AI Drafter 
TaxTMI 
TaxTMI 
2011 (12) TMI 501
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....as some cavities in the back seat of the car were found which were opened by the keys which were in the possession of the appellant. The cavities were found to be containing silver slabs, some silver jewellery and also cash. According to Department, the appellant on being asked, could not produce any document regarding legal possession of the silver slabs and silver jewellery. Since the place where the car was intercepted was a lonely place and not considered safe, the officers along with Panchas took the appellant and his car to the office of Customs Division, Varanasi, where a thorough search was made and inventory of the goods recovered from the car was prepared. In all 67 pieces of silver bullion weighing 114.902 kg. valued at Rs. 5,68,887/-, silver ornaments weighing 3.875 kg. valued at Rs. 22,111/- and Indian currency of Rs. 63,000/- were recovered from the car which were placed under seizure under reasonable belief, that the silver and silver jewellery was of smuggled origin and Indian currency of Rs. 63,000/- was sale proceeds of the smuggled silver. Statement of driver of the car, Shri Jai Prakash Yadav was recorded wherein he stated that since the last 4 months he u....
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....by the appellant in his statement dated 28-1-2000 and 29-1-2000. While the appellant's statement regarding purchase of the car from Shri Shiv Mangal Prasad, Tilak Road, Deoria was found to be correct, his statement that during his visit to Deoria, he used to stay at Nawalgarhia Dharamshala, Mohan Road was found to be incorrect as the Manager of Dharamshala on checking his records gave a letter that no person with the name Ranchor Das Agarwal had ever stayed in his Dharamshala. On inquiry it was found that there was no person named Santosh living near Sabzi Mandi in Deoria engaged in melting of silver. Since M/s. Swastik Metals was a silver refiner in Deoria, the officers conducted inquiry with Shri Ramesh Kumar of M/s. Swastik who in his statement dated 2-2-2000, stated that about a week back Shri Ranchhor Das of Rasra had come to him for getting some silver refined, but due to non-settlement of rate he did not give the silver for refining and except this, no business has been done with Shri Ranchhor Das. Inquiry was also made with Shri Chunnu Babu, Shri Shiv Prasad and Shri Uttam and each of these three persons in their respective statement stated that they had not purchased any s....
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....naments under seizure were confiscated under Section 111(d) of Customs Act, 1962, the Indian currency under seizure was confiscated under Section 121 of Customs Act, 1962 and the Maruti Car No. UP-52B/803 was confiscated under Section 115(2) of Customs Act, 1962. All the confiscations were absolute confiscation without any option to redeem the goods on payment of redemption fine. A penalty of Rs. 50,000/- was also imposed on the appellant under Section 112 of Customs Act, 1962. 1.6 On appeal being filed before the Commissioner (Appeals) against the Additional Commissioner's order, he vide order-in-appeal dated 3-9-2002 dismissed the appeal. In course of proceeding before the Commissioner (Appeals), the Commissioner (Appeals) on the request of the appellant, got the seized silver bullion examined and after observing that the pieces of the silver shows the marks of the various melters gave a finding that the same had been put by the appellant on the silver slabs after decreasing the purity of the smuggled bullion from the Nepal. He also gave a finding that silver bullion being notified under Section 123 of Customs Act, 1962, the burden of proof that the same is not of smuggle....
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.... decisions or alike things. 26. Tribunal should not have shifted the burden on the Revenue (appellant) keeping in view the provisions contained in Section 123 of the Act. 27. In view of above, question is answered as under - 1. Burden to prove innocence was not on the shoulder of appellant rather it was on the respondent. 2. Finding recorded by the Tribunal is perverse being based on extraneous material. 28. In view of above, appeal is allowed. Tribunal's order is set aside. The matter is remanded back to the Tribunal to decide the appeal afresh keeping in view the observation made hereinabove expeditiously and preferably within a period of three months from the date of service of certified copy of this order." 1.9 Accordingly, this matter was heard afresh for de novo decisions in accordance with the direction of the Hon'ble High Court. 2. Heard both the sides. 2.1 Shri Bipin Garg, Advocate, the learned Counsel for the appellant, pleaded that the place where the silver was seized in the morning of 28-1-2000 is far away from Indo-Nepal border, that neither si....
