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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 ..... landshahar at platform No. 6 and allegedly recovered six pieces of gold bars. After preparing the final Fard (Baramadgi), by the GRP Police Officer on the same date, the impugned gold alongwith the passenger were handed over to the Customs Officer of Customs (Preventive), Division Varanasi for further investigation. No document regarding sale purchase/transportation of the recovered six pieces of foreign origin gold bars was produced by Shri Shiv Raj Singh who was immediately arrested, who allegedly confessed as per the Panchnama proceedings and the custodial statement that the recovered foreign origin bars have been brought into India from Bangladesh, through off route by way of smuggling, thus, there was the sufficient alleged reasons to believe that the gold bars have been brought into India from Bangladesh in violation of the provisions of Section 7 (1) (c), Section 11, Section 46 of the Act, read with the Section 123 of the Act. Impugned gold bars were seized. Shri Shiv Raj Singh informed that he works as driver of Shri Hariom Sehgal, owner of M/s Sai Max Jewellers. The modus operandi of the present case was that on tickets arranged by Shri Hariom Sehgal, he reached Kolkata by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on the scheduled date, Shri Hariom Sehgal failed to turn up and in due proceedings M/s Netplanet recovered bill No. SM#8 dated 17th July 2018 and revised credit note dated 22nd July 2018 in deleted tally folder whose date of generation was impracticable to be found. Accordingly, a Show Cause Notice dated 17.01.2019 was issued proposing therein confiscation of the said seized foreign gold along with baniyan used for concealing the said gold under Sections 111(b) & (d) and 119 of the Act, respectively. Penalties were also proposed to be imposed upon M/s Sai Max Jewellers, Shri Hariom Sehgal and Shri Shiv Raj Singh under Section 112(b) of the Act. The Adjudicating Authority vide Order-in-Original No. 03/ADC/2020-21 dated 15.06.2020 ordered for absolute confiscation of the said 06 pieces of gold bars and imposed penalty of Rs. 60,00,000/- on M/s Sai Max Jewellers, Rs. 60,00,000/- on M/s Sai Max Traders and Rs. 10,00,000/- on Shri Shiv Raj Singh. Aggrieved with this order, M/s Sai Max Jewellers, M/s Sai Max Traders and Shri Shiv Raj Singh filed appeal before the First Appellate Authority which was decided by Order-in-Appeal No. 198-200-CUS/APPL/LKO/2020 dated 25.11.2020 remanding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and other related documents from Kolkata was filed with the Authorities, copy of stock register, copy of the GSTR-1 and GSTR-2 returns were also filed, and the all the documentary evidence on record and the question of allegations was hence mired into controversy and release was sought. That it is also a fact on record that follow-up enquiry was taken up by the Office of Commissioner of Customs (Preventive), Kolkata, in respect of the trading Company M/s Ambey Trading Company, 01, Ravindra Sarni, 2nd floor, Kolkata, pertaining to the seizure of impugned gold bullion (In the report dated 04.10.2018 issued in C No. VIII (54) 10/ miscellaneous-ENQ/Varanasi /Gold/B &I/CCP-WB/2018-19/1287) and in para 1 and 2 the Learned Superintendent of Customs Preventive Kolkata made the following observation. It is the grievance of the Respondents that in spite of repeated request the said primary report on the follow-up enquiry by the Kolkata Customs, masking the repeated reminders, was never provided to the Respondents, who compelled by circumstances laid hands through the Right to Information Act, along with the copy of the statement recorded under Section 108 of the Act, by Kolkata Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of Tax Invoices issued by M/s Sai Max Traders, in this case aligning with the Barter transaction, gold bullion was purchased from M/s Surya Jewellers, and by way of barter/ payment of consideration, Jewellery was sold under cover of proper Tax Invoice, copy GST Registration of Surya Jewellers is also enclosed. Copy of the bank statement of M/s Sai Max Traders, which was already submitted to the Appellate Authorities as well as the Kolkata Customs is re-submitted before us. (a) that it is re-affirmed that M/s Sai Max Traders, the Respondent, had also purchased the gold bullion from M/s P C Jewellers, copies of the ledger account along with Tax Invoice are produced. Further in support thereof, the Respondent M/s Sai Max Jewellers, also submits its ledger account, supported with the copy of purchase and sale Invoices to establish the credibility