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TMI Blog2024 (5) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Officer, held that the pre-requisite of seizure is not satisfied. Accordingly, it is held that the circumstances as required under the Customs Act are not satisfied and consequentially the whole burden or onus to establish the smuggled nature of gold is on the Revenue. In addition to the above, fact remains that the gold did not have any foreign marking; Department under established that the same has been smuggled. The situation would certainly create reasons to believe that the impugned gold could be smuggled one, necessitated further prove. It does not constitute reasonable belief to seize the gold u/s 123 of the Act. Thus, we do not find any reasons to interfere with the impugned Order-in-Appeal passed by the learned Commissioner (Appeals) and accordingly, the same is sustained. The appeals filed by the Department are thus dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... emanded to judicial custody after being produced before the Special CJM (Economic Offences), Varanasi. Thereafter, on 31.07.2018, Shri Shiv Raj Singh filed a bail application before the Court of Special Chief Judicial Magistrate (Economic Offences), Varanasi stating that Shri Hariom Sehgal was the Proprietor of M/s Sai Max Traders who had sent 06 kgs gold to his other firm M/s Ambey Trading Company, 193, 2nd Floor, Ravindra Sarani, Kolkata-7000005 (hereinafter referred to as "M/s Ambey Trading Co.") through his worker Shri Azad Pandey on 17.07.2018 for manufacture of jewellery but the jewellery could not be manufactured and thus, Shri Shiv Raj Singh was on his way to return the same from Kolkata where in-between he was apprehended by GRP Officers. In the meantime, on request of Customs Division Varanasi, subsequent follow up was conducted by Customs House, New Delhi on 13.09.2018 at the residential premises of Shri Hariom Sehgal and Shri Shiv Raj Singh and the premises of M/s Sai Max Jewellers and Sai Max Traders. Their report dated 19.09.2018 in respect of follow up revealed that neither contraband goods nor incriminating documents were recovered from the residential premises, M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals) vide the impugned order upheld the Order-in-Original dated 22.07.2021 and dismissed the Department's appeals before him. Hence the present appeals before the Tribunal. 3. The learned Departmental Representative reiterated the grounds of the appeals and submitted that M/s Sai Max Traders, Delhi sent gold to M/s Ambey Trading, Kolkata vide invoice SMT#8 dated 17.07.2018 but the same was revised on 22.07.2018 and found in deleted tally folder of laptop recovered. On inspection of both the invoices, it was observed that in invoice dated 17.07.2018, there was no reference of Buyer, order no. and supplier reference, invoice no. in SMT#8 and the same was rectified as Credit Note No. 1 in place of invoice no. and Buyer's reference in place of supplier ref no.. The actual date of change of invoice is not ascertainable as per the report of M/s Netplanet dated 20.11.2018. 4. Learned Advocate appearing on behalf of the Respondent filed written submissions alongwith relied upon decisions and some other documents. He submitted that it is an established fact that the impugned gold bullion never had any foreign marking nor was 24 carats and in fact the purity of the gold was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -, vide Taxable Invoice No. BM/701/2017-18 dated 09.01.2018. b) Acknowledgment of the payment by M/s Promise Marketing, Kolkata to M/s Sai Max Traders, the proprietor of Ambey Trading Company. c) The said Electronic Weighing instrument used for gold ornaments/ jewellery and bullion certified by the Office of Controller of Legal Metrology Act, Kolkata (West Bengal), being Serial No. 133975. d) Registration with Kolkata Municipal Corporation (License Department being No. BB 128208 for 2018-19) certifying the nature of trade as wholesaler of the items of Gold, Silver Jewellery and Stone. e) Telephone Bill issued by Bharat Sanchar Nigam Limited in the name of M/s Ambey Trading Company, 193, Ravindra Sarni, 2nd Floor, Kolkata. f) Certificate by Kolkata Municipal Corporation (permanent) for the enlistment in the Municipal Area for trading as wholesaler of Gold, Silver Jewellery. g) Copy of Lease Agreement of the premises owned by Mr. Hari Om Sehgal the Proprietor of M/s Sai Max Traders and Ambey Trading Company executed between the land-lord. h) Copy of License Agreement of Leave and License between Mis Varsha Gupta Licenser and Mr. Hari Om Sehgal, the Licensee. i) Copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of M/s Ambey Trading