TaxTMI 
TaxTMI 
2024 (4) TMI 382
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....anchanama dt.02.12.2020 & 03.12.2020 from the possession of Mr. V. Venkata Rama Krishna with imposition of penalty of Rs.50,000/- under section 112(a) & (b)(i); (III) against imposition of penalty of Rs.1,00,000/- under section 112(a) & (b) on Mr. R. Rajasekhar. 2. As the appeals arise from common SCN & OIO, these are taken up together. The brief facts are that Mr. R. Rajasekhar - appellant is the managing partner of M/s Lakshmi Narasimha Swamy Bullion Merchants. He is running a firm in the name and style of M/s Rayapudi Lakshmi Narasimha Rao Son, Jaggaiahpeta. The other two appellants viz., Mr. N. Pavan Kumar (NPK for short) and Mr. V. Venkata Rama Krishna (VVRK for short) are his employees. 3. The said two employees, while travelling by bus bearing number: AP 26 Z 0359, were intercepted by the officers of DRI on 02.12.2020 at about 19:20 hrs at RTC Bus Stand, Ongole. Upon enquiry by the officers, these two persons admitted that they are carrying gold, which they had purchased in Chennai on cash payment as per the instructions of their owner - Mr. R. Rajasekhar and further stated that they were not carrying any documents/purchase bills for the gold carried by them. The offic....
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....d obtain gold of around 1500 gms from Mr. Jawahar and Mr. Rajesh, who are staying in Shaokarpet, Chennai. Mr. R. Rajasekhar had given an amount of Rs.74,50,000/- for handing over the same to Mr. Jawahar and Mr. Rajesh. Mr. R. Rajasekhar had also given approximately 140 gms of 22 ct melted gold to Mr. VVRK and instructed him to hand over the same to Mr. Jawahar and collect 24 ct equivalent gold. On 01.12.2020 evening, they had started their journey and via Tirupati reached Chennai by 10:00 hrs on 02.12.2020. Thereafter, they proceeded to Shaokarpet, Chennai and proceeded to melting shop near Elephant Gate in Shaokarpet area where they met Mr. Jawahar and handed over cash of Rs.49,63,280/- and collected gold approximately 1000 gms. Mr. VVRK handed over 140 gms of 22 ct melted gold and in exchange collected 129 gms of 24 ct gold. Thereafter, they proceeded to nearby melting shop and met Mr. Rajesh and handed over cash of Rs.24,86,720/- and collected 500 gms of gold. Thereafter, during the return journey, they have been intercepted by the officers at Ongole Bus Stand. They also stated that the said gold collected/purchased by them at Chennai is according to their knowledge smuggled gol....
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....aggayapet, AP was searched on 09.12.2020 under Panchanama proceedings and no incriminating documents or things were recovered. On 21.12.2020, the statement of Mr. R. Rajasekhar was recorded, who inter alia stated as follows: 10.1. That he is the managing partner of M/s Lakshmi Narasimha Swamy Bullion Merchants, which was established 15 years back. His elder brother - Mr. R. Seetharam Kumar is the other partner. They are engaged in trading of gold and silver bullion. 10.2. That he is the proprietor of M/s Rayapudi Lakshmi Narasimha Rao Son, which was established about 4 years back and is engaged in retail sale of gold and silver jewellery. 10.3. That they purchased gold bullion from Sri Visakha Bullion Corporation, Vijayawada; CAPS Gold, Hyderabad/Vijayawada; DP Gold, Vijayawada; Augmount Enterprises (P) Ltd, Vijayawada; Balaji Bullion, Chennai, etc. 10.4. That they mostly purchase gold from the aforementioned firms through online. They maintain margin amount with these firms. They book required quantity of gold bullion online and make payment through banking channel. After making payment, they send any of their staff with the authorisation to col....
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.... 10.8. That he had contacted the partner of Balaji Bullion and Jewellery on 02.12.2020 over landline phone and had ordered for 500 gms of bullion comprising in 5 biscuits form, each weighing 100 gms. He had requested them to hand over the said gold bullion to his staff Mr. NPK and Mr. VVRK, who were already at Chennai. Thereafter, he directed his staff and accordingly, they had collected the gold from Balaji Bullion and Jewellery at Chennai. He further stated that payment for the purchase of 500 gms gold bullion was made on the very next day i.e., 03.12.2020 through SBI and also submitted the RTGS slip indicating transfer of Rs.25,13,500/- to Balaji Bullion and Jewellery. 10.9. That M/s Rayapudi Lakshmi Narasimha Rao Son had stock of 985.222 gms 916 grade (22 ct) and 284.678 gms 18 ct as on 29.11.2020 and also submitted the stock statement showing the stock of ornaments in M/s Rayapudi Lakshmi Narasimha Rao Son. As these are old fashioned ornaments, he decided to melt these and convert them into 24 ct gold bullion. On 29.11.2020, he got this gold ornaments melted with a person named Mr. Vishnu of Jaggayyapet, who has got his house cum shop at Karumanchivari Street, Bes....
