TaxTMI 
TaxTMI 
2024 (5) TMI 834
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....Raj Singh S/o Shri Ram Prasad Singh of Bulandshahar at platform No. 6 and allegedly recovered six pieces of gold bars. After preparing the final Fard (Baramadgi), by the GRP Police Officer on the same date, the impugned gold alongwith the passenger were handed over to the Customs Officer of Customs (Preventive), Division Varanasi for further investigation. No document regarding sale purchase/transportation of the recovered six pieces of foreign origin gold bars was produced by Shri Shiv Raj Singh who was immediately arrested, who allegedly confessed as per the Panchnama proceedings and the custodial statement that the recovered foreign origin bars have been brought into India from Bangladesh, through off route by way of smuggling, thus, there was the sufficient alleged reasons to believe that the gold bars have been brought into India from Bangladesh in violation of the provisions of Section 7 (1) (c), Section 11, Section 46 of the Act, read with the Section 123 of the Act. Impugned gold bars were seized. Shri Shiv Raj Singh informed that he works as driver of Shri Hariom Sehgal, owner of M/s Sai Max Jewellers. The modus operandi of the present case was that on tickets arranged by ....
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....n presence of Shri Hariom Sehgal. However, on the scheduled date, Shri Hariom Sehgal failed to turn up and in due proceedings M/s Netplanet recovered bill No. SM#8 dated 17th July 2018 and revised credit note dated 22nd July 2018 in deleted tally folder whose date of generation was impracticable to be found. Accordingly, a Show Cause Notice dated 17.01.2019 was issued proposing therein confiscation of the said seized foreign gold along with baniyan used for concealing the said gold under Sections 111(b) & (d) and 119 of the Act, respectively. Penalties were also proposed to be imposed upon M/s Sai Max Jewellers, Shri Hariom Sehgal and Shri Shiv Raj Singh under Section 112(b) of the Act. The Adjudicating Authority vide Order-in-Original No. 03/ADC/2020-21 dated 15.06.2020 ordered for absolute confiscation of the said 06 pieces of gold bars and imposed penalty of Rs. 60,00,000/- on M/s Sai Max Jewellers, Rs. 60,00,000/- on M/s Sai Max Traders and Rs. 10,00,000/- on Shri Shiv Raj Singh. Aggrieved with this order, M/s Sai Max Jewellers, M/s Sai Max Traders and Shri Shiv Raj Singh filed appeal before the First Appellate Authority which was decided by Order-in-Appeal No. 198-200-CUS/APPL....
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....M/s Ambey Trading Company, Kolkata, its registration and other related documents from Kolkata was filed with the Authorities, copy of stock register, copy of the GSTR-1 and GSTR-2 returns were also filed, and the all the documentary evidence on record and the question of allegations was hence mired into controversy and release was sought. That it is also a fact on record that follow-up enquiry was taken up by the Office of Commissioner of Customs (Preventive), Kolkata, in respect of the trading Company M/s Ambey Trading Company, 01, Ravindra Sarni, 2nd floor, Kolkata, pertaining to the seizure of impugned gold bullion (In the report dated 04.10.2018 issued in C No. VIII (54) 10/ miscellaneous-ENQ/Varanasi /Gold/B &I/CCP-WB/2018-19/1287) and in para 1 and 2 the Learned Superintendent of Customs Preventive Kolkata made the following observation. It is the grievance of the Respondents that in spite of repeated request the said primary report on the follow-up enquiry by the Kolkata Customs, masking the repeated reminders, was never provided to the Respondents, who compelled by circumstances laid hands through the Right to Information Act, along with the copy of the statement recorded u....
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....Jewellers. The Respondent enclosed copy of Ledger Account, Copy of Tax Invoices, issued by M/s Priya Jewellers, and copy of Tax Invoices issued by M/s Sai Max Traders, in this case aligning with the Barter transaction, gold bullion was purchased from M/s Surya Jewellers, and by way of barter/ payment of consideration, Jewellery was sold under cover of proper Tax Invoice, copy GST Registration of Surya Jewellers is also enclosed. Copy of the bank statement of M/s Sai Max Traders, which was already submitted to the Appellate Authorities as well as the Kolkata Customs is re-submitted before us. (a) that it is re-affirmed that M/s Sai Max Traders, the Respondent, had also purchased the gold bullion from M/s P C Jewellers, copies of the ledger account along with Tax Invoice are produced. Further in support thereof, the Respondent M/s Sai Max Jewellers, also submits its ledger account, supported with the copy of purchase and sale Invoices to establish the credibility of the business. Statement of Hari Om Sehgal was also recorded. Mr. Hari Om Sahgal affirmed that he had transferred 6 kgs of gold bullion to Kolkata to his own concern, and in the following question and answer....
