TaxTMI 
TaxTMI 
2024 (4) TMI 1016
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....tnesses. 2.1 Out of two teams formed for search, one team searched the Gaddi (Business premises) of Shri Lalit Krishna Agrawal i.e. M/s. Lalit Krishna Agrawal at Bara Bazar, Darbhanga-846004 and other team searched the house of Shri Lalit Krishna Agrawal, near Petrol Pump, Lalbagh, Darbhanga in presence of independent witnesses and lady officers. After completion of the search at house of Shri Lalit Krishna Agrawal, the team joined the other team in search operation at the Gaddi of M/s. Lalit Krishna Agrawal at Bara Bazar, Darbhanga-846004. No contraband goods was recovered from the House of Shri Lalit Krishna Agrawal. 2.2 During search at the Gaddi (Business premises) of Shri Lalit Krishna Agrawal i.e. M/s. Lalit Krishna Agrawal at Bara Bazar, Darbhanga-846004, 79.58 kgs. of Silver Jewellery, 50 Kgs. of Silver Boondi, Indian Currency amounting to Rs. 79,00,000/- and some documents were recovered. Samples of the Silver Boondi were drawn from each packet and kept in plastic pouches and sealed them in the envelopes for testing purpose. The envelopes were duly sealed in the presence of the independent witnesses and the said notice and a token of proof of the same, they also made the....
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....e of investigation, no contraband goods were recovered. The respondent being a trader in silver ornaments/silver boondi, was searched and 79.58 kgs. of Silver Jewellery, 50 kgs. of Silver Boondi, Indian Currency amounting to Rs. 79,00,000/- were recovered. These were presumed by the Revenue and these are the third country origin, but no such evidence has been produced by the Revenue to allege that these are third country origin. 6. In fact, during the course of investigation, it is a fact on record that boondi silver and silver jewellery were recovered from the shop of the respondent. So, the question arises that in the absence of any seizure of Port or Airport or not having any foreign markings on the goods seized from the respondent, how the officers came to the conclusion that the goods are third country origin goods. Therefore, first, onus on the Revenue is to make a reasonable belief that the goods are of third country. Admittedly, no such evidence has been produced by the Revenue to allege that to make a reasonable belief, the goods are of third country origin. In the absence of that, the goods in question cannot be confiscated. 7. Furthermore, the confiscation of Indian Cu....
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....nfiscation under this Act, he may seize such goods : xx xx xx Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer, (1A) The Central Government may, having regard to the perishable or hazardous nature of any goods, depreciation in the value of the goods with the passage of time, constraints of storage space for the goods or any other relevant considerations, by notification in the Official Gazette, specify the goods or class of goods which shall, as soon as may be after its seizure under sub-section (1), be disposed of by the proper officer in such manner as the Central Government may, from time to time, determine after following the procedure hereinafter specified, xx xx xx 15.1 Section 110 opens with the words "if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goo....
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....eason to believe' and 'liable to confiscation' under Section 110 of the Customs Act, 1962 and has allowed the Appeal, While deciding the case in favour of the Appellant, the Hon'ble High Court, Patna has relied upon different case laws as detailed hereunder and many more. (i) Sheo Nath Singh v. CIT, (1972) 3 SCC 234 : - The reason to believe can't be basis on mere suspicion, gossip or rumour though belief on an honest basis and on reasonable grounds and the officer may act on direct or circumstantial evidence. If the officer were to act without any material or irrelevant, extraneous material, it would constitute an act without jurisdiction. (ii) Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I, Calcutta and another, AIR 1961 SC 372 : - The expression "reason to believe postulates belief and the existence of reasons for that belief. The belief must be held in good faith; it can't be merely pretence. The expression does not mean a purely subjective satisfaction of the Income Tax Officer; the forum of decision as to the existence of reasons and the belief is not in the mind of the Income Tax Officer. It contemplates existence of reasons on which the b....
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....department in the case of Commissioner of Customs (Preventive) v. Prabhash Kumar Jalan; the Hon'ble CESTAT, Kolkata relies upon the case of Shanti Lal Mehta - 1983 (14) E.L.T. 1715 (S.C.) by inscribing that it was held by the Hon'ble Supreme Court that "the reasonable belief is a prerequisite condition of the power of seizure that the statute confers on the officer. The reasonable belief as required by Sec. 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". In the said case, the apex court also held that in order to attract the provisions of Sec. 123 it is essential that the goods must be smuggled goods. The term 'smuggled' means goods of foreign origin and imported from abroad. There must be something suggesting their foreign origin and their recent importation from abroad. It cannot, from unaccounted goods, be inferred that they are smuggled goods, for they may be stolen goods. 15.6 In light of above observations as well as on the judgments and orders of the Apex Court/High Courts/Tribunals, I find that the only safeguard that is available to a person against indiscriminate seizure, which is a serious intr....
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....onstitute in the words of the statute, "a reasonable belief that the goods (gold) were smuggled. It was held to be a matter of subjective satisfaction of the Customs Officer and a suspicion that goods were obtained illegally was sufficient to constitute a reasonable belief." 15.9 From the above mentioned cases, it is observed that the view of the Hon'ble Supreme Court was that the existence of 'circumstances' was the condition fundamental to the making of an opinion, the existence of the circumstances, if questioned, had to be proved at least prima facie and that it was not enough to assert that circumstance existed and gave no clue to what they were because the circumstances must be such as to lead to conclusions of certain definiteness, on the question of subjective satisfaction of the seizing officer as to the existence of the circumstances. 16. It is admitted fact that Silver Boondi weighing 50 Kg., Silver Jewellery weighing 79.58 Kg. had been recovered from the business premises of the Appellant. The impugned inventory of goods seized, on the face of it, discloses that neither the Silver Boondi and Silver Jewellery had bore marking of foreign origin or label to suggest to ....
