TaxTMI 
TaxTMI 
2024 (1) TMI 467
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....so filed separate appeal challenging non-imposition of penalty under Section 114AA of the Act against the appellant, Suresh Bhonsle. 2. The facts of the case are that acting on a specific information that three persons would engage themselves in handing and taking over smuggled gold in Delhi, the officers of Directorate of Revenue Intelligence, (DRI), apprehended three persons, namely, Shri Amzad Khan, Shri Imran Mullick and Mohammed Wajid in presence of independent witnesses on 14.05.2016 at around, 09:40 hours. Pursuant to notice under Section 102 of the Customs Act, they were apprised of the right to be searched either in the presence of a Magistrate or a Gazetted Officer, they were searched as per their reply given in writing in the presence of a gazetted officer at the DRI office. On the personal search of Shri Amzad Khan and Imran Mullick apart from other things, three pieces of heavy yellow colour metal bars wrapped in carbon paper and Newspaper and fastened on their waist under the shirt were recovered. The recovered yellow colour metal bars were got examined and valued from Shri Vikram Bhasin, Jewellery Appraiser, Customs, (IGIA) in presence of independent witnesses and....
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....ver, she denied having signed any Challans (copies of challans recovered from Amjad Khan and Imran Mullick) as she did not look after the business at all. As per the statement of Shri Shyamal Roy, Accountant of M/s. Bullion Traders, there was no transaction after March 2016 and there was no stock apart from what was shown in the stock register. 6. Shri Suresh Bhonsle in his statement recorded under Section 108 of the Act on 17.05.2016 stated that they were in the business of trading of gold and silver, and he was a partner along with his brother and mother in the firm M/s.Bullion Traders. He denied that he knows Shri Amzad Khan and Shri Imran Mullick. On 15.07.2016 when the statement of Shri Suresh Bhosale was recorded he admitted that he used to receive gold from one Shri Mohan of Kathmandu, Nepal through one Shri Ramesh in melted condition to suppress the foreign originality. He also admitted the transaction of gold being delivered by Shri Amzad Khan and Shri Imran Malik at Delhi and also that he took signatures of his mother on blank pages of Challan book to use the same to cover the transportation of smuggled goods. He categorically admitted that he did not make any entry in....
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....der Section 114AA, no penalty has been imposed by the Adjudicating Authority on Shri Suresh Bhonsle. 10. We have heard the Shri R. K. Rawal, Consultant for the appellant and also Shri Rakesh Kumar, Authorised Representative for the Revenue and perused the records of the case. 11. The first submission on behalf of the appellant is that the gold seized is not of foreign origin. He has seriously challenged the report of the jewellery appraiser and sought for retesting of the gold to ascertain the purity, but the same has not been allowed. He also submitted that gold was entrusted to Shri Amzad Khan and Imran Mullick for delivery to Delhi under proper challan, therefore, the burden of proof shifts on to the department and relied on the decision in Ashok Kumar Aggarwal - 2016 (342) ELT 232 (Cal.). Further, there is no evidence of the smuggled nature of the gold. For imposing penalty under Section 112(b) of the Act, the department was required to produce cogent evidence. No CDR has been furnished to show any conversation with Shri Mohan of Nepal. Referring to the decision of the Apex Court in Mohtesham Mohd. Ismal vs Special Director Enforcement, Directorate, 2007(220) ELT 2, he su....
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.... of Suresh Bhonsle to Mohd. Wajid, Imran Mullick, Amjad Khan and Mohd. Abid showing regular incoming and outgoing calls to each other during the relevant period as noted extensively in the impugned order. The frequent phone calls between all of them clearly establish their connivance in dealing with the sale purchase of gold procured in an illegal manner which amounts to smuggling. No document has been produced to show legal procurement of gold. These facts are sufficient to draw the conclusion that all these persons are involved in illicit trade of gold on regular basis. 15. The contention of the appellant that gold is not of foreign origin is not sustainable in view of his own statement dated 15.07.2016 where he specifically admitted that he used to get gold from one Mohan of Kathmandu, Nepal through one Rajesh. Gold of foreign origin was received in melted form to hide its identity and suppress that it is of foreign origin. It is a settled principle of law that the statement recorded under section 108 of the Act is binding on the appellant (Romesh Chandra Mehta vs. State of West Bengal, 1969 (2) SCR 461, Percy Rustam Ji Basta vs. State of Maharashtra, 1971 (1) SCC 847, Assist....
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....tatutory provisions whereby gold has been put in restricted category by DGFT and in terms of the RBI Circular only nominated agencies and banks are entitled to import the foreign marked gold bars. 17. Having arrived at the finding that the gold seized was smuggled gold, it would fall under the category of 'prohibited goods' as defined in Section 2(33) of the Act and therefore liable for confiscation under the provisions of section 111 of the Act. We have recently observed in the case of Shankar Lal Goyal vs. Commissioner of Customs Final Order No.51685/2023 dated 22.12.2023 relating to seizure of gold : "10. The definition of 'prohibited goods' have been the subject matter of interpretation in various decisions. In the case of Sheikh Mohammed Omar Vs Collector of Customs, Calcutta & Ors. - 1970(2) SCC 728, the contention raised by the appellant therein that the expression 'prohibition' used in Section 111(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by clause (3) of the Import (Control) Order, 1955 was negatived by the Supreme Court, holding that the word 'any prohibition' in section 111(d) ....
