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TMI Blog2025 (4) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... on an intelligence, that the officers of DRI, LZU, intercepted two persons, in the intervening night of 04-05/09/2020, travelling in BUS No UP-22AT-0568, from Gorakhpur to Delhi, and found 3998.83 grams of gold valued at Rs 2,12,79,096, allegedly of foreign origin and seized the same under the reasonable belief that the same was smuggled. The two persons identified as Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, stated that they were carrying gold, under Voucher No 644 dated 03/09/2020 & Voucher No 645 dated 03/09/2020, issued by M/s Bajrang Bullion Traders Hindi Bazar Gorakhpur; they work for M/s Bajrang Billion Traders owned by Shri Sharad Chand Agrahari; they were going to deliver the smuggled gold to M/s Mahaveer Bullion Karol Bagh New Delhi; they did not have any valid document regarding purchase or import of said gold; earlier they delivered, on 21/08/2020, to M/s Mahaveer Bullion Karol Bagh New Delhi on the instructions of Shri Sharad Chand Agrahari. Both Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni were arrested under the belief that they liable for punishment under Section 135(1)(i)(A) of the Customs Act 1962. 2.1. Search of the premises of Bajrang Bullion Trader ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allegation; Hon'ble supreme Court held in Assistant Collector of Customs Vs Charan Das Malhotra 1983 (13) ELT 1477 (SC), reasonable belief is to be relevant and not extraneous and it must be supported with other independent corroborative evidences; Hon'ble supreme Court held also in Kewal Krishan Vs State of Punjab, 1993 (67) ELT 17 (SC) that confiscatory power based on 'reason to believe' has to be exercised only on the satisfaction based on certain objective material; Reasonable belief' must be at the time when the gold are seized and not subsequent to seizure; when the gold is accounted for in the books of accounts & submitted to the DRI at the time of search, department cannot term it as Smuggled; as there was no reasonable belief, as per above facts, Section 123 does not apply to the case; no presumption could be raised under Section 123; there was no obligation on the appellant to prove that the gold were not smuggled; the burden of proof was wrongly cast on the appellant and thus, the proceedings are vitiated. He further relies on the following cases. * Final Order No. 75553/2024 dated 01.03.2024of the Kolkata Bench of this Tribunal in the case of Purnanand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhash Kumar Jalan, CESTAT, Kolkata Bench, Final Order No. 75500/2021, dated 27-8-2021. * Shri Sarvendra Kumar Mishra v. Commissioner of Customs Vide Final Order Nos. 70198-70199/2021, dated 6-9-2021. * Nand Kishore Modi v. Commissioner of Customs (Preventive), West Bengal, 2015 (325) E.L.T. 781. * Rajesh Pawar v. UOI, 2014 (309) E.L.T. 600 (Cal.). * Commissioner of Customs (Prev.) Kolkata v. Ashok Kumar Agarwal, 2017 (348) E.L.T. 555 (Tri. - Kolkata) 7. Learned Counsel submits further that Department has failed to discharge the obligation cast upon it; it is the case of the Department that the gold is smuggled; to prove the same, Department has not extended the investigation to reach the root of the matter and thus, completely failed to show as to how the gold were smuggled; on the contrary, the appellant submitted sufficient documents in support of the licit acquisition of seized gold and discharged the burden under Section 123 of Customs Act, 1962; therefore, the impugned order needs to be set aside. He submits that the entire case has been made by the department based on the confessional statements recorded under duress by the Custom officers; such a statement was retra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that there is no material available on record to show that the invoices placed by the appellant were false or fabricated; there is no allegation to that extent either; department has either to accept the documents or to negate it but the department has not done either of the two, which is not permissible; apparently, the invoices contained GST number and PAN; the Department has never doubted the genuine nature of documents produced by the appellant; hence, documentary evidence prevails over the oral statement as held in Gopal Prasad 2020 (371) ELT 243 (Pat). He further submits that penalty cannot be imposed based on hearsay evidence, or the incriminating statement of other co accused as held in Vinod Solanki v. Union of India 2009 (233) ELT157 (SC). 10. Shri A.K. Choudhary, Learned authorised Representative, for the Revenue reiterates the findings of the impugned order and relies on, the decision, dated 28.06.2024, of High Court for Telangana in WP Nos 28523 and 28548 of 2023, in support of the Revenue Contention that seizure of Gold was legal and proper. 11. Heard both sides and perused the records of the case. Brief issues that require our consideration in the instant case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bent on the Customs authorities to prove that the seized goods are liable for confiscation; in the event of failure to prove so, there is no question of confiscation and penalty. 