TaxTMI 
TaxTMI 
2005 (9) TMI 501
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....y) (4) Shri Natubhai Babubhai Patel Rs. 5,000/- (Rupees five thousand only) (5) Shri Jashwant Kanjibhai Patel Rs. 5,000/- (Rupees five thousand only) (6) Shri Arvindhvai Kantilal Patel Rs. 5,000/- (Rupees five thousand only) (7) Shri Bhikhabhai Tulsibhai Patel Rs. 5,000/- (Rupees five thousand only) (8) Smt. Rasilaben Harshadbhai Rathod Rs. 5,000/- (Rupees five thousand only) (9) Shri Satishbhai Amrutlal Patel Rs. 5,000/- (Rupees five thousand only) They are being disposed off by this common order. 2.1 After hearing both sides and considering the material on record it is found: (a) Officers of Crime Branch of the Ahmedabad Police pursuant to an information stopped 8 persons, in two groups, a Lakudi Talao crossing Ahmedabad at about 8 pm on 23-10-1999. On interrogation and verification, after this interception, and these persons disclosing that they were carrying gold, the police officers searched them and found 551 Foreign Brand marled gold bars of 10 tolas (hereinafter referred to TT bars) to be with them as detailed below : (i) Shri ....
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....a. (c) At the time of the said seizure by the Customs Officer, all these persons and the gold, were at the premises belonging to M/s. S.K. Jewellers situated at 13-B, Jeewandeep Building, where the said persons from whom the gold was recovered were taken by the police officers after intercepting them at Lakudi Talao crossing, Ahmedabad. These persons and the gold was admittedly under the police guard from 23-10-99 when the police intercepted these persons up to the final panchanama drawn by the Customs officers on 29-10-99. (d) Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion, Ahmedabad and Shri Shailesh Patel, Proprietor of M/s. S.K. Jeweller another Bullion, dealer of Ahmedbad have owned up the 500 bars seized, on 29-10-99 . (300 TT bars by Shri Shailesh Patel and 200 by Shri Vijay D. Patel). Shri Shailesh Patel had claimed the total 351 TT bars (300 seized and 51 returned to Shri Nandubhai Brijlal Soni by the Customs officers) and Shri Vijay D. Patel had claimed 200 TT bars seized on 29-10-99 and also had disclosed to the officers on 23/24-10-1999 that these 300 bars claimed by Shailesh were sold by Vijay to Shailesh. (e) &nb....
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....ng 58,320 Kgs. valued at Rs. 2,70,000,00 (Two crores seventy lakh) seized under panchanama dated 28/29-10-99 should not be confiscated under the provisions of Section 111(a), 111(b), 111(d) and 111(o) of the Customs Act, 1962. (ii) Duty at tariff rate should not be charged from them under Section 28 of the Customs Act, 1962. (iii) Interest should not be charged from them under provisions of Section 28AB of Customs Act, 1962. (iv) Penalty should not be imposed on each of them under the provisions of Section 112(a)/112(b)/114A of the Customs Act, 1962. (v) The articles shown against each in Annexure-D used for concealing the FM Gold TT bars should not be confiscated under Section 118 of the Customs Act, 1962. The Commissioner ordered the confiscation of the 500 TT marked gold, the waist band, shoes and imposed penalty as recorded hereinabove. (f) Since M/s. S.K. Jewellers, M/s. Paras Bullion, and M/s. Patel Bullion, were found to be Proprietary fi....
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....Bullion in committing contravention of the provisions of the Foreign Trade (Development and Regulation) Act, 1992 as enumerated in the SCN dated 1-3-2001 issued to them, and thereby all of the aforementioned five Noticees, i.e. Noticee Nos. 3, 4, 5, 6 and 7 have rendered themselves liable to penalty as provided under Section 112 of the Customs Act 1962." The above reasons and the findings arrived by the Commissioner, over- looks, a fact, that one Nandubai V. Soni was also found carrying 51 TT bars, concealed in the shoes he was wearing, in a similar manner. He was not even issued the show cause notice, nor the gold found concealed and carried by him seized. It was returned on production of a bill of M/s. Amarpali of Ahmedabad even though it was not in his name. This Nandubai was intercepted by the police, along with the other persons on the same errand on the same date i.e. at about 8 pm on 23-10-1999. The possession of gold by this person was obtained in a similar fashion from the Bullion dealers, as in other cases. The said bullion dealers were carrying TT bars with them and accompanying these carriers. From these facts it....
