TaxTMI 
TaxTMI 
2008 (3) TMI 88
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....ainst the order of absolute confiscation and imposition of penalty under Section 112 of the Customs Act, 1962. (iii) Appeal No. C/649/01 is filed by Shri Jaswant K. Patel against the impost of penalty as a carrier of gold biscuits with foreign marks. (iv) Appeal No. C/651/01 is filed by Shri Bhikabhai Patel against the impost of penalty as a carrier of gold biscuits with foreign marks. (v) Appeal No. C/652/01 is filed by Shri Arvind K. Patel against impost of penalty as a carrier of gold biscuits with foreign marks. (vi) Appeal No. C/648/01 is filed by Smt. Rasilben H. Rathod against impost of penalty as carrier of gold biscuits with foreign marks, (vii) Appeal No. C/653/01 is filed by Shri J.D. Patel against impost of penalty as carrier of gold biscuits with foreign marks. (viii) Appeal No. C/650/01 is filed by Shri Devang A. Patel is against the impost of penalty as an abettor in preparing documents. (ix) Appeal No. C/655/01 is filed by Shailesh A. Patel against impost of penalty as person involved in preparing documents to give legitimacy to the whole case. 3. The relevant facts that arise for consideration are that appellants at serial nos. (i) to (vii) ....
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....ies and hence the burden of proof shifted to the customs to prove that these gold biscuits were smuggled. The other appellants resisted the show cause notice for imposition of penalty on the point that they were employees/relatives and friends of the owners of the gold biscuits and were helping to safely carry the gold biscuits. The learned adjudicating authority did not accept the contentions of the appellants and vide his order- in-original absolutely confiscated the gold, imposed penalties on all the appellants on the findings that the appellants have not discharged the burden of proof as provided under Section 123 of the Customs Act, 1962 and the documents relied upon by the appellants were prepared subsequently on the direction of the appellants. In the earlier round of litigation Tribunal held in favour of the appellants. The Hon'ble Supreme Court set aside that order of the Tribunal and remanded the matters to consider the issue afresh with direction to deal with the findings of the adjudicating authority as regards transportation methods, trade practices, Bills/Challan and linking etc. by appreciating the same, hence these appeals are heard and disposed off. 4. When thes....
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.... to disallow the value of 300 gold biscuits from the purchases of the appellant in appeal no. C/654/01 on the basis of the seizure and the evidence of the Customs authorities in this case but the Commissioner (Appeals), Income-tax has come to the conclusion that appellant M/s. S.K. Jewellers has licitly purchased 300 gold biscuits from M/s. Paras Bullions. It is the submission that, if that is so, then the one governmental authority holds that these 300 gold biscuits were legally purchased while another government authority hold it is not so. It is the submission that much relied upon evidence as regards of the preparation of the bills to S.K. Jewellers is erroneous, as the accountant of the S.K. Jewellers had confirmed that bill was received on 23- 10-1999. It is the submission that the revenue has not discharged the burden that the seized and later on confiscated 500 gold biscuits were smuggled one. It was also submitted that in the gold trade the bills are raised generally after three to four days as is evidenced from the documents produced by them now. It was submitted that the passengers coming from abroad carry gold biscuits in shoes and declare the same to be in shoes. It wa....
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.... in the absence of any evidence the provisions of the Section 123 had to be applied and the appellants had to discharge the burden of proof as to licit possession of gold biscuits. It was submitted that it is unacceptable that such reputed bullion traders like M/s. Paras Bullions and S.K. Jewellers were travelling without any documents. It was also submitted that it is on record that all the appellants have stated that they were proceeding towards Mumbai to dispose off these gold biscuits. It was submitted that the appellants had not given any plausible reason for carrying gold biscuits in shoes if these were licitly procured gold biscuits. It was submitted that the appellants subsequently antedated the bills in order to legitimize their activities. The learned SDR took us through the statements and emphasized that at no point of time the appellants could produce any documentary evidence to discharge the burden as envisaged under Section 123 of the Customs Act, 1962. It was submitted that the person who prepared the bills had categorically confessed that the bills were prepared on 24-10-1999 and not on 23-10-1999 as is sought to be impressed. It was also his submission that the sal....
