TaxTMI 
TaxTMI 
2025 (4) TMI 1415
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....riefly stated the facts of the case are that acting upon an intelligence, that the officers of DRI, LZU, intercepted two persons, in the intervening night of 04-05/09/2020, travelling in BUS No UP-22AT-0568, from Gorakhpur to Delhi, and found 3998.83 grams of gold valued at Rs 2,12,79,096, allegedly of foreign origin and seized the same under the reasonable belief that the same was smuggled. The two persons identified as Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, stated that they were carrying gold, under Voucher No 644 dated 03/09/2020 & Voucher No 645 dated 03/09/2020, issued by M/s Bajrang Bullion Traders Hindi Bazar Gorakhpur; they work for M/s Bajrang Billion Traders owned by Shri Sharad Chand Agrahari; they were going to deliver the smuggled gold to M/s Mahaveer Bullion Karol Bagh New Delhi; they did not have any valid document regarding purchase or import of said gold; earlier they delivered, on 21/08/2020, to M/s Mahaveer Bullion Karol Bagh New Delhi on the instructions of Shri Sharad Chand Agrahari. Both Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni were arrested under the belief that they liable for punishment under Section 135(1)(i)(A) of the Customs Act 1962. ....
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....or Bangladesh, there must be irrefutable evidence to prove the allegation; Hon'ble supreme Court held in Assistant Collector of Customs Vs Charan Das Malhotra 1983 (13) ELT 1477 (SC), reasonable belief is to be relevant and not extraneous and it must be supported with other independent corroborative evidences; Hon'ble supreme Court held also in Kewal Krishan Vs State of Punjab, 1993 (67) ELT 17 (SC) that confiscatory power based on 'reason to believe' has to be exercised only on the satisfaction based on certain objective material; Reasonable belief' must be at the time when the gold are seized and not subsequent to seizure; when the gold is accounted for in the books of accounts & submitted to the DRI at the time of search, department cannot term it as Smuggled; as there was no reasonable belief, as per above facts, Section 123 does not apply to the case; no presumption could be raised under Section 123; there was no obligation on the appellant to prove that the gold were not smuggled; the burden of proof was wrongly cast on the appellant and thus, the proceedings are vitiated. He further relies on the following cases. • Final Order No. 75553/2024 dated 01....
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....ssioner of Customs, Lucknow, 2018 (362) E.L.T. 847 (Tri. - All.) • Shantilal Mehta v. UOI and Others, 1983 (14) E.L.T. 1715 (Del.). • CCC (P) v. Prabhash Kumar Jalan, CESTAT, Kolkata Bench, Final Order No. 75500/2021, dated 27-8-2021. • Shri Sarvendra Kumar Mishra v. Commissioner of Customs Vide Final Order Nos. 70198-70199/2021, dated 6-9-2021. • Nand Kishore Modi v. Commissioner of Customs (Preventive), West Bengal, 2015 (325) E.L.T. 781. • Rajesh Pawar v. UOI, 2014 (309) E.L.T. 600 (Cal.). • Commissioner of Customs (Prev.) Kolkata v. Ashok Kumar Agarwal, 2017 (348) E.L.T. 555 (Tri. - Kolkata) 7. Learned Counsel submits further that Department has failed to discharge the obligation cast upon it; it is the case of the Department that the gold is smuggled; to prove the same, Department has not extended the investigation to reach the root of the matter and thus, completely failed to show as to how the gold were smuggled; on the contrary, the appellant submitted sufficient documents in support of the licit acquisition of seized gold and discharged the burden under Section 123 of Customs Act, 1962; theref....
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....ould prevail over the oral evidence, which is retracted. there is also no confession by the appellant that the gold was smuggled; he relies on Imtiaz Iqbal Pothiwala - 2019 (365) E.L.T. 167 (Bom.) 9. Learned Counsel submits that there is no material available on record to show that the invoices placed by the appellant were false or fabricated; there is no allegation to that extent either; department has either to accept the documents or to negate it but the department has not done either of the two, which is not permissible; apparently, the invoices contained GST number and PAN; the Department has never doubted the genuine nature of documents produced by the appellant; hence, documentary evidence prevails over the oral statement as held in Gopal Prasad 2020 (371) ELT 243 (Pat). He further submits that penalty cannot be imposed based on hearsay evidence, or the incriminating statement of other co accused as held in Vinod Solanki v. Union of India 2009 (233) ELT157 (SC). 10. Shri A.K. Choudhary, Learned authorised Representative, for the Revenue reiterates the findings of the impugned order and relies on, the decision, dated 28.06.2024, of High Court for Telangana in WP Nos 285....
