TaxTMI 
TaxTMI 
2024 (4) TMI 43
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....nical). 2. When the Appeal was taken up for Hearing, the Ld. Counsel appearing on behalf of the Appellants submits that there are two statements recorded initially by the Appellant Nos. 1 to 4, who have subsequently retracted during the third recorded statement. The Department has proceeded with their subsequent investigation based on the facts coming out of the third recorded statement. The third statement was recorded on 15 & 16 February 2016. In this statement they have stated that one Mr. Rinku Verma is the owner of the gold. Subsequently, Mr. Rinku Verma [Appellant No. 5 herein] has produced documentary evidence to the effect that the gold in question was procured by him from Snehal Gems Pvt Ltd Mumbai. Towards this, he has submitted the invoices raised by the seller. The details of the payment made through banking channel and copy of the ledger account maintained by the seller were submitted. Investigation was carried out at the end of Snehal Gems Pvt Ltd., and their Director Mr Pradeep Kumar Bothra [Appellant No. 6 herein] has recorded his statement, wherein he has confirmed that they have sold the gold in question to Mr Rinku Verma under these invoices. They have also pr....
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....Appellant No. 5. He takes me through the various findings given by the Hon'ble Member (Technical), wherein he has gone into each and every point in a detailed manner and has given findings to come to a conclusion as to why the appellants have not been able to discharge the burden to rebut the allegations. Therefore, he submits that Member (Technical) has correctly affirmed the Order-in-Original. Accordingly, he prays that the Appeals may be dismissed. 6. Heard both sides in detail and perused the documents placed on record in the Appeal paper books and documents submitted by both the sides. 7. On going through the Appeal papers and other documents submitted by both the sides, the facts of the case emerging are as under : 7.1 The four appellants 1-4, namely Rajendra Kumar Dhuria, Saurabh, Golu Verma and Shubham Verma were intercepted by the authorities at Howrah railway station. They were found to be in possession of 6 pieces of 1 kg. gold bar each. The said gold was foreign marked of Swiss origin with 995.0 purity. The gold bars carried the markings "PMAPSUISSE PMAP ESSAYEUR FONDEUR". In the entire proceedings, the foreign origin of the gold is not disputed by any party. ....
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.... not appear before the authorities 08.01.2016 Pradeep Kumar Bothra, Director of Snehal Gems Pvt. Ltd, appears before the authorities for the first time. He submits that he has sold the 6 kg. gold to Rinku Verma against the 4 bills tendered by him. He states that in the course of their gold trade, they have bought the gold from other Vendors. On a question as to whether the gold seized is the same which has been sold by him, he states that he can only confirm that the Rinku Verma regularly buys the gold and cannot comment as to whether the seized gold is the same or not. 15.2.2016 & 16.02.2016 The appellants 1 to 4 vide their letter dated 15/2 & 16/2/2016 retract their earlier statements and submit that that earlier statements tendered on 19.05.2015 and 28.07.2015 were were given under duress and were not correct 7.3 To summarize the above events : (a) The Appellants 1 to 4 on 19.5.2015 and 28.7.2015, uniformly state that the gold in question was procured for Rinku Verma [Appellant Number 5] from Shashi Kant Patil of Dhanlakshmi Bullion Pvt Ltd on cash payment. (b) The Appellants 1 to 4 vide their letter dated 12.10.2015, submit that the seized gold ....
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....ma is concerned. 7.7 While it is a case of complete Role Reversal, still what emerges is that under both the Roles, Rinku Verma is the claimant towards the ownership of the seized gold. Thus, it cannot be denied that in any view of the matter, Rinku Verma [Appellant Number 5], is the owner of the gold. 8. At this point, it would be important to go through the provisions of Section 123 of the Customs Act 1962. The relevant portions are extracted below : 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 from 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. 9. The above statutory provision at Section 123 (1) (a) (ii....