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....hurry, Mr. NPK had forgotten to collect invoice. Further, in respect of 1129.460 gms of gold in bar and piece form, he stated that the said gold was received from Mr. Gorakh in lieu of remelted gold given by him. Further stated that since there is no sale or purchase of gold involved, he has not raised any bill. He also did not raise any delivery challan for the melted gold carried by Mr. NPK and Mr. VVRK from Jaggayyapet to Chennai. 11. In the course of further investigation, the officers recorded the statement of Mr. J. Vishnu Vardhan on 10.02.2021, who is said to have melted the ornaments at Jaggayyapet for Mr. R. Rajasekhar and he inter alia stated that he has gold and silver smelting shop in the front portion of his house where he melts gold ornaments or gold biscuits brought by the customer and turns them into rods and return. He charges Rs.100/- for melting 100 gms of gold. He does not give any receipt/bill nor he has GST registration. He does not maintain any record or details such as date gold was melted, the customer name, quantity of gold, etc. Further, he stated that he knew Mr. R. Rajasekhar as he regularly gets gold jewellery melted from him. Mr. R. Rajasekhar owns....
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.... 200 to 250 gms. The total weight of gold brought by them was about 1250 to 1300 gms. 12.7. That since he does not charge anything for the work done other than retaining the wastage/impurity, therefore, he does not issue any documents nor keep record. In December 2020, he had given one bar weighing around 950 gms having 999 purity and one gold bit weighing around 125 to 150 gms having 999 purity. Normally for conversion, they retain 1 gm gold per kg along with wastage/impurity being copper and silver. 13. With respect to Bill No.329 dt.01.12.2020 of M/s Lakshmipathy Thulabaram, Chennai, which was found and recovered during Panchanama proceedings on 03.12.2020, the officers requested the DRI, Chennai to conduct further investigation to find out the role of the appellants, etc. DRI, Chennai vide their letter dt.16.02.2021 reported that there was no such firm in the name and style of M/s Lakshmipathy Thulabaram at the given address as mentioned in the bill. It was also informed that Mr. Jawahar and Mr. Rajesh could not be traced as the address is insufficient and hence, no verification/ investigation could be conducted of the said persons. 14. The officers also conducte....
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....ere duly explained to them in their mother tongue and the depositions made by them were recorded under section 108 in Telugu language. Pursuant to investigations, SCN dt.12.11.2021 was issued by the DRI, Hyderabad Zonal Unit, proposing to confiscate 5 gold biscuits of 100 gms each with foreign markings and 3 gold bars and 1 small piece of remelted smuggled gold totalling 1500.460 gms valued at Rs.75,09,802/- seized under Panchanama dt.02.12.2020 and 03.12.2020 from the possession of Mr. NPK under section 111(d) and (o) of the Customs Act with further proposal to impose penalty under section 112(a) and (b) of the Act. 17. Further proposed to confiscate one gold bar and 2 uneven small pieces of remelted gold of foreign origin weighing 129 gms valued at Rs.6,45,000/- under Panchanama dt.02.12.2020 & 03.12.2020 from Mr. VVRK under section 111(d) and (o) of the Customs Act with further proposal to impose penalty under section 112(a) and (b) of the Act. 18. Further, Mr. R. Rajasekhar was required to show cause as to why 5 gold biscuits with markings (100 gms in 5 Nos.) and 3 gold bars and one very small piece of remelted gold weighing 1500.460 gms seized from Mr. NPK should not be ....
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....luntarily by them and the same was recorded by the officers as dictated by them. It was further urged that the retracted statements are no longer reliable as held by Hon'ble Supreme Court in the case of KTMS Mohammed vs UOI [AIR 1992 (SC) 1831]. Further the appellants have laid cogent evidence regarding possession of gold as stock in trade in the shape of gold ornaments which the appellant got melted and further got converted to pure gold of 24 ct purity as is evident from the facts aforementioned. Revenue has recorded the statements of the persons who have melted and purified the gold and the same has been corroborated by the said persons. 23. It is further urged that the officers did not draw a seizure report as is evident on the face of record, in terms of section 165 of Cr.P.C. and also as per CBIC Circular No.01/2017-Cus, wherein instructions were given that the officers should issue an order of seizure clearly mentioning therein the reasons to believe that the goods are liable for confiscation as held by the Apex Court in Sheonath Singh vs AAC [AIR 1971 (SC) 2451]. In the absence of seizure report/memo, it cannot be known if the officers have followed the guidelines issued....
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....ornament account, the appellant had issued on 29.11.2020, 990.222 gms; further from gold ornament account (monthly summary), the appellant had in the month of December sent out 284.678 gms gold. Further these entries also find mention in old gold item register for the month of November 2020 and further on 01.12.2020, stock in transit is shown as 1269 gms. Similar entires are also found in stock in transit register. Further, in the balance sheet as on 31.03.2022 of M/s Rayapudi Lakshmi Narasimha Rao Son, there is closing stock of Rs.65.25 lakhs. Further, in the stock journal voucher, the appellant has reflected on 03.12.2020, the stock lying with DRI 1129.460 gms valued at Rs.51,44,141/-. 27. Learned Counsel further urges that in view of the aforementioned facts and circumstances on record and the source of gold confiscated being duly explained, the impugned order is fit to be set aside with consequential relief to the appellant. 28. Arguing the appeals of Mr. NPK & Mr. VVRK, learned Counsel inter alia urges the aforementioned submissions made in the case of Mr. R. Rajasekhar. He further urges that these appellants - Mr. NPK & Mr. VVRK have rightly retracted their statement re....