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TMI Blog2025 (4) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... Officers of the Headquarters P&I Branch, C.C. (P), West Bengal, Kolkata intercepted Shri Sanjay Kumar Agarwal, the Appellant No. 1, at Shalimar Railway Station. On examination, he was found to be in possession of seven (07) pieces of gold collectively weighing 474.250 grams of gold valued at Rs.18,01,676/-. As the Appellant No. 1 was not having any document for licit procurement of the said gold, the said gold was detained vide Detention Memo No. 03/September/2019-2020 dated 15.09.2019 and later, converted to seizure under Section 110 of the Customs Act, 1962 vide Seizure Case No. 22/IMP/CL/GOLD/P&I/CCP/WB/2019-20 dated 12.10.2019. The gold in question was seized under the belief that the said gold hold had been illegally imported into India without payment of appropriate Customs duties. 2.1. In his statement recorded under Section 108 of the Customs Act, 1962, the Appellant No. 1 inter alia stated that he works under Shri Sanjay Kumar Kotal of M/s. Kanishk Jewellers and Bullin Private Limited, 158/A, Bidhan Park, Netaji Colony, Kolkata - 700 090 (the Appellant No. 2 herein), on whose direction he was proceeding to M/s. Shyam Narayan Jewellers of Bakhargang, Patna, on 13.09.2019 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, Dated. 12.10.2019 by the S&D Unit, C.C.[P],W.B. as per instructions/procedure laid down in the Chapter- 11 of the department's Disposal Manual-2019." 4.1. On appeal, the Ld. Commissioner (Appeals), vide the impugned Order-in-Appeal dated 19.07.2023, upheld the confiscation of gold and imposition of penalties imposed vide the above mentioned Order-in-Original dated 30.03.2022. 5. Aggrieved by the impugned order, both the Appellants have filed appeals before the Tribunal. 5.1. As both the appeals emanate from the same Order-in-Appeal, both are taken up together for decision by a common order. 6. The contentions raised by both the Appellants in these appeals are summarized as under: - i) As per Section 110(1) of the Customs Act, 1962, Officers can seize the goods only when there is a 'reasonable belief' that the said goods have been smuggled into the country without payment of applicable duties of Customs. However, in the present case, the Officers have not exercised any 'reasonable belief' that the gold in question was smuggled in nature. There is no foreign marking available on the said gold to indicate that the same had been illegally imported into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he officer concerned but to be exercised in accordance with restraints imposed by law and such belief must be that of an honest and reasonable person based upon reasonable grounds. Reasons should either appear on the face of the notice or must be available on the materials which had been placed before him. 6.1. Regarding applicability of Section 123 of Customs Act, 1962, in this case, the Appellants submit that the key element under section 123 of the Customs Act, 1962 is 'reasonable belief'; that the seizure so made in the present case is clearly without 'reasonable belief'. It is thus argued that when there is clear absence of reasonable belief, the initial burden in terms of Section 123 of the Customs Act, 1962 automatically shifts to the Department. 6.2. The Appellants have also submitted that the documentary evidence submitted them clearly indicate that the gold in question was indigenously procured. It is further submitted by the Appellants that the ld. adjudicating authority has recorded the genuineness of the documents submitted them at paragraphs 15.17 and 16.05 of the Order-in-Original dated 30.03.2022; however, in spite of admitting the genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndard weight. There are no foreign markings available on the said gold pieces. 9.2. I find that Board, vide its Circular No. 01/2017 dated 08.02.2017, has instructed to pass a specific order depicting the reasonable belief of the officer concerned while seizing the goods. Therefore, deviation thereof, clearly depicts that the seizure so made is illegal and hence, the goods are liable to be released and in corollary thereof, confiscation under Section 111 of the Customs Act 1962 is not at all warranted. Thus, when preliminary seizure of goods is in dispute, the SCN proceedings become vitiated in nature thereby making the impugned order liable to be quashed. 9.3. I also 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 lies on the Department to prove that seized gold is of smuggled in nature. The Appellants contend that no evidence has been b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ument for the licit procurement of the gold bars. 10.2. I 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. The burden in the instant case lies on the Revenue to prove that seized gold is of smuggled in nature. However, I find that no evidence has been brought on record by the Revenue to substantiate their allegation that the gold is of foreign origin and smuggled in nature. 10.3. I also observe that the provisions of Section 123 are not applicable to indigenously procured gold. Hence, I find merit in the argument of the appellant that the onus is on the Department to prove that the gold is of smuggled in nature and the Department has failed to bring in any evidence to prove that the gold is smuggled in nature. 10.4. I observe that the appellants relied upon many decisions to support their contention. In the case of Sanjeeb Kumar @ Pappu Kumar vs Joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector 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 decision, without evidence, the benefit of presumption under Section 123 of the Customs Act, 1962 is not available to the Revenue. Therefore, we hold that the gold in question is not restricted item but being smuggled one liable for confiscation and the same can be redeemed on payment of redemption fine. We also take note of the fact that the value of gold is Rs. 1,26,22,800/- and margin of profit in the trade of gold is very less, therefore, considering the value of gold and margin of profit, we hold that the redemption fine of Rs. 5 lakhs is appropriate in the facts and circumstances of the case. Therefore, we impose redemption fine of Rs. 5 lakhs on the gold in question which can be redeemed on payment of the said redemption fine. Considering the fact, that appellants are involved in the activity of smuggling of gold, therefore, penalty of Rs. 1 lakh each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable 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 the gold is seized " 10.6. I observe that the only ground in which the gold was seized by the offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gold was smuggled into India. 10.9. In view of the above discussions and the decisions cited above, I hold that the burden under Section 123 of Customs Act, to prove that the gold is not smuggled in nature, does not lie on the Appellants, in this case. The onus is on the Departmental officers that the gold is of smuggled in nature. However, I observe that the officers of the Department could not establish that the gold is of smuggled in nature. 10.10. I find that the Appellants have produced evidence in support of legal procurement of the gold, vide Invoice No. KJ/WB/19-20/1042 dated 31.05.2019 by which 700 grams of gold was purchased by the Appellant No. 2 (M/s. Kanishk Jewellers and Bullion Pvt. Ltd.) from M/s. Kartikey Jewellers Pvt. Ltd. It has been stated that out of this, 474.250 grams of gold was given to the Appellant No. 1 for the purpose of delivering the subject gold to M/s. Shyam Narayan Jewellers, Bakargang, Patna for the purpose of making ornaments. For the sake of ready reference, scanned copy of the said invoice is reproduced below : - 10.11. In this regard, I observe that the ld. adjudicating authority has given a finding regarding validity of these documents ..... X X X X Extracts X X X X X X X X Extracts X X X X
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