TaxTMI 
TaxTMI 
2021 (12) TMI 632
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.... Appeal No. 40646 of 2018 have been filed by Shri P. Balaji seeking setting aside the order of confiscation of deposit of Rupees Ninety lakhs available as fixed deposit of Bank of Baroda, T. Nagar Branch, Chennai and also setting aside the penalty imposed upon him. Application No. 40264 of 2018 in this appeal is filed seeking the Tribunal to direct the respondent/Revenue to not part with the amount deposited in the Bank of Baroda. 5. Appeal No. 40647 of 2018 is filed by Shri K. Srinivasulu praying that the penalty imposed on him in the impugned order may be set aside. 6. We have heard both sides and perused the records. Facts of the case, after filtering out unnecessary details, are that the Directorate of Revenue, Intelligence [DRI], Chennai received information from the Railway Protection Force of Central Railway Station, Chennai that they had intercepted a passenger Shri V. Sathyanarayana while he was passing through the door frame metal detector at 9.20 AM on 9.5.2014 and he was found to carry pieces of gold in a jacket tied around his waist. On receiving this information, officers of DRI proceeded to the Railway Station and questioned Shri Sathyanarayana who said that he....
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...."GOLD 9990" and "995.0" on two of them. On enquiry regarding the gold seized from Shri Sathyanarayana, Shri Balaji stated that he received 3.158 kg. of gold bars from M/s Surana Corporation without any bill, and these were of foreign origin and smuggled into the country and he handed them over to Shri Sathyanarayana. With the help of a Certified Assayer the purity of the cut pieces of gold and the gold coins were checked and the two gold coins were of 24 carat purity and one gold coin was of 22 carat purity and they were also seized along with some documents. 8. In his statement on 9.5.2014, Shri Sathyanarayana said that he collected Rupees Thirty lakhs from Shri Manda Ramu, brought it concealed in his jacket, handed it to Shri Balaji and received the gold pieces which he again concealed in the jacket and was stopped by RPF officers at the Railway station. The two kutcha paper chits No. 43 & 44 were already the newspaper packing of gold. He receives a monthly salary of Rs. 8000/- and that he would come to Chennai twice a week at the behest of Shri Manda Ramu to pay cash to Shri Balaji and take back gold to Shri Manda Ramu. He never receives any invoice or bill for the gold bars.....
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.... Penalty should not be imposed on each of them under Section 112 of the Customs Act, 1962. 39. Now, therefore, S/Shri P. Balaji and K. Srinivasulu are hereby, jointly and/or severally, called upon to show cause to the Commissioner of Customs (Chennai-III), Custom House No. 60, Rajaji Salai, Chennai-1 within 30 days of receipt of this notice, as to why: (i) the seized 173.400 gm of cut pieces of gold bars and 70.300 gm of foreign marked coins, totally valued at Rs. 7,29,053/-, should not be confiscated under Section 111(a), 111(d) or 111(d), 111(l) & 111(m), as the case may be, whether or not there is any change in their form, in terms of section 120 of the Customs Act, 1962 as may be applicable; (ii) penalty should not be imposed on each of them under Section 112 of the Customs Act, 1962. (iii) the amount of Rs. 90,00,000/-, presently deposited as fixed deposit in the Bank of Baroda, T. Nagar Branch, Chennai should not be confiscated under Section 121 of the Customs Act, 1962 and appropriated to Government Account. 40. S/Shri Vijayaraj Surana, J. Thiyagarajan and G. Venkatesh are hereby called upon to show cause to the Commissioner of Cu....
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....s only) on Shri G. Venkatesh under Section 112(b) of the Customs Act, 1962. (x) Imposition of penalty of Rs. 5,00,000/- (Rupees Five lakhs only) on Shri K. Srinivasulu under Section 112(b) of the Customs Act, 1962. (xi) Imposition of penalty of Rs. 45,00,000/- (Rupees Forth five lakhs only) on Shri Vijayaraj Surana under Section 112(b) of the Customs Act, 1962." 11. Aggrieved by the impugned order, these appeals have been filed. In his Appeal No. 42254 of 2017 Shri Manda Ramu submitted as follows: (i) The seized gold bars do not have any foreign markings as can be seen from the order passed by Hon'ble Additional Chief Commissioner Metropolitan Magistrate (EOI) in Crl. M.P. No. 3501/2016, an application filed by DRI for taking inventory of the seized gold under Section 110(1B) of the Customs Act; (ii) Payment for the gold bars was made through RTGS; (iii) Statements recorded by the DRI were retracted. The outcome of the cross examination was in favour of the appellant. (iv) Since there are no foreign markings, the gold bars are not liable for confiscation. (v) Section 123 would apply only if there is a reasonable beli....