of the business. Statement of Hari Om Sehgal was also recorded. Mr. Hari Om Sahgal affirmed that he had transferred 6 kgs of gold bullion to Kolkata to his own concern, and in the following question and answer he also affirmed the credential of one Mr. Dharma Raj as authorized person of M/s Ambey Trading Company who have received 6 Kgs o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts "Para 4: As desired by the said Summon dated 13.09.2018, I am also enclosing herewith certified copy of (1) Bank Statement for the period from 01.04.2018 to 14.09.2018 obtained from the Central Bank of India, Branch Code-307, Karol Bagh, New Delhi in respect of my firm M/s Sat Mix Trades 2605/4 2nd Floor, Beaodon Pura, Karol Bagh, New Delhi having Current Account No. 3588847671 (2) Bank Statement for the period from 01.04.2018 to 14.09.2018 having Current Account No. 3589954273, obtained from the Central Bank of India in respect of my wife Ms. Seema Rani Sehgal's firm M/s Sai Max Jewellers. House No. 2652 & 2653. Plot No. 40, 41, 42, Bank Street. Naiwala, Karol Bagh, New Delhi and (3) Bank Statement for the period from 01.04.2018 to 14.09.2018 having Overdraft Account No. 4007869962, obtained from the Central Bank of India in respect of M/s Sai Max Jewellers, House No. 2652 & 2653, Plot No. 40, 41, 42, Bank Street, Nawala Karol Bagh, New Delhi." It is a fact on record and evidence that two respective letter claiming the impugned gold was filed by Respondent No. 1, i.e. M/s Sai Max Traders through it proprietor Hari Om Sehgal requesting for the release of gold and, vide le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osecution despite repeated directions never made available nor incorporated the report submitted by Kolkata Customs authorities of 4th October 2018 which was eventually procured by RTI by Noticees. This establishes that the prosecution has failed to discharge burden of proof and thus, it concludes that the said gold bars were not smuggled. Accordingly, based on the above facts and discussion I hold that the seized gold bars were of Indian Origin." Findings in the Adjudication Order, was challenged by the Revenue before Commissioner (Appeals) Customs, Lucknow in the 2nd round of litigation and the Learned Commissioner (Appeals) held as follows : "The adjudicating authority had analyzed the stock register of M/s Sai Max Traders, Delhi at length for the period - 01.01.2018 to 31.07.2018 and found the transaction genuine. He elaborated the purchases of gold weighing 2 kg., 3680.200 gram and 1502 gm by M/s Sai Max Traders, Delhi on 21.06.2018, 10.07.2018 & 16.07.2018 respectively and also, the outward entry dated 17.07.2018 of 6000 gms of gold to Kolkata. The adjudicating authority also observed that Invoice No. SMT#8 dated 17.07.2018 was recovered successfully from the laptop resume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication report to the Jurisdictional Customs (P), Varanasi along with the copy of Statement of Shri Hari Om Sehgal, who with fortitude confirms his ownership, possession, purchase documents, ledger account, payment of GST, GSTR return, which prior to issuance of Show Cause Notice, had already been detailed and submitted to the Jurisdictional Authorities, supported with documents who were already seized of the matter and here in this case, this is a case of interception by Police/GRP at Railway Station, to create a story and which was eventually snow balled through the Panchnama, which was only the record of proceedings, illegally creating story of the alleged smuggling from Bangladesh, without there being any evidence to the contrary, and purely on unwarranted assumption and presumption, and in any view of the matter reasonable suspect cannot take place of either the proof or for a credible formation of reasons to believe. (b) That the Respondent during the currency of the seizure was having the turnover of 300 crores odd and now having a turnover of around 500 crores odd, if any onus with regard to the source of procurement of gold was concerned, not only through the document an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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 Respondent also rely 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 and not reasonable believe to be relevant extraneous. (II) In Kewal Krishan V. State of Punjab, AIR 1967 SC 737, Kapur J., while dealing with identical provisions had clarified that confiscatory power based on 'reason to believe&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the reasons for the belief cannot be investigated." The Respondent also rely 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 and not reasonable