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....d. There was a follow-up action by Customs Preventive, New Customs House, New Delhi to whom while letter dated 17.09.2018 the following submission were made as detailed in internal para 4 along with the copies of documents "Para 4: As desired by the said Summon dated 13.09.2018, I am also enclosing herewith certified copy of (1) Bank Statement for the period from 01.04.2018 to 14.09.2018 obtained from the Central Bank of India, Branch Code-307, Karol Bagh, New Delhi in respect of my firm M/s Sat Mix Trades 2605/4 2nd Floor, Beaodon Pura, Karol Bagh, New Delhi having Current Account No. 3588847671 (2) Bank Statement for the period from 01.04.2018 to 14.09.2018 having Current Account No. 3589954273, obtained from the Central Bank of India in respect of my wife Ms. Seema Rani Sehgal's firm M/s Sai Max Jewellers. House No. 2652 & 2653. Plot No. 40, 41, 42, Bank Street. Naiwala, Karol Bagh, New Delhi and (3) Bank Statement for the period from 01.04.2018 to 14.09.2018 having Overdraft Account No. 4007869962, obtained from the Central Bank of India in respect of M/s Sai Max Jewellers, House No. 2652 & 2653, Plot No. 40, 41, 42, Bank Street, Nawala Karol Bagh, New Delhi." I....
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....Para 25.28 held as follows : "Para 25.28 : From the discussion in aforesaid paras it is amply clear that there are no arguments by the prosecution as to how those gold bars were smuggled into India. To avoid this basic question, prosecution despite repeated directions never made available nor incorporated the report submitted by Kolkata Customs authorities of 4th October 2018 which was eventually procured by RTI by Noticees. This establishes that the prosecution has failed to discharge burden of proof and thus, it concludes that the said gold bars were not smuggled. Accordingly, based on the above facts and discussion I hold that the seized gold bars were of Indian Origin." Findings in the Adjudication Order, was challenged by the Revenue before Commissioner (Appeals) Customs, Lucknow in the 2nd round of litigation and the Learned Commissioner (Appeals) held as follows : "The adjudicating authority had analyzed the stock register of M/s Sai Max Traders, Delhi at length for the period - 01.01.2018 to 31.07.2018 and found the transaction genuine. He elaborated the purchases of gold weighing 2 kg., 3680.200 gram and 1502 gm by M/s Sai Max Traders, Delhi on 21.06.2....
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....f town seizure, and the movement of Gold Bullion from Delhi to Kolkata and its return from M/s Ambey Trading Company back to Delhi to its principal is well established through the document and verification done by the Kolkata Customs, finding support with the forwarding of proper verification report to the Jurisdictional Customs (P), Varanasi along with the copy of Statement of Shri Hari Om Sehgal, who with fortitude confirms his ownership, possession, purchase documents, ledger account, payment of GST, GSTR return, which prior to issuance of Show Cause Notice, had already been detailed and submitted to the Jurisdictional Authorities, supported with documents who were already seized of the matter and here in this case, this is a case of interception by Police/GRP at Railway Station, to create a story and which was eventually snow balled through the Panchnama, which was only the record of proceedings, illegally creating story of the alleged smuggling from Bangladesh, without there being any evidence to the contrary, and purely on unwarranted assumption and presumption, and in any view of the matter reasonable suspect cannot take place of either the proof or for a credible formation ....
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....ed the meaning of the word 'reason to believe' as under:- "reason to believe" by opining it to be not the subjective satisfaction of the officer concerned, for "such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with their strains imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief cannot be investigated. In view of the above, the Appellants stated that to form a 'reasonable belief that the goods are smuggled from Bangladesh, there must be irrefutable evidence to prove that allegation. In the present case there is no such evidence available to prove that the goods were of foreign origin and smuggled into India from Bangladesh. 17. The Respondent also rely upon the following decisions in support of their argument that the 'reasonable belief must be supported with other independent corroborative ....