Company, Kolkata, Mr. Hari Om Sehgal confirmed registration under the Trade License. * In Question No. 24 Department asked as to why the gold ornaments could not be manufactured in Kolkata to which Mr. Sehgal replied that the gold smith who was the assigned with the job of making gold Jewellery sought time more than that was stipulated, along with demanding of excess consideration, and as such the subjected 6 Kgs of gold bullion of Indian origin was called back to M/s Sai Max Traders. * Question No. 25 query was raised relating to the purchase Invoice of M/s Ambey Trading Company, to which Mr. Hari Om Sahgal replied since the firm had no GST registration, for this reason the entire work had been taken up only in Delhi, and as such there was no sale or purchase being effected form the company, except for job work. * In reply to Question No. 28 he confirmed Mr. Dharam Raj to be the Manger supervising Kolkata office of M/s Ambey Trading Company. * And in concluding Question and Answer No. 30, he requested the Customs Department that all the document and papers submitted may kindly be verified and the gold bullion may kindly be returned and he confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re appropriately the version of the Department only on the reasonable suspect and the said action not only showed perversity but arbitrariness and the distance between alleged and proved was the onerous duty of the Department. 5. Heard both sides and perused the appeal records. 6. We find that in the current case, pursuant to the issuance of the Show Cause Notice, without verification of the documents, the matter was adjudicated by the Learned Additional Commissioner of Lucknow, in the first round of litigation, wherein, in spite of specific written request, copies of verification as well as follow-up report by Kolkata Customs and statement of Mr. Sehgal was never provided. Although the proceedings arising of the Show Cause Notice were upheld by the Learned Additional Commissioner in the first round of the litigation, the Learned Commissioner (Appeals) Customs, Lucknow, set aside the impugned order with speaking direction, and remitted the matter for afresh adjudication. In the second round of the litigation before the Learned Adjudicating Authority, the Learned Adjudicating Authority held that the benefit of the presumption under Section 123 does not go in favour of the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed under section 138B of the Act was not followed? D. Whether the term "smuggling" has been defined under the Customs Act, whether the statements recorded in custody has any evidentiary value in absence of independent corroboration / evidence and whether the Appellant Revenue has preferred the Appeals in most mechanical manner ironing away the statements recorded on 04.10.2018 of Mr. Hari Om Sehgal (owner) by Kolkata Customs, forwarding the verification report, relating to the additional place of business at Kolkata, M/s Ambey Trading Company, whether the observation made by the Adjudicating and Appellate Authority in favour of the Respondents needs to be upheld. (a) As submission to Question the number framed at Serial No. A, the respondents submit and argue that both the Authorities below have taken a pragmatic view in appreciating all the evidences on record, and also determining the question of law involved in the matter because the Respondents are well established gold and Silver Bullion Dealer along with Jewellery items in Delhi by the name of M/s Sai Max Traders and M/s Sai Max Jewellery, respectively and also had an additional place of business in Kolkata by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Patna High Court in the case of Ramesh Kumar Baid Vs. CC(P) Patna reported in 2020 (374) E.L.T. 879 (Pat.) the Hon'ble High Court held thus : "15. The Appellant stated that the gold pieces/bars were seized on the reasonable belief that they were smuggled into India from Bangladesh. The Adjudicating authority has relied upon the decision of the Hon'ble Supreme Court in the case of Gopal Das Uddhav Das Ahuja v. UOI reported in 2004 (176) ELT 3 (SC) for effecting the seizure on the ground of reasonable belief. However, the said case is distinguishable on the ground, firstly, that the subjected case was during the breathing period of Gold Control Act, wherein possession of primary gold even unmarked had a thrust of burden upon the Assessee. When the Gold Control Act was repealed without a saving clause, the said decision under the Gold Control Act has no relevancy under the Customs Act. Currently under the Customs Law, the burden has been thrust upon the Department and the presumption under Section 123 of the Customs Act has no application in the present case, as the gold seized is of Indian origin. 