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TMI Blog2023 (7) TMI 1410X X X X Extracts X X X X X X X X Extracts X X X X ..... Street, Kolkata- 700007, under Section 111(b) and 111(d) of the Customs Act, 1962; (b) I order for confiscation of the seized wrapping and concealing materials i.e. shredded pieces of newspapers used for wrapping / concealing the gold bars, cut pieces of the gold bar having no commercial value under Section 119 of the Customs Act, 1962; (c) I order for confiscation of the seized Indian currency amounting to Rs. 20,16,100/- (Rupees Twenty lakh Sixteen thousand and one hundred) only under Section 121 of the Customs Act, 1962; (d) I impose penalty for Rs. 4,50,000/- (Rupees Four lakh fifty thousand) only upon Shri Anurag Jalan Under Section 112(b) & Section 114AA of the Customs Act, 1962; (e) I impose penalty for Rs. 25,000/- (Rupees Twenty five thousand ) only upon Shri Shreyash Agarwal under Section 112(b) of the Customs Act, 1962; (f) I impose penalty for Rs. 50,000/- (Rupees Fifty thousand) only upon Shri Dhan Kishore Agarwal Under Section 112(b) of the Customs Act, 1962; (g) I impose penalty for Rs. 25,000/- (Rupees Twenty five thousand) only upon Shri Shri Param Hans, under Section 114AA of the Customs Act, 1962." 2. The facts of the case are as under : 2.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 23 (twenty three) number of bags made of HDPE and cotton having foreign marking upon them containing Silver granules believed to be of foreign origin totally weighing 418.700 kgs. and valued at Rs.1,95,11,420/- (ii) 505 pieces of mixed white coloured silver coins collectively weighing 10.082 Kgs. Valued at Rs.4,20,668/- (iii) 20 pieces of gold coins believed to be made of gold of foreign origin collectively weighing 91.9 grams and valued at Rs.3,51,701/- (iv) Indian currency notes of denomination of Rs. 2000, Rs. 500, Rs. 200 & 100 totally amounted to Rs. 20,16,100/- 2.5 As Shri Anujrag Jalan failed to produce any licit document in support of legal possession, acquisition dealing with the goods as mentioned above. Accordingly, all those were seized under Section 110 of the Customs Act, 1962 on the reasons to believe that those were smuggled into India from Bangladesh in contravention of the provision of the Customs Act, 1962 and liable for confiscation under Section 111 of the Customs Act, 1962. Indian currency of Rs. 20,16,100/- (Rupees Twenty Lakhs Sixteen thousand of one hundred) recovered from the said premises were also seized under Section 110 of the Customs Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dhan Kishore Agarwal he kept the packets containing 4 pcs of gold hars and 5 pcs of cut pieces of gold bars totally weighing 6356.05 gm in his custody. The said gold was delivered to him by Baikunth Prasad, an employee of Shri Anurag Jalan; that against query Shri Anurag Jalan told him that he was facing some problem in keeping those gold with him for the time being but assured to take back the gold as early as possible; that he had not asked the Anurag Jalan about the source of the gold; that previously on two occasion in January, 2020 he kept some packets of gold in similar quantity in the same safe as per instructions of Dhan Kishore Agarwal; that those packets of gold were also sent by Shri Anurag Jalan through Baikunth Prasad; that however, on those two occasions Shri Anurag Jalan took back those packets of gold on the next day. 2.9 Shri Anurag Jalan in his voluntary statement under Section 108 of Customs Act, 1962 has inter alia admitted that he is the owner of the seized gold weighing 6.356 kgs and 4 kg seized from the premise of Roopm Saree and from the room No. 405, 61, Manohar Das Street, Kolkata-07 respectively; that he had no documents in support of licit acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dilip Singh also used to stay with him; that some persons used to come to the shop of Shri Anurag jalan and deliver gold biscuits; that Shri Dilip Singh used to get those gold biscuits melted from different melting workshops of Burrabazar to form gold bars that Shri Dilip Singh used to keep those gold bars in the almirah of room No. 405 of 61, Manohar das Street Sonapatty and deliver to other persons; that he also used to accompany Dilip Singh to the gold melting workshops sometimes; that after 10 January 2020. Anurag Jalan looked visibly worried and sent Dilip Singh to his native place, that after that Dilip Singh used to contact him from a new mobile number 8481927656 instead of his old mobile number 8017979210. 2.11 Shri Baikunth Prasad further submitted that after departure of Shri Dilip Singh, he was entrusted with the job of receiving smuggled gold biscuits from different persons, got those gold biscuits melted from different melting workshops to form gold bars and either keep those gold bars in the almirah of room No. 405, Manohar Das Street or deliver the same to Ashu Babu at the shop of Roopam Saree which belongs to Shri Dhan Kishore Agarwal, the father in law of Shri Anu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the addressee left the place. However against summons sent through email a reply dated 03.09.2020 received from Shri Param Hans, Proprietor of Prithvi Gold. By the said letter it was intimated that Prithvi Gold is a broker only. He had purchased the gold from Kratika Jewellers and sold the same to Jalan Bullion & Jewellers. He only earned the brokerage amount which was the difference amount between sale and purchase price. 