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....reference here] : (a) In his voluntary statement recorded under Section 108 of the Customs Act, 1962, Raghendra Kumar Dhuriya stated that he and Golu Verma each paid Rs. 41 lakhs totaling Rs. 82 lakhs to Shashikant Patil of M/s Dhanlaxmi Bullion Pvt. Ltd., 43, Nalini Seth Road, 1st Floor, Kolkata-700007 and took the delivery of 3 kg gold from him and after taking delivery they first went to Room No. 306, 67/43, Strand Road, Cross Road No. 08, 2nd Floor, Kolkata where they had stayed. After reaching there, they both found that Subham Verma and Sourabh Kumar were already there with 3 Kg gold. In the afternoon, they all four left with 6 Kg gold to Howrah Station to board the train towards Allahabad to hand over the gold to Rinku Verma (b) In his voluntary statement recorded under Section 108 of the Customs Act, 1962, Sourabh stated that he and Shubham Verma paid Rs. 35 Lakhs and Rs. 48 Lakhs respectively to Shashikant Patil of M/s Dhanlaxmi Bullion Pvt. Ltd., 43, Nalini Seth Road, 1st Floor, Kolkata-700007 and took delivery of 3 kg gold from him and after taking delivery they first went to Room No. 306, 67/43, Strand Road, Cross Road No. 08, 2nd Floor, Kolkata where ....
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.... his shop at 90/A/107, Mahajani Tola, Allahabad. He further stated that he knows Raghendra Kumar Dhuriya, Sourabh, Shubham Verma and Golu Verma and all they used to work for him. He also stated that he had been doing the business for last one year with Shashikant Patil of M/s Dhanlaxmi Bullion Pvt. Ltd., 43, Nalini Seth Road, 1st Floor, Room No. 101, Sonapatty, Kolkata but could not provide any sale-purchase document or any transactional evidence. He also stated that he does the business of sale and purchase of gold and jewellery with Meera Jewellers of Delhi, Snehal Gems Pvt. Ltd. of Mumbai and Shashikant Patil and Pradeep Gupta of Kolkata. He claimed that 6 kg gold recovered from the possession of Rajendra Kumar Dhuriya (2 kg gold of foreign origin), Shubham Verma (02 kg gold of foreign origin), Sourabh (01 kg gold of foreign origin) and Golu Verma (01 kg gold of foreign origin) was purchased by him from Snehal Gems Pvt. Ltd, Bidg. No. 6/127, Mittal Industrial Estate Andheri, Kuria Road, Andheri East, Mumbai-400059 vide:- (i) Bill No. GOLD/MAY/1/2015-16 dated 02/05/2015 (1 kg gold), (ii) Bill No. GOLD/MAY/2/2015-16 dated 05/05/2015 (2 kg gold), (iii) Bi....
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....y letters were received from the four accused persons i.e. Raghendra Kumar Dhuriya, Sourabh, Subham Verma and Golu Verma wherein all of them mentioned that the gold seized from their possession was given to them by Rinku Verma of Allahabad for the purpose of getting gold jewellery in exchange of the same from Kolkata, Sonapatty and their statements recorded on 19/05/2015 was not proper, correct or voluntary, hence to verify the genuiness of the claim made by Rinku Verma and to complete the investigation, another summons were served to them for recording before the Superintendent of Customs, P & I Branch, CC(P), W.B., Kolkata. Raghendra Kumar Dhuriya & Sourabh tendered their voluntary statement on 15/02/2016 and Subham Verma & Golu Verma tendered their voluntary statement on 16/02/2016 before the Superintendent of Customs wherein they inter alia stated that they have never heard the name of person namely Pradeep Kumar Bothra and any firm namely M/s. Snehal Gems Pvt. Ltd. When they were asked that why they had mentioned in their letter that their statement recorded on 19/05/2015 and 28/07/2015 that they had procured the seized gold from one Shashikant Patil of Sonapatty, Kolkata, the....
