TaxTMI 
TaxTMI 
2023 (4) TMI 837
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....shirt was intercepted by the officers. On inquiry, he introduced himself as Mohammed Ali Jinnah from Devakottai and that he had come by bus from Perungalathur to Pallavaram. He denied having gold bars of foreign origin or foreign marked gold bars in his person or in his luggage. On persistent inquiry by the officers, he agreed that he was carrying gold bars in his bag. He was taken to the office of the DRI at T. Nagar, Chennai - 17 along with other independent witnesses for further examination. During the personal search of the respondent (Mohammed Ali Jinnah), the officers recovered a copy of his Aadhar card, bus ticket and on search of his backpack, the officers found two packets wrapped with blue adhesive tape and kept in green and blue polythene bag. On cutting open these packets, it contained two crude gold bars (of weight 1720 and 1377 grams) totally weighing 3097 grams and valued at Rs.91,98,090/- (Rs.2,970/- per gram). The respondent did not have any valid document for the possession of the gold and it appeared to the department that these two crude gold bars are smuggled into India from Sri Lanka without declaring it to customs with an intention to evade payment of customs....
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....d Smt. Nashrina Begum who are respectively father, mother and wife of the respondent. In these letters, they claimed that the gold seized was not smuggled gold and that it was purchased in India only from his earnings. On verification of the details of statement of bank account of the respondent from the Devakottai Branch of Indian Overseas Bank, it was seen that as on 1.5.2017 there was a balance of Rs.415/- only and most of the cash deposits happened during the period before the seizure of gold. The statement of Sri G. Kannan (goldsmith) was recorded who stated that he has not melted the gold for the respondent. 6. The respondent was again issued summons to produce bank account details, income, source of funds and income tax statements. He appeared on 7.6.2017 and gave a voluntary statement under sec. 108 of the Customs Act, 1962 wherein he agreed that he was present during the mahazar proceedings. He agreed that he had travelled as per the tickets obtained from the State Transport Corporation. It was also stated that he maintained a bank account with IOB, Devakottai and later his wife's name was added to the bank account. He earlier worked in Malaysia and Saudi Arabia and submi....
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....appeal before the Commissioner (Appeals). After granting personal hearing on 19.9.2019 and on various dates, the Commissioner (Appeals) vide the order impugned herein held that the department has failed to prove that the gold is smuggled into India. The Commissioner (Appeals) allowed the appeal. Aggrieved, the department is now before the Tribunal. 11. The learned AR Smt. Anandalakshmi Ganeshram appeared and argued for the department. The learned AR filed written synopsis in which the grounds of appeal are summarized. It is submitted that the Commissioner (Appeals) has completely ignored the evidence available on record of the case. In the voluntary statement dated 23.1.2017 and 24.1.2017, the respondent has admitted his involvement in the smuggling. Further, the respondent has not produced any valid document to show legal possession / import of the smuggled crude gold bars and has admitted the activity of smuggling for monetary consideration. The findings of the Commissioner (Appeals) that the crude gold bars do not have foreign markings and therefore cannot be presumed that they are of foreign origin is erroneous. 12. In para 16 and 17 of the impugned order, it is stated by the....
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....Latha and one Nagendra. The mobile numbers used by the respondent was in the name of one Krishnaveni. This is detailed in para 10 to 12 of the Show Cause Notice. 16. The findings of the Commissioner (Appeals) in para 24 and 25 that the investigation agency has not been able to prove any positive evidence that the gold was smuggled from Sri Lanka into India as it did not contain any foreign markings is factually incorrect. The certificate issued by the assayer would prove the purity of the gold to be 999.9. Only foreign gold bars will have such purity. 17. The contention of the respondent that the request for cross-examination of the assayer Shri K.G. Shankar, the goldsmith Kannan and other witnesses was denied and therefore has caused much prejudice to them is put forward by the respondent only for the purpose of absolving from the penal liability. The learned AR prayed that the appeal may be allowed. 18. The respondent was represented by Shri B. Kumar, Senior Advocate assisted by Advocates Shri T. Sudhan Raj and Shri Shruthan. 19. The learned Senior Advocate submitted that the entire Show Cause Notice is based on the statements recorded from the respondent on 23.1.2017 and 24.....
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.... the same, he had produced his passport before the authorities. The gold was purchased out of his money and also the jewelleries that belonged to his family which was melted by Shri A. Kannan (goldsmith) into crude bars. The department has not examined or verified from Shri A. Kannan. Instead, the department has recorded statement of Shri G. Kannan who is also having a shop in the same complex. The respondent vide letter dated 17.7.2017 informed the officers much before the issue of Show Cause Notice (21.7.2017) to verify and examine Shri A. Kannan. This request was ignored by the department and there was no investigation done as to whether A. Kannan has melted the gold into crude bars for the respondent. Even during the adjudication proceedings, the respondent had requested to examine Shri A. Kannan who had melted the gold for the respondent. The request for cross-examination was denied by the adjudicating authority. The learned counsel relied upon the judgment of the Hon'ble High Court of Madras in the case of M/s. Jet Unipex in W.P. No. 5233 of 2016 dated 19.5.2020 to argue that the evidence placed by the department cannot be accepted when the request for cross-examination h....
