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TMI Blog2024 (8) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of the gold has to be under reasonable belief that it was smuggled gold. When the gold was covered under proper documents like job work gold invoice vouchers and GST purchase invoice etc., as apparent from Panchanama, there did not exist any reasonable belief that the said golds were smuggled in nature, on the date of seizure. Therefore, merely on presumption without any tangible documents or belief, invokation of the Section 123 for the purpose of shifting the onus of burden cannot be sustained - though the goods which were seized under the reasonable belief that they were liable for confiscation under the Customs Act and CGST Act, there was no sufficient material available to the customs officials on the date of seizure to form a reasonable belief in respect of appellants gold that they were smuggled gold or were of foreign origin. Presumption under Section 123 - HELD THAT:- In the case of COLLECTOR OF CUS., MADRAS VERSUS NATHELLA SAMPATHU CHETTY [ 1961 (9) TMI 3 - SUPREME COURT] Hon ble Supreme Court, inter alia, observed in para 44 that reasonableness of the belief has to be judged by all the circumstances appearing at that moment. Therefore, even though subsequently they w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. The order of the Commissioner (Appeals) is set aside - Appeal allowed. - MR. A.K. JYOTISHI, MEMBER (TECHNICAL) Shri Narasimha Murthy, Consultant for the Appellant. Shri K Sreenivasa Reddy, Authorised Representative for the Respondent. ORDER M/s Raj Jewellery Mall (hereinafter referred to as appellant) has come in appeal against the Order-in-Appeal No. HYD-CUS-000-APP-49-23-24 (App-I) dated 31.08.2023 passed by Commissioner (Appeals). Commissioner (Appeals), vide impugned order, has rejected the appeal filed by the appellant against the Order-in-Original dated 31.03.2022 vide which the Adjudicating Authority has absolutely confiscated 4 pieces of gold bars of foreign origin weighing 100 gms each, engraved with marking of MMTCPAMP, totally 400 gms, valued at Rs. 20,98,400/- under Section 111(d) and 111(f). He has also imposed a penalty of Rs. 4,20,000/- on the appellant under Section 112(b)(i) of Customs Act. 2. The issue, in brief, is that on the basis of specific Intelligence Officers of Customs (Preventive) examined certain consignments at Domestic Inbound Terminal, Air Cargo Complex, Rajiv Gandhi International Airport, Shamshabad on 10.11.2020. They, interalia, foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purchase of said gold bars by the appellant and therefore it appeared to them that these gold bars were smuggled in nature and therefore liable for confiscation. Department also invoked provisions of Section 123 of Customs Act vide para 13(h) of show cause notice. 4. On adjudication, the Adjudicating Authority has held that the said gold bars were of foreign origin, which were re-melted and affixed with fake marking of MMTC-PAMP with an intention to mis-lead the Customs Authority that the said gold was purchased from a nominated agency M/s MMTC. He also held that the appellant failed to discharge burden of proof that these were not smuggled gold in terms of Section 123 of the Customs Act 1962 by relying on certain judgments including D. Srinivas Vs Commissioner of Customs, Bangalore [2002 (148) ELT 946 (Tri-Bang)], Subhash Jain Vs State [2016 (333) ELT 51 (Del)] and Baburaya Narayan Nayak Vs Commissioner of Customs, Bangalore [2018 (364) ELT 811 (Tri-Bang)]. He has also relied on the Hon ble Supreme Court s judgment in the case of Om Prakash Bhatia Vs Commissioner of Customs, Delhi [2003 (155) ELT 423 (SC)] to hold that said goods were liable for confiscation. Further, by ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2020. ii) whether in the facts of the case, the Department has been able to establish conclusively that said gold bars were of foreign origin and were smuggled initially and subsequently re-melted and affixed with false markings. iii) whether in the facts of the case, presumptions available under Section 123 can be invoked or otherwise against the appellants. 10. On going through the facts of the case, it is obvious that acting upon certain Intelligence, Officers of Customs Branch went through the details of the consignments booked from Vijayawada to Mumbai via Hyderabad and verified the goods carried under Air Way Bill No. 312/VGA/7109650 dated 10.11.2020 where the shipper was found to be one Shri Sunil Kumar Saini of Jai Mata Di Logistics. On physical verification of consignment under the reasonable belief that the consignment contained foreign marked smuggled gold bars, the box was opened and found to have contained 11 individual small packets. On screening of individual packets, Officer identified some images of gold biscuits/cut pieces of gold biscuits in 4 packets which were respectively not accompanied by any proper document. The Officers also observed presence of jeweller ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of in terms of Section 123. He has also relied on various judgments in support that Section 123 is invokable in the facts of the case, as follows: a) D. Srinivas Vs Commissioner of Customs, Bangalore [2002 (148) ELT 946 (Tri-Bang)] b) Subhash Jain Vs State [2016 (333) ELT 51 (Del)] 13. Commissioner (Appeals) in his impugned order has merely upheld the order of the Original Authority for absolutely confiscating the gold bars. On perusal of records, I find that the case of the Department is that the seized golds were of foreign origin which were illegally imported smuggled golds and further re-melted on which certain markings were embossed by the appellant to mis-lead the Customs Authority. However, the arguments of the appellant that they have never claimed that said gold as the one which has been purchased from MMTC and the fact they had claimed that the said gold bars were purchased from M/s Shubham Jewellers, Mumbai would indicate that the gold in questions were not of foreign origin. One of the main thrusts of the Department is that so called supplier of impugned gold has refused to acknowledge that the said golds were supplied by him, whereas, the appellants have brought eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ama (serial no. 1 is appellant s) without distinguishing which law is applicable for which consignment. 