AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 940
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....aid gold bars/pieces were seized by the DRI officers on the reasonable belief that they were smuggled into India from Bangladesh without any legal documents. 2. Samples of the gold bars/pieces were drawn and sent to CRCL, Kolkata for testing. The test report received from CRCL on 27.01.2020 revealed the purity of the gold as under:- Sl. No. Name of Sample Lab No. & Date Purity 1 SAMPLE-1 3605/SZD (G)-467 dtd15.01.2020 99.6% 2 SAMPLE-2 3606/SZD (G)-468 dtd15.01.2020 99.5% 3 SAMPLE-3 3607/SZD (G)-469 dtd.15.01.2020 99.6% 4 SAMPLE-4 3608/SZD (G)-470 dtd.15.01.2020 99.8% 5 SAMPLE-5 3609/SZD (G)-471 dtd.15.01.2020 99.5% 3. Statements were recorded from Shri Rajesh Kumar Yadav and Shri Umanath on 10.01.2020 wherein they stated that they have been working in a jewellery shop at Jaunpur, U.P. namely M/s. Gandhi & Sons whose proprietor is Shri Manoj Kr. Seth. The Mobile Numbers of Shri Rajesh Kumar Yadav are 9919553261 and 9369919332. They stated that they have received the gold from one Shri Dilip Singh, staff of Shri Anuragji of Kolkata and the gold pieces were carried by them for being handed over to Shri Manoj....
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.... grams and valued Rs.1,67,98,278/- (One Crore Sixty-Seven Lakh Ninety-Eight Thousand Two Hundred Seventy-Eight) only, recovered from possession of Shri Rajesh Kumar Yadav, Noticee No.1 and Shri Umanath, Noticee No.2 at Gaya Railway Station and seized on 10.01.2020, under Clauses (b), (d) and (p) of the Customs Act, 1962; (b) Seized pieces of newspaper, rubber, cloth belt [Kamarbandh' and Gamchha used for concealing the smuggled consignment of gold mentioned under preceding Clause, under Section 119 of the Customs Act, 1962; 2. I impose a penalty of Rs.10,00,000/- (Rupees Ten Lakh) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Rajesh Kumar Yadav, Noticee No.1; 3. I impose a penalty of Rs.10,00,000/- (Rupees Ten Lakh) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Umanath, Noticee No.2; 4. I impose a penalty of Rs.50,00,000/- (Rupees Fifty Lakh) only under Section 112(a) and 112(b) of the Customs Act, 1962 on Shri Manoj Kumar Seth, Noticee No.3; 5. I impose a penalty of Rs.50,00,000/- (Rupees Fifty Lakh) only under section 114AA of the Customs Act, 1962 on Shri Manoj Kumar Seth, Noticee No.3; ....
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....f the Customs Act,1962 are not sustainable as they have no role in the alleged seizure of the smuggled gold at Gaya Railway station. 10. The Appellants relied upon the following case laws :- Hon'ble Bombay High Court in the case of State of Maharashtra v. Prithviraj Pokhraj Jain reported in 2000 (126) ELT 180 (Bom.) CESTAT, Kolkata in the case of Nitya Gopal Biswas v. Commr. Of Customs (Prev.), Kolkata reported in 2016 (344) ELT 209 (Tri.- Kolkata) CESTAT, Kolkata in the case of Nand Kishore Sumani v. Comm. Of Cus., C.EX. & ST, Siliguri, reported in 2016 (333) ELT 448 (Tri.-Kolkata) Hon'ble Calcutta High Court in the case of Comm. Of Cus., Ex. & ST., Siliguri, reported in 2016 (337) ELT 10 (Cal.) CESTAT, Kolkata in the case of Madhukar Sonaba Bhagat v. Commr. Of Customs (Prev.), West Bengal, reported in 2019 (368) ELT 990 (Tri.-Kolkata). CESTAT, Kolkata in the case of Ram Naresh Chaurasiya v. Comm. Of Customs (Prev.), Patna, reported in 2019 (365) ELT 940 (Tri.- Kolkata) CESTAT, Kolkata in the case of Commr. Of Customs (Preventive), Kolkata v. Ashok Kumar Agarwal, reported in 2017 (348) ELT 555 (Tri.-Kolkata) ....
