Gopal Das Bedi & Sons and Others v. Union of India and Others, reported in AIR 1982 Patna 152; (iii) Yogendra Prasad v. The Union of India, 2004 (4) PLJR 675 and (iv) PG Holdings Pvt. Ltd. v. State of Bihar, reported in 2008 (2) PLJR 538). 15.8 The question of 'reasonable belief' was again considered by the Supreme Court in Pukhraj v. D.R. Kohli, [AIR 1962 S.C. 1559 = 1983 (13) E.L.T. 1360] & in the case Collector of Customs, Madras v. N. Sampathu Chetty [AIR 1962 S.C. 316], In the case of Pukhraj v. D.R. Kohli, it was contended that the question whether there was a reasonable belief or not was justifiable and since there was no material on the record to show that the belief could have been reasonable the statutory presumption could not be raised. In rejecting this contention the Supreme Court held : "After all, when you are dealing with a question as to whether the belief in the mind of the Officer who effected the seizure was reasonable or not, we are not sitting in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fected in any suspicious circumstance. As the appellant is engaged in trading of gold and silver jewellery, there is normal practise of keeping the aforesaid items for selling purpose, of the same. Therefore the aforesaid items were kept in a bona fide manner/general practice, not in concealed mode. Thus, keeping items of silver in shop and business premises cannot provide a basis to have presumption about its possession being illegal in nature. It is noticed that the Respondent department has mainly relied upon the statement of appellant wherein he has confessed that the silver boondi was purchased without payment of import duty from traders of Bihar and Mumbai and were of foreign origin. But I do not find any corroborative evidence regarding purchase of the said item such as mode of payment to the traders, identity of seller, documents related to purchase of the aforesaid item etc. Further there is no foreign marking on the aforesaid item and there is nothing on record regarding purity of the silver jewellery. It is observed that the appellant has vehemently denied the aforesaid allegation in the instant proceeding and has submitted copy of the invoice no. TX/19-154, dated 17-10- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 123 of the Act. 16.3 It is also noticed that the purity of silver ornaments had not been disclosed by the investigation authority in the SCN. None of the witnesses had testified that the seized silver items were imported smuggled silver. Thus, the Customs Authority had no material before it from which it could have come to the conclusion that the seized items of silver are believed to be of foreign origin and are illegally imported into India. Further it is noticed that the Show Cause Notice does not disclose as to how the Customs Authorities could assert that the seized silver items are of foreign origin. It was obligatory on the part of the Customs Authorities first to establish "reasons to believe" to assume jurisdiction in the matter and then to establish that the silver items were of foreign origin. According to the records of the case, on the facts, it is clear that the Customs Department has been unable to establish any such ground to proceed with. 16.4 In the facts as stated above, there is no prior reasons to believe and nor is there any material to justify, even prima facie, the allegations that recovered silver items are illegally imported into India f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in Kewal Krishan v. State of Punjab, 1993 (67) E.L.T. 17 (S.C.). The Apex Court has observed as follows :- "When goods are seized by the Customs Officer in the reasonable belief that they are smuggled goods then under S. 178A of the Sea Customs Act the onus of proving that they are not smuggled goods, that is, not of foreign origin on which duty is not paid, is on the person from whose possession the goods are seized. The onus is not on the prosecution to show that the goods are not of Indian origin." 17.2 The Apex Court in Union of India v. Shyamsunder, 1994 (74) E.L.T. 197 (S.C.) = AIR 1994 S.C. 485 has held that the persons from whom the contraband articles were seized had not satisfactorily discharged the burden of proof cast on them as required by Section 123 of the Customs Act that they are not smuggled. From the plain language of Section 123 and from the decisions of the Apex Court it is clear that if the goods are seized on a reasonable belief that they are smuggled goods, the burden of proof is shifted on the persons named in Section 123 to prove to the contrary. 17.3 In case of Ram Naresh Chaurasiya v. Commissioner of Customs (Prev.), Patna reported in 2019 (365) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llery is not smuggled under Section 123. 