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.... 98 or 99% pure silver will get the same melted so as to reduce its purity and in that process incur extra expenditure, that there was no incentive for smuggling of silver from Nepal during January, 2000, as is clear from the newspapers of Nepal, from which it is clear that the price of silver in Nepal at that time was higher than its price in India, that the only evidence relied upon by the department in support of its allegation that the silver under seizure is of smuggled origin, is the statement dated 28-1-2000 of the appellant, that a part of his statement regarding stay of the appellant at Nawalgarhia Dharmshala, Mohan Road in Deoria in course of his visit to Nepal and sale of smuggled silver after dilution to Shri Shiv Prasad, Shri Chunnu Babu and Shri Uttam has been found to be incorrect, that even this statement was retracted by the appellant at the first available opportunity - on 30th January, 2000 when the appellant was produced before the Magistrate, that the Magistrate had also recorded the statement of Shri Sunil Kumar, Inspector on 24-4-2000 and Shri Sunil Kumar in his statement has stated that the appellant was in the Customs custody from 28-1-2000 to 29-1-2000 til....
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....ecovered from the secret cavities of the vehicle were having purity varying from 50% to 99% and were not having any marking of foreign origin and except for certain confessional statements which were retracted there was no other evidence regarding smuggled origin of the similar, the same could not be confiscated. Another judgment cited by him was in the case of Lalchand D. Kothari v. C.C. (P), Mumbai reported in 2001 (136) E.L.T. 525 (Tri. - Mumbai), wherein it was held that even when the gold under seizure were having foreign marks, the same is not to be regarded as smuggled gold without any further evidence and the confiscation based on admission of the noticees which were retracted is not sustainable. 2.2 Mrs. R. Jagdav, the learned SDR defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the appellant in his statement dated 28-1-2000 had clearly stated that the silver slabs seized from him had been smuggled by him from Nepal and subsequently their purity was reduced so as to conceal their smuggled origin, that though the appellant on 30th January, 2000 retracted his statement by giving a letter to Judicial Magistrate all....
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....to silver bullion. It is for this reason only that Hon'ble Allahabad High Court in its judgment dated 28-7-2010 has held that the burden to prove that the silver was not of smuggled origin is on the appellant and it is the appellant who has to lead the evidence in this regard. Thus, the matter has been remanded for de novo decision on the basis that the burden of proving that the silver under seizure not of smuggled origin is on the appellant and it is he who had to produce the evidence in this regard. 5. Though under the provisions of Section 123(1) of Customs Act, 1962 where any goods notified under this Section are seized from a person on reasonable belief that the same are of smuggled origin, the burden of proving that they are not of smuggled origin, is on the person from whose possession the same have been seized and thus this Section provides for presumption regarding the smuggled nature of the goods notified in this Section seized from a person. This presumption is a rebuttable presumption and once the person produces some evidence indicating their legal import the burden would shift to the department. 6. In this case on going through the records, I find tha....
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....enough for application of this Section. In view of this, the statement dated 28-1-2000 of the appellant by itself cannot be treated as a reliable evidence in support of the department's allegation of smuggled origin of the silver, more so when there are absolutely no markings indicating foreign origin on the seized goods. In this background when the appellant immediately after his release on bail submitted an affidavit on 5th May, 2000 claiming that the silver under seizure had been purchased by him from various persons and that the same was being taken by him to M/s. Swastik Metal, Varanasi for refining and on account of non-settlement about the rate for refining, the silver was not given to M/s. Swastik for refining and it is this silver which was being taken back by him to Rasra, then claims of the appellant should have been verified. I find that absolutely no inquiry has been conducted by the Department in this regard. On the contrary, the statement dated 2-2-2000 of Shri Ramesh Kumar of M/s. Swastik Metal confirms the appellant's plea that the appellant had visited his premises in connection with refining of silver, but due to non-settlement of rate, the silver was not given f....