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....an arbitrary power and has to be exercised in accordance with their strains imposed by law" and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief cannot be investigated." The Respondent also rely upon the following decisions in support of their argument that the 'reasonable belief must be supported with other independent corroborative evidences. (I) In Assistant Collector of Customs v. Charan Das Malhotra, 1971 (1) SCC 697, Shelat J., has held and not reasonable believe to be relevant extraneous. (II) In Kewal Krishan V. State of Punjab, AIR 1967 SC 737, Kapur J., while dealing with identical provisions had clarified that confiscatory power based on 'reason to believe' has to be exercised only on the satisfaction based on certain objective material. " c. Relying upon Hon'ble Delhi High Court in the case of Shanti Lal Mehta Vs. Union of India and other ....
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....without any independent corroboration it cannot sustain a conviction and retracted confession may form basis of conviction without corroboration if it is found to be perfectly voluntary, true and trustworthy. The Court is duty bound to examine whether the statement referred to as a confessional statement meets the test of truthfulness and being voluntary in nature. In absence of any independent material brought on record by the appellant, the Chief Metropolitan Magistrate was perfectly justified in acquitting the accused no. 2. In absence of any evidence corroborating the statement of the accused no. 2 made before the Customs Officer on 24th March, 1996 under Section 108 of the Customs Act, the statement in isolation do not warrant conviction, particularly when it is retracted with a plea of coercion," b) Further in the case of Balwant Raj Soni, the Tribunal, cited supra in Para 24 addressed this issue with the cover of Judgments, wherein the findings of the Tribunal are as below: "24. In support of their claim, the Appellants relied upon the following decisions: i) Mohtesham Mohd. Ismail Vs. Special Director, Enforcement Directorate- 2007 (220) ELT 3 (SC....
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....4 (Tri.-Kolkata) Para-6. Mere inculpatory statement of the co-accused about the purchase of gold from the appellant cannot be the basis of imposing penalty under Section 112(b) of the Customs Act, 1962 in the absence of any other corroborative evidence." Answer No. D : a) The term smuggling is not defined under the Customs Act and with regard to the words smuggled the Hon'ble Delhi High Court in the case of Shanti Lal Mehta (supra) in para 60 defined the term along with the law laid down as follows : "The word "Smuggled" mans that the goods were of foreign origin and that they had been imported from abroad. Since, in the instant case, there was nothing absolutely from which inference about their origin or recent import could arise nor there was definite evidence to show that the appellant knew or had reason to believe that those items were smuggled, therefore, the presumption under Section 123 of the Customs Act that the goods were "Smuggled" did not arise. (Para 60)" b) Because it an established fact that the Respondent as a claimant of Gold has an additional place of business in Kolkata in the name and style of M/s Ambey Trading Compan....
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....y Kolkata Customs and also the question of law, correctly interpreting Section 123 of the Customs Act, wherein in without credible formation of reasons to belief / reasonable believe the benefit of presumption under Section 123 does not go in favour of the Department. Admittedly there is no foreign marking on the gold bars seized from Shri Shivraj Singh. Admittedly, it is case of town seizure and as such the onus was on Customs Officers to establish the allegation of smuggling which they have not done. No sample of the gold was drawn; the valuer had no mechanism whatsoever and howsoever to check the purity of the gold bullion, in carets and fineness, which not only have been done by drawing of sample, sending it to the laboratory and treating the same with chemical compound which would give the exact purity of gold and its fineness; the same cannot be checked using a touch stone. 7. We find that the impugned gold intercepted, initially taken possession by the officer of GRP and then handed over to Customs. Admittedly, the gold did not have any tell-tale foreign marking and it was merely accused that the markings were removed to hoodwink investigation. The place of seizure is not....
