TaxTMI 
TaxTMI 
2025 (5) TMI 2109
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.... No.550 of 2019 dated 14.11.2019, the Appellate Commissioner allowed the appeal filed by the Respondent against Order-in-Original No.65168 of 2018 dated 10.09.2018 passed by the Additional Commissioner of Customs, (Chennai-III) Commissionerate, Chennai. 3. The Respondent had earlier suffered an adverse order in Order- in-Original No.65168 of 2018 dated 10.09.2018 from the File No.OS.No.08/2017-PAU/DRI/CZU/VIII/48/ENQ-1/INT-01/2017 in the hands of the Additional Commissioner of Customs, (Chennai-III) Commissionerate, Chennai. 4. By the aforesaid Order-in-Original No.65168 of 2018 dated 10.09.2018, the Additional Commissioner of Customs, (Chennai-III) Commissionerate, had passed the following Order:- i. I confiscate the seized 3.097 kg of foreign origin gold bars, totally valued at Rs. 91,98,090/- under Section 111(a), 111(d) and 111(i) of the Customs Act, 1962. ii. I confiscate the packing materials with no commercial value used for concealing the smuggled gold bars under Section 119 of the Customs Act, 1962. iii. I impose penalty of Rs. 5,00,000/- (Rupees Five Lakhs Only) on Shri Mohammed Ali Jinnah under Section 112 of the Customs Act, 1962. ....
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.... of Revenue Intelligence (DRI). 11. During the personal search, the Officers recovered a copy of the Aadhaar Card bearing No.6674 6560 5340, 4 Bus Tickets viz., Ticket No.047841, Ticket No.29737, Ticket No.85449 and Ticket No.084311 and Ticket No.80372 for Trichy to Chennai. 12. The Officers found two packets of gold bars wrapped with blue adhesive tape which were kept in green and blue polythene bags and on cutting the two packets after removal of the blue adhesive tapes from the two packets, it was found wrapped in black tape, brown adhesive tape and thin white paper. The packet contained 2 crude gold bars weighing about 3097 grams (1720 grams + 1377 grams) and was valued a total sum of Rs. 91,98,090/- at Rs. 2,970/- per gram. 13. The seized gold bars appeared to have been concealed and smuggled into India from Srilanka without declaring with the Customs Department with an intention to avoid payment of appropriate customs duties and therefore were liable for confiscation under the provisions of the Customs Act, 1962 and therefore, a mahazar was drawn on 23.01.2017. 14. In a voluntary statement dated 23.01.2017, the Respondent also stated that one person named Murugan ....
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....tary statement on 23.01.2017 and 24.01.2017 that he travelled from Devekottai and reached Chennai and that he maintained a Bank Account in Indian Overseas Bank (IOB), Devakottai and that had earlier worked in Malaysia and Saudi Arabia and submitted a copy of the passport. However, the Respondent admitted that he neither had a PAN Card nor was an Income Tax Assessee. 20. The Respondent was thus summoned on 10.04.2017 for personal appearance on 17.04.2017 to which the Respondent replied that he was not well and would later appear. Letters were also received from Shahul Hameed, Ayesha Beevi and Nashrina Begum, the father, the mother and the wife of the Respondent, who claimed that the seized gold bars were not smuggled gold bars but were purchased in India only from the Respondent earnings. 21. However, on verification from the Bank Statement of the Respondent, it was noticed that the Respondent only had a meagre bank balance of Rs. 415/- and mostly cash deposits and withdrawals were made only during the period before the seizure of the gold. 22. The Additional Chief Metropolitan Magistrate (E.O.I), Egmore, Chennai vide Order dated 31.08.2017 in Crl.M.P.No.1818 of 2017 confir....
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....he burden of proof is on the person from whose possession, the goods were seized under Section 123 of the Customs Act, 1962, the initial burden of proof has been discharged by the Department. It is therefore submitted that Order-in-Original No.65168 of 2018 dated 10.09.2018 that was passed by the Additional Commissioner of Customs, Chennai-III Commissionerate was rightly interfered and set aside by the Appellate Commissioner vide Order-in- Appeal Seaport C.Cus.II No.550 of 2019 dated 14.11.2019 which decision was affirmed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) vide Impugned Order. 27. Learned Senior Counsel for the Respondent further submits that at the time when the mahazar statement was recorded, telephone numbers of the said Murugan and Batcha alias Pitchai were recorded. However, no statements were obtained from the said Murugan and Batcha alias Pitchai. 28. It is submitted by Learned Senior Counsel for the Respondent that the seized gold bars were assayed i.e., valued by appropriate gold assayer on 24.01.2017 who certified that the 2 gold bars were of 24 Carat of the purity (99.9%) of 999.9 fineness and that the value of the crude gold bar wei....
