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2025 (6) TMI 270
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....tice dated 12.04.2021 was issued proposing to confiscate the seized Gold under the provisions of Customs, Act, 1962; subsequently, search of residential premises of Girish Mitruka and Harish Mitruka, conducted on 06.07.2021, resulted in recovery of 7770.410 gm of silver valued at Rs. 3,20,738/- and cash amounting Rs. 16,50,000; in absence of any licit document about recovery of goods as mentioned, the same were seized under relevant provisions of Customs Act, 1962 and a supplementary show cause notice dated 22.11.2021was issued. It was alleged that smuggling of foreign origin gold into India from Myanmar was planned and executed by way of conspiracy by S/Sh. (i) Girish Mitruka (ii) Harish Mitruka (iii) Abhishek Kumar and (iv) Ritesh Kumar; Girish Mitruka & Harish Mitruka made arrangements for procuring foreign origin gold from Myanmar; as per instruction of Shri Girish Mitruka & Shi Harish Mitruka, Shri Abhishek Kumar and Shri Ritesh Kumar went to Guwahati, Assam, on 29.01.2021 & 02.02.2021 respectively; they took delivery of foreign origin gold and handed over the same to Shri Girish Mitruka & Shri Harish Mitruka in Katihar; Shri Harish Mitruka & Shri Girish Mitruka got the said g....
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....harged from the firm. • on 13.2.21 DRI, Zonal Unit, Lucknow, has intercepted and seized 3499.750 gm of gold from both the employees Abhishek and Ritesh on Lucknow-Ayodhya Highway, while they were under transit for delivering the gold to the purchaser; Harish Mitruka has filed his written reply 30.03.21 before the DRI Patna, stating the same. • the statement of both the employees Ritesh and Abhishek has been recorded by the DRI officials under coercion; both the employees Abhishek Kumar and Ritesh Kumar retraction of their statements dated 13.02.21, on 18.02.21 at the first opportunity, before the special CJM (Customs), Lucknow; they have also submitted in their replies dated 25.05.21, to the Show Cause Notice that they were the employees of Harish Mitruka and have requested for the release of gold; statements recorded under coercion having been retracted immediately, cannot be used or relied upon against the assessee • In his statement dated 06.07.21, Shri Girish Mitruka stated that the silver seized from the house is the old family property which has been melted the profit and partitioned amongst the family members. It has been further stated....
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.... the entry in the GSTR-2A return of the purchaser is automatic and auto-populated with the GSTR-1 return of the seller; the invoices issued by the sellers, when duly reflected in the GSTR-2A return, cannot be said by any stretch of imagination to be fake and manipulated; it is evident that the seller cannot deny the issuance of the invoices; it appears that the statement of the sellers have been recorded under coercion behind the back of the appellant; no opportunity of cross-examination of the sellers was given to the appellant, which is clear violation of principles of natural justice; • Learned Commissioner, in the impugned order, has failed to categorically conclude that the present case falls within the exceptions provided under Section 138B and therefore the impugned order is liable to be set aside on this very ground itself; Section 122A of the Customs Act, 1962 makes the principles of natural Justice applicable to an adjudication proceeding undertaken under the Act of 1962 4. The appellants relied on the cases in the grounds of appeal and submit as follows: (i). K.I. PAVUNNY versus Assistant Collector, reported in 1997 (90) ELT 241 (SC) to submit th....
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....8 (362) ELT 465 (Bom.) to submit that in the absence of cross examination, reliance on the statement of witnesses on the ground that all reasonable efforts were made to ensure their presence is not sustainable. 5. Shri Santosh Kumar, Learned authorised representative for the Revenue, reiterates the findings and the impugned order and submits as follows: • Shri Abhishek Kumar and Shri Ritesh Kumar failed to provide any licit documents in respect of gold recovered from them at the time of interception, on 13.02.2021;burden of proof under section 123 of Customs Act, 1962 has not been discharged; both the persons intercepted by the DRI, in their statements admitted that gold was of smuggled through Myanmar into India via Guwahati to Katihar (Bihar) and then delivered to different places; statements of both the persons, are corroborative to each other and with the other factual circumstances; appellants had never been able to produce any valid documents in support of their claim of the seized gold and silver; the gold is a notified item under Section 123 of the Act; therefore, in absence of any valid documents, the recovered gold will be considered as foreign origin gold....
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.... the arguments of the Learned Counsel for the appellants that the claim of legal purchase of Gold is incorrect; bank statements indicate that all the entries in respect of claimed purchase are of after the date of interception i.e. after 13.02.2021; Statements of the shop owners and follow up investigation conducted by the DRI, proved that the said invoices were fake and manipulated. He submits that the plea that statements of Shri Abhishek Kumar and Shri Ritesh Kumar were recorded by the DRI under coercion and have been retracted is unfounded; mere retraction does not make the statements involuntary or unlawfully obtained and non-reliable; he relies on the following cases: • Vinod Solanki 2009 (233) ELT 157 (SC) • Rajendra Kumar Damani @ Raju Damani 2024 (389) ELT 444 (Cal.) • Zaki Ishrati2013 (291) ELT 161 (All.) • Surjeet Singh Chhabra 1997-89-ELT-646-SC • KTMS Mohammed AIR 1992 SC 1831 • D. Bhoormull 1983(13) ELT 1546 (SC) 7. Heard both sides and perused the records of the case. Brief issues that require our consideration in the instant case is to see as to whether (i). Whether the Department co....