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....any documents at the time when the GRP made the recovery of the said gold bars from his possession. Thereupon under Supurdiginama dated 24.07.2018 the impugned gold was handed over to the Customs officers for investigation and further action in the matter. While defense states that the said gold was accompanied with proper returnable invoice/bill of supply/challan, which were not taken into cognisance by authorities. For valuation of gold, valuer was called on railway station in mid night for ascertaining purity of gold while customs authorities did not draw punchnama on the spot and it was drawn next day in customs office. 25.4. I find that the Panchnama dated 24.07.2018 details that on being enquired by the officers of Customs the Noticee No. 3, namely, Shri Shiv Raj Singh stated in front of the panchas that the impugned recovered 06 pieces of gold bars weighing 5999.820 grams valued at Rs. 1,83,59,448/-. On being asked by the Customs officers he stated before the panchas that he was Shiv raj Singh s/o Sri Ram Prasad Singh, R/o Vill. Pali Anandgadhi, PS. Narsena, Distt. Bulandshahar, and present address was Khasara No. 1092/1063, Gali No. 9, Kadi Vihar, Kadipur, Distt. N....
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....962, seized those 6 piece gold bars under Section 110 of the Customs Act, 1962 vide Seizure Order dated 24.07.2018. 25.7. I find from the records that during investigation summons were issued to Shri Hariom Sehgal, Proprietor of M/s Sai Max Traders, 2605/4, 2nd Floor, Gali No. 4, Beadonpura, Karolbagh, New Delhi-110005 for providing documents as well as for recording his statement on 24.08.2018, 04.09.2018 and 12.09.2018 But, Shri Hariom Sehgal did not appear. Several letters were received from him seeking extension on various personal grounds. Shri Hariom Sehgal, proprietor of M/s Sai Max Traders, 2605/4, 2nd Floor, Gali No. 4, Beadonpura, Karolbagh, New Delhi-110005 and owner of alleged Foreign Origin 6 kg gold appeared before Kolkata customs officers and tendered his statement on 4th October 2018. 25.8. I find that Mr Hariom Sehghal had made his claim before the appropriate authorities of Custom Preventive Varanasi, wherein all the documents relating to purchase of the Gold Bullion, on discharge of proper levy of GST, its payment of consideration only through banking channel, copies of Bank Statement, credentials of Ambey Trading Company, Kolkata, a sister conc....
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....ur-02 was requested to open the Laptop seized to retrieve the data. The Laptop was got opened in the office on 20.11.2018 by the Expert M/s NETPLANET, 7/118 'c' Swaroop Nagar, Near Model Bakery, Kanpur-02 in the presence of two independent witness to retrieve the data. The expert of M/s NETPLANET reported that "as desired by you, I have inspected the given laptop make DELL and retrieved the data from the laptop original as well deleted (i.e. MS office files, pdf files and tally files). I have given all the related filed to the officers, the given bill No. SM#8 dated 17-July-18 and revised credit note No. 22-July-18 was inspected in the given laptop, it was present in the deleted tally folder. This fact gives credence to the fact that the said gold was carried under proper bill. 25.13. Further as per records the party has submitted additional documents vide their letter dated 18.05.2020, wherein it is mentioned that stock/Item Register of Gold Bar 99.50 provided by the party for the period 01 Jan 2018 to 31 Jul 2018 indicates an opening balance of 1468.373 grams as on 01.07.2018 and further against the column "Inwards Quantity "02 entries appear in the month of July....
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....ws: Remarks prima facie it was revealed as per available records that:- [a] M/s Ambey Trading Company, Kolkata-700007 is engaged in manufacturing of gold jewelleries in the given address. [b] M/s Ambey Trading Company, Kolkata-700007 is a sister concern of M/s Sai Max Traders, Karolbagh, New Delhi. [c] Found that 6000.000 grams of gold has been delivered to M/s Ambey Trading Company, Kolkata-700007 under proper tax invoice dated 17.07.2018 issued by M/s Sai Max Traders, Karolbagh, New Delhi. [d] Gold may be received from M/s Sai Max Traders, Karolbagh, New Delhi 110005 as manufacturing cost of gold ornament is cheap in Kolkata. (e) apart from above, latest manual designed gold jewelleries in little weighment of gold is available in Kolkata. vide this report it is crystal clear that indeed the said quantity of gold was sent from M/s Sai Max Traders, Karolbagh, New Delhi-110005 to its sister concern to M/s Ambey Trading Company, Kolkata -700007 under proper tax invoice dated 17.07.2018 for manufacture of jewellery. The, investigating officers also have nowhere disputed the report submitted by Kolkata Customs. 25.17. I fin....
