TaxTMI 
TaxTMI 
2024 (4) TMI 444
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....intaining proper books of accounts and records which are subjected to audit by the Chartered Accountant. 2. The other Appellant - Mr. Chinni Narasimha Rao (CNR for short) is a clerk assisting in the business of M/s Annapoorna Gold Smiths, Ongole. 3. From March 2020 to June 2020, their firm was almost non-functional due to the COVID-19 pandemic. As there was a decline in the severity of the pandemic during July 2020 and August 2020 and in anticipation of some demand for ornaments in the ensuing period, they planned to convert the stock of pure gold into ornaments so that they can sell on some profit. As on 18.08.2020, as per the Gold Metal stock register, they had a stock of 6303.804 gms of pure gold. Out of this, a quantity of 4872.105 gms of pure gold was given to different goldsmiths locally and at Chennai for conversion into ornaments and the balance stock of pure gold left with them was 1431.699 gms. 4. On 22.08.2020, Mr. TPK instructed Mr. CNR, an employee in their firm (co-noticee) to proceed to Coimbatore on 23.08.2020, to carry pure gold of 1431.699 gms and to purchase latest designs of ornaments at Coimbatore for which he agreed. Accordingly, a delivery challan bearing ....
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.... of the said car were detained and brought to the DRI office at Nellore for detailed examination etc. On reaching the DRI office Mr. CNR took out a packet wrapped in brown tape and handed over to the officers. On opening the said packet two small pieces of yellow metal and 2 bars were seen. There were no markings on the yellow metal. Mr. CNR admitted that the 2 bars and 2 small pieces (total 4 pieces) are remelted smuggled Gold. He further stated that the said Gold was purchased from Mr. Venkatesh of Coimbatore for an amount of Rs.76 lakhs, on behalf of his employer Mr. TPK of M/s Annapoorna Gold Smiths Jewellers, who had given him cash amount of Rs.76 lakhs. 8. The officers got the Gold pieces assayed by the valuer Mr. Mallikarjun, who after examination gave his report as follows: - Sl.No. Particulars No. of bars/ pieces Weight in gms Purity % 01 Gold Bar 01 Bar 538.980 99.9 02 Gold Bar 01 Bar 842.550 99.9 03 Small Piece of Gold 01 piece 43.600 99.9 04 Small Piece of Gold 01 piece 6.480 99.9 Total 1431.61 grams Value Rs.75,87,533/- 9. Statement of Mr. CNR was recorded by the officers, who inter alia stated that on 23.08.2020 in the evening at around ....
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....he same appeared to be smuggled in nature and liable to confiscation, accordingly, the gold in question was seized under the provisions of the Customs Act. The proceedings are recorded under Panchanama. On being asked Mr. CNR stated that the car belonged to Mr. TPK, who had in the recent past purchased the car from Mr. A. Prabhakar Rao and the transfer of ownership was under process. It appeared to the officers that the value of the car is Rs.4,68,000/- as mentioned in the Insurance Policy and as the said car appeared to be used for transportation of smuggled foreign origin Gold, it was also liable for confiscation and accordingly, the said car was also seized. The Panchanama proceedings concluded at about 17:30 hours on 25.08.2020. 13. In his subsequent statement, Mr. CNR, recorded on 26.08.2020, stated that this was the first time he was purchasing Gold. That he had visited Coimbatore twice that year but only for receiving finished ornaments and not for purchasing Gold. The reason for purchasing Gold from a distant place like Coimbatore was that gold was available at the cheaper price as compared to Vijayawada and as the gold purchased from Coimbatore is remelted from smuggled f....
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....old. He had given the Gold to Mr. CNR under delivery challan No. AGS/03 dated 22.08.2020 and submitted a duly signed copy of the same. He had also instructed his son Mr. T. Pranav Trinath to go along with Mr. CNR in the car. He had instructed Mr. CNR to visit M/s JRV Jewellers at Coimbatore, whose proprietor is Mr. Venkatesh, mobile number 9843341209 to purchase ornaments against the same. On 24.08.2020, after reaching Coimbatore Mr. CNR informed him over phone that on visiting M/s JRV Jewellers, he found that no stock of ornaments were available due to nonavailability of workers/ gold smiths due to prevailing COVID-19 situation. Thus, he instructed Mr. CNR to place the order for the ornaments with M/s JRV Jewellers and return to Ongole on the same day with the gold metal being 1431.699 gms. The said quantity of Gold metal is having purity of 99.9% and is duly supported by the gold metal register for the period 01.04.2020 to 31.08.2020, which is maintained on tally software. As per the gold metal register, on 23.08.2020, they had stock of 6400.00 gms of gold metal having purity 90.9%. Further stated that he knows Mr. Venkatesh of M/s JRV Jewellers, Coimbatore for the last 5 years a....
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....like Valcambi/Swiss/Argor. The maximum weight of each gold bar would be 100 grams and they would receive proportionate gold bars as per the weights mentioned in the invoice. Further, he stated that Mr. CNR had been working in their firm for the last 8 years. 18. In further summons issued, the Appellant - Mr. TPK appeared on 15.10.2020 before the officers and further furnished documents and depositions and his statement was also recorded. On being asked that he has tried to cover up the offence committed by him by producing a delivery challan dated 22.08.2020 and in fact not issued any document or delivery challan for the transaction of supply of Gold other than sales, he replied that it was not correct and he had handed over the gold to Mr. CNR under delivery challan only. 19. In the course of investigation, statement of Smt. Padma Priya. V, the Proprietrix of M/s JRV Jewellers, Coimbatore was recorded on 23.11.2020 wherein she inter alia stated that they were engaged in the manufacture of Gold jewellery through various job workers and supplied the same to their customers. The day-to-day activities of the firm were looked after by her husband Mr. R. Venkatesh. The firm is registe....
