TaxTMI 
TaxTMI 
2023 (3) TMI 1084
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....rately. Against the orders of the Commissioner (Appeals), Shri Deepak Handa filed appeal C/52922 of 2016 and Shri Ravi Handa filed C/52923 of 2016. Both these appeals have been disposed of by Final Order No. 51520-51521/2021 dated 25.5.2021. The order, in a nutshell, upheld the confiscation of the primary gold with foreign markings but set aside the confiscation of the gold ornaments and the cash. Consequently, the penalties were also reduced. 2. After the above order, the Commissioner (Appeals) passed the impugned order in respect of the appellant which also involves confiscation of the primary gold, confiscation of the jewellery, confiscation of money and imposition of penalty. In this appeal, the appellant is assailing the following: a) Confiscation of 2776.94 grams of gold valued at Rs. 72,21,040/- seized from the appellant by a Panchnama dated 24.8.2017. This gold includes (i) one kg gold bar of 995 purity with marking 'Argos Heraeuss'; (ii) one kg gold bar of 995 purity with marking " Rand refinery"; (iii) one cut piece of gold of 995 purity weighing 195.23 grams; (iv) a plastic box with jewellery weighing 246.37 grams; and (v) a plastic pouch with jewellery weigh....
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.....34 grams in a plastic pouch and cash of Rs. 8,86,500 were seized from the shop of the appellant in Delhi which are the subject matter of this appeal and the impugned order. 8. Investigations were completed and the SCN was issued and it was adjudicated by the Additional Commissioner of Customs who passed the OIO as follows: i. I confiscate the seized gold weighing 15.3890 kg (recovered from Shri Deepak Handa) valued at Rs. 4,60,02,337, seized vide panchnama dated 23/24-8-2017 under section 111(d), 111 (i) and 111(p) read with section 120 of the Customs Act, 1962. ii. I confiscate the seized gold weighing 2776.94 grams (recovered from Shri Kashi Kumar Aggarwal) valued at Rs. 72,21,040/- seized vide panchnama dated 24.8.2017 under section 111(d), 111(i) and 111(p) read with section 120 of the Customs Act, 1962 iii. I confiscate the seized gold weighing 1,118.24 grams (recovered from M/s. Baibhav Ornaments) valued at Rs. 46,83,820/- seized vide panchnama dated 24.8.2017 under sections 11(d), 111(i) and 111(p) read with section 120 of the Customs Act, 1962. iv. I confiscate Indian currency amounting to Rs. 8,86,500 seized vide panchnama dated 24.8....
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....lant. e) The two gold bars weighing 1000 grams each having purity of 995 and foreign markings were purchased by M/s. Easy Trading from M/s. Pinki Chains. The appellant produced invoice dated 19.8.2017 and a copy of ledger account, copy of Form DVAT-56, copy of GST R2A of M/s. Pinki Chains along with other supporting documents and evidences. f) Revenue has not adduced any evidence to show that the seized gold was smuggled. g) The bills produced show that the gold was legally purchased from the local market. The appellant was only a broker and was not the importer or owner of the seized gold. h) Section 111 (d) of the Customs Act does not apply to town seizures of goods. It applies to those cases where the goods have been imported in violation of any prohibition. i) Section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant. j) Section 111(p) applies only to goods notified under Chapter IVA of the Act and gold is not notified under this section. k) Section 12....
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....ngs and he was unable to produce any document to prove their licit possession although he claimed to have purchased them from M/s. Uma Traders. d) No prejudice is caused to the appellant from not allowing cross examination of the co-accused as they were in cahoots. The appellant also confessed to having dealt with the seized smuggled gold to Deepak. What is admitted need not be proved. Reliance is placed on Mohammed Muzzamil vs CBIC [2021(376) ELT 46 (Telangana)]. e) In case of gold notified under section 123 which is seized under reasonable belief that it is smuggled, the burden of proving that it is not rests on the person from who it is seized. 12. We proceed to examine the relevant legal provisions of the Act and then examine each of the four issues viz., the confiscation of the gold bars, confiscation of the jewellery, confiscation of the seized cash and imposition of penalty upon the appellant. Legal provisions 13. The Customs Act, 1962 regulates imports and exports and provides for confiscation of certain goods, imposition of penalty on individuals and also has provisions for arrest and prosecution of the offenders. The provisions relevant to this ....
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....the goods or five thousand rupees, whichever is the greater;......." SECTION 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 value of the smuggled goods shall be liable to confiscation. SECTION 121. Confiscation of sale-proceeds of smuggled goods. - Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation. SECTION 123. Burden of proof in certain cases. (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 ....