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....p), we propose to take up the issue by splitting the appeals of the claimant's individually. 7.1 We take up the issue of 200 gold biscuits with mark of 'CREDIT SUISSE". It is seen from records that Shri Vijay D. Patel proprietor of Paras Bullions (in appeal no. C/676/01) has claimed ownership of these gold biscuits. The adjudicating authority in the impugned order has held that the appellant has not discharged the burden of proof by coming to the following findings: "It may be mentioned here that Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion has stated in his statement recorded under Section 108 of the Customs Act, 1962 on 24-10-99 that he had purchased 200 pieces of foreign marked gold bars "CREDIT SUISEE" mark from M/s. Riddisiddhi Bullion Dineshbhai, authorized person of M/s. Riddisiddhi Bullions had given him a delivery of total 200 gold biscuits of Foreign Mark at about 19.00 hrs of 23- 10-99 at their premises at Manekchowk; and that Shri Dineshbhai had given him zerox copy of one delivery challan dated 23-110-99. He has also confirmed that no document other than the above said delivery challan was provided to him by M/s. Riddisiddhi Bullion Ltd. The assertion of....
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....ions Ltd. on 23-10-1999 and had taken the delivery on that date itself. The authorities on recording the statement of Shri Vijay D. Patel confronted Shri Dinesh Chaganlal Jain authorized person of Riddhi Siddhi Bullion. The officers summoned Shri Dinesh Chaganlal Jain to the office of the Superintendent, Customs (Preventive), H.Q. Ahmedabad on. 24-10-1999 itself and recorded his statement independently under Section 108 of the Customs Act, 1962. The relevant portion of the statement of Dinesh Chganlal Jain as regards the sale of 200 biscuits of foreign mark gold biscuits is read: "On being asked in respect of one document from the seized file mentioned at Annexure A at serial no. 5, page no. 591, bill no. 294/G.L./9/2000 dated 23-10-1999 being bill in duplicate in the name of M/s.. Paras Bullion, I state that the 350 nos. of imported gold biscuits mentioned in the said bill weighing 40824.00 grams and valued at Rs. 1,91,80,000/-, I state that the said 350 nos. of imported gold biscuits , have been delivered to Shri Vijay Bhai, owner of M/s. Paras Bullion on 23-10-1999 at 16.30 hrs". It is seen from the records and the statement that Shri Dinesh Chaganlal Jain of M/s. Riddhi S....
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....ontain any question or clarification being sought on this point. The revenue has not brought on record during the course of recording the statements and investigation that there was a trade practice to mention the marks of gold biscuits on the documents, in the absence of any evidence to that effect, revenue cannot now turn around and say that there is no co-relation between the seized gold biscuits and the purchase bill due to absence of mention of marks on the purchase bill. The emphasis of the adjudicating authority that the challan of Riddhi Siddhi Bullions Ltd. did not contain brand name or marks to co-relate the sale of the seized gold biscuits is without any legal backing. It requires to be mentioned here that after repeal of Gold (Control) Act no elaborate records are required to be maintained, except the normal records to show the sale and purchase of the goods. There seems to be no Rule or Regulation which mandates the requirement of maintaining records in respect of purchases of gold, as is required in the case of Notified Goods (Prevention of Illegal Import) Rules, 1969 read with Sections 11C, 11D, 11E, 11F and 11G of the Customs Act, 1962 or such rules as is in Central....
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....seen from the records that Shri Dinesh Chaganlal Jain, authorized signatory of Riddhi Siddhi Bullion Ltd., in his statement before authorities on 24-10-1999 gave the time, date, place and quantity of the gold biscuits purchased from ABM-Amro bank, which is not questioned by the revenue till date. It is further seen from the statement that the authorized signatory had deposed that the 250 gold biscuits of foreign marks were delivered to M/s. Riddhi Siddhi Bullion Ltd. by delivery order dated 23-10-1999 and M/s. ABM-Amro has issued a regular Invoice/Bill to M/s. Riddhi Siddhi Bullion Ltd., on 25-10-1999, a fact, which is not disputed by the revenue by adducing contrary evidence. This evidence in form of statement of the seller of the gold biscuits to current appellant is a primary evidence which indicates that the 200 nos. seized gold biscuits with foreign marks were not of smuggled nature. 7.3 The evidences produced in the nature of primary corroboration as to the non-smuggled nature of the 200 nos. seized gold biscuits with foreign mark of CREDIT SUISSE and inability of revenue to show from records, the smuggled nature of the these seized gold biscuits, to our mind, appellant Sh....
