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TMI Blog2025 (1) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... d is of smuggled in nature, is not sustainable. Applicability of Burden of Proof as envisaged under Section 123 of Customs Act,1962 - HELD THAT:- Section 123 of the Customs Act clearly stipulates that a reasonable belief that the gold is of smuggled in nature is mandatory for invocation of the said provision. However, in the present case no reasonable belief has been formed by the officers that the gold is of smuggled in nature and hence the provisions of Section 123 are not applicable in this case and the burden lies on the department to prove that seized gold is of smuggled in nature. However, no evidence has been brought on record by the Revenue to substantiate the allegation that the gold is of foreign origin and smuggled in nature - the provisions of Section 123 are not applicable to indigenously procured gold. Reliance placed upon the decision in the case of BALANAGU NAGA VENKATA RAGHAVENDRA AND BALANAGU VENKATA SIVA KANAKA RATNAM VERSUS COMMISSIONER OF CUSTOMS, VIJAYAWADA [ 2021 (2) TMI 612 - CESTAT HYDERABAD] , wherein it has been held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(b) of the Customs Act, 1962. Aggrieved against the confiscation of gold and imposition of penalty, Shri. Sonu Kumar Deshmukh (the appellant), has filed this appeal. 2. The facts of the case are that gold bars weighing 2513.40 Grams valued at Rs. 76,65,870/- was seized from the personal possession of Mr. Sonu Kumar Deshmukh while he was about to board the Brahmaputra mail on 24.10.2013. Apart from gold, 3/6 pcs of handsets as well as Indian currency amounting to Rs. 29,470 were also seized. The seizure was effected by a team of officers comprising of the Superintendent (Prev.) Circle Kishanganj and Preventive Officers assisted by SSB officials and G.R.P./R.P.F. personnel on the 'reasonable belief' that the said gold was contraband in nature and was smuggled from Bangladesh. Consequent to seizure, statements of all the three apprehended persons were recorded in terms of section 107 of the Customs Act, 1962, wherein the appellant stated the name of Srikant Jadhav as the person from whom the said gold was purchased. However, the said statement was later on retracted by the appellant. 2.1. A search was conducted at the premises of Srikant Jadhav of Sonarpatti Kishanganj whose employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted gold from M/s. Rand refinery, South Africa. From the letter dated 03.12.2013 of HDFC Bank, it was found that they also imported gold from Switzerland. 2.4. The appellant submitted documents as issued to him by M/s Supreme Gold and thereby contended that the gold seized from his possession could have been possibly procured from both M/s Akshay Kripa Jewellers & Supreme Gold Jewellers, Delhi in the usual course of trade which could not be recollected by him then. Thus, the appellant claimed that he has submitted all the relevant documents to prove his licit acquisition of gold from domestic sources. 2.5. The Superintendent of Customs (Prev.) caused further investigation at Delhi and visited M/s Akshay Kripa Jewellers & Supreme Gold Jewellers, Delhi to cross verify the documents and transactions made with the appellant and the said jewellers from 25.02.2013 to 04.05.2013, to which they produced a list of Nine importers who sold gold to them during the relevant period. Thereafter, another statement was recorded from the appellant on 20.03.2014. 2.6. On completion of the investigation, a Show Cause Notice under C. No. VIII(10)310-Import/2013- 14/1680 dated 11.04.2014 was issued t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f AD(G.P Series) Circular No. 07 dated 06.03.1998. The appellant submits that there was no restriction on the sale of the gold imported by nominated agencies to individuals like appellant, whose family business was smelting of gold and silver and purification of the said metals at Buxar for further sale to goldsmiths/silversmiths of jewellery/ornaments. Accordingly, the appellant submits that they have discharged the burden that the gold was procured by them in a licit manner and hence the confiscation of the legally procured gold is not sustainable. 3.3. The appellant submits that evidences available on record prove that they were having gold with the marking Rand Refinery and Credit Swisse in their possession which were having no bar numbers. It was possible since the Tax Invoices of the sellers M/s. Supreme Gold Jewellers and M/s. Akshay Kripa Jewellers (Pvt.) Ltd. did not indicate the same and therefore the benefit of doubt should have been extended to the appellant. It is his contention that the ld. adjudicating authority has failed to verify from M/s. Supreme Gold Jewellers & M/s Akshay Kripa Jewellers, Chandni Chowk, New Delhi, as to why they did not state that the bar numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the source of importation of the same and therefore, they have discharged the burden of licit procurement of the gold. Further, the appellant submits that the evidence provided by M/s. Akshay Kripa Jewellers (Pvt.) Ltd. and M/s. Supreme Gold, Delhi, in the course of follow up action, goes to indicate that both jewellers purchased and sold the gold with the markings Rand Refinery and Credit Swisse which they had acquired from M/s. Atma Ram Amar Nath and Ms. Lawat Jewellers, Delhi, who had acquired the same from the HDFC Bank, Delhi, the actual importers; the letter's dated 3.12.2013 and 18.01-2014 issued by HDFC bank authorities with annexures has proved beyond doubt that they imported gold which was indeed sold with the marking Rand Refinery and Credit Swisse during the said period when the appellant dealt with the jewellers M/s. Akshay Kripa Jewellers (Pvt.) Ltd. and M/s. Supreme Gold of Delhi. The appellant also contends that the investigating officers could not produce any evidence contrary to their submissions. Accordingly, the appellant submits that the confiscation of the licitly procured gold is sustainable and prayed for setting aside the impugned order. 