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....uld not be liable to be seized in the first place; • If there was no reasonable belief, then the onus cannot be shifted on the person from whom the goods were seized; • wrong invocation of Section 110, leaves no scope to invoke section 123; • It would then be incumbent on the Customs authorities to prove that the seized goods are liable for confiscation; in the event of failure to prove so, there is no question of confiscation and penalty. 13. We find that the impugned Gold was seized from Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, travelling by Bus No UP-22AT-0568, on 04-05/09/2020, from Gorakhpur to Delhi. Understandably, seizure took place at a place far away from Customs Station, Air or Sea port, in an area not specified under a Section 111(H), as notified under Section 6 of the Customs, Act,1962; there were no foreign markings on the gold pieces seized; the purity was found to be 99.92, 97.81,99.26 and 89.34 and not 99.99 % by weight. It was not established that the persons apprehended were coming to India, form as place outside India. Under the circumstances, we are of the considered opinion that the authorities failed to estab....
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....re imported after the restrictions against import were imposed. (Amba Lal v. Union of India, AIR 1961 S.C. 264. In Pukhraj v. D.R. Kohli, AIR 1962 S.C. 1559 the Supreme Court said that when the court was dealing with the question as to whether the belief in the mind of the officer who effected a seizure, was reasonable or not, the court was not sitting in appeal over the decision of the said officer. All that it could consider was whether there was any ground which prima facie justified a reasonable belief. That the officer had reasonable belief must be stated in the notice to show cause. It must be adjudicated upon by the authorities under the Act. At the stage of appeal or revision from the orders of the officer adjudging confiscation each successive appellate or revisional authority has also to address itself to this requirement of reasonable belief. The seizing officer either by his own evidence or other materials placed before the adjudicating authority, has to prove to its satisfaction that there was ground for him to reasonably believe that the goods were smuggled goods, that is to say that the goods were imported into the country and imported at a time and place when they w....
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....y some definite material by way of some definite information or otherwise so that he could be said to have seized the goods in a reasonable belief that they were smuggled goods. (Bapalal v. Collector of Central Excise, AIR 1965 Gujarat 135). The question is whether the record before me shows that there was a reasonable belief in the mind of the seizing officer that the goods were smuggled goods. It does not appear to me that he had entertained any reasonable belief at the time of seizure. Neither the board on appeal, nor the Central Government applied their mind to this question. Two reasons: 57. Applying the principles of these cases to the facts of the present case what do we find? Two reasons were given in support of the reasonable belief. One is that the customs authorities received some information. What is that information? It was never disclosed to the petitioner. Nor was it disclosed to the adjudicating authorities. Very vague words such as `on information received' are used in the show cause notice. The information on which the customs authorities act must be definite information. No one suggests that they must disclose the name of the informant. That wou....
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....goods? 59. The belief must be such as any reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. Simply because the goods were not accounted for at that time does not necessarily mean that the goods were smuggled goods. Unaccounted goods may be stolen goods. Reasonable belief could be entertained either on the basis of some external indicia or on the basis of some internal information that the goods had been illegally imported into India from Nepal or some other foreign country either without payment of duty or in contravention of any restriction or prohibition imposed by statute. There was nothing to suggest the foreign origin of the goods. There was nothing to suggest the illegal importation of the goods into the country. 60. The goods must be smuggled goods. The word `smuggled' means that the goods were of foreign origin and they had been imported from abroad. Only then does the presumption under Section 123 arise. The goods themselves did not suggest that the petitioner was an old smuggler or a dealer in smuggled goods. If there was such information with the customs, they ought to have disclosed it. The....