2.15 Under cover of his letter dated 08.09.2020. Shri param Hans also forwarded among others an unsigned Tax invoice purportedly of Kratika Jewellers. As per that unsigned invoice total 9520.800 gms gold bar were sold to Prithvi Gold on 14.01.2020 total value of which was shown as Rs. 3,82,94,086/- In the said invoice, there is also no mention of mode of payment. From the Ledger Account of Prithvi Gold, also submitted by Shri Param Hans, it is found that payment was stated to be made to Kartika Jewellers through bank on following different dates 05.02.2020- Rs. 10,00,000/- 06.02.2020- Rs. 9,50.000/- 13.02.2020- Rs. 7, 00,000/- 13.02.2020- Rs. 2,90,000/- Total Rs 29,40,000/- However, from the bank statement of Prithvi Gold copy of which was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell. 2.18 In support of legal procurement of the silver coins, Shri Anurag Jalan submitted copies of journal voucher dated 17.01.2020 & 20.01.2020, bills dated 17.01.2020 of S K Coins Maker and two letters dated 15.01.2020 & 18.01.2020 of Jalan Bullion & Jewelers. It was claimed that total 10 kg Silver was supplied by Jalan Bullion & Jewellers to S K Coins Maker for manufacturing coins. The manufacturing charges were Rs. 600/- per kg and total Rs. 6000/- was paid by Jalan Bullion & Jewellers to S K Coins Maker. Interestingly nowhere in the bills of S K Coins Maker the number of Pcs of silver coins manufactured by them were mentioned, only total quantity of 10 kg were mentioned in their two bills. In this connection it is also to mentioned, only total quantity of 10 kg were mentioned in their two bills. In this connection it is also to mention that after examining the seized silver coins, govt. approved assayer Shri AB Kundu Jewellers declared that our of 505 pieces mixed white coloured coins of different shapes & sizes. 352 coins weighing 4806.420 gms were made of pure silver and silver content of the rest coins i.e. 153 pieces coins weighing 5726.000 gms were 80%. However, nowher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumptions. 3.3 It is the submission that it is a settled law that the reasonable belief cannot be formed on mere pretense or suspicion. In this case, the Panchnama drawn by the DRI is a narration like a caged parrot wherein without there being any iota of evidence, the allegation has been raised on a mere suspect of alleged smuggling from Bangladesh. 3.4 He also submitted that there is no evidence to the contrary put up by the DRI and the entire gold bullion being of Indian origin along with the silver granules, which were cohesively covered by the proper document of title and the claim of the appellant cannot be faulted with and all along, it is the settled law that the benefit of presumption under Section 123 under the Customs Act, 1962 does not go in favour of the Revenue because there is the absence of formation of reasonable belief and above all a seizure and no foreign marking on the impugned gold nor any case of defacing or any interception at International Border. 3.5 It is also submitted that the statements of Shri Anurag Jalan and Shri Bakunth Prasad, were also recorded under duress, coercion and illegal detention and custody and used to cause prejudice. 3.6 Shri A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Jaimata Ji Enterprises. 3.12 He further submitted that the term "smuggling" has not been defined under Customs Act and the said issue has been examined by the Hon'ble High Court of Delhi in the case of Shanti Lal Mehta Vs. Union of India & Others reported in 1983 (14) ELT 1715 (Del). 3.13 He further submitted that the statement of Shri Anurag Jalan taken into custody, does not have any evidentiary value in the absence of independent corroboration. To support his contention, he relied on the decision of the Hon'ble High Court of Bombay in the case of Union of India Vs. Kisan Ratan Singh reported in 2020 (372) ELT 714 (Bom.) and he also relied on the decision of the Hon'ble Supreme Court in the case of Vinod Solanki Vs. Union of India reported in 2009 (233) ELT 157 (SC) and also he relied on the decision of the Hon'ble High Court of Madras in the case of Chennai I Vs. Sainul Abideen Neelam reported in 2014 (300) ELT 342 (Mad.). He also relied on the decision of the Hon'ble Supeme Court in the case of Sitaram Sao Vs. State of Jharkhand repored in (2007) 12 SCC 630. 