2021 (12) TMI 1024 - AT - Customs

Customs case appeal: Show Cause Notice void ab initio. Lack of service and notice period. Legitimate possession proven.

M/s DI GOLD DESIGNER JEWELLERY, M/s RIDHI SIDHI JEWELLERS AND M/s PRADEEP RATUSARIA Versus Commissioner of Customs (Preventive) Delhi

M/s DI GOLD DESIGNER JEWELLERY, M/s RIDHI SIDHI JEWELLERS AND M/s PRADEEP RATUSARIA Versus Commissioner of Customs (Preventive) Delhi - TMI Issues Involved:1. Timeliness of the Show Cause Notice under Section 124 of Customs Act.2. Proper service and sufficiency of notice period for appearance before the investigating authority.3. Legitimacy of the possession of the seized gold under Section 123 of Customs Act.4. Alleged violation of principles of natural justice.5. Basis for the presumption of smuggling by the adjudicating authority.Issue-wise Detailed Analysis:1. Timeliness of the Show Cause Notice:The appellants argued that the Show Cause Notice under Section 124 of the Customs Act, 1962, was issued after the mandatory period of six months from the date of seizure, which expired on 27/05/2015, whereas the notice was issued on 05/11/2015. The Tribunal upheld this argument, stating that the show cause notice was barred by time and thus void ab initio, referencing the decision in Rakesh Kumar Bhagat vs. Commissioner of Customs, New Delhi.2. Proper Service and Sufficiency of Notice Period:The appellants M/s DI Gold & M/s Ridhi Sidhi Jewellers claimed that the show cause notice was not properly served and insufficient time was given for their appearance. The Tribunal found that the notices were served with just five to seven days for appearance, and often received after the hearing date had expired. This was held as a violation of the principles of natural justice, as it did not provide a reasonable opportunity for the appellants to present their case.3. Legitimacy of the Possession of the Seized Gold:The appellants provided documents such as tax invoices, work orders, and delivery challans to prove that the gold was legally acquired and sent for job work through the trade practice of 'Angarias.' The Tribunal observed that the appellants had sufficiently discharged their burden of proof under Section 123 of the Customs Act by providing these documents. The department failed to investigate or provide evidence that the gold was smuggled.4. Alleged Violation of Principles of Natural Justice:The Tribunal noted that the absence of the appellants was not intentional but due to the short notice period. This lack of reasonable time for appearance was deemed a violation of the principles of natural justice. The Tribunal drew support from the decision of the Hon'ble High Court of Delhi in the case of Directorate General of Central Excise Intelligence vs State, emphasizing the necessity of reasonable opportunity for hearing.5. Basis for the Presumption of Smuggling:The Tribunal found that the adjudicating authority's conclusion that the gold was smuggled was based on mere presumption due to the foreign markings on the gold. The Tribunal emphasized that the mere fact of foreign origin was insufficient to prove smuggling. The department's failure to investigate the origin and duty payment of the gold was highlighted. The Tribunal referenced multiple decisions, including Krishna Kumar Dhandia vs. Commission of Customs and Union of India vs. Imtiyaz Iqwal Pothiawala, to support its stance that the burden of proof had shifted to the department, which it failed to fulfill.Conclusion:The Tribunal concluded that:i) The show cause notice was barred by limitation.ii) The appellants were denied proper and reasonable opportunity, violating principles of natural justice.iii) The appellants had sufficiently proven the licit possession of the gold.iv) The department failed to provide evidence of smuggling.Thus, the Order-in-Appeal was set aside, and the appeals were allowed.