17.6 I observe that the investigating authority did not make an effort to collect any direct or indirect even circumstantial evidence to show that the silver items were of foreign origin and smuggled into India in the instant case. They were in good faith that silver are declared as notified item under section 123 of Customs Act, 1962 and the burden of proving that the said silver are not smuggled lies with the possessor/owner or any person who claims to be the owner of the goods so seized. They have only relied upon the statement of appellant wherein they have stated that they have purchased foreign origin silver without payment of import duty. But it is noticed that there is no evidence in the statement of the appellant as to how seized silver boondi and silver jewellery was brought into India. Further there is also no evidence in the statement regarding the person who had smuggled the aforesaid item. I find that the department has not investigated the matter to find out the source of smuggling of the aforesaid item. There is nothing on record to prove that the aforesaid item is smuggled in India. In the light of liberalised policy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 123 of the Act. 18.2 Proceedings under Customs Act being penal in nature, burden is always on the department to establish the case as per 1990 (48) E.L.T. 210 (Bom.) in the case of Santosh Gupta v. UOI. In order to attract Section 123 of Customs Act, the seized goods must be smuggled goods. The term "smuggled" means goods of foreign origin and imported from abroad. There must be something suggesting their foreign origin and their recent importation from abroad. Therefore confiscation of goods under Section 111 of the Customs Act, 1962 is not sustainable when there is no iota of evidence that seized items of silver boondi and silver jewellery were of foreign origin or smuggled into India. Suspicion/presumption howsoever strong cannot take the place of evidence. 18.3 Though the adjudicating authority has highlighted the grounds of reasonable belief; but I find that the department fails to place the grounds of reasonable belief at the time of seizure by any positive evidence. Subsequent investigation has also not established that the silver items were smuggled and therefore the provision of Sec. 123 of the Customs Act is not invocable. A perusal of Section 123 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of contrary evidence. Consequently there is no violation of Section 121 by the Appellant in the instant case. 19.1 I find that CESTAT in the case of Ramchandra v. Collector of Customs, reported in 1992 (60) E.L.T. 277 (Tribunal), has held that before violation of Sec. 121 is established the following ingredients must be satisfied : (1) There must be a sale. (2) The sale must be smuggled goods. (3) These sales must be by a person having knowledge or reason to believe that the goods were of foreign origin. (4) The seller and purchaser and the quantity of gold must be established by the Customs Authorities. This decision was relied upon by the Tribunal in the case of Commissioner of Customs (Prev.), Kolkata v. Atiquer Rahman, reported in 2010 (252) E.L.T. (Tri. - Kolkata). In this case the Tribunal had inter alia held that : "(5) I find that in the present case the Revenue wants to confiscate the Indian currency on the ground that the same is sale proceeds of smuggled gold. I find that the Tribunal in the case of Ramachandra (supra) relied upon by the respondent held that for violation of Sec. 121 of the Customs Act, the ingredients must be satisfied. Sec. 121 of the Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has miserably failed to provide any evidence regarding sale of smuggled goods. In absence of any cogent evidence the sale of jewellery by the appellant cannot be denied. 19.3 On perusal of cash book it is noticed that date wise entries of sales of gold and silver jewellery are reflected in Cash Book for the period, i.e. 1-4-2019 to 31-3-2020. It is also noticed that the Appellant has shown opening balance of cash in hand amounting to Rs. 77,16,828/- as on 21-10-2019. Further Cash Book on the aforesaid date reflects GST sales amounting to Rs. 1,98,800/. As per the cash book it is noticed that the Appellant has made expenses amounting to Rs. 213/- on the aforesaid date. Accordingly closing balance as per Cash Book on 21-10-2019 is Rs. 79,15,415 (Rs. 77,16,828/+ Rs. 1,98,800/ - Rs. 213/) which has also been duly certified by the Chartered Accountant in his certificate dated 9-9-2021. It also reflects the seizure amount of Rs. 79,00,000/ by Customs. I observe that the closing balance is greater than seized amount of cash, hence covers the seized amount also. Therefore, there cannot be any question regarding non-accountal of the seized cash amount. It is also found that such documents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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