3.14 He further submitted that the allegation of alleged smuggling from Bangladesh is the complete story of DRI wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments advanced by both sides and after going through the impugned order and after going through the reports placed before us, we find that the following issues have been raised under consideration : Issue No. (1) Whether in the absence of formation of reasonable belief, the presumption under Section 123 of Customs Act, 1962, goes in favour of the Revenue or not ? We find that in this case, it is alleged against the appellants on the basis of formation of reasonable belief that they were involved in smuggling of gold and silver from Bangladesh and therefore, search was conducted on the premises of the appellants, wherein certain gold bar/pieces were recovered and it was alleged that they believed to be a foreign origin and clearing being a notified items under Section 123 of Customs Act, 1962. Therefore, onus on the appellants to show that they have procured the said gold from licit means or not. 7. We have gone through the judgement of this Tribunal in the case of Shri Balwant Raj Soni dated 18.05.2023, whether the question of presumption under Section 123 of the Customs Act, 1962 goes in favour of the Revenue or not and this Tribunal has observed as under : "15. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Customs v. Charan Das Malhotra, 1971 (1) SCC 697, Shelat J., has held reasonable believe to be relevant and not 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. 18. The Appellants relied upon judgment of the Hon'ble Supreme Court in the case of Sita Ram Sao Vs State of Jharkhand reported in (2007) 12 SCC 630, wherein the Hon'ble Apex Court defined the word 'Corroboration' as under: "34. The word 'corroboration' means not mere evidence tending to confirm other evidence. In DPP Vs Hester (1972) 3 AIR ER 10.16, Lord Morris said: "The purpose of corroboration is not to give validity or credence to evidence which is deficient or suspect or incredible but only to confirm and support that which as evidence is sufficient and satisfactory and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. But this was done later on. The letter was written on 3-7-1967. The reply was received on 24-7-1967. But at the time of seizure all that the officer had before him were 2 packets of diamonds and 5 ornaments. Neither the diamonds nor the ornaments had any foreign markings or label to suggest to the customs that these were smuggled goods. In the search list these two packets of diamonds are described as "appearing to be diamonds". This shows that the customs officer did not believe them to be diamonds on any reasonable ground. The ornaments had no foreign label or making. They were ordinary ornaments as are worn in this country. There was nothing peculiar about them. Nothing extraordinary. On this material could any reasonable man entertain a belief that these were smuggled goods 59. The belief must be such as any reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. Simply because the goods were not accounted for at that time does not necessarily mean that the goods were smuggled goods. Unaccounted goods may be stolen goods. Reasonable belief could be entertained either on the basis of some external indicia or on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntant had gone to the income tax officer. The officer did not wait for the man to arrive to explain the entries to him. He seized the goods and took them away. This was not a case of reasonable belief. It was a case of suspicion. A case of speculation. A case of guess work. 63. As a result Section 123 did not apply to the case. There was no reasonable belief. No presumption could be raised under Section 123. There was no obligation on the petitioner to prove that the goods were not smuggled. The burden of proof was wrongly cast on him. The entire inquiry was vitiated." 20. From the above discussion, we observe that the 'reasonable belief' on which the DRI officers presumed that the gold bars/pieces were of smuggled nature is not supported by any corroborative evidence. There is no document available on record to establish that gold bars/pieces were smuggled into India from Bangladesh. The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of assumptions and presumptions without any concrete evidence to substantiate this claim. Hence, we hold that material evidence available on record does not establish that the gold bars/piec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Rajesh Kumar Yadav and Umanath did not produce any document for their lawful possession of the recovered gold bars/pieces at the time of seizure in Gaya Railway Station on 10/01/20. 22.3 The contention of the Appellants is that the gold bar/pieces were not of foreign origin. Section 123 of Customs Act is applicable only to foreign marked gold. Also the gold bars/pieces sized is not of 99.99 purity. Since, there is no foreign mark available on the gold bars/pieces seized from the Appellants, the provisions of section 123 is not applicable in this case. 22.4 The Appellants relied upon many decisions to support their case. In the case of Sanjeeb Kumar @ Pappu Kumar vs Jt CC, Lucknow, 2019 (369) ELT 1177 ( Tri-All), it has been held as under: "3. The Learned Counsel for the appellants submits that in terms of Section 123 of Customs Act, 1962 the onus is on the appellant to prove that the gold in question is not smuggled one, although appellants have failed to prove that gold is not smuggled one but the allegation of the Revenue that the gold is restricted item being third country origin has not been proved by the Revenue and no evidence has been brought on record