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....The adjudicating authority failed to consider or appreciate any outcome of cross-examination. (x) On cross examination, Shri Thiyagarajan and Shri J. Venkatesh they said that they do not know the appellant Shri Balaji nor have they seen him. They further confirmed that they have not sold any gold to Shri Balaji. Penalty under Section 112(b) is also not imposable upon them. 14. In his appeal C/40647 of 2018 Shri K. Srinivasulu submitted as follows: (i) After the demise of his mother, he was not at all involved in the affairs of his business and this has been recorded categorically in paragraph 51 & 55 of the impugned order as follows : "51. It is seen from the case record that Shri K. Srinivasulu is partner of Shri P. Balaji in running SLN Securities & Forex Pvt. Ltd. I have seen his submissions along with Balaji and also individually through his Counsel vide letter dated 20.4.2017. It is also observed from the voluntary statement of Shri P. Balaji dated 10.5.2014 that at question No. 8 regarding role of Shri K. Srinivasulu, Shri P. Balaji stated that Shri K. Srinivasulu's mother expired one year ago and his father is a heart patient, recently he is not....
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....stained. (vii) Whether the imposition of penalty of Rupees Twenty lakhs under Section 112(b) of Shri P. Balaji can be sustained. (viii) Whether imposition of penalty of Rupees Five lakhs upon Shri K. Srinivasulu under Section 112(b) of the Customs Act can be sustained. 16. Although penalties were imposed on certain other persons they are not in appeal before us and hence such penalties are not the subject matter of these appeals. It is undisputed that the gold was found concealed in the jacket of Shri V. Sathyanarayana and was detected as he was passing through the door frame metal detector at the Railway Station. On receiving information from the Railway Protection Force officers, the officers of DRI intercepted and questioned him and he explained that he works for Shri Manda Ramu of M/s Om Lakshmi Venkateshwara Jewellers, Rajahmundry and had brought Rupees Thirty lakhs in cash, gave it to Shri Balaji of M/s SLN Securities, Chennai and received gold pieces as per instructions from Shri Manda Ramu and was carrying them back concealed the same jacket when he was stopped by the RPF. He did not have any invoice or document for the purchase of gold. He only had two....
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....invoice for purchase of 2000 gm of gold and tried to explain that the two add up to substantiate the sale of 3.158 kg of gold to Shri Manda Ramu. 18. However, invoice for 2 kg. of gold issued by M/s Khazanchi Jewellers issued in favour of M/s SLN Security was for gold of 99.5% purity. It is impossible for this purity to have instantly increased 99.9% which was the purity of the gold which was seized as per the report of the assayer and the weight tallied exactly with that in the katcha slips. Therefore, this invoice cannot support the appellant that the seized gold was purchased from M/s Khazanchi Jewellers. Further, Shri Balaji could not submit any evidence for purchase of or legal import of 243.7 gm. of gold including foreign marked gold coins which were found in his office at the time of search. The appellant sought to plead that the statements were retracted during cross examination and, therefore, they cannot be relied upon. It is worth noting that personal hearings were held and cross examination were allowed in all cases where they were sought. Simply because the person making the statement retracts his earlier statement during cross examination, it does not mean that the....
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....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 of goods which the Central Government may by notification in the Official Gazette specify". In fact, Section 120 of the Customs Act specifically provides that the smuggled goods if confiscated notwithstanding any change in their form. It reads as follows : "120. Confiscation of smuggled goods notwithstanding any change in form, etc.- (1) Smuggled goods may be confiscated notwithstanding any change in their form. (2) Where smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation: Provided that where the owner of such goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the values of the smuggled goods shall be liable to confiscation. 20. What is significant in this case is that the gold was of 99.9% purity which is the purity of the foreign gold. 21. It has also....
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.... According to the appellants, the payment was for 3.158 kg. of gold which we have already held to be smuggled and hence liable for confiscation. Consequently, Rupees Ninety lakhs can only be considered as sale proceeds of this smuggled gold liable for confiscation under Section 121 of the Custom Act, 1962. 25. As far as imposition of penalty of Rs. 10 lakhs upon Shri V. Sathyanarayana under Section 112(b) of Customs Act, 1962 is concerned, we find that the confiscated gold was being carried by him, though as a courier for Shri Manda Ramu this penalty needs to be upheld. Therefore, he has rendered himself liable for penalty under Section 112(b). However, considering that he was only a courier carrying the gold reduced to penalty on him to Rupees One lakh. 26. As far as the penalty of Rupees Twenty lakhs upon Shri Manda Ramu is concerned, we find that he was the buyer of the smuggled gold which has been confiscated and therefore, we find no interference is required with the penalty imposed upon him. 27. Similarly, we find no reason to interfere with the penalty of Rupees Twenty lakhs imposed upon Shri Balaji under Section 112(b) of the Customs Act, 1962. 28. Regarding pen....