TaxTMI 
TaxTMI 
2019 (3) TMI 457
X X X X Extracts X X X X
X X X X Extracts X X X X
..... That apart, Rs. 42,000/- in cash, alleged to be sale proceeds of contraband gold, was also recovered. The confession statements of the apprehended persons revealed involvement of one Om Prakash Khatri, Director of M/s Panna Gold Impex Ltd. Show cause notices were issued to the aforesaid three persons and the company, and after adjudication, the Joint Commissioner as per Annexure A order dated 05.05.2015 ordered absolute confiscation of the gold bars and jewellery under Section 111(a), (d) and (m) read with Section 120(1) of the Customs Act, 1962 (for short "the Act") and also imposed a penalty of Rs. 20 lakhs on Om Prakash Khatri and Rs. 10 lakhs on M/s Panna Gold Impex Ltd. under Section 114AA of the Act. The Adjudicating Authority also imposed a penalty of Rs. 5 lakhs each on the aforementioned three persons as well as the Company under Section 112 of the Act. The currency was however ordered to be released. 3. The appeals filed before the Commissioner was disposed of vide a common order at Annexure B dated 08.10.2015 modifying the order of the Adjudicating Authority by quashing the confiscation of gold ornaments. The remaining part of the order was sustained. The parties agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty has been demanded by the Department from the persons apprehended and there was absolutely no material on the basis of which the Department could have reasonably believed that the goods were smuggled, and therefore, the adjudicating as well as appellate authority's orders were quashed. 8. It is seen that the statements of the two salesmen of the Company were recorded under Section 108 of the Act by the DRI. Wherein, they had stated that they collected gold bars and pieces smuggled into India from Kerala and took the same to Mumbai to be handed over to Om Prakash Khatri, who is one of the Directors of M/s Panna Gold Impex Ltd. It is stated by them that an associate of Om Prakash Khatri at Thiruvananthapruam handed over the gold to them. They also admitted having collected gold from Kerala on earlier occasions for being handed over to Khatri. Ornaments were made out of smuggled gold and sold at a very competitive price. The salesmen revealed that they did not travel by flights for the reason that there was security checking and customs checking at the Airport. 5 kgs. of gold ornaments were given to them to be sold in Kerala, without any document or bill. They also admitted tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade of such smuggled gold. No reliable documentary proof was also produced by the company to prove that they had purchased the gold legally, and therefore, the Adjudicatory Authority ordered confiscation of gold bars and ornaments and also imposed the penalty as stated above. In first appeal, the ornaments were ordered to be released, but the confiscation of gold bars and pieces confirmed. 12. Coming to the finding of the Tribunal regarding the burden of proof, it would be necessary to examine the scope of Section 123 of the Act, which deals with burden of proof in certain cases. Section 123(2) in particular, is pertinent, which reads thus: "123. Burden of proof in certain cases.- (1) When any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be- (a)in a case where the seizure is from the possession of any person,- (i)on the person from whose possession the goods were seized, and (ii)..... (b).......... (2) This section shall apply to gold and manufactures thereof, watches and any other class or good which the Central Government may by no....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... an innocent receipt of gold lay upon the appellant under Section 106 Evidence Act. The totality of facts proved was enough, in our opinion, to raise a presumption under Section 114 Evidence Act that the gold had been illegally imported into the country so as to be covered by Section 111(d) of the Act. The appellant had not offered any other reasonable explanation of the manner in which it was being carried." 14. In the aforesaid decision, the Hon'ble Supreme Court has held that the appellant in that case was fully aware of the allegations made against him, and had given an inculpatory statement under Section 108 of the Act regarding the circumstances in which he was arrested with the gold bars. 15. In Sailash Amulakh Jogani v. Union of India, 2009 (241) ELT 348 (Bom) relied on by the learned Counsel for the Department, the goods involved were diamonds, which were not notified under Section 123 of the Act and it was held that in view of the fact that there was no notification, the onus of proving the diamonds are of foreign origin and are smuggled to India was on the Department. It was, however, held that the burden on the Department is very slight and since the diamonds wer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....old recovered from the possession of two persons and their statements as to the source of the gold was sufficient to have a reasonable belief that the gold is smuggled. The two persons who were carrying the gold had nothing in their possession to prove the legitimacy of the gold they carried. The fact that the gold bars and pieces did not have any marking on them is suspicious and it points to a concerted effort to erase the markings on them. The burden under Section 123 which is only of a reasonable belief; is effectively discharged by the Department who initiated action on the basis of the seizure and the recorded statements of the detained persons. The mere fact that the interception and seizure was not affected in an international border or near an airport or seaport is irrelevant, since the statements of the intercepted persons clearly indicate that they were asked to avoid such means of transport and stick to the normal modes of public transport. There can also be no presumption drawn that the carriers of smuggled gold after the gold reaches the country would only resort to commutation by air or sea. The persons from whom the gold was seized disowned the same and said that th....