by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... origin of the watches is tried to be shown from the foreign markings on the watches. The question whether the foreign markings of goods can be treated as admissible in evidence was considered by Naik J. in Criminal Appeal No. 3 of 1966, decided on 22nd December, 1966. Among the property involved in that case were some gold slabs. The slabs bore the marking "Johnson Mathey 9990 London". Naik J. observed in his judgment that the markings do not speak for themselves and that evidence would be hearsay evidence. There was nothing to indicate that the markings were really done by Johnson Mathey in London. No presumption can arise in regard to the markings, unless there is evidence to show that those markings were made by a particular company in the ordinary course of business. A Division Bench of the Gujarat High Court has also taken a similar view in Asstt. Collector of Customs, Baroda v. M. Ibrahim Pirjada, 1970 Criminal Law Journal, 1305. There, the Gujarat High Court has held that mere markings cannot be taken as proof of the fact of foreign origin of the goods as such markings and labels would be hearsay evidence. With respect, I agree with the above view." Relying on the said de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for forming a reasonable belief that the seized gold was smuggled. Therefore, the Officers did not have a reasonable belief in the first place to assert that the seized primary gold was smuggled gold which is essential to shift the burden on to the accused under Section 123. The case of Om Prakash Khatri (supra) was different inasmuch as in that case while the foreign markings were missing on the gold in that case the carriers had admitted that they were carrying smuggled gold for Shri Khatri and that it was smuggled through Kerala and they were carrying it to Bombay and marks and numbers have been deleted to avoid being caught. They also admitted that they avoid air travel as there is a high risk of being caught. Coupled with these statements was the fact the gold of very high purity. The ratio of this judgment does not apply to the present case and the facts are quite different. 15. In view of the above, we find that the officers of the Department had no reasonable belief that the gold was smuggled and therefore they have not discharged their responsibility of forming reasonable belief under Section 123 without which the burden of proof will not shift to the person from whom t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onoticees and the retractions thereof, can be relied upon to establish the guilty of the appellants when the procedure prescribed under Section 123 of the Customs Act, 1962, was not followed or not ? The Revenue has also relied upon the various statements recorded during the course of investigation. The statement of Shri Anurag Jalan was also recorded but the same has been relied upon by the Revenue to allege that the gold in question is smuggled one. 12. Further, we take note of the fact that the Revenue has relied upon the retracted statement of Shri Anurag Jalan, the said issue was also examined by of this Tribunal in the case of Shri Balwant Raj Soni (supra) and it was held by this Tribunal as under : "23. The next question to be answered is whether the retracted statements of the co-accused can be relied upon to establish the guilt of the Appellants, when the procedure prescribed under section 138B of the Customs Act was not followed. The Appellants stated that the retracted statements does not have higher evidentiary value than facts on record. They contended that the findings in the impugned order are based mainly on the basis of the statements of the co-accused, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 non-compliance of the mandate under Section 138B of the Customs Act, 1962 by the Adjudicating Authority which is pari materia with Section 9D of the Central Excise Act, 1944. In the case of Flemingo DFS Pvt. Ltd., Vs. Commissioner of Customs, Visakhapatnam reported in 2018 (363) ELT 450 (Tri-Hyderabad), it has been held that if Revenue chooses not to examine any person in the adjudication proceedings, it amounts to giving up that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any independent evidence do not constitute the legal evidence and there is no justification for imposition of penalty on the Appellant. 30. In the present case, the Appellants submits that only on the basis of the statement of the co-accused inference has been made about the smuggled nature of the gold bars/pieces. The Appellants relied on the decision in the case of Surinder Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." Relying on the decision of this Tribunal in the case of Shri Balwant Raj Soni (supra), we hold that the statement/retracted statements cannot be the basis to establish that the gold in question is smuggled one. Therefore, Issue No.(3) is also answered in favour of the appellants. Issue No.(4) Whether the facts and circumstances of the case, the penalties on the appellants can be imposed or not ? 13. We further take note of the fact tha ..... 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