13. We find that the impugned Gold was seized from Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, travelling by Bus No UP-22AT-0568, on 04-05/09/2020, from Gorakhpur to Delhi. Understandably, seizure took place at a place far away from Customs Station, Air or Sea port, in an area not specified under a Section 111(H), as notified under Section 6 of the Customs, Act,1962; there were no foreign markings on the gold pieces seized; the purity was found to be 99.92, 97.81,99.26 and 89.34 and not 99.99 % by weight. It was not established that the persons apprehended were coming to India, form as place outside India. Under the circumstances, we are of the considered opinion that the authorities failed to establish that there was reasonable belief, before affecting the seizure. 14. We find that Hon'ble Delhi High Court in the case of Shanti Lal Mehta v. UOI and Others reported in 1983 (14) ELT 1715 (Del.). The Hon'ble High Court reviewed the jurisprudence on the matter till then and set aside the confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting in appeal over the decision of the said officer. All that it could consider was whether there was any ground which prima facie justified a reasonable belief. That the officer had reasonable belief must be stated in the notice to show cause. It must be adjudicated upon by the authorities under the Act. At the stage of appeal or revision from the orders of the officer adjudging confiscation each successive appellate or revisional authority has also to address itself to this requirement of reasonable belief. The seizing officer either by his own evidence or other materials placed before the adjudicating authority, has to prove to its satisfaction that there was ground for him to reasonably believe that the goods were smuggled goods, that is to say that the goods were imported into the country and imported at a time and place when they were restricted or prohibited from being imported. If the adjudicating authority is not satisfied that the goods were seized on a reasonable belief Section 123 cannot be invoked and in that event it would be for the customs authorities to prove that the goods were smuggled and Section 123 in that event would have no application. If, therefore, Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the goods were smuggled goods. It does not appear to me that he had entertained any reasonable belief at the time of seizure. Neither the board on appeal, nor the Central Government applied their mind to this question. Two reasons: 57. Applying the principles of these cases to the facts of the present case what do we find? Two reasons were given in support of the reasonable belief. One is that the customs authorities received some information. What is that information? It was never disclosed to the petitioner. Nor was it disclosed to the adjudicating authorities. Very vague words such as `on information received' are used in the show cause notice. The information on which the customs authorities act must be definite information. No one suggests that they must disclose the name of the informant. That would be detrimental to investigation and against public interest. The least they can do is to give the gist of the information so that the person from whom the goods are seized knows the nature of the information received by the customs. To hold otherwise would mean that the customs officer can act on any information, wishy-washy though it may be, received from the underworld t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... external indicia or on the basis of some internal information that the goods had been illegally imported into India from Nepal or some other foreign country either without payment of duty or in contravention of any restriction or prohibition imposed by statute. There was nothing to suggest the foreign origin of the goods. There was nothing to suggest the illegal importation of the goods into the country. 60. The goods must be smuggled goods. The word `smuggled' means that the goods were of foreign origin and they had been imported from abroad. Only then does the presumption under Section 123 arise. The goods themselves did not suggest that the petitioner was an old smuggler or a dealer in smuggled goods. If there was such information with the customs, they ought to have disclosed it. The goods themselves did not suggest any illicit importation. Nor was there any inscription on the goods which could be the basis of the reasonable belief that the goods were of foreign origin. There was nothing in the appearance of the goods to suggest that they had been newly manufactured and brought into this country very recently from another country. In a word there was nothing absolutely from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LT 167 (Bom.), held as under: "7. Secondly, the questions which arise for our consideration in this case is in the context of the application of Section 123 of the Act in respect of the goods notified therein. Gold is an item which is notified under Section 123 of the Act and it provides that burden of proof in case of notified goods, would be upon the person from whose possession and/or the person who claims ownership of the goods to prove that the seized goods are not smuggled goods. However, before the aforesaid burden could be cast upon the person who claims to be the owner of the seized goods, the Revenue should be able to establish that the goods seized under Section 110 of the Act, was on a reasonable belief that the imported goods