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....ession the goods so seized were recovered. This section applies to gold and articles of gold. The main accused in this case, Shri Raghendra Kumar Dhuriya, Shri Sourabh, Shri Subham Verma, Shri Golu Verma and claimant of the seized gold Shri Rinku Verma have not been able to discharge the burden of proof under Section 123 of the Customs Act, 1962. (k) Therefore, (1) Shri Raghendra Kumar Dhuriya, (2) Shri Sourabh, (2) Shri Subham Verma, (4) Shri Golu Verma, (5) Shri Rinku Verma and (6) Shri Pradeep Kumar Bothra are required to show cause before the Commissioner of Customs (Preventive), W.B. Kolkata, having office at Customs House, (3rd Floor), 15/1, Strand Road, Kolkata-700001 within 30 (thirty) days from the date of receipt of this notice 14. The Adjudication process requires the Noticee to make his submissions along with supporting documents in defence of his case. In the present case, it would also be relevant to go through the submissions made by Rinku Verma [Appellant No. 5 - claimant of ownership]. The relevant portions are extracted below : 2. The goods seized in the instant case were lawfully purchased by him and he has also submitted the copies of such l....
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....e duly enclosed as relied upon documents under covering letter dated 18.05.2017 duly issued by the Ld. Superintendent of Customs (Preventive), Adjudication Branch, CC(P), WB, Kolkata in favour of my above named client. As such, the fact of purchase of gold by Shri Rinku Verma and sale of the same by M/s. SGPL in his favour were corroborated during the course of investigation by way of adequate, proper and legal documents before the investigating authority. The seller of the gold had also acknowledged & corroborated such fact and produced documents to substantiate his source of gold and stock as on date of sale in favour of the present noticee no. 5. (iii) That in the present Show Cause Notice, nowhere such documents produced by the present noticee as well as M/s. SGPL have been alleged or established on evidence as false, incorrect or forged in nature. (iv) That surprisingly, at para 27 of the Show Cause Notice it is alleged that the present noticee in connivance with the Director of M/s. SGPL had tried to legalize his unauthorized and illegal transaction by submitting 'non-relevance' documents. However, how the documents produced by the present noticee and/or M/s....
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....GOLD/MAY/2/2015-16 dated 05/05/2015 (2 Kg gold), (iii) Bill No. GOLD/MAY/3/2015-16 dated 09/05/2015 (2 Kg gold) and (iv) Bill No. GOLD/MAY/4/2015-16 dated 12/05/2015 (1 Kg gold) I find that all the above mentioned bills are not supported by any import documents. Besides, Rinku Verma did not submit any payment related documents. Rinku Verma stated that all the required documents may be sought for from Snehal Gems Pvt. Ltd. 5. xxxxxxxxxxx I find that the aforesaid 06 (Six) pieces of gold bars of foreign origin were seized under Section 110 of the Customs Act, 1962 on the reasonable belief that they were smuggled into India through unauthorized route and are liable for confiscation under Section 11(b) and Section 111(d) of the Customs Act, 1962. In terms of section 123 of the Customs Act, 1962, the onus in the subject case for proving that the seized 06(six) pieces of gold bars of foreign origin, totally weighing 6.00 kgs valued at Rs. 1,68,58,500/- are not smuggled gold shall be on Shri Raghendra Kumar Dhuriya, Shri Sourabh, Shir Subham Verma, Shri Golu Verma from whose possession the aforesaid 06 (six) pieces of gold bars were seized and the claimant of the seized ....
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....tion. It is also evident that on the direction of Rinku Verma, all the aforesaid four apprehended persons have tendered false and fabricated statements to support illegal dealings of Rinku Verma in smuggled gold and to avoid the legal consequences of their involvement in the clandestine activity of smuggling of gold. I find the letters received from the four apprehended persons i.e. Raghendra Kumar Dhuriya, Sourabh, Subham Verma and Golu Verma at the final stage of investigation as detailed above is a desperate attempt by Rinku Verma to avoid the legal consequences of being involved in gold smuggling activities and is also a futile attempt to claim that the seized smuggled gold was legally sourced. I find that to substantiate the claim made by the Rinku Verma that the 06 (six) kgs. Of gold had allegedly been purchased by him from Snehal Gems Pvt. Ltd., the 04 (four) apprehended persons have totally contradicted their earlier statements dated 19.5.2015 and 28.7.2015 wherein they had indisputably admitted that they had obtained the gold from the shop of Shashikant Patil and had claimed on 15.2.2016 and 16.2.2016 that the gold seized from their possession was given to them by Rinku Ve....