believe to be relevant extraneous. (II) In Kewal Krishan V. State of Punjab, AIR 1967 SC 737, Kapur J., while dealing with identical provisions had clarified that confiscatory power based on 'reason to believe' has to be exercised only on the satisfaction based on certain objective material. " c. Relying upon Hon'ble Delhi High Court in the case of Shanti Lal Mehta Vs. Union of India and other reported in 1983 (14) E.L.T. 1715 (Delhi), which dealt with the town seizures, the definition of "smuggled goods" along with the interpretation of Section 123 of the Customs Act, 1962, the above questions has been addressed by the Tribunal in the Judgments in the case of Balwant Raj Soni and other VS. CCE, Preventive, Patna, Final Order No. 75455-57/2023 dated 18.05.2023 followed by the case of Shreyas Agarwal and others VS. CCP, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistrate was perfectly justified in acquitting the accused no. 2. In absence of any evidence corroborating the statement of the accused no. 2 made before the Customs Officer on 24th March, 1996 under Section 108 of the Customs Act, the statement in isolation do not warrant conviction, particularly when it is retracted with a plea of coercion," b) Further in the case of Balwant Raj Soni, the Tribunal, cited supra in Para 24 addressed this issue with the cover of Judgments, wherein the findings of the Tribunal are as below: "24. In support of their claim, the Appellants relied upon the following decisions: i) Mohtesham Mohd. Ismail Vs. Special Director, Enforcement Directorate- 2007 (220) ELT 3 (SC). That a confession of a co-accused person cannot be treated as substantive evidence and can be pressed into service only when the Court is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of the conclusion deducible therefrom. A confession purported to have been made before an authority would require a closure scrutiny. It is therefore, now well settled that the Court must seek corroboration of the purported confession from independe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds were of foreign origin and that they had been imported from abroad. Since, in the instant case, there was nothing absolutely from which inference about their origin or recent import could arise nor there was definite evidence to show that the appellant knew or had reason to believe that those items were smuggled, therefore, the presumption under Section 123 of the Customs Act that the goods were "Smuggled" did not arise. (Para 60)" b) Because it an established fact that the Respondent as a claimant of Gold has an additional place of business in Kolkata in the name and style of M/s Ambey Trading Company, 193, Ravindra Sarni, 2nd Floor, Bada Bazar, Kolkata, who under investigation by the Kolkata Customs in a follow up inquiry had submitted all the documents in addition to what had already been submitted before the Varanasi Customs, and the Office of the Commissioner Customs (Preventive), through Superintendent (Preventive) who had forwarded his final report of the follow-up inquiry in respect of M/s Ambey Trading Company, Kolkata, wherein the contents of the remarks of the verification report in addition to the statement dated 04.10.2018 of Mr. Hari Om Sehgal, the report by Kolk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and fineness, which not only have been done by drawing of sample, sending it to the laboratory and treating the same with chemical compound which would give the exact purity of gold and its fineness; the same cannot be checked using a touch stone. 7. We find that the impugned gold intercepted, initially taken possession by the officer of GRP and then handed over to Customs. Admittedly, the gold did not have any tell-tale foreign marking and it was merely accused that the markings were removed to hoodwink investigation. The place of seizure is not in Customs area. Hon'ble Supreme Court in the case of Gian Chand & Ors (Supra), wherein in case of seizure by the Police and thereafter the possession was shifted to the Customs Officer, held that the pre-requisite of seizure is not satisfied. We find that the Adjudicating Authority vide Order-in-Original No. 27/JC/2021-22 dated 22.07.2021 held as under:- "25.1. I have carefully gone through all the documents available on records in form of Show Cause Notice No. 72/ADC/2018 dated 17.01.2019 (hereinafter referred to as the impugned SCN) along with relied upon documents, written defence and letters submitted by the noticees along with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being enquired by the officers of Customs the Noticee No. 3, namely, Shri Shiv Raj Singh stated in front of the panchas