15. In his statement dated 04.12.2020 Shri Sujit Kumar Jain, Managing Partner of the appellant, interalia, submitted that these were purchased from Shubham Jewellers, Mumbai under the cover of invoice no. 62 dated 17.10.2022 and were being sent to one M/s Tapsi Gold, Mumbai under their delivery challan voucher no. 1 dated 09.11.2020 for making ornaments on job work basis. He also submitted that such transactions have been reflected in their GSTR-2A and bank statement. However, the Customs Authority asked him to explain about dis-owning of the delivery of impugned gold bars by M/s Shubham Jewellers. He re-iterated the same statement and explained that he did not know why Shubham Jewellers, Mumbai was denying the fact that the said gold bars were sold to them. He also confirmed that they have provided the original delivery challan voucher no. 001 dated 09.11.2020 and a xerox purchase invoice no. 62 dated 17.10.2020 to the courier M/s Jai Mata Di Logistics for the purpose of transportation. However, the fact that Department had contacted M/s Shubham Jewellers via e-mail and their re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable for confiscation on the date of seizure is concurred, facts would say that since there were many consignments containing different types of gold and jewelleries and in view of certain un-specified intelligence/information, there could have been a reasonable belief by the Department that certain goods were of offending nature and were liable for confiscation under the Customs Act. However, what is important to note is that in order to invoke Section 123, the seizure of the gold has to be under reasonable belief that it was smuggled gold. When the gold was covered under proper documents like job work gold invoice vouchers and GST purchase invoice etc., as apparent from Panchanama, there did not exist any reasonable belief that the said golds were smuggled in nature, on the date of seizure. Therefore, merely on presumption without any tangible documents or belief, invokation of the Section 123 for the purpose of shifting the onus of burden cannot be sustained. Further, the fact the Departmental Officers were themselves not sure as to under which provisions said goods were liable to confiscation i.e whether Customs Act or CGST Act, they cannot have reasonable presumption that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder which the reasonable belief could be farmed and the gold could be considered to be of foreign origin, and smuggled or otherwise. In general, I find that the issue whether there was material before Customs Officer to form a reasonable belief that the seized golds were smuggled goods or otherwise was the subject matter dealt with extensively by the Hon ble Supreme Court in the case of Indru Ram Chand Bharvani Vs Union of India [1988 (7) TMI 78 SC] where after examining after the provisions of Section 123, and 110 read with 123, interalia, held that there must be materials to confirm a reasonable belief that the goods in questions are smuggled. In the case, the Hon ble Supreme Court found that there was no trust worthy evidence, documentary etc., as regards legal acquisition and therefore it was rightly invokable. The Department s reliance on the case law of Om Prakash Katri Vs Commissioner in support of that it requires only a reasonable belief as far as gold is concerned that it was smuggled and in the given facts there was reasonable belief, is not tenable in view of discussion in foregoing paras that on the date of seizure there could not have been any reasonable belief to ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Adjudicating Authority accepts that these markings were not of foreign origin. Therefore, when the markings were not of the foreign origin and fact that gold of purity 999 can be sold in domestic market under legitimate invoices etc., the Customs needs to have proved with sufficient evidence that the gold was actually made out of re-melted gold bar initially smuggled into India. There is no evidence to that effect in the show cause notice. Thus, the conclusion drawn by the adjudication is based on presumptions and surmisings. 23. Thus, the Department has not been able to prove conclusively that the said gold bars were of foreign origin which were subsequently smuggled and re-melted and were carrying fake markings. Since Section 123 cannot be invoked and appellants had already discharged the initial burden by disclosing the source of legitimate purchase, it was for the Department to carry out further investigation and establish that such golds were actually smuggled gold and were liable for confiscation under the Customs Act 1962. 24. Therefore, in the facts of the case, the confiscation and more so absolute confiscation of the seized gold is not legally tenable and therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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