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....sciously and deliberately involved himself in the gold smuggling activities of Rinku Verma and has harboured the smuggling activities of Rinku Verma and is thus liable to be penalized under Section 114AA of Customs Act, 1962. 8. I find it evident from statements of the 04 (four) apprehended persons i.e. Raghendra Kumar Dhuriya, Sourabh, Subham Verma and Golu Verma that Rinku Verma is the main person involved in the gold smuggling activities and the seized smuggled gold was also claimed by him (Rinku Verma) on the basis of unsubstantiated gold purchase documents. I find Rinku Verma has knowingly, willingly and voluntarily involved himself in the nefarious activity of smuggling of gold. I find all efforts were made by Rinku Verma in a futile attempt to prove that the smuggled gold was legally obtained. The gold purchase documents furnished by him were not corroborated by him or by Pradeep Kumar Bothra who claimed without any supporting documents to have sold the gold to Rinku Verma. I find Rinku Verma has actively, consciously and deliberately involved himself in the gold smuggling activities and has claimed the seized gold on the basis of purported uncorroborated gold purch....
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....t recorded by him on 16.10.2015, is not known. (ii) Except for the small notings about 'connivance' and 'trying to harbor the smuggling activity of Rinku Verma', there is no detailing about the role played by Pradeep Kumar Bothra, so as to bring him in as a co-noticee. Unless it is proved by way of proper evidence that the Invoice details given by him towards his own purchases, his Invoices raised on Rinku Verma and the Banking transactions are fabricated and sham, he cannot be made a co-noticee on mere assumptions. However, he has been made a co-noticee with no in-depth investigation. (iii) After taking a clear view that Rinku Verma is the mastermind and Appellant No. 1 to 4 acting on his behest, still the Appellant 1 to 4 have been treated as the main accused [usage of this word itself is not correct since this is not a prosecution proceeding]. (iv) Section 123 very clearly states that the burden of proof lies with the person claiming the ownership. The Appellant No. 1 to 4 have been claiming that they have bought the gold for Rinku Verma. Subsequently he has claimed the ownership stating that he has bought from Snehal Gems Pvt Ltd. Therefore, the issue....
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....e no. 5 and/or 6, are false, incorrect or forged in nature. In absence of such allegation that the documents are false, forged and/or afterthought & fabricated in nature, the investigating authorities cannot allege 'non-relevance' documents. 23. From the relevant portion of the Order in Original extracted above, it is seen that the Adjudicating authority has more or less reiterated the allegations in the Show Cause Notice and has made no attempt to address the issues raised by the Noticee. Principles of natural justice requires him to address all the issues and give a proper finding as to why the submissions are not acceptable for the conclusions arrived at by him, which has not been done in this case. 24. In his reply to SCN, Noticee No. 5 submitted that Noticee 6 had duly produced his purchase documents along with stock, sale, purchase registers as well as Ledger Account maintained with respect to sale in favour of Shri Rinku Verma. Such documents are duly enclosed as relied upon documents under covering letter dated 18.05.2017 issued by the Ld. Superintendent of Customs (Preventive), Adjudication Branch, CC(P), WB. However, the Adjudicating authority at Para 7 holds "I fin....
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....the gold on cash basis to Rinku Verma. He issues a simple denial on 16.10.2015 and subsequently, this lead is given a quiet burial. It is not known as to what stopped the Revenue from pursuing this lead to drive home the point that Shashi Kant Patil had a role to play in the present case and the gold in question was indeed procured from this source. This is a very serious lapse in the entire investigation process. 28. The chronological events clearly prove that the transactions in question has lead to many queries for which proper answer was required to be found by the Revenue. The delays caused due to non-appearance for the Summons issued, non-production of the Invoices even when the Appellants 1 to 4 were jailed, producing of the Invoices after many months, retraction of statement by the Appellants 1 to 4 after many months etc, gives enough cause to raise many queries. But these are the cues to be taken for an in-depth and exhaustive investigation to arrive at a clear conclusion about the role played by each of the noticee while issuing the Show Cause Notice. Once this exercise is done, it is for the Noticees to make their submissions and after this, it is for the Adjudicating....