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....further contend that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has appreciated both the oral and documentary evidence placed on record in proper perspective and has rightly dismissed the appeal preferred by the Appellant as against the Order passed by the Commissioner of Customs (Appeals-II), Chennai, who also on going through the entire materials placed before him, has set aside the confiscation of goods (gold) and also penalties imposed by the adjudicating authority. Therefore, it is contended that both the authorities below have rightly adjudicated the matter and passed well-considered orders which require no interference. 32. It is submitted by the learned Senior Counsel for the Respondent that the observation of the Additional Chief Metropolitan Magistrate (E.O.I), Egmore, Chennai vide Order dated 31.08.2017 in Crl.M.P.No.1818 of 2017 that the seized crude gold bars did not have any foreign markings which ought to have been considered by the Additional Commissioner of Customs, Chennai-III Commissionerate while ordering absolute confiscation of the gold bars seized from the respondent weighing about 3097 grams under Section 111(a), (d) and (i) of the Cu....
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....ure of the two gold bars from the custody of the Respondent. 40. It has to be borne in mind that the seizure of gold bars from the Respondent on 23.01.2017 was not a mere coincidence or a chance as seizure was from an area which is normally and ordinarily under the control of the local police. 41. It has to be remembered that the Officer from the Customs Department including the Directorate of Revenue Intelligence (DRI) depend on tip-off from wide network of informants they have developed. The Officers from the Directorate of Revenue Intelligence (DRI) admittedly seized the gold bars from the custody of the Respondent at the Pallavaram Bus Stand, Chennai on 23.01.2017. The Respondent has not denied that the gold bars were seized from his custody. 42. But, for the intelligence gathered by the Officers from the Directorate of Revenue Intelligence (DRI) from their sources, they would not have got information regarding transportation of gold bars in person with the Respondent. 43. Based on the aforesaid information gathered, the Officers from the Directorate of Revenue Intelligence (DRI) intercepted the Respondent at Pallavaram Bus Stand, Chennai at about 6.30 p.m. in the e....
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....ning and were melted into 2 gold bars through a goldsmith. 51. However, in response to the summons issued by the Department, the Respondent in his statement dated 07.06.2017, stated that he started from Devekottai, Sivagangai District to Pudhupattinam on 21.01.2017 in the night and that he visited Kottaipattinam Dhargha at about 3.00 a.m. on the following day on 22.01.2017 and thereafter proceeded back to Devakottai via Thondi, from where he proceeded to Pudukottai and thereafter to Chennai via Trichy. 52. The Respondent had not stated that he visited his house in Devakottai, Sivagangai District on 22.01.2017 enroute to Chennai via Pudukottai, Trichy after returning from Kottaipattinam Dhargha. The uniform and consistent statement of the Respondent from the date of retraction and the letters of the father, namely Shahul Hameed, the mother, namely Ayesha Beevi and the wife, namely Nashrina Begum of the Respondent are similar though with contradictions. 53. However, the facts remains that the Respondent's wife in her statement dated 14.07.2017, has introduced the name of Kannan Aachari of East Street, Nambudhalai who allegedly melted the jewellery and gold coins purchase....
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....ho also deposed and gave statements under Section 108 of the Customs Act, 1962 on 14.07.2017. 60. The statement of the Respondent and his wife also stands contradicted by the statement of the said Umar Katha, the uncle of the Respondent's wife. Both these person have denied either melting of the jewellery or having any connection with the gold bar or jewellery seized from the Respondent. 61. In fact, in his statement dated 14.07.2017, the said G.Kannan Aachari of East Street, Nambudhalai has clearly stated that the Respondent's wife's uncle namely the said Umar Katha used to sometimes place orders for small jewellery and that barring the same, there were no other transactions and that the Respondent and his family members have merely used his name deliberately to extricate themselves from the problems they were facing under the Customs Act, 1962. 62. In his statement dated 17.07.2017, the Respondent has however tried to downplay the statement given by his wife on 14.07.2017 by stating that the Respondent's wife's uncle Umar Katha was acquainted with another Aachari namely Kannan Aachari of Thondi, Ramanathapuram District when the Respondent was employed....
