TaxTMI 
TaxTMI 
2021 (2) TMI 612
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.... big shopper bag moving suspiciously and approached him; he identified himself as Shri Balanagu Naga Venkata Raghavendra. When Officers asked him if he was carrying non-customs duty paid goods, he said that he was carrying gold with him and showed three packets wrapped in newspaper tied with rubber bands. On opening, one packet had one big piece, two small cut pieces and one very small hammered piece of yellow metal in one bag. In another bag were one big piece and one small piece of yellow metal and in a short packet were one big piece, one small piece and one very small piece of yellow metal. The big yellow metal pieces had marks y.999 inscribed on them. On verification of the papers available with Shri B.N.V. Raghavendra they found a letter addressed to one Shri Vijay of Trissur, Kerala requesting him to handover 1700 gms of gold to the bearer of the letter and that Rs. 50 lakhs in cash is being sent to him. Shri B.N.V. Raghavendra explained that the letter was written by his father to Shri Vijay in Kerala. The Officers informed that they have reasonable belief that the go....
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....n asked about which of the individual pieces will add up to 605 gms of gold, he has deposed that he did not remember how much gold was purchased by him from Pinninti Koti on 23/06/2016 * Shri B.V.S. Kanaka Ratnam in his statement dated 27/06/2016 has stated that 1700 gms of gold available in their family and 600 gms of ornaments of his wife were got melted nearly one month back. However, the same is not supported by Shri Jaggavarapu Nageswara Rao who has actually melted the gold for Shri B.V.S. Kanaka Ratnam as he has categorically deposed that he has melted only 600 gms of gold nearly 2 or 3 months back. * Shri B.V.S. Kanaka Ratnam & Shri B.N.V. Raghavendra have argued that it was their family gold which was shown as asset in their balance sheets and the same was melted for the purpose of selling the same. However, Shri B.V.S. Kanaka Ratnam in his statement dated 28/07/2016 deposed that the gold available in the family was sold and bought several times over and the same quantity is being maintained as the quantity of gold sold is bought again. * Shri B.V.S. Kanaka Ratnam in his statement dated 27/06/2016 has deposed that he was in his house only on 23/06/2016 & 2....
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....onfirm the smuggled nature of the gold. On the other hand, Shri B.N.V. Raghavendra from whose possession the gold was seized and Shri B.V.S. Kanaka Ratnam who has claimed ownership of the gold have not produced any proof regarding import of the gold through licit channels or purchase of old gold available in India. They have not produced any sale/purchase voucher towards purchase of the said gold. They have also contradicted themselves as detailed ibid at para 16. Thus, it appears that they have failed to discharge the responsibility cast on them under Section 123 of the Customs Act, 1962 to prove that the seized gold is not smuggled into India without payment of duty. Shri B.N.V. Raghavendra is in possession of the gold and Shri B.V.S. Kanaka Ratnam claiming ownership of the gold appears to be knowingly dealing in non customs duty paid gold. They have not provided any proof regarding payment of Customs duty in respect of the said Gold. 20. From the above it appears that Shri B.N.V. Raghavendra and ShriB.V.S.KanakaRatnam appears to be involved in trading of smuggled gold. They could not produce the proof of duty payment on the seiz....
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....M of Railways confirming the travel of both the appellants was taken into account but they were not allowed to cross examine the Senior DCM. ii) The Commissioner did not study the facts and records the case and came to wrong conclusions. iii) The Commissioner should have given them an option to redeem the confiscated gold under Section 125 of the Customs Act even if the gold was to be confiscated. 7. In the additional written submissions made after the hearing the appellants again asserted that they should have been allowed to cross-examine the Senior DCM who confirmed their travel from Trissur to Vijayawada. They also further contested that the Department has failed to discharge the obligation cast upon it. It is the case of Department that the gold is smuggled one. To prove the same to be smuggled, the Department has not extended the investigation to reach to the root of the matter. The Department has completely failed to go into the root of the matter as to how the goods were smuggled in nature nor has it based any evidence to this effect. By no stretch of imagination can the goods be termed as smuggled ones. Therefore, ....
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....r Section 123 of Customs Act, 1962 being only of a reasonable belief, effectively discharged by Department - Mere fact that interception and seizure not affected in an international border or near an airport or seaport irrelevant - Onus to prove that the gold was not smuggled, so as to upset the reasonable belief entertained by Department shifted and squarely rested on owner - Gold bars and pieces found to be of 99.8% purity but this fact ignored by Tribunal - Registers produced and the transactions alleged as well as the quantity seized and that seen from the alleged Travel Authorisation Vouchers not tallying - Therefore, appellants clearly failed to discharge the onus of proof cast on them by Section 123 ibid - Tribunal not justified in upsetting the findings of the first appellate authority - Confiscation upheld - Sections 111(a), (d) and (m) read with Section 120(1) of Customs Act, 1962. This judgment was upheld by the Hon'ble Supreme Court. iv) On the question of the gold being not allowed for redemption after confiscation, he relies on the judgment of the Hon'ble Supreme Court in the case of Shri Om Prakash Bhatia Vs Commissioner of Customs, Delhi [2003....
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....arned Commissioner was correct in not allowing cross examination of the Senior DCM. 11. The next issue (ii) to be decided is whether the Department had a reasonable belief as required under Section 123.This Section reads as follows:- A Section 123 " (1) Where 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 such seizure is made from the possession of any person,.- (i) on the person from whose possession of the goods were seized, and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold, and manufactures thereof, watches, and any other class or good which the Central Government may by notification in the Official Gazette, specify" According to the Show Cause Notice the reasonable belief that the seized gold w....
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....lted. Hon'ble High Court of Kerala held as follows:- 19. The unmarked gold 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 se....