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....and informed him about the recovery or gold biscuits by Police and on being called by him he had gone to the residence of Shri Vijay D. Patel on 24-I 0-99 and as directed by him i.e. Shri Devang A. Patel, he had prepared the bill No. 11931 dated 23-10-99 on 24-10-99. The above facts have been corroborated by Shri Devang A. Patel himself in his statement dated 7-12-99. Both S/Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion and Shailesh R. Patel have admitted to have not issued/received any bill, voucher or delivery challan in regard to the aforementioned 300 pieces of foreign marked gold bars covered by the said bill No. 11931 dated 23-10-99. Shri Shailesh R. Patel has not made payment either in cash or cheque for the said 300 pieces of foreign marked gold bars. The above facts are admitted by both S/Shri Vijay D. Patel and Shailesh R. Patel in their statements dated 24-10-99. Further, no details regarding identity/brand of the said 300 gold bars are given in the said bill. In the circumstances narrated hereinabove, there is no credibility of the bill No. 11931 dated 23-10-99. Also in absence of any mention of Brand or identification mark of the gold bars in the said ....
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....Choksi vide Bill No. 5936 dated 21-10-1999, 5981 dated 23-10-1999 (at page no. 11 of main paper book) and Bill no. 5960 dated 22-10-1999 (at page no. 13 of main paper book), and also different bills and purchased 570 nos. of gold biscuits with foreign marks from M/s. Amrapali Industries Ltd., (Bullion Division) vide bill no. 3983/99 dated 9-9-1999 (at page no. 12 of the main paper book) and bill no. G/3135/99 dated 16-9-1999 (at page no. 14 of the main paper book). The investigating officers summoned Shri Nareshbhai Keshavlal Choksi the proprietor of M/s. K.L. Choksi, on 24-10-1999 to verify the authenticity of deposition of Shri Vijay D. Patel and recorded his statement in their office under Section 108 of the Customs Act, 1962. Shri Nareshbahai K.L. Choksi had categorically stated that his firm M/s. K.L. Choksi had sold 454 nos. of gold biscuits with foreign marks to M/s. Paras Bullions and also gave the bill nos. under which these gold biscuits were sold. It is seen that the quantity of 454 nos. of gold biscuits matches with the statement of the purchaser and sellers with the records as produced by the purchaser. It is also to be noticed that statement of Shri Nareshbhai K. Chok....
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....d 23-10-1999 to Shri Satish A. Patel, the part-time accountant of M/s. S.K. Jewellers on 23-10-1999 itself. It is seen from records that investigating authorities after recording statement of Shri Ashwin I. Patel on 6-12-1999, recorded a further statement of Shri Dewang Patel on 7-12-1999 Shri Dewang Patel stated that Shri Ashwin I. Patel had prepared the bill no. 11931 dated 23-10-1999 for 300 gold biscuits and was delivered by him to part-time accountant on 23-10-1999 at 1930 hrs. It can be seen from the records that the part-time accountant in his statement recorded under Section 108 of the Customs Act, 1962 stated the said bill no.11931 dated 23-10-1999 was received by him on 23-10-1999 at 1930 hrs itself, a fact which has been corroborated by Shri Dewang Patel in his statements dated 6-11-1999 and 7-12-1999 i.e. before and after the statement of Shri Ashwin I. Patel. It has to be seen whether the seized gold biscuits were imported in violation of the Customs Act, 1962 so as to make them liable for absolute confiscation. The adjudicating authority has failed to consider the fact that the seized gold biscuits were licitly imported into India as has been proved from the chain of ....
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....t a prosecution. But it cannot be denied that the relevant provisions of the Sea Customs Act and the Land Customs Act are penal in character. The appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been corn- miffed by a person under the said Acts, summon and examine witnesses, decide whether an offence is committed, make an order of confiscation of the goods in respect of which the offence is committed, make an order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned, see Ss. 168 and 171A of the Sea Customs Act and Ss.5 and 7 of the Land Customs Act. To such a situation, though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as they are statutorily made applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. If so, the burden of proof is on the customs authorities and they have to bring home the guilt to the person alleged to have committed a particular offence under the said Acts by adducing satisfactory evidence. In the present case no such evidence is forth....
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....given stage of the proceedings. Three Judges Bench of the Hon'ble Supreme Court of India in the Balumal Jamnadas Batra v. State of Maharashtra as reported at [1983 (13) E.L.T. 1558 (S.C.)] has held as under "It is true that lighters and flints were notified as provided in Section 123(2) in the Official Gazette of 26-8-1967. Nevertheless, as the provisions of Section 123(1) of the Act only lay down a procedural rule, they could be applied when the case came up for trial before the Presidency Magistrate who actually decided it on 15-7-1969. Indeed, the complaint itself was filed on 30-10-1968. It is immaterial that the appellant was found in possession of the goods on 21-4-1967". (Emphasis Supplied) In the case before us we find that the appellants when intercepted with seized gold biscuits had categorically stated the source of supply/purchase and followed it up with documentary evidence at the time of adjudication. We observe that investigating officer summoned and recorded the statement of suppliers and accepted their version that seized gold biscuits were imported into India legally If that be so, then the production of documentary evidence by the appellants at the time ....