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....d seized is of Indian origin. 16. The Appellants have relied upon the decision of the Hon'ble Supreme Court in the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628, which has explained the meaning of the word 'reason to believe' as under:- "reason to believe" by opining it to be not the subjective satisfaction of the officer concerned, for "such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with their strains imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief cannot be investigated. In view of the above, the Appellants stated that to form a 'reasonable belief' that the goods are smuggled from Bangladesh, there must be irrefutable evidence to prove that allegation. In the present case there is no such evidence available to prove that the goods were of for....
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.... power of seizure that the statute confers on the officer. (See Collector of Customs v. Sampathu Chetty, AIR 1962 S.C. 316). The preliminary requirement of Section 110 is that the officer seizing should entertain a reasonable belief that the goods seized were smuggled. 55. Reasonable belief as required by Section 110 refers to the point of time when the goods in question are seized and not to a stage subsequent to the act of seizure. (M.G. Abrol v. Amichand, AIR 1961 Bom. 227). The condition precedent that there was such a reasonable belief anterior to the seizure must exist before the presumption under Section 123 can be invoked." 19.2 Smuggled goods - Reasonable belief cannot be based on presumption. "58. The second reason for entertaining a reasonable belief is that the seized goods were not accounted for by the petitioner on 15-2-1967 when the officer seized the goods from his possession. The seized goods consisted of 20 items of ornaments and diamonds. Out of these six items were released before the show cause notice was issued. One item was released at the adjudication stage. Six items were released by the Board on appeal. Only 7 items have been confiscated.....
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....uld be the basis of the reasonable belief that the goods were of foreign origin. There was nothing in the appearance of the goods to suggest that they had been newly manufactured and brought into this country very recently from another country. In a word there was nothing absolutely from which inferences about their origin or recent import could arise. It was not a case where large quantity of gold with foreign markings was found hidden in the trousers of the accused as happened in Hukma v. State of Rajasthan, AIR 1965 S.C. 476. 61. In fact there is a finding by the Board in favour of the petitioner supporting his contention that there could be no reasonable belief in the mind of the officer when he seized the goods. On the penalty of Rs. 25,000/- imposed on the petitioner the Board observed : "there is no definite evidence to show that the appellant knew or had reason to believe that those items were smuggled. In the absence of this evidence the penalty imposed is not justified. The Board accordingly remits the personal penalty in full". If the petitioner did not know that the goods were smuggled, how could the customs officer reasonably believe that the goods were smuggl....
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....smuggled one, on the person who claims ownership of the gold. For the sake of easy reference, the said section 123 is reproduced below: 22.1 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 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 the goods were seized; and (ii) if any person, other than the person form 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 of goods which the Central Government may be notification in the Official Gazette specify 22.2 We find that Section 123 applies inter-alia to gold/silver bullion seized on the reasonable belief that they are smuggled goods . The burden of proving that they are not smu....
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.... question is not smuggled one. In that circumstances, the Revenue has rightly absolute confiscated the Gold in question. 5. Heard the parties. 6. Considering the submissions made by both the sides, we find that the appellants have failed to prove the source of procurement of gold, therefore, we hold that gold is smuggled one but on the same time, Revenue is also failed to prove that gold is of third country origin and smuggled through Nepal. In fact, the Revenue has not adduced any evidence to that effect, whereas on the other side, Shri Sanjeeb Kumar, himself has categorically stated that he is not dealing with the purchase and sale of the gold. Therefore, the Revenue has failed to prove that the gold in question is of third country origin and have been imported/smuggled through Nepal. In that circumstances, the gold in question cannot be held as restricted goods and they can be released on payment of redemption fine and penalty as the goods are smuggled in nature. We also gone through the case law relied upon by the Learned Counsel for the appellants in the case of Prithviraj Pokhraj Jain (supra) wherein in Para 19 which is extracted below wherein the Hon'ble Hi....
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....old in question but also the statements made during the investigation which formed the basis of the reasonable belief of the officers. In the present case, none of the statements recorded by the Department admit to or even suggest that the gold was smuggled gold. It has also not been brought out in the show cause notice that the purity of the seized gold is such that it could only have been of foreign origin. It is true that the conduct of the appellants was suspicious inasmuch as the gold pieces were being carried in newspapers and a letter was found written to one Shri Vijay in Trissur for requesting the gold to be handed over to the bearer of the letter. It is also confirmed by the DCM, Railways that the appellants had travelled from Trissur to Vijayawada by train. However, we note that Trissur is not even a port in itself. The gold was apparently collected from one Shri Vijay in Trissur. There were also several contradictions between different statements as recorded in para 16 of the show cause notice. All these would show that Shri Kanaka Ratnam (Appellant in Appeal No. 30496 of 2017) wrote a letter to Shri Vijay of Trissur to hand over gold to the bearer of the letter and bot....