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....Shri Shiv raj singh, meaning thereby business of the firms were authentic. They also cross checked the bank statements of the firms and found them proper. 25.22. I find that M/s Sai Max Traders have purchased gold bars from Surya Jewellers, New Delhi, M/s Sai Jewellers, New Delhi. It has sold gold bars to M/s Bedi Jewels International, New Delhi, M/s S.B Jewellers, New Delhi, M/s Maharaja Jewellers, Jaipur, (twice) M/s Sai Jewellers, New Delhi (twice). It has also submitted a copy of sale invoice of gold bars to M/s Ambey Trading Co, Kolkata. The said invoice has also been revised. I find that the transactions of M/s Sai Max Traders, and M/S Sai Max jewellers New Delhi, as provided in the form of purchase register stock register GST returns appears to be genuine. As regards the said quantity of gold following transactions were done by the firms: • That on 21.06.2018 Gold weighing 2 kg, valued at 6,26,7000/- had been bought by Sai Max Traders / Noticee No. 2 from PC Jewellers against Invoice No. TI001333, GSTIN No. 07AADCP5443Q1ZW on which tax has duly been discharged. • Further on 10.07.2018 gold weighing 3680.200 gram valued at 11563234/- had bee....
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....oticees have provided documents proving that the said gold was procured through legal means and Lawful GST has already been paid on the said gold. 25.27. Reliance can be placed on judgement of Honorable Mumbai High court in the case State of Maharashtra Vs Prithviraj Pokhraj Jain reported in (2000 (126) E.L.T. 180 (bom)) has held that in the absence of presumption under section 123 of the Customs Act, 1962, on the initial seizure of the goods by police, the burden of proof that the goods are smuggled lies entirely on prosecution. This order has attained its finality Thus, it is clear that in handed over cases by the police or any other agencies (in this case GRP Mughalsarai) to the Customs the burden of proving that the goods are of smuggled nature lies entirely upon the prosecution. Hon'ble High court judgement has already been accepted I find that in a similar case of Gold handover by GRP Mughalsarai to the Customs Varanasi, CESTAT Allahabad Bench in Lokesh Kumar Chaudhari Vs. Customs Lucknow has allowed the appeal of the party on the grounds of non embossing of country of make on gold bullion and department of able to establish the smuggled nature of the seized foreign ....
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....re not guilty hence no penalty under Section 112 (b) of Customs Act, 1962 leviable. Hence, order for dropping of proceedings against them under provisions of Customs Act, 1962. 26. Accordingly, based on the above discussion and findings, I pass the following order: ORDER I drop all the proceedings against all the three noticees under provisions of Customs Act, 1962. I order release of the seized gold bars to its lawful owner." 8. On appeal by the Department, the learned Commissioner (Appeals) while upholding the Order-in-Original has observed as under:- "I have gone through the case records. By the impugned order, the adjudicating authority has dropped all the proceedings against M/s. Sai Max Jewellers, M/s Sai Max Traders and Shri Shiv Raj Singh which has been contested by the Appellant department on the basis of grounds of appeal detailed above. The respondent has submitted that the present appeal may be decided on the basis of documentary evidences available on record. I find that 'Gold' is a notified item under Section 123 of the Customs Act, 1962, where burden of proving that the said goods is not the smuggled one, is eit....
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....ernational border or Customs area. The department had also failed to bring on record any documentary evidence against the aforesaid claim submitted by the respondent in their support. Instead, it appears that the Customs was concealing the said report of the Kolkata Customs in order just to sustain their case. In view of above, I am in complete agreement with the findings of the adjudicating authority as elaborated in the impugned order that the respondent had discharged their obligation as required Section 123 of the Customs Act, 1962 by providing requisite details/documents with respect to procurement of the impugned gold in legitimate manner. As regards the department's reliance on the statement of Shri Shiv Raj Singh confessing the smuggling of the impugned gold, I find that the respondent had submitted the necessary documents with respect to purchase and movement of the impugned gold from their Delhi based firm to Kolkata based sister concern. These documents were found in order by the adjudicating authority after examination. Kolkata Customs report dated 04.10.2018 also speaks of in favour of the respondent. Thus, I am of the opinion that the respondent ....