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....e and Customs dated 18-9-1971 and the order of the Central Government dated 30-5-1972 are quashed. The respondents are directed to return to the petitioner items 6 to 11 and 16 of the search lists forthwith. The parties are left to bear their own costs. ... 15. We further find that The Hon'ble High Court of Bombay in the case of Union of India Vs. Imtiaz Iqbal Pothiawala reported in 2019 (365) ELT 167 (Bom.), held as under: "7. Secondly, the questions which arise for our consideration in this case is in the context of the application of Section 123 of the Act in respect of the goods notified therein. Gold is an item which is notified under Section 123 of the Act and it provides that burden of proof in case of notified goods, would be upon the person from whose possession and/or the person who claims ownership of the goods to prove that the seized goods are not smuggled goods. However, before the aforesaid burden could be cast upon the person who claims to be the owner of the seized goods, the Revenue should be able to establish that the goods seized under Section 110 of the Act, was on a reasonable belief that the imported goods were smuggled goods. Therefore, where sei....
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....onable 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. 17. We find that Tribunal in the case of Balanagu Naga Venkata Raghavendra Vs CC Vijayawada 2021 (378) ELT 493 (Tri-Hyd) held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. Tribunal held as follows. "14. The confiscation of the gold by the adjudicating authority was set aside by the Tribunal and on appeal by the Revenue the Hon'ble High Court of Kerala, in the above factual matrix, has overturned the decision of the Tribunal. Therefore, it was not merely the purity of the gold in question but also the statements made during the investigation which formed the basis of the reasonable belief of the officers. In the present case, none of the statements recorded by the Department admit to or even suggest that the gold was smuggled gold. It has also not been brought out in the sho....
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....forming reasonable belief under Section 123 without which the burden of proof will not shift to the person from whom the gold is seized." 18. We further find that the Tribunal in the case of Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T) dismissed the appeal of Revenue holding that jewelry not bearing any foreign marking and in the absence of any evidence other than statement of Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni, who retracted them later the officers of DRI could not establish that there are sufficient grounds to establish that the 'reasonable belief' as contemplated in Section 110 of the Customs, Act, existed in the case, before effecting the seizure. We find that the percentage of purity as per CRCL was 99.92, 97.81,99.26 and 89.34, which would not make any prudent person to accept that the impugned gold pieces were of foreign origin and were smuggled in to India. Not even a semblance of evidence appears to have been gathered to ascertain where did the gold come from? Who smuggled it? What was the modus of bringing in to India? Where and how was it handed over to the appellants or their agents. Therefore, the ....
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....at Shri Bhuvanesh Chand Agarwal, of M/s Shriji Traders, Lucknow. 20. These investigations are not conclusive enough to establish that the impugned gold was smuggled. Interestingly, both M/s Shriji Traders, Lucknow and M/s Mahaveer Bullion Traders New Delhi did not deny transactions with M/s Bajarang Bullion or shri Sharad Agrahari. To the reasons best known to them, they have stated that the signature on invoices produced by the Bajrang Bullion, to claim licit purchase of impugned gold was not theirs. Surprisingly, the investigation concluded at that point only. Neither the signatures were got verified nor further enquiries to ascertain or negate the claim of financial transactions etc. were conducted. As we find that the existence of reasonable belief was suspect, the onus to prove otherwise was not on the appellants but on the department. In the instant case, the appellants have discharged the burden by producing documents and accounts. We are of the considered opinion that burden envisaged in Section 123 is not absolute in nature. Once the persons from whom gold was seized have claimed licit purchase of the impugned gold, it was incumbent upon the investigation to disprove th....
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....by the Adjudicating Authority confiscating the goods is not sustainable. We find that Tribunal, in the case of Flamingo DFS Pvt Ltd., Vs. Commissioner of Customs, Visakhapatnam reported in 2018 (363) ELT 450 (Tri-Hyderabad), held that if Revenue chooses not to examine any person in the adjudication proceedings, it amounts to giving up that witness and such statement cannot be considered relevant. We find that the adjudicating authority not only relies on the statements of Shri Manoj Kumar Nishad, Shri Rajan Kumar Sahni, Shri Sharad Agrahari etc, but also records a finding that all of them have retracted their statements vide written replies filed in this regard. At least for this reason, Learned Commissioner should have examined them, under the provisions of Section 138 B, in the adjudication proceedings, so that he could rely on their statements and could have considered the statements to be reliable and relevant. We find that Hon'ble Punjab and Haryana High Court held, in the case of G-Tech Industries Vs. Union of India- 2016 (339) ELT 209 (P&H), that the statement of any person cannot be relied upon directly, in the context of Section 9D of the Central Excise Act, 1944 which is ....