16. The Respondent rely upon the decision of the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd credible: and corroborative evidence will only fill its role if it is completely credible " 19. The Appellants also relied upon the decision of the Hon'ble Delhi High Court in the case of Shanti Lal Mehta VS UOI and Others reported in 1983 (14) ELT 1715 (DEL), which elaborately" c) The basic question is formation of reasonable believe which must be at the time when the goods are sized and not subsequent to the seizure, which was the pre-requisite condition of the power of seizure that the statute confers on the Officers as held by Commissioner of Customs Vs. Sampathu Chtty-AIR 1962 SC 316 followed in the case of M. G. Abrol Vs. Amichand reported in AIR 1961 Bombay 227, wherein it is also held that the condition precedent there was such a reasonable belief, and period to the seizure must exists before the presumption under Section 123 can be evoked. "16. the Appellants have relied upon the decision of the Hon'ble supreme Court in the case of Tata Chemical Ltd. Vs. Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628, which has explained the meaning of the word 'reason to believe' as under: - "reason to believe" by opining it to be not the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... witness, a statement recorded under Section 108 in isolation could not be relied upon. For this, I find support in State of Maharashtra v. Harshad Vaherbhai Patel & Ors. [2012 (1) Bom.C.R. (Cri) 500] and unreported judgment of this Court in Shri Malki Singh v. Suresh Kumar Himatial Parmar in Criminal Appeal No. 228 of 1999 delivered on 29-11-2019 [2020 (371) E.L.T. 642 (Bom.)]. Paragraph 8 of Malki Singh's judgment reads as under: "8. It is no doubt true that under section 104 of the Customs Act, 1962, the Customs Officer is vested with power to arrest if he has reason to believe that any person has committed an offence punishable under sections 135 or 135A of the Customs Act. Under Section 108 of the Customs Act, the Customs Officer is also vested with power to summon persons to give evidence documents and all persons so summoned are bound to attend, on being summoned. The statement made to the Customs Officer is not hit by Section 25 of the Indian Evidence Act, 1872, the position of law being very well settled that the Customs Officers are not police officers and resultantly, a statement made to the Customs Officer is not hit by Section 25. At the same time, the positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 108 of the act against the co-accused with a weak type of evidence and conviction of co-accused cannot be based on the uncorroborated statement of co-accused. iv) Anisur Rahaman Vs. Commissioner of Customs (Prev.) West Bengal 2003 (160) ELT 816 (Tri-Kolkata). Non-appearance before DRI Officer in response to summons is not a ground for holding that the appellant is guilty-The entire case is based upon 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. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged / imaginary concept of smuggling from Bangladesh, and portrays anathema of travesty and of justice. The content of report is as under : - "Remarks: Prima facie it was revealed as per available records that : - (a) M/s Ambey Trading Company, Kolkata-700007 is engaged in manufacturing of gold jewellery in given address. (b) M/s Ambey Trading Company, Kolkata 700007 is sister concern of M/s Sai Max Traders, Karol Bagh, New Delhi. (c) Found that 6000.000 grams gold has been delivered to M/s Ambey Trading Company, Kolkata-700007 under proper Tex Invoice dated 17.02.2018 issued by M/s Sai Max Traders, Karolbagh, New Delhi. (d) Gold may be received from M/s Sai Max Traders, Karolbagh, New Delhi-110005 manufacturing cost of gold ornaments is cheap in Kolkata. (e) Apart from above, latest manual designed gold jewelleries in little weighment of gold available in Kolkata (emphasis / documents enclosed)." Because the authorities below have granted relief to the Respondents after candidly examining the documentary evidence on examining the follow-up report by Kolkata Customs and also the question of law, correctly interpreting Section 123 of the Customs Act, wherein in witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned 06 pieces of seized gold bars weighing 5999.820 grams valued at Rs. 1,83,59,448/- (Rupees one crore eighty three lakhs fifty nine thousand four hundred and forty eight only) is involved in the alleged smuggling of foreign origin gold or not? * Whether Sri Shiv Raj Singh, S/o Sri Ram Prasad Singh, R/o Vill-Pali Anandgadhi, PS. Narsena, Distt. Bulandshahar, is involved in carrying of allegedly smuggled, the aforesaid 06 pieces of gold