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....fore, we cannot uphold the imposition of penalty, on these carriers of and in for the reasons arrived by the ld. Commissioner, more so when in the year 1999, availability of foreign marked gold, legally imported, would be within the knowledge of these carriers of the bullion market Ahmedabad and the fact that M/s. S.K. Jewellers and M/s. Paras Bullion were dealing in foreign marked gold and this was not only the day/trip/errand they had embarked upon. We therefore find these trusted person/carriers/employees to be innocent carriers of TT bars, indulging in the normal course of their trade/profession to be carrying the same from the Bullion dealers premises in Ahmedabad to a safe destination as per the requirement of the Bullion dealers, in the normal course of their profession. They are not found to have dealt with TT bars, knowingly that the said bars were non-duty paid and therefore liable to confiscation. They cannot be held liable to penalty as held by the Commissioner. Penalty on these trusted perscns/employees/carriers is therefore is to be set aside and their appeal allowed. (h) As regards Shri Satishbai A. Patel, the Commissioner has found that while wo....
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.... in this market would lead us to find nothing amiss in invoices being written/prepared, with or without brand marks, subsequent to sales and deliveries. The penalty as arrived on this appellant is to be set aside and his appeal allowed. (i) As regards the reasons to arrive at a penalty on Devang A. Patel, Proprietor of M/s. Patel Bullion, the Commissioner records in para 46 of the order as follows : "46. It may be mentioned here that consequent upon the recovery of gold by Police from the said Shri Vijay D. Patel and Shri Shailesh R. Patel along with the aforementioned persons, Shri Devang A. Patel had tried to get the bills prepared for the 500 gold, biscuits of foreign markings recovered from the abovementioned Noticees by Police on 23-10-1999 as is evident form his own statement dated 7-12-99 and the statement dated 6-12-99 of Shri Ashwinbhai I. Patel just to legalise, as an afterthought, the sale/purchase of the aforementioned 500 gold biscuits of foreign mark placed under seizure on 28/29-10-99. Further, Shri Devangbhai Patel has claimed the ownership of the 200 pcs of 'CREDIT SUISSE' mark gold TT bars seized from Shri Vijay D. Patel vi....
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....ons of Foreign Trade (Development and Regulation) Act, 1992 and Customs Act, 1962 as enumerated in the SCN dated 1-3-2000 issued to them and thereby he has rendered himself liable to penalty under Section 112 of the Customs Act, 1962." On considering the reasons, as arrived at for imposition of penalty on Devang Patel, we cannot find the backing of law or facts to uphold the same. On the ground that Devang A. Patel has made attempts to produce documents for the 200 gold TT bars and the reliance on the statements of Vijay D. Patel dated 23-10-99 and his employees to conclude that the ownership of the 200 bars rested with Mr. Vijay Patel of M/s. Paras Bullion and that he said gold was not delivered to M/s. Devang A. Patel, as claimed and therefore an offence under the Foreign Trade (Development and Regulation) Act, 1992 and the Customs Act, 1962, as the cause to arrived at to penalty on Devang Patel is not upheld. Even assuming that a false claim was made by Devang in a proceeding under the Customs Act, 1962, such an effort cannot result in confiscation of the goods per se. For producing forged/fabricated false documents in a ....
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....ssioner not only has rejected this vital piece of documentary evidence of M/s. ABN Amro Bank which were with the investigators and thus before him but has also concluded that the documents produced in defence was not credible and in para 45 has concluded as follows : "45. In view of the above facts and circumstances, I am fully convinced that the seized 500 foreign marked gold T.T. bars weighing 58.320 kgs valued at Rs. 2,70,00,000/- were imported into India in contravention of the provisions of Foreign Trade (Development and Regulation) Act, 1992 and Baggage Rules, 1998 framed under Section 79 of the Customs Act, 1962. The restrictions imposed under Foreign Trade (Development and Regulation) Act, 1992 are deemed to have been imposed under Section 11 of the Customs Act, 1962. Gold can be imported into India through the following routes : (i) by passenger (as per provisions of Notification No. 171/94, as amended). (ii) By MMTC Ltd, the Handicraft and Handloom Export Corporation, State Trading Corporation, PEC Ltd. or any other agency authorised by RBI as per provisions of Notification No. 117/94, as amended. I fi....
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....lty as he found liability in case of Shri Devang Patel of M/s. Patel Bullion to be. Once the documents produced by ABN Amro Bank or RBL or M/s. K.L. Choksi or/and M/s. Amarpali Industries are not being questioned on their credibility the TT bars supplied by them cannot be found to be non-duty paid or/and cleared from an unauthorised port without payment of duty and thus liable to confiscation under Section 111D of the Customs Act, 1962. The Commissioner has positively rejected credible documents on flimsy grounds of a xerox copy not being legible etc. The order of confiscation of the 500 bars of gold can be set aside only on this ground. (k) It was further submitted on behalf of the Appellant by the ld. Counsel, Shri Sanjanwala, that since no Notice is issued of M/s. K.L. Choksi, M/s. Amarpali and M/s. Ridhisidhi Bullion who had purchased the gold from authorised dealers (Banks in this case) and admitted having sold the same to the Applicant, the show cause notice against the Applicants cannot be sustained. Since the obligation to pay the import duty, if any, is on the importers and not on the subsequent purchasers. The other submission is since adj....