that the impugned recovered 06 pieces of gold bars weighing 5999.820 grams valued at Rs. 1,83,59,448/-. On being asked by the Customs officers he stated before the panchas that he was Shiv raj Singh s/o Sri Ram Prasad Singh, R/o Vill. Pali Anandgadhi, PS. Narsena, Distt. Bulandshahar, and present address was Khasara No. 1092/1063, Gali No. 9, Kadi Vihar, Kadipur, Distt. Narela, North-West Delhi-110036. He further stated that he works for Shri Hariom Sehgal owner of M/s Sai Max Jewellers, 2nd Floor, 2605, beside Ashoka Photographer, beside Bank Street, Karol Bag, New Delhi, r/o Road No. 7, Purvi Punjabi Bagh, New Delhi. He went on stating that on 09.07.2018 he went to Kolkata on the directions of Shri Hariom Sehgal and stayed in Sahara Lodge at Howarh. He informed his staying details to Shri Hariom Sehgal on phone. Thereupon at 13.00 hrs Shri Hariom Sehgal asked him on phone to go outside the lodge and collect 03 pcs of gold bar. After receiving the gold, he brought the same to New Delhi and handed over to Shri Hariom Sehgal. Therefore it is found that he was a rou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gold appeared before Kolkata customs officers and tendered his statement on 4th October 2018. 25.8. I find that Mr Hariom Sehghal had made his claim before the appropriate authorities of Custom Preventive Varanasi, wherein all the documents relating to purchase of the Gold Bullion, on discharge of proper levy of GST, its payment of consideration only through banking channel, copies of Bank Statement, credentials of Ambey Trading Company, Kolkata, a sister concern Bill of Supply/ Invoice being the documents for transfer of gold by way of stock transfer from M/s Sai Max Traders Delhi to Ambey Trading Kolkata, for making of Jewellery on job basis and its return under cover of proper challan was cohesively submitted to the investigating officers. Behoving that at the very first available opportunity, the burden cast in term of Section 123 of the Customs Act, 1962, wherein appropriately the burden was discharged by the Noticee No. 2, although it was upon the Customs but the Noticees being assessee of GST provided all the documents for licit purchase of gold bullion, its transfer and even the GST Returns and Copies thereof, regarding the possession of the Gold supported with Bank State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old was carried under proper bill. 25.13. Further as per records the party has submitted additional documents vide their letter dated 18.05.2020, wherein it is mentioned that stock/Item Register of Gold Bar 99.50 provided by the party for the period 01 Jan 2018 to 31 Jul 2018 indicates an opening balance of 1468.373 grams as on 01.07.2018 and further against the column "Inwards Quantity "02 entries appear in the month of July. One entry pertains to Sai Max Jewellers dated 10.07.2018 showing an inward quantity of 3680.200 gram and another entry pertaining to Surya Jewellers dated 16.07.2018 showing an inward quantity of 1502.000 gram corresponding banking transactions have also been provided by the noticees. Further, an entry appears in the Stock Item Register in Column "Outwards Quantity" which shows 6000.000 grams pertaining to STOCK At KOLKATA dated 17.07.2018 and Vch No. 1. In this regard, the party in the bail application filed before the Hon'ble High court had earlier submitted issue Voucher No. 1 dated 17.07.2018 and Tax Invoice No. SMT#8 dated 17.07.2018 showing transfer of the 6.00 kg Gold Bar to M/s Ambey Trading Co. in Kolkata which was resumed successfully from lap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal clear that indeed the said quantity of gold was sent from M/s Sai Max Traders, Karolbagh, New Delhi-110005 to its sister concern to M/s Ambey Trading Company, Kolkata -700007 under proper tax invoice dated 17.07.2018 for manufacture of jewellery. The, investigating officers also have nowhere disputed the report submitted by Kolkata Customs. 25.17. I find that verification report of Kolkata Customs was deliberately hided by authorities to deliberately make out a case of nothing. This fact is amply recorded in the file, since even being enquired by the then adjudicating authority several times and reminders there of, investigating team never sent the desired follow up report of Kolkata customs for his perusal and consideration. The noticees sought adjournment several times on this pretext to argue their case. Eventually noticees had to procure the follow up report from Kolkata Customs under RTI and made it a part of their defense reply. The genuineness of RTI reply was cross checked and it was found to be authentic on mail dated 23 dec. 2019 by Kolkata