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....to keep them as secure as possible, especially in Bombay where pickpockets are known for their dexterity". (Emphasis Supplied) It seems that the Customs department itself accepts the mode of transportation of gold biscuits in shoes, which is evident from the remarks on the Baggage receipt no. 0296644 dated 1-3-2007, which is endorsed by the Customs officials as produced along with the miscellaneous application. 11. We had asked the learned DR, whether the investigating officers had shown the seized gold biscuits to the seller to verify, that, the very same were sold, the answer was in negative. It is se from records that revenue has not adduced any evidence, even remotely, to indicate that the seized gold biscuits were of smuggled nature, while appellants have clearly demonstrated that they had licitly purchased the gold biscuits in a normal sale and purchase transactions. It is also seen from records and evidence that the seized gold biscuits at the hands of sellers were not smuggled is accepted by the revenue, by not con ducting any further investigation or summoning the persons who had supplied seized gold biscuits to appellants and also by not issuing any show cause no....
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.... herein before, inter alia, not only proceeded on the basis that one of the carriers had been let off but also purported normal fashion of transport of gold bars for which no evidence was brought on record. Tribunal should have dealt with the findings that there existed serious discrepancies in the bills or vouchers." 15.1 Certain relevant facts require to be highlighted. 15.2 Two bullion dealers along with six other persons were intercepted by the police with 551 gold bars with foreign marks when they were proceeding to Mumbai. The bullion dealer Shri Vijay D. Patel, Proprietor of M/s. Paras bullion along with his two assistants Shri Bikabhai D. Patel and Shri Nathubhai D. Patel were found carrying 90, 55, and 55 gold bars respectively. Another bullion dealer Shri Sailesh R. Patel, Proprietor of M/s. S.K. Jewellers along with four of his assistants namely Shri Nattubhai Brijial Soni, Shri Arvind K. Patel, Shri Jaswanth K. Patel and Smt. Rasilaben Rathore were carrying 100, 51, 55, 50 and 95 gold bars respectively. 15.3.1 On the basis of intimation received from the police, customs authorities commenced investigations and seized 200 gold biscuits from the first group an....
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.... fuel, purchase of defence equipments, etc., the needs of individual could be different. Some people might be interested in investing in idle assets like gold. Therefore, in respect of items which are prone to smuggling, the unusual step of shifting the burden of proving that the gold or diamonds seized from the custody of persons is provided for. 17.2 Our nation faced acute shortage of foreign exchange in 1991 and was about to default in payment of foreign debts and narrowly escaped humiliation by making the payment by pledging gold which was in the possession the Government. 17.3 If the Section 123 notified is seized abandoned then naturally the question of burden of proof does not arise except when somebody claims ownership. When the goods are seized from the possession of a person, the burden to prove that the gold has been imported legally and it has been acquired legally is on the person from whose possession the gold has been seized. If the person from whose possession the gold has been seized is not the owner and somebody else claims the ownership the burden is cast collectively on both the persons i.e. the person from whose possession the gold is seized and the perso....
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....ly about oral agreement for sale. There is a dispute as to whether the bill was issued on 23-10-99 and delivered to the part-time accountant on the very same day but was prepared on 24-10-99 as a cover up operation by antedating it to 23-10-99. In the over all circumstances, it appears that the claim that the bill was prepared on 23-10-99 is an after thought. If it was prepared on 23-10-99 no valid reason has been given as to why a bill said to have issued by Paras Bullion was not carried along with the consignment. It would not have been burdensome to carry such a piece of paper and they would not be exposed any risk. Was it out of ignorance or out of deliberate design? In respect of 51 gold bars which was in possession of Shri Nattubhai Brijial Soni the bill was carried with them and hence the same was released. Apparently they were aware of the importance of such bill to show the legality of acquisition and possession. It cannot therefore be out of ignorance. 18.3 Shri Vijay D. Patel carries a Xerox copy of delivery challan issued by ABN Amro Bank in favour of M/s. Riddhi Siddhi Bullion. This document in original can be an evidence for valid possession by M/s. Riddhhi Siddhi ....