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....d foreign origin smuggled gold by his clerk Mr. CNR. He does not know why Smt. Padma Priya. V of M/s JRV Jewellers deposed like that and that she might have deposed out of confusion. He volunteered and deposed by way of reiteration that the seized Gold was sent through his clerk Mr. CNR under delivery challan to Coimbatore for purchase of Gold jewellery, in exchange of the metal which belonged to his firm. On being suggested that his deposition regarding the seized Gold was by way of an afterthought, to cover up his offence, in the light of the statement of Mr. CNR and Smt. Padma Priya, he replied that the same was not true and he does not know why they have deposed in this manner, which is probably due to confusion etc. 22. As it appeared to Revenue that the source of gold explained by Mr. TPK, being out of business stock, is not plausible and further, in view of the statement given by Mr. CNR and Smt. Padma Priya, that the gold is of foreign origin and smuggled in nature and is liable for confiscation, accordingly, SCN dated 25.03.2021 was issued requiring to show cause jointly to Mr. CNR and Mr. TPK, Appellants herein, as to why the 2 gold bars with 2 small pieces of gold total....
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....gating agency with regard to the smuggled nature of the gold in question. Admittedly, the Gold pieces seized are not of standard weight, shape and size. The gold bars seized are admittedly of irregular weight and size having no foreign markings. It is known in the trade all over that foreign origin gold bars are either of 100 gms or of 1 kg and are of regular size and shape and also contain the markings of the refiner with unique serial number. 25.3. The statements of both Mr. CNR as well as Smt. Padma Priya and others have been recorded in gross violation of order dt.03.04.2018 given by the Apex Court in the case of Shafhi Mohammad vs The State of Himachal Pradesh in SLP (Crl.) No. 2302 of 2017. The DRI was also one of the investigating agencies specified to comply with the directions of the Apex Court. Further Hon'ble Madras High Court in the case of P. Murali vs SIO, Kolkata [2021 (4) TMI 312] have directed that the process of investigation of the concerned person be videographed and the data stored till the completion of the proceedings. Thus for noncompliance with the directions of the Apex Court, the statements have no evidentiary value and cannot be relied upon. It is a mat....
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....f their accounts, financial statements like Balance Sheet, Profit & Loss account, copy of GST returns, etc. Such documents fully support the contention of the Appellant in regard to 1431 gms of gold sent for conversion to gold jewellery under challan through Mr. CNR. Such cogent evidence has been rejected by revenue arbitrarily, which is against the provisions of law. 25.7. It is also evident in the face of record that Mr. TPK, at the very first instance, when his premises were searched both office and residence on the same day i.e., 25.08.2020, nothing incriminating was found by Revenue and further on that very day, the appellant had produced copy of his records. Thus, the whole case of Revenue is made on assumptions and presumptions, having no legs to stand. This is also evident as Revenue has never questioned the Appellant - Mr. TPK as to the source of cash of Rs.76 lakhs allegedly sent by him for purchase of gold in cash. Further as per the statement of Smt. Padma Priya. V, she had stated that they do not sell Gold bullion nor they accept cash payments. In such a situation, there is no reason for Mr. CNR to approach them for purchase of gold on cash payment. The statement of M....
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....as to prove that retraction of confession made by him was because of threat, coercion, etc., but the requirement is that it may appear to the court as such." 25.12. It is further urged that the appellant by leading cogent evidence as to the source of gold seized by the officers, has discharged the onus under section 123 of the Act. The appellant in support produced his books of account and also records of purchase, sale, etc., has established that the seized gold was part of his stock in trade. Further, admittedly the seizure is by way of town seizure and is not seizure in Customs Port nor the person from whose possession the gold was seized had arrived in India from any foreign country. Thus, it was the onus of the Revenue to bring on record evidence in support of their allegation that the gold in question is of smuggled in nature. Revenue has not brought any iota of evidence to support their allegation save and except reliance placed on the retracted statements of Mr. CNR & Smt. Padma Priya. V. 25.13. It is further urged that SCN is bad and hit by limitation as admittedly, the SCN has been issued after more than 6 months from the date of seizure. Further, it is evident o....
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....traction has been made by Mr. CNR and others only at the time of filing reply to SCN and not earlier and hence, such retraction is only by way of afterthought. He further refers to the calculation with respect to closing stock made by the Adjudicating Authority in para 76.3 of the OIO. Further urges that the Appellants have not been able to discharge the burden of proof as required under section 123 of the Act. He further places reliance on the following rulings:- a) CC, Kerala vs Om Prakash Khatri [2019 (366) ELT 402 (Ker.)] b) CC, Madras vs Nathella Sampathu Chetty [1999 (110) ELT 157 (SC)] c) UOI & others vs Raj Grow Impex LLP & others [2021 (377) ELT 145 (SC)] 27. Having considered the rival contentions, I find that the owner of the gold in question Mr. TPK, at the very initial stage of being questioned by Revenue, has stated that the gold is out of stock in trade. Further, he has lead evidence that as per his stock register, he was having 6303.804 gms of gold. Thus, issue of 1431.61 gms of gold, after adjusting the sales made till 23.08.2020 on the date on which gold in question was sent for conversion into ornaments through his employee - Mr. CNR, stands fully explaine....