Customs. It appears that had the Kolkata Customs report made available to the then adjudicating authority earlier, even no Show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on 21.06.2018 Gold weighing 2 kg, valued at 6,26,7000/- had been bought by Sai Max Traders / Noticee No. 2 from PC Jewellers against Invoice No. TI001333, GSTIN No. 07AADCP5443Q1ZW on which tax has duly been discharged. * Further on 10.07.2018 gold weighing 3680.200 gram valued at 11563234/- had been purchased under Invoice NO. SMJ# 13 from M/s Sai Max Jewellers, 2652- 2653, Plot No. 40, 41 & 42, Bank Stereet, Karol Bagh, New Delhi 110005 and tax has been discharged under GSTIN NO. 07AETPS4340E1Z9. * That on 16.07.2018 again gold weighing 1502 gram. Valued at Rs. 47,21,180/- had been purchased under cover of Invoice No GST-26 from M/s Surya Jewellers, 248B/8, 2nd Floor Beadon Pura, Karol Bagh Delhi-5 and due tax has been discharged under GSTIN NO. 07AWZPA8374Q1ZD for making of Kolkata specialized jewellery on job basis from goldsmith. I find that all the transaction as submitted by the defence were with firm that were having GSTIN. 25.23. Further from the CDRs of the mobile of the Shri Azad Pandey, it is quite evident that he used to visit to Kolkata carrying gold and back to Delhi frequently, which was corroborated by statement of Shri Shiv Raj Singh dated 24.07.2018. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CESTAT Allahabad Bench in Lokesh Kumar Chaudhari Vs. Customs Lucknow has allowed the appeal of the party on the grounds of non embossing of country of make on gold bullion and department of able to establish the smuggled nature of the seized foreign origin gold. 25.28. From the discussion in aforesaid paras it is amply clear that there are no arguments by the prosecution as to how those gold bars were smuggled into India. To avoid this basic question, prosecution despite repeated directions never made available nor incorporated the report submitted by Kolkata customs authorities of 4th October 2018 which was eventually procured by RTI by noticees. This establishes that the prosecution has failed to discharge burden of proof and thus, it concludes that the said gold bars were not smuggled. Accordingly, based on the above facts and discussion I hold that the seized gold bars were of Indian origin. 25.29. I find that in the instant case there is no violation of the provisions of Section 7 (1) (c), 11 and 46 of the Customs Act for the reason that Sec 7 (1) (c) relates to appointment of Customs port and in the current case except for suspicion, surmises and conjecturers there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. I find that 'Gold' is a notified item under Section 123 of the Customs Act, 1962, where burden of proving that the said goods is not the smuggled one, is either on the carrier or on the owner. The adjudicating authority had discussed this issue at length in the impugned order. The adjudicating authority had observed that the respondent had made claim before the Customs authority, Varanasi submitting all the documents relating to purchase of Gold bullion & its payment, credential of M/s Ambey Trading Co., Kolkata (a sister concern), Invoice for transfer of the impugned gold from M/s Sai Max Traders, Delhi to M/s Ambey Trading, Kolkata for jewellery making & its return under challan etc. Further, Shri Hariom Sehgal, Proprietor of M/s Ambey Trading Co., Kolkata in his statement dated 04.10 2018 tendered before Kolkata Customs stated that 6000 grms of gold (99.5%) was issued by M/s Sai Max Traders, Delhi to M/s Ambey Trading, Kolkata vide invoice no SMT#8 dated 17.07.2018. The adjudicating authority had analyzed the stock register of M/s Sai Max Traders, Delhi at length for the period - 01.01.2018 to 31.07.2018 and found the transactions genuine. He elaborated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination. Kolkata Customs report dated 04.10.2018 also speaks of in favour of the respondent. Thus, I am of the opinion that the respondent had fulfilled the burden of proof that the impugned gold was not the smuggled one as stipulated under Section 123 of the Customs Act, 1962. In these circumstances, the statement of Shri Shiv Raj Singh loses its relevance as his statement appears to be based more on conjectures and surmises than any reliable facts. In the light of foregoing paras, I do not find any force in the departmental appeal and consequently, I upheld the impugned order as just & proper. The departmental appeal is, thus, dismissed." 9. 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 gol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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