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....dated 20.02.2017 of the Respondent and the statement given on 17.07.2017 by the Respondent. It is only on the strength of these contradictory statements, Show Cause Notice dated 21.07.2017 was issued subsequently to the Respondent, to the said Murugan and to the said Batcha alias Pitchai. 70. The fact however remains that the Respondent has not discharged the burden of proof cast on him under Section 123 of the Customs Act, 1961. The Respondent has not proved the means of purchase of huge quantity of gold bars which according to him were purchased as bullions / gold coins over a period of time and melted. 71. As per Section 123 of the Customs Act, 1962, the burden of proof in certain cases, where any goods to which the Section applies are seized in the reasonable belief that they are smuggled goods then the burden of proving that they are not smuggled goods shall be, in a case where such seizure is made from the possession of any person, the burden of proof would be on the person from whose possession the goods were seized and 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. 72. Sec....
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....in". 75. The Hon'ble Supreme Court in "Union of India Vs. Shyamsunder", AIR 1994 SC 485, held that the persons from whom the contraband articles were seized had not satisfactorily discharged the burden of proof cast on them as required by Section 123 of the Customs Act, 1962 that they are not smuggled. 76. Applying the decisions of the Hon'ble Supreme Court to the facts of the case, it is clear that that if the goods are seized on a reasonable belief that they are smuggled goods, then the burden is shifted on persons as specified in the aforesaid Section. 77. The Respondent has not produced any document to establish the means to purchase 3.097 Kg of gold bars / coins or gold jewellery as was stated by the Respondent and later by the Respondent's wife Nashrina Begum on 14.07.2021. 78. The Respondent has not explained the source of Income for having purchased gold worth valued at Rs. 91,98,090/- on the date of seizure. Therefore, it cannot be said that the Respondent had discharged the burden of proof under Section 123 of the Customs Act, 1962. 79. That apart, adjudication under the Customs Act, 1962 is governed by the Principle of Preponderance of Probabil....
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....trace out the call details of the persons and their whereabouts on the date of the seizure and few days before the date of the seizure. 85. Records reveal that the mobile SIM number which was used by the Respondent was registered in the name of one Krishnaveni and was procured from a retailer namely 'Filosa Communications'. 86. The photographs attached to the SIM Registrations Forms / Applications for the aforesaid mobile SIM number and the photographs in the Electoral Photo Identity Card / Voter Identity Card itself indicates that photos are of two different persons but the name of Krishnaveni was used to register the SIM. 87. The call data between 09.01.2017 and 23.01.2017 indicates that several calls were exchanged between Mobile No.7395940600 and Mobile No.7397320012. Mobile No.7395940600 which was used by the said Batcha alias Pitchai had been in regular touch with Mobile No.7397320012 used by the Respondent. 88. It was incumbent on the part of the Customs Department to have also taken steps to get to the root of modus operandi adopted by the smugglers right from the registration of mobile numbers with fake names / identity and how an ordinary person like t....
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....le Phone with SIM No.7397320012 which was in the name of Krishnaveni. The Respondent has also not given any explanation as to why he was not having a mobile SIM registered in his name. It is quite possible this information was elicited but was deliberately not kept in the official records to allow the real persons behind the scene out of the bounds of law. 96. It is clear that the Respondent was employed by high and mighty. They were regularly indulging in nefarious activities including the smuggling of gold and contraband items using mobile phone with fake identities and employed the Respondent as a carrier to transport the smuggled gold bars. 97. It is thus clear that there are several infirmities in the shoddy investigation carried out by the Directorate of Revenue Intelligence (DRI). The investigation was shoddy only to allow the actual smugglers of the gold bars to go scot-free and to punish the Respondent who was merely used a cheap labour to transport the smuggled gold bars. It is clear that the Customs Department and the Directorate of Revenue Intelligence (DRI) have allowed the main culprit to go scot-free. 98. It was incumbent on the part of the Respondent to hav....
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....y a carrier with no means, we are inclined to partly modify the penalty imposed on him. It is reduced to Rs. 1,00,000/- to allow him to start his life afresh. 104. Since the Respondent has not proved that he had no means to buy gold worth Rs. 91,98,090/-, we hold that it was correctly ordered to be confiscated by the Additional Commissioner of Customs, (Chennai-III) Commissionerate in the Order-in-Original No.65168 of 2018 dated 10.09.2018 from File No.OS.No.08/2017-PAU/DRI/CZU/VIII/48/ENQ- 1/INT-01/2017. 105. Thus, this Civil Miscellaneous Appeal stands allowed. No costs. Connected Civil Miscellaneous Petition is closed. ============= Document 1 Statement in Tamil Statement in English நான௠எனà¯à®©à¯à®Ÿà¯ˆà®¯ கடà¯à®®à¯ˆà®¯à®¾à®© I used to buy and store this gold உழைபà¯à®ªà®¿à®©à¯ மூலம௠வெளிநாடà¯à®•à®³à®¿à®²à¯ with the savings I had வேலை செயà¯à®¤à¯ சிறà¯à®• சிறà¯à®• ச....