4. The Ld. Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may be notification in the Official Gazette specify." 7.1. We find that Section 123 applies inter-alia to gold bars bullion seized on the reasonable belief that they are smuggled goods. The burden of proving that they are not smuggled goods shall be on the person, who claims to be the owner of the goods from whose possession the goods are seized. The contention of the Department is that in the instant case gold bars were not of smuggled in nature, lies on the appellant Shri Sonu Kumar Deshmukh from whose possession the impugned goods were seized. The Department contended that the appellant did not produce any document for the licit procurement of the gold bars. 7.2. We observe that Section 123 of the Customs Act clearly stipulates that a 'reasonable belief' that the gold is of smuggled in nature is mandatory for invocation of the said provision. However, in the present case no reasonable belief has been formed by the officers that the gold is of smuggled in nature and hence the provisions of Section 123 are not applicable in this case and the burden lie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but on the same time, Revenue is also failed to prove that gold is of third country origin and smuggled through Nepal. In fact, the Revenue has not adduced any evidence to that effect, whereas on the other side, Shri Sanjeeb Kumar, himself has categorically stated that he is not dealing with the purchase and sale of the gold. Therefore, the Revenue has failed to prove that the gold in question is of third country origin and have been imported/smuggled through Nepal. In that circumstances, the gold in question cannot be held as restricted goods and they can be released on payment of redemption fine and penalty as the goods are smuggled in nature. We also gone through the case law relied upon by the Learned Counsel for the appellants in the case of Prithviraj Pokhraj Jain (supra) wherein in Para 19 which is extracted below wherein the Hon'ble High Court observed as under - "19. The burden was, therefore, on the prosecution to prove that the goods were smuggled. For this the prosecution relied upon the evidence of Hebbar who stated that he believed the goods to be smuggled, because watches and watch straps were of foreign origin, the import of which was heavily restricted and prohi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the Appellants when the seizure of gold without foreign markings are seized from city. The relevant portion of the order is reproduced below. "14. The confiscation of the gold by the adjudicating authority was set aside by the Tribunal and on appeal by the Revenue the Hon'ble High Court of Kerala, in the above factual matrix, has overturned the decision of the Tribunal. Therefore, it was not merely the purity of the gold in question but also the statements made during the investigation which formed the basis of the reasonable belief of the officers. In the present case, none of the statements recorded by the Department admit to or even suggest that the gold was smuggled gold. It has also not been brought out in the show cause notice that the purity of the seized gold is such that it could only have been of foreignconduct of the appellants was suspicious inasmuch as the gold pieces were being carried in newspapers and a letter was found written to one Shri Vijay in Trissur for requesting the gold to be handed over to the bearer of the letter. It is also confirmed by the DCM, Railways that the appellants had travelled from Trissur to Vijayawada by train. However, we note that Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legally procuring primary gold which as per the Exim Policy and RBI regulations was permitted for import by all Nominated Banks/Agencies/Premier or Star trading houses for use in the domestic sector. The appellant's submission is that the gold which was recovered from his possession was that which had remained unsold from his stock that he acquired from H/s. Supreme Gold and M/s.Akshay Kripa Jewellers (Pvt.) Ltd., Delhi. The only ground in which the gold was seized by the officers was that the appellant was not having any document for licit purchase of the same at the time when they were intercepted. We observe that failure to produce documents in respect of the goods carried by a person does not ipso facto prove that the goods are contraband in nature. The allegation of smuggling needs to be proved with cogent reasoning and corroborative evidence thereof. Subsequently, if the appellant could produce documents for its legal purchase, the same cannot be ignored to conclude that the gold is of smuggled in nature. In this regard, the appellant has relied on the case of Commissioner of Cus.(Prev.), Shillong v. Sri Sangpuia reported in 2005(189) E.L.T.321 (Tri. - Kolkata), whereof the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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