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.... to sum up, if any goods including cash, are liable to confiscation under section 111, they constitute smuggled goods and if they are seized under the reasonable belief that they are smuggled goods and if such goods are also notified under section 123, the burden of proving that they are not smuggled rests on the person from who the goods are seized. Otherwise it rests on the Revenue. It is undisputed that gold is covered under section 123 and cash is not. Therefore, the burden of proof insofar as the cash is concerned, rests on the Revenue. The burden of proof shifts to the appellant with respect to gold depending on whether it was seized under the reasonable belief that it was 'smuggled goods'. If so, the burden shifts to the appellant and not otherwise. 17. The next important section is 121 which provides for confiscation of the sale proceeds of the smuggled goods. This is the section under which the cash has been confiscated. What is different between sections 111 and 121 is that the former provides for confiscation of smuggled goods whereas the latter provides for confiscation of the sale proceeds of smuggled goods. Naturally, such sale would take place after smuggling and ....
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....vened". Issues in this case 23. We proceed to examine the submissions by both sides with respect to each of the issues in this case and decide. A. Foreign marked gold bars, two, weighing 2 kg in total and having a purity of 99.5%, one cut piece of yellow metal of the same purity weighing 195.23 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in Original) 24. These two gold bars and the cut gold piece had extremely high levels of purity and were in primary form and the gold bars had foreign markings. They were seized from the appellant in a follow up operation to the seizure of foreign marked gold bars from Deepak and Surinder. They were found in the premises of the appellant. When the officers questioned the appellant on 25.8.2017, the appellant admitted that he had sold foreign marked gold to Deepak without invoice or receipt and further that he would sell so to Deepak 2 or 3 times a month. The appellant had no receipts or documents to show that the gold was not of foreign origin. In fact, even in the appeal before us, the appellant does not dispute that the gold was of foreign origin. The officers, therefore, had a reasonable beli....
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....y the learned Chief Metropolitan Magistrate when the appellant was produced after arrest. We find while the case emanated from the seizure of gold bars from Shri Deepak Handa and follow up investigation was conducted based on the statements of Deepak and Ravi, insofar as this gold is concerned, it stands on its own footing. Even if the statements of Deepak and Ravi are ignored, the fact that the gold bars were seized from the appellant is not in dispute. It is also not in dispute that they are of foreign origin and had foreign markings and were of very high purity is not in dispute. It is also not in dispute that no duty paid documents in the form of Bill of Entry (whether the duty is paid by the appellant or the importer from whom the appellant claims to have purchased) is available. No such document is produced till date even before us. Therefore, the case against the appellant does not in any way get diluted. The fact that the appellant had given his statements on 24.8.2017 and 25.8.2017 but subsequently retracted them when produced before the Ld. CMM was also examined. The statements give out several personal details which are likely to be in the exclusive knowledge of the appe....
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....ods and the department has not discharged this burden. We disagree. The appellant was in possession of foreign marked gold and had no documents to show that duty was paid on it. This gave the department reasonable belief to seize. The burden of proof is on the appellant. If one has duty paid gold bars which are seized and confiscated, it will not be unreasonable to expect that one would obtain the duty paid documents and produce instead of letting the gold be confiscated and getting oneself arrested. If the gold which the appellant was in possession was, indeed, duty paid, the documents to show that must be with the appellant and in his exclusive knowledge which he must produce, however no such documents have been produced not only before the investigating officers or the adjudicating authority but even before us. We are therefore, satisfied that the appellant has not discharged his burden of proving that the gold bars and the cut piece were not smuggled. 29. Learned counsel further submitted that Section 111 (d) of the Customs Act does not apply to town seizures of goods. It applies to those cases where the goods have been imported in violation of any prohibition. He submits th....
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....ohibition and that may be partial or complete. Any restriction to import or Export is to an extent a prohibition. We, therefore, find section 111(d) applies to this case. 31. We, however, agree with the submission of the appellant that section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant. Section 111(p) applies only to goods notified under Chapter IVA of the Act and that gold is not notified under this Chapter is not in dispute. Therefore, confiscation under sections 111(i) and (p) are not sustainable. 32. To sum up, we find that the gold bars and piece of gold were correctly held liable for confiscation under section 111(d) by the adjudicating authority and such confiscation was correctly upheld in the impugned order. Confiscation under sections 111(i) and (p) need to be set aside. B. Gold jewellery weighing 581.71 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in original) 33. These gold ornaments were confiscated in the order in original and the confiscation w....
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....the person who has so sold the goods had either the knowledge or had reason to believe that the goods were smuggled. Merely because some unaccounted cash is lying, it cannot be confiscated unless the three conditions in Section 121 are fulfilled. From the records of this case, we do not find that the Revenue has established any of these factors or even identified which were the smuggled goods which were sold by the person from whom the cash is seized. Confiscation of this cash is therefore, liable to be set aside and we do so. It also needs to be noted that an identical view was taken with respect to the cash seized from Baibhav Ornaments and Radhika Jewellers in this Tribunal's Final Order dated 25.5.2021. D. Penalty of Rs. 25,00,000 imposed on the appellant under Section 112 (S.No. (vii) of the operative part of the Order in Original) 35. Penalty under section 112 is imposable for any acts or omissions which render the goods liable to confiscation under section 111 of the Act. This section reads as follows: SECTION 112. Penalty for improper importation of goods, etc.- Any person, - (a) who, in relation to any goods, does or omits to....