or not? 25.3. It is evident from the records that on 23.07.2018 at 21:35hrs, GRP, Thana Mughal Sarai, intercepted the Noticee No. 3, namely, Shri Shiv Raj Singh on suspicion and recovered the impugned 06 pieces of gold bars at Platform No. 06 of Railway Station Mughal Sarai and called upon the officers of Customs. The Officers of Customs arrived there on 24.07.2018 after being informed by the GRP. I find that the Fard dated 23.07.2018 prepared by the GRP alleges that the gold bars appeared to be smuggled as the Noticee No. 3, i.e., Shri Shiv Raj Singh could not produce any documents at the time when the GRP made the recovery of the said gold bars from his possession. Thereupon under Supurdiginama dated 24.07.2018 the impugned gold was handed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gold bars, he kept the same in the Baniyan specially designed for carrying the gold bars and wore it on his body. After receiving the gold bars, he took Duranto Express at 08.30 hrs. for Delhi but at Mughal Sarai, officers of GRP intercepted him and got deboarded him from train. On being further asked he Stated that the instant gold bars were brought into Kolkata after being smuggled from Bangladesh. I find that earlier in his statement he has stated that he met the person who handed over gold to him at Kolkata for the first time and did not know him, both these statements of Shri Shiv Raj Singh are in mutual contradiction with each other, he could not substantiate as to when and how the said gold was brought into India. 25.6. Thereupon, the Officers on reasonable belief that the recovered 06 pieces of gold bars weighing 5999.820 grams valued at Rs. 1,83,59,448/- were of foreign origin and were smuggled into India and were liable to confiscation under Section 111 of the Customs Act, 1962, seized those 6 piece gold bars under Section 110 of the Customs Act, 1962 vide Seizure Order dated 24.07.2018. 25.7. I find from the records that during investigation summons were issued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Odd and is registered under GST and also files regular returns and pays due tax there on to the exchequer. 25.10. I also find that summons were issued under Section 108 of the Customs Act, 1962 to Shri Azad Pandey, working at M/s Sai Max Traders, 2605/4, 2nd Floor, Gali No. 4, Beadonpura, Karolbagh, New Delhi-110005 for his statement on 22.08.2018. Shri Azad Pandey did not appear in compliance of the summons. No effort after this was done to take version of Shri Azad pandey by investigating officers (I.O.), 25.11. I also find that no summons were issued to Shri Pradeep pandey by I.O., while Shri Shiv Raj Singh had stated that Shri Azad Pandey along with Shri Pradip Pandey used to travel Kolkata and back frequently carrying gold. 25.12. I find that follow-up action took place at the premises of Notice No. 2 and laptop was seized on 20.11.2018 by Delhi Customs Thereupon, M/s NETPLANET, 7/118 'c' Swaroop Nagar, Near Model Bakery, Kanpur-02 was requested to open the Laptop seized to retrieve the data. The Laptop was got opened in the office on 20.11.2018 by the Expert M/s NETPLANET, 7/118 'c' Swaroop Nagar, Near Model Bakery, Kanpur-02 in the presence of two in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot;Absent/Addressee moved". 25.15. I find that the defence has procured the report dated 04.10.2018 pertaining to follow up conducted by the Kolkata Customs through RTI and the said report is submitted as evidence during the personal hearing on 05.12.2019. The said report contains statement of Shri Hariom Sehgal, proprietor of M/s Ambey Trading Co Kolkata recorded under Section 108 of the Customs Act, 1962. Further I find that Shri Hariom Sehgal, Proprietor of Noticee No. 2 firm M/s Sai Max Traders, New Delhi & M/s Ambey Trading Co. Kolkata and spouse of Shri Hariom Sehgal, namely, Mrs Seema Sehgal, the proprietor of Noticee No. 1 namely M/s Sai Max Jewellers, New Delhi has appeared in person on 04.10.2018 under summons for and recorded their statement under Section 108 of the Customs Act, 1962. 25.16. I find the report of Superintendent Customs Kolkata is of paramount importance as it clearly states the facts of the case it is as follows: Remarks prima facie it was revealed as per available records that:- [a] M/s Ambey Trading Company, Kolkata-700007 is engaged in manufacturing of gold jewelleries in the given address. [b] M/s Ambey Trading Company, Kolkata-700007 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d GST invoices of purchase of gold bars as well as GST Returns to prove the impugned gold bars were legal and of Indian origin. As per record of the findings of Follow up report dated 04.10.2018 of Kolkata Customs the existence of M/s Ambey Trading Company, Kolkata is established as they have attached request application of the said firm for registration in Nagar Nigam and Landline telephone bill adding that the said firm is a sister concern of the Noticee No. 2, namely, M/s Sai Max Traders, New Delhi. 