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....for the time being in force, then import of gold, in contravention of the above, is prohibited. For prohibitions and restrictions, Customs Act, 1962, provides for machinery, by means of search, seizure, confiscation and penalties. Act also provides for detection, prevention and punishment for evasion of duty. 87. The expression, "subject to prohibition in the Act and any other law for the time being in force." in Section 2(33) of the Customs Act, has wide cannotation and meaning, and it should be interpreted, in the context of the scheme of the Act, and not to be confined to a narrow meaning that gold is not an enumerated prohibited goods to be imported into the country. If such narrow construction and meaning have to be given, then the object of the Customs Act, 1962, would be defeated." 13. We would now consider the latest decision by the jurisdictional High Court in the case of Nidhi Kapoor - dated 21.08.2023 reported in 2023 (8) TMI 1008, where both the learned Judges have passed separate detailed judgment considering the various notifications issued by the DGFT and also the Circulars issued by RBI, specifically considering the following issues: "I. I....
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....nsidering the facts and circumstances of each case before it, but also in a transparent, fair and judicious manner under Section 125 of the Act." In his separate judgement concurring with the aforesaid view, Justice Yashwant Varma observed as under:- "145. In summation, we note that Section 2(33) of the Act while defining prohibited goods firstly brings within its dragnet all goods in respect of which a prohibitory notification or order may have been Signature Not Verified Digitally Signed By: NEHA Signing Date:21.08.2023 17:00:50 issued. That order could be one promulgated either under Section 11 of the Act, Section 3(2) of the FTDR or any other law for the time being in force. However, a reading of the latter part of Section 2(33) clearly leads us to conclude that goods which have been imported in violation of a condition for import would also fall within its ambit. If Section 2(33) were envisaged to extend only to goods the import of which were explicitly proscribed alone, there would have been no occasion for the authors of the statute to have spoken of goods imported in compliance with import conditions falling outside the scope of " prohibited goods". ....
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....icted goods', but the decisions referred to above, have interpreted the expression 'prohibited goods' under Section 2(33) so as to include restricted goods. In terms of the definition of 'prohibited goods' in Section 2(33) even prohibited goods could be imported or exported, subject to compliance with the terms and conditions as prescribed but if import is not done lawfully as per the procedure prescribed under the Customs Act or any other law for the time being in force, in that event the said goods would fall under the definition of 'prohibited goods'. The necessary corollary is that goods being imported if not subjected to check up at the customs on their arrival and are cleared without payment of customs duty are treated as 'smuggled goods'. As observed by the Madras High Court in Malabar Diamond Gallery P Ltd. (supra) " The expression, subject to the prohibition under the Customs Act, 1962, or any other law for the time being in force, in Section 2(33) of the Customs Act, has to be read and understood, in the light of what is stated in the entirety of the Act and other laws. Production of legal and valid documents for import along with payment of duty, determined on the goods ....
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.... Tribunal in Deepak Handa vs. Principal Commissioner of Customs (Preventive) Customs Appeal No. 52922/2019 vide Final Order No. 51520- 51521/2021 dated 25.05.2021 where gold bars of foreign origin recovered without any licit documents were held liable for absolute confiscation with penalty. The relevant para reads as under : "29. Under Section 111(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force can be confiscated. Gold is a prohibited good inasmuch as its import was permitted during the relevant period only by designated agencies under the Foreign Trade (Development & Regulation) Act, 1992. There is no evidence on record whatsoever to show that the seized gold was imported by one of the approved agencies. Thus, the gold is liable for confiscation under Section 111(d). Thereafter if the designated authority, in turn, sold the gold to anyone and such person carried them, concealed in a secret jacket or false bottom of a suitcase or shoes, Section 111(i) would not apply. Ho....
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....ercised judiciously and for which all the relevant facts and factors and the implication of discretion has to be weighed to arrive at a balanced decision, the Supreme Court in the case of Union of India Vs. Raj Grow Impex LLP (supra) made observations to the following effect : "79. As noticed, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has to be guided by law; has to be according to the rules of reason and justice; and has to be based on relevant considerations. The quest has to be to find what is proper. Moreover, an authority acting under the Customs Act, when exercising discretion conferred by Section 125 thereof, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The purpose behind leaving such discretion with the Adjudicating Authority in relation to prohibited goods is, obviously, to ensure that all the pros and cons shall be weighed before taking a final decision for release or absolute confiscation of goods." 19. We find that the Allahabad High Court in Jalil Ahmad vs. State vide order dated 22.12.1978 - 1979 Cri.L.J.514 rightly....
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.... the time of seizure. We also find that on the request made by the appellant, the Jewellery Appraiser, Shri Vikram Bhasin was called and cross examined by Sh. Deepak Choudhry, Advocate for the appellants. We find that on being asked about the margin of accuracy of purity, which could be drawn by using the touchstone method, Shri Bhasin replied that in that particular case, the margin of accuracy was almost 100% as they were gold bars cut pieces. He further added that consistency level will remain almost the same as gravity of the gold bar remains the same. It is also pertinent to note that on being asked as to whether the method of analysis adopted by him is capable of ascertaining whether the gold bar is made up from melting jewellery or it is a virgin bar, Shri Bhasin replied in affirmative. All this would reveal that fair opportunity has been granted to the appellants and the plea of re-testing was nothing but delaying tactics as it would not really make any difference if the gold recovered was less pure. Purity of the gold, in the instant case is not really relevant in view of the peculiar circumstances, i.e., the voluntary statements of all the persons recorded under section 1....