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....oldsmiths to whom the said goods were sent for exchanging the same into gold jewellery. The investigation also alleged that at the time of interception of Mr.Rajesh Kuamr Yadav and Mr. Umanath, they were not carrying any papers/document related to purchase of the gold from M/s Chandan Enterprises. However,the Investigation failed to make any inquiry from M/s. Chandan Enterprises about the legal purchase of the gold. 22.7 We observe that the Appellants claimed that the gold bars/pieces were purchased from M/s Chandan Enterprises. Delhi. The investigation has not verified the documents submitted by them in support their claim of domestic purchase of the gold bars/pieces. They brushed aside the evidences submitted by the Appellants by citing some mismatch in the dates. One of the reasons cited for ignoring the invoice was that the invoices were not carried along with them by the persons who carried the gold. Not having the invoices at the time of seizure cannot be areason to ignore their claim. The documents produced could have been verified to find out the veracity of their claim. On the contrary, the investigation could not provide any evidence to establish the smuggled nature of....
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....Section 108 of the Customs Act can be basis of conviction of other coaccused. The Ld. Trial Court has rightly held that statement of co - accused under Section 108 of the act against the co-accused with a weak type of evidence and conviction of co-accused cannot be based on the uncorroborated statement of co-accused. iv) Anisur Rahaman Vs. Commissioner of Customs (Prev.) West Bengal 2003 (160) ELT 816 (Tri-Kolkata). Non-appearance before DRI Officer in response to summons is not a ground for holding that the appellant is guilty-The entire case is based upon the statement of the Driver which is in the nature of uncorroborated statement of a co-accused and cannot be made the sole-basis for penalizing the appellant. v) Jahed Mondal Vs. Commissioner of Customs (Prev.), West Bengal- 2002 (149) ELT 319 (Tri.-Kol.) Para 8 & 11.). Penalty has been imposed upon Shri Jahed Mondal based upon the statement of Bablu Biswas who was intercepted by the Customs Officer from whose possession one gold biscuit has been recovered. Penalty cannot be imposed on the basis of confession of co-accused unless corroborated by other evidences. Non-appearance in response to S....
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....r, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D (1) mandates that the evidence of the witness has to be recorded before the Adjudicating Authority, as in such an atmosphere, there would be no occasion for any trepidation on the part of the witness concerned." 27. The Appellants submits that the Adjudicating Authority, therefore, should follow the procedure to rely on the statement as relevant for proving the truth of the contents of the statement, to admit the statement in evidence. In this case, the said mandate has not been followed and hence the statement of the co-accused in this case cannot be said to be voluntary and his statement also cannot be said to be true and correct and shall not be taken as evidence. 28. The Appellants submits that after examination by the Adjudicating Authority the question of cross-examination would arise as has been held in Prakash Raghunath Autad....
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....d nature of the gold. It is a settled law that the statement of the coaccused cannot be relied without any independent corroboration. 31.1 In the case of Commissioner of Customs (Preventive), Lucknow vs Shakil Ahmad Khan, it has been held that confiscation based on retracted statements not sustainable. The gist of the Order is reproduced below: Smuggling - Burden of proof - Retracted confessional statements of co-accused - No efforts made to prove that confessional statements were voluntary - Accused were not examined during adjudication - HELD : Confiscation and penalty order based only on retracted statements of accused persons were not sustainable - It was contrary to settled legal position, illegal, arbitrary and liable to be set aside - Sections 108, 111, 112 and 123 of Customs Act, 1962. [paras 22, 25, 26] Evidence - Confessional statement of co-accused - It is not substantive evidence against another co-accused - It can at best be used for assurance to Court - In absence of any substantive evidence, it was inappropriate to base conviction of accused on statements of co-accused - Section 108 of Customs Act, 1962. [para 25] 31.2 The Tribunal in the case....
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....xceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher : Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;] [(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of ....