25.21. I further find that Delhi Customs team in the follow up found both the firms M/s Sai Max Traders, New Delhi and M/s Sai Max Jewellers, New Delhi on their given address and recovered a laptop from the spot and reported through there letter dated 19/09/2018 that nothing incriminating nor any contraband item was found in both the firms and at residential premise of Shri Shiv raj singh, meaning thereby business of the firms were authentic. They also cross checked the bank statements of the firms and found them proper. 25.22. I find that M/s Sai Max Traders have purchased gold bars from Surya Jewellers, New Delhi, M/s Sai Jewellers, New Delhi. It has sold gold bars to M/s Bedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars to contain any substance. 25.26. I find that there is no evidence provided by the I.O. in order to prove that the said 6 gold bars were illegally imported into India and were smuggled. The gold is one of the goods, which is specified in Section 123 of the Customs Act, 1962, wherein its sub-section (1)(a) provides that the burden of proving that gold is not smuggled goods shall lie on the person who has claimed ownership thereof, but this clause does not apply for handover cases in heart of the state by police. There is nothing on record to substantiate from which International border it crossed into India and how and when? However, the Noticees of the impugned SCN have been successful to prove that the said 6 gold bars are not smuggled, instead those were procured through legal means. The Noticees have provided documents proving that the said gold was procured through legal means and Lawful GST has already been paid on the said gold. 25.27. Reliance can be placed on judgement of Honorable Mumbai High court in the case State of Maharashtra Vs Prithviraj Pokhraj Jain reported in (2000 (126) E.L.T. 180 (bom)) has held that in the absence of presumption under section 123 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case was remanded back by Commissioner Appeals to the adjudicating authority to abide by principles of natural justice and to hear the noticees afresh and pass speaking order considering all documents of the appellants which were overlooked earlier. 25.32. In view of the aforesaid discussion, evidences and case laws I find that the said seized 06 pcs gold bars weighing 5999.820 grams valued at Rs. 1,83,59,448/- (Rupees One Crore Eighty-Three Lakhs Fifty-Nine Thousand Four Hundred Forty-Eight only) were of Indian origin and were not smuggled into India therefore are not liable to confiscation under Section 111 (b) & (d) of the Customs Act, 1962. I order release of the seized gold bars to its lawful owner 1 also hold that the Noticees No. 1, No. 2 and No. 3 are not guilty hence no penalty under Section 112 (b) of Customs Act, 1962 leviable. Hence, order for dropping of proceedings against them under provisions of Customs Act, 1962. 26. Accordingly, based on the above discussion and findings, I pass the following order: ORDER I drop all the proceedings against all the three noticees under provisions of Customs Act, 1962. I order release of the seized gold bars to its law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 6000 gms of gold was delivered to M/s Ambey Trading Co., Kolkata under proper tax invoice dated 17.07.2018 issued by M/s Sai Max Traders, Delhi. The adjudicating authority also observed that the team had not submitted the said report to the then adjudicating authority for his consideration. He also pointed out that in the impugned show cause notice, M/s Ambey Trading Co., Kolkata was shown as dummy/non-existent unit whereas the same was found as working in the said follow-up report investigating I also find that the impugned gold did not bear any mark as pointed out by the adjudicating authority. Further, seizure of the said gold was effected at Mughalsarai Railway station, which is far away from any international border or Customs area. The department had also failed to bring on record any documentary evidence against the aforesaid claim submitted by the respondent in their support. Instead, it appears that the Customs was concealing the said report of the Kolkata Customs in order just to sustain their case. In view of above, I am in complete agreement with the findings of the adjudicating authority as elaborated in the impugned order that the respondent had discharged their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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