were smuggled goods. Therefore, where seizure is a subject of challenge on the ground of absence of reasonable belief then, the question of burden of proof on the person, claiming to be the owner of the goods, would arise only when the challenge to seizure is, negatived. In the facts of the present case, neither before us nor before the authorities under the Act, has the respondent No. 1 challenged the seizure for absence of reasonable belief th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. Tribunal held as follows. "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 foreign origin. It is true that the conduct 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 Vijay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Rajan Kumar Sahni, who retracted them later the officers of DRI could not establish that there are sufficient grounds to establish that the 'reasonable belief' as contemplated in Section 110 of the Customs, Act, existed in the case, before effecting the seizure. We find that the percentage of purity as per CRCL was 99.92, 97.81,99.26 and 89.34, which would not make any prudent person to accept that the impugned gold pieces were of foreign origin and were smuggled in to India. Not even a semblance of evidence appears to have been gathered to ascertain where did the gold come from? Who smuggled it? What was the modus of bringing in to India? Where and how was it handed over to the appellants or their agents. Therefore, the claim of reasonable belief is nothing but a presumption or at best a figment of imagination. It 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 a place outside India. The analysis of CDR only indicates that Shri Sharad Chandra Agrahari was in touch with Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni at various places and on various dates in India. Underst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of impugned gold was not theirs. Surprisingly, the investigation concluded at that point only. Neither the signatures were got verified nor further enquiries to ascertain or negate the claim of financial transactions etc. were conducted. As we find that the existence of reasonable belief was suspect, the onus to prove otherwise was not on the appellants but on the department. In the instant case, the appellants have discharged the burden by producing documents and accounts. We are of the considered opinion that burden envisaged in Section 123 is not absolute in nature. Once the persons from whom gold was seized have claimed licit purchase of the impugned gold, it was incumbent upon the investigation to disprove the same with evidence, after taking the enquiries to a logical conclusion. That having not been done, Revenue cannot say that the appellants failed to discharge the burden of proof. The appellants may have violated any other law for time being in force, but that would not render goods liable for confiscation under Customs Act,1962. 21. We find on perusal of the statements, Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, Shri Sharad Agrahari and others, that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Manoj Kumar Nishad, Shri Rajan Kumar Sahni, Shri Sharad Agrahari etc, but also records a finding that all of them have retracted their statements vide written replies filed in this regard. At least for this reason, Learned Commissioner should have examined them, under the provisions of Section 138 B, in the adjudication proceedings, so that he could rely on their statements and could have considered the statements to be reliable and relevant. We find that Hon'ble Punjab and Haryana High Court held, in the case of G-Tech Industries Vs. Union of India- 2016 (339) ELT 209 (P&H), that the statement of any person cannot be relied upon directly, in the context of Section 9D of the Central Excise Act, 1944 which is Pari Materia with Section 138B of the Customs Act, 1962 by the Adjudicating Authority. Hon'ble High Court held that 15. The rationale behind the above precaution contained in clause (b) of Section 9D (1) is obvious. The statement recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable belief that the goods are liable for confiscation, after the goods were seized, basing solely on the statements of the persons and brushing aside the submissions of the appellants on the licit procurement of the gold in the domestic market. This is not acceptable. Reasonable belief contemplated in Section 110 of Customs Act, 1962, should exist to the satisfaction of the officers and any authority at least to an extent wherein the same does not take the colour of assumptions and presumptions. Reasonable belief is not established in the instant case. 25. Hence, the provisions of Section 123 are not invited. Even assuming that the same are attracted, the appellants have discharged the burden which is not negated by the department. The proceedings were vitiated for not following the procedure laid down under Section 138B of the Customs Act,1962. Principles of Natural Justice have been violated in not examining the witnesses as per Section 138B. We are of the considered opinion that no case has been made by Revenue, for seizure or confiscation of the impugned gold, Pithu Bag and packing material. Consequently, no case has been made for imposition of penalties. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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