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....eal may be dismissed. 25. Heard both sides. 26. At the outset it has to be stated that though the Show Cause Notice is issued by DRI, it is submitted by the learned counsel that the respondent is giving up the claim and contest on the issue as to whether DRI is the proper officer for issuing the Show Cause Notice. The respondent has filed affidavit to this effect which reads as under:- "2. I submit that the above appeal has been preferred by the appellant against the order of the Commissioner of Customs (Appeals) in Order-in-Appeal Seaport C. Cus. II No. 550/2019 dated 14.11.2019. 3. I state and submit that the Show Cause Notice had been issued by the DRI. The said issue whether DRI officers are proper officers or not to issue Show Cause Notice who are not proper officers as per the Supreme Court's decision. But through this affidavit, I am not pressing the issue and the matter may be taken on merits without going into the jurisdictional issue of DRI." 27. We therefore proceed to examine the merits of the case. The allegation in the Show Cause Notice is that the gold seized from the respondent is gold smuggled into India without declaring it to Customs for avoiding payment o....
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.... Murugan or Batcha. If the case of the department is to be accepted, the mobile phone of the respondent which was available to the investigation agency would be the first evidence by which the call details of the respondent can be verified as to whether he has made any calls to Murugan or Batcha. The event chain starts with a loose link. 29. The purity of the gold as certified by the assayer is the main reason for the department to allege that the gold is of foreign origin and is smuggled into India. Apart from challenging the certificate issued by assayer, the learned counsel has also challenged the method adopted for ascertaining the purity of the gold. It is not stated in the certificate as to what is the method adopted by the assayer to ascertain the purity. The learned counsel submitted that the touchstone method is not an acceptable method to prove the purity of the gold. The Customs officers ought to have obtained a report from a competent agency like the Government Mint. The decision in the case of Customs Vs. Dina Aruna Gupta reported in 2011 (274) ELT 323 (Del.) is relied by the respondent to assail the certificate of assayer. The relevant para reads as under:- "31. Th....
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....at each of the biscuits was of 24 carrat purity and was of foreign origin because of the markings and fineness, the evidence of PW2 would not be legal, hence, becomes inadmissible. The prosecution has not produced any other evidence in proof of the fact that each one of the biscuits in question is gold and of particular purity and fineness. So, it has to fail." (Emphasis supplied) 31. We have to say that in the case on hand, the certificate does not mention 999.9% as contended by department. It merely says 24 carat. It does not mention the method adopted to test the purity. Further, the certificate is not made part of RUD. The copy of certificate is not given to the respondent. Again, the request to cross-examine the assayer was denied. It is produced belatedly and there is no petition filed by learned AR stating reasons to accept the document at the appellate stage. On the totality of these facts, we have to hold that the certificate of the assayer produced by the learned AR cannot be accepted in evidence. 32. Apart from the certificate, the department relies on the statements given by the respondent on 23/24.1.2017. These statements have been retracted later by the respondent.....
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....s been smuggled. We have perused the statement of Shri Dhuria and find that the information about the gold being smuggle from Bangladesh is very general in natue. We find that nowhere Shri Dhuria has confessed that the impugned Gold is smuggled from Bangladesh. It is not open for the department to draw conclusions from a general statement to particularlse about the impugned goods. As admittedly, the gold having no foreign markings, the onus would be on department to prove the smuggled nature of the same. The onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, it cannot be conclusively relied upon. 16. The expert valuer has not subjected the gold to any analysis as to find out the purity of the Gold, which is also one of the determining factors. It is not clear as to how he has reported the purity of the gold without testing. The original authority comes to the conclusion that the impugned gold is of foreign origin by alluding to a website which said that purity can be 995 onwards. Valuer is expected to arrive at the p....
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....h Vs. Commissioner - 2011 (268) ELT A109 (SC) to argue that not allowing cross-examination will not be violation of principles of natural justice. These cases are distinguishable on facts. When the evidence relied by the department to prove that the gold is of foreign origin is the certificate issued by assayer, the rejection of request to cross-examine him without giving cogent reasons vitiates the proceedings. 38. The evidence put forward by the department to allege that the gold is smuggled from Sri Lanka is too flimsy to be accepted. The Commissioner (Appeals) in para 34 has held as under:- "34. In view of the above findings, it is held that the essential things for confiscation namely proof of the gold having been smuggled into India was not proved. The investigation has assumed that the impugned gold was smuggled from Sri Lanka and no corroborative evidence was produced by the DRI. More so, it was certified by the Court that the gold bars do not have foreign markings. AA has proceeded on wrong premises that the impugned crude Gold bars are of foreign origin. There was no positive evidence except the statement of the appellant. The retracted statement has not been corrobora....