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....ere is no evidence regarding any discrepancy in stock of the silver found by the Respondent department in course of search of the premises of the appellant. Further excess stock of silver other than purchase has not been proved by the department. Accordingly there is no evidence of purchase of smuggled silver as the items of silver have been duly accounted for in the stock by the appellant. It is also noticed that the appellant has submitted copy of inventory dated 28-6-2013 drawn by the Income Tax Department regarding declaration of silver. As per the aforesaid declaration it is observed that there is evidence of bulk purchase of the aforesaid item in the past also. As regards stock of silver boondi, I find that it is the general practise of manufacturing silver boondi from silver bar for making silver jewellery of particular choice by the sellers of the aforesaid item as per the demand of the customers. In some cases the silver jewellery is directly manufactured from silver bar and it depends upon the requirement and choice of the jewellery manufacturer. The Respondent department has not submitted any evidence proving that the purchased silver is not used in manufacturing of silv....
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....thority. 17. Regarding applicability of Section 123 of the Customs Act, 1962 it is relevant to go through the provisions of this Section which is reproduced below; "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 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. (2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify." 17.1 A perusal of Section 123 of the Customs Act would show that where any goods, namely, gold, watche....
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....epartment could not adduce any evidence whatsoever to prove that the said two gold bars were smuggled in the two countries. Therefore, the presumption regarding the smuggled nature of seized gold under Section 123 of the Customs Act, is not invocable." 17.4 Again, in case of Commissioner of Customs (Prev.), Shillong v. Manisha Devi Jain [2019 (370) E.L.T. 401 (Tri. - Kolkata)] held "5. On perusal of records, I find that the Indian Origin remolten gold/gold ornaments could not be legally confiscated as the possession of the same is not prohibited under any provision of law. In the present case, the seized gold do not bear foreign markings and do not have uniform weight/purity. It is observed that the respondent belongs to a respectable and a well to do family. She is also a regular Income Tax assessee. The seized gold rods were made from the gold ornaments belonging to her. 6. In view of the above observations and settled legal propositions, every piece of gold possessed by a person in India cannot be considered to be of smuggled nature and that the possessor of such gold cannot be made to discharge the onus u/s. 123 of the Customs Act, 1962." 17.5 Under the above facts and ....
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....igating authority did not try to collect any direct or indirect even circumstantial evidence to show that the seized goods were smuggled goods and contented that as per provisions of Section 123 of the Customs Act, 1962, the onus lies on the Appellant to prove that the seized silver items were not smuggled one. In fact, the Supreme Court in R.V.E. Venkatachala Gounder v. Arulmigu Viswesaraswami & V.P. Temple - (2003) 8 SCC J752 has observed as under :- "However as held in A. Raghavamma v. A. Chenchamma [AIR 1964 (SC) 136] there is an essential distinction between the burden of proof and onus of proof : burden lies upon a person who has to prove the facts and never shifts onus of proof shifts. Such a shifting is a continuous process in the evaluation of evidence. In our opinion, in a suit for possession based on title once the plaintiff has been able to create a high degree of probability so as to shift the onus on the defendant, it is for the defendant to discharge his onus and in the absence thereof, the burden of proof lying on the plaintiff shall be held to have been discharged so as to amount to proof of the plaintiff title." 18.1 Therefore, the principle laid down in R.V.E....
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....on the person in case he claims to be the owner of the goods so seized. Thus it is clear that if the goods are seized on the reasonable belief that they are smuggled goods, then only the burden of proving that those are not smuggled goods rests on the person specified in the said provision. However, the reasonable belief for seizure is missing in the case and so the burden of proof does not shift to the Appellant. The department fails to prove and establish their case. In the situation, I find that the impugned order confiscating the silver boondi and silver jewellery is not in accordance with the law and is not proper. 19. As regards confiscation of Indian currency as sale proceeds of smuggled goods under Section 121 of the Customs Act, 1962 I find that the Appellant have submitted that they are registered under GST and are filing their GST return regularly and the same is genuine sale proceeds of their trading activity. I find that when the department fails to prove their case that the silver items were smuggled, then it can't be derived that the Indian Currency recovered and seized during the case were acquired through sale proceeds of smuggled goods. I further observe that th....
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....t the goods are being smuggled in nature and the seller and purchaser and quantity of smuggled goods is not established. In these circumstances I find no infirmity in the impugned order and the appeals are dismissed." I find that the aforesaid case law is squarely, applicable in the instant case and there is no violation of Section 121 by the Appellant in view of the discussions made above. 19.2 The Appellant has submitted copy of Purchase invoices for the period 2019-2020, cash book for the aforesaid period, sale invoices for the period 1-10-2019 to 21-10-2019, GST Returns for the period 2019-20, Balance Sheet for the Financial Year 2013-14 to 2018-19 in the instant proceeding. On perusal of income portion of the Profit & Loss Account of the appellant it is noticed that the appellant has shown income mainly from sale of Gold Jewellery and Silver Jewellery, Further on perusal of sale invoices it is noticed that applicable GST has been paid on sale invoices and the same has been reflected in the GST Returns also. The aforesaid fact has also been verified by the Respondent department and it has been contended that no complete address or PAN is mentioned in the invoices and it is ....