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....ras Bullion PAMP 370 G/4135/99 dated 16-9-99 9 V-E-14 TOTAL: 890 300 (iii) Dealer-wise the gold acquired by M/s. Paras Bullion and sold to M/s. S.K Jewellers as under : Name of gold Dealer No of gold bars acquired No. of gold bars sold to others No of bal gold bars No. of gold bars sold to M/s. S.K. Jewellers M/s. K.L. Choksi M/s. Amrapali Ind. Ltd. 320 570 110 480 210 90 210 90 Total 890 590 300 300 These transactions are covered by Sale Bills and have been confirmed under Section 108 of the Customs Act, 1962 by Shri Naresh K. Choksi Proprietor of M/s. K.L. Choksi in his statement dated 24-10-99 and by Shri Yashwantbhai A. Thakkar, Managing Director of M/s. Amarpali Industries Ltd. Branch-wise gold in balance sold by M/s. Paras Bullion to M/s. S.K. Jewellers and found in search Customs from the Appellant and his employees. Brand Balance sold by M/s. Paras Bullion to M/s. S.K. Jewellers As per the Customs Panchanarma ARGOR 282 282 PAMP SUISEE 9 9 JOHNSON 9 9 MATHEW TOTAL ....
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....r stated that he sold following foreign mark gold biscuits to M/s. Paras Bullion: (Addl. P B/27) 1. Suisse 90 2. Johnson Mathew 163 3. Argor 201" (vii) The Customs officers who were investigating the case were satisfied about the legal purchase of gold by M/s. K.L. Chokshi and M/s. Amarpali Industries Ltd. And legal sale thereof to M/s. Paras Bullion did not issue any notice to them. These submissions have force and discharge the burden of the TT Bars to be duty paid and not smuggled, if the same is cast on the appellants. On 25-10-99, the police had also called the Income tax Department at 13B, Jeevan Deep Building, Narayan Pura, Ahmedabad who started their investigation independently, Shri Sanjanwala ld. Sr. Advocate, relied upon the order passed by the CIT (A), Ahmedabad dated 24th Sept., 2002 in support of their arguments and maintain that all the documents which are produced before the Income tax Authority also. On close scrutiny of the said documents, Income tax Appellate Authority has clearly come to the conclusion that the gold bars completely tally and the accounts produced ....
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.... all gold bars were legal and accounted for, and there is nothing doubtful about the said transaction, we do not find any justification for holding a contrary view. Income tax Officers, are, in the course of their dealing with Account books maintenance, better equipped to arrive at the quality and accuracy of account books, maintained and about manipulations therein. The findings of the ld. Commissioner (Customs) that entries have been manipulated in the books of M/s. Paras Bullion are only on the assumption based on so many entries could not be effected within the time period, as deduced by him. When in the present case, sales could be effected during the course of the day, and it is admitted by the Accountant that the entries are not made as and when each transaction takes place, but are made in a consolidated fashion, subsequent to the transactions, on a given day; there is no statutory requirement of the entries to be made in account books and thereafter effect sales/delivery as is the case under the Central Excise Act, 1944 procedures which mandates to make entries in the RG-1, PLA register and other books and thereafter effect delivery. Then the Commissioner (Customs) appears....
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.... guard. Why they were not taken to a Police Station? Explanation is not forth coming. Normally Police would take a person detained on a suspicion to a Police Station for safety/security and/or place them in a Police Lock up. It is also not in dispute that the Police Officers were present throughout in the office of S.K. Jewellers with Lady Constables. In other words, the said 8 persons were free to move themselves of their own will nor they were not free to deal with the gold in question, in a manner they would like to. It is therefore difficult for us to believe, that after their interception by Police, on prior information, the said 8 persons remained voluntarily along with the gold at the office of M/s. S.K. Jewellers under a Police guard during the period 23-10-99 to 29-10-99. No Police guard has ever been proved to have been sought by M/s. S.K. Jewellers or others, for these office premises of theirs anytime in the past or subsequent to 23-10-99. Why should a guard be placed if goods/person are not under detention? The panchanama therefore drawn by the Customs Officers is under the supervision of the police officer and the entire 'panchanama' is a suspect document. While....