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....ast upon the respondent under Section 123 of the Act, that they were not smuggled goods, is not discharged. This we note from the questions framed is only in view of the absence of legal evidence, such as maintenance of books of account, registration with the Sales Tax, Income-tax, etc., to show legal purchase of the gold. (ii) We are of the view that in the absence of evidence in the form of regular books of account, registration under the income-tax and Sales Tax, etc., cannot ispo facto lead to the conclusion that the seized gold bars, are smuggled gold bars. These may lead to proceedings for breaches of other Acts but it does not follow from it that the gold bars are smuggled goods. In fact, if a person in possession of the stolen gold is able to establish that it had come into India after a proper declaration and compliance of the Act, no confiscation under the Act, can arise. Proceedings under the Indian Penal Code may be initiated by the police for theft, but it would not by reason of theft become smuggled goods. Moreover, smuggling as defined under Section 2(39) of the Act, is an act or omission which will render goods liable to confiscation under Section 111 of th....
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....n fact, the person running two firms viz; - Mr. Bhupendra Thakkar has himself admitted in his statements to the Office of DRI that the seized gold has been sold by him to respondent No. 1. In fact, on 9th March, 2000, employee of Mr. Bhupendra Thakkar i.e. Mr. Devang Patel, in his statements had shown copies of the invoices to the Officers of DRI, evidencing sale of gold by [M/s. Paras Bullion and M/s. Pavan Jewellers] to respondent No. 1. Besides, the bills showing the acquisition of gold from [M/s. Paras Bullion and M/s. Pavan Jewellers] were also produced with the bail application on 10th March, 2000 filed by respondent No. 1; (x) Further, Mr. Bhupendra Thakkar, in his statement has also explained the source of the gold in possession of [M/s. Paras Bullion and M/s. Pavan Jewellers] namely-purchase from companies and firms who in turn had purchased the same from the Banks. The purchase and sale of gold by [M/s. Paras Bullion and M/s. Pavan Jewellers] were reflected in their separate books of account which were also produced before Officers of DRI. Nothing adverse is shown to us which would justify ignoring the same; (xi) It is noteworthy that the Officers of DRI....
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....nce, non-acceptance of the same or casting doubts on the same on this ground alone is erroneous, without in-dept verification of the evidence produced. In the present case, the belated made claim of Rinku Verma has not been considered adversely, since Revenue itself has carried out further investigations at Snehal Gems, and no conclusive evidence has been brought in by the Revenue to the effect that these documents are sham / forged / non-existent. The Dept has also abandoned the early lead / angle about the cash purchase from Shashi Kant Patil. Hence, I find that the ratio of the Bombay High Court discussed above would be squarely be applicable in the present Appeals. 33. Out of my detailed observations on the investigation and Show Cause Notice, some observations are also echoed from the Interim Order No. 1 to 6/2023 dated 29.08.2023, passed by this Bench. The Hon'ble Member (Technical) has found some glaring lapses in the Show Causes Notice, which he has elaborated at Para 58 of the Order. For the sake of brevity, I am refraining from reproducing the same, but confining myself to some of the points getting highlighted therein : • The investigations undertaken by ....
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....long with Appellant No. 5. In fact the only person who would be required to discharge the burden of proof would be Appellant No. 5. Framing of charges on Appellant No. 1 to 4 on this count is erroneous. The ownership claimant Rinku Verma [Appellant No. 5] has produced 4 Invoices towards purchase from Snehal Gems Pvt Ltd. The transaction details by way of ledger and bank have been produced by him. Taking this lead, the Revenue has caused investigation at the end of Snehal Gems, who have confirmed the transactions in respect of 4 Invoices and also produced their purchase invoices and many other records which are part of the relied upon documents in the Show Cause Notice. No proper conclusion has been arrived at by Revenue to disprove the claims of Rinku Verma and Snehal Gems Pvt Ltd. The issues raised in the reply to Show Cause Notice have not been properly addressed. While certain discrepancies might have been observed when the documents were examined by the Bench, but on their own, it cannot be conclusively concluded that the documents were fabricated / forged in the absence of any specifics coming in, in the Show Cause Notice. (b) The Revenue had an original lead about th....