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....as not found to be a practice but only as part of malpractice. 19.5 A passenger claims to have come through the airport concealing his gold in the shoes and declaring to the customs Mumbai Sahar airport and then getting a certificate in the baggage receipt dated 1-3-07 issued for payment of duty that the gold was concealed for safety purposes in the shoes. The passenger, perhaps, feared that some robbers may rob him while he was travelling in the aircraft! Some customs officer has also willingly or unknowingly obliged the said passenger and given such a certificate. In my opinion, the customs officer has gone beyond his normal call of duty/role in certifying that the gold was transported for safety purposes. It can be only a case where a certificate has been is sued as solicited by the passenger. The officer was not required to acknowledge the mode of transport, packing, etc., of the goods imported by various passengers. Even if this particular passenger who has brought by concealing in his shoes, fearing theft/robbery of gold this cannot lead to conclusion that there is a practice to transport gold by concealing in shoes. In spite of the odd method followed, the passenger ha....
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....is not the case of each of the carrier, in addition to having the gold concealed in the peculiar manner, has chosen to carry the relevant papers, showing legal possession of the gold. Their masters who accompanied also did not carry the relevant papers evidencing legal possession. 22.2 If the police have not intercepted, and the customs have not come into the picture can it be reasonably presumed that after disposal of the gold in Mumbai market, Shri S.R. Patel, Shri Vijay D. Patel that we expect them to prepare bills and regularize the transaction or not to account them at all? 23. The following emerges : (a) The concealment of gold bars in shoes cannot be considered as a trade practice but only as a practice followed by members of seasoned criminal gangs. (b) The submission that preparation of invoice after the lapse of a few days is a trade practice cannot be accepted without the attendant circumstances. In the cases cited by the ld. Advocate, the supplies were with de livery challans followed by invoices after delay of a few days. This cannot be compared with the conduct of the appellants who have neither is sued the invoices nor the delivery challans. (c) The br....
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....onsignments were meant in Mumbai, etc. become irrelevant. In such a situation these persons also would have been allowed to go with the gold bars as was done in the case of Shri Nattubhai Brijial Soni. The gold bars have been seized under the reasonable belief that they are smuggled goods. Their story is unbelievable. Each omission and conduct appears condonable but cumulatively, their conduct and the entire circumstances taken together shows that they were not on any genuine business mission but on certain clandestine activities. 24.3 In the light of the above, in my considered opinion, the claimant- owners have not discharged their burden of proof in terms of Section 123 of the Customs Act. Therefore, confiscation of the 500 gold bars deserves to be upheld. Penalties are also warranted. 25. The order of confiscation of 500 gold bars is upheld However taking the entire facts and circumstances of the case, the penalty imposed on Shri Vijay D. Patel is reduced from Rs. 50 lakhs to Rs. 10 laths and the penalty imposed on Shri Sailesh R. Patel is reduced from Rs. 50 laths to Rs. 10 lakhs. The penalties imposed on others are not excessive and hence not interfered with. Sd/- ....
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....p; Member (Judicial) Dated 23-8-2007 Dated 29-8-2007 27. [Order per: S.S. Kang, Vice-Presi....
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....9 clearly disclosed that he has sold 300 number of gold biscuits to Shri Shailesh R. Patel and also disclosed the source of the gold biscuits as he purchased 454 of gold biscuits from M/s. K.L. Choksi and 750 no. of gold biscuits from other bullion dealers. Shri Vijay D. Patel also produced documents regarding purchase of the gold biscuits. Investigation was also conducted from Shri Keshavlal Choksi proprietor of M/s. K.L. Choksi, in the statement admitted that the sale of 454 no. of gold biscuits with foreign marks to M/s. Paras Bullion and also gave the bill numbers under which the same are sold. No investigation was conducted in respect of the other source disclosed by Shri Vijay D. Patel in this statement. The contention of the appellant is that the Revenue is alleging that the gold in question is smuggled in nature but there is no evidence on record nor there any admission by the persons from whose possession the same was recovered. The contention is that in view of this the gold biscuits in question cannot be confiscated on the ground that the same are smuggled into India. The appellant also relied upon the findings and investigation conducted by Income-tax department regardi....
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....hase of the gold in question and the same were subsequently dropped on the ground that entire transaction in respect of gold bars were legally accounted for and there is no doubt about the said transactions. In view of the evidence produced by the appellant to show the legal procurement of the purchase of the gold in question and in absence of other evidence to show that gold in question is smuggled in nature. I agree with the view of Hon'ble Member (J) allowing the appeals. The matter placed before regular bench for further necessary action. Sd/- (S.S. Kang) Vice-President Dated : 7-3-2008 MAJORITY ORDER 33. In view of the majority decision, the appeals are allowed, confiscation set aside, penalties also set aside, with consequential relief, if any. (Pronounced in Court on…………….) Sd/- ....