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..... 9. The appellants submit that the entire payment was made to all the parties by banking channels; bank statement was annexed with reply to Show Cause Notice; Payment of 12,78,487.00 has been made to Narayan Alankar Mandir on 10.03.2021; payment to Ashok Kumar Ashish Kumar has been made on several dates i.e. 25,00,000 + 24,59,450 on 01.03.2021+ 18,50,000 on 03.03.2021+ 20,00,000 plus 19,00,000 on 06.03.2021; payments of 38,40,000on 22.02.2021 and 17,12,818on 10.03.2021 were made to Maruti Ornaments. They submit that these sellers have duly filed their returns under the GST; on the filing of GSTR-1 return by the sellers, on the portal of GST, invoices are auto populated and its duly reflected in the GSTR-2A return of the firms; these facts evidence that the gold seized is of Indian origin and is a legal purchase by M/s Mitruka Traders and that it is incorrect to allege that the invoices are fabricated. They submit that they were not allowed to cross-examine Shri Abhishek Kumar and Shri Ritesh Kumar and the said investigation report was not supplied to the appellants enabling them to defend themselves, in violation of the principles of Natural justice. 10. We find it would be ....
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....der Section 110; the reasonable belief cannot be based on presumption; a case of suspicion or speculation is not one of reasonable belief. • If there was no reasonable belief, then the onus cannot be shifted on the person from whom the goods were seized; Section 123 kicks in only when Section 110 is satisfied and that "reasonable belief" exists and can be explained before the adjudicating authority or tribunal or court, as the case may be. • If Revenue fails to prove reasonable belief, then the goods would not be liable to be seized in the first place. 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. • If Revenue is able to prove reasonable belief, then the seizure under 110 is proper and Section 123 sets in. If the person from whom goods were siezed is able to prove that the goods in question were not smuggled, then the onus under Section 123 stands discharged. 12. In view of the above, it is clear that it would be incu....
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....ods seized were smuggled. 55. Reasonable belief as required by Section 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. (M.G. Abrol v. Amichand, AIR 1961 Bom. 227). The condition precedent that there was such a reasonable belief anterior to the seizure must exist before the presumption under Section 123 can be invoked. Section 123 says. ............................................................................................................ 56. In Babulal Amthalal Mehta v. Collector of Customs, AIR 1957 S.C. 877, while considering the provisions of Section 178A of the Sea Customs Act, 1878, it was observed; "Though the word 'smuggling' is not defined in the Act, it must be understood as having the ordinary dictionary meaning, namely, carrying of goods clandestinely into a country." Where Section 123 cannot be invoked it would be for the customs authorities to prove that the goods were 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....
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....icer. Nevertheless, it is manifest that at the stage of the adjudication (when only the rule of evidence laid down by the section comes into operation) the very facts which led the seizing officer to effect the seizure, as distinguished from their significance as affording a reasonable belief for the seizing officer to hold that the goods are smuggled, are before the adjudicating officer. These facts which justified the seizing officer to reasonably believe that the goods were smuggled would certainly import a rational connection between the facts on which the presumption is raised and the fact to be proved, so that whatever other constitutional infirmity might attach to the impugned provision, the lack of rational connection is not one of them." It would be necessary, therefore, before any person could be called upon to prove that the goods seized from him were not smuggled goods, that the customs officer making the seizure must proceed upon the foundation of a reasonable belief inspired in him by 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. (....
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....ioner claimed that they belonged to the queen mother of Nepal. A letter was written to queen mother. On her behalf a reply was received that she had given certain ornaments to the petitioner for polishing, remaking etc., though not for sale. But this was done later on. The letter was written on 3-7-1967. The reply was received on 24-7-1967. But at the time of seizure all that the officer had before him were 2 packets of diamonds and 5 ornaments. Neither the diamonds nor the ornaments had any foreign markings or label to suggest to the customs that these were smuggled goods. In the search list these two packets of diamonds are described as "appearing to be diamonds". This shows that the customs officer did not believe them to be diamonds on any reasonable ground. The ornaments had no foreign label or making. They were ordinary ornaments as are worn in this country. There was nothing peculiar about them. Nothing extraordinary. On this material could any reasonable man entertain a belief that these were smuggled 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 beca....
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....that as the goods had not been accounted for these are smuggled goods. At the time of seizure what happened was this. The petitioner was present at the shop. He told the customs officer that they were duly entered in his account books but his accountant had gone to the income tax officer. The officer did not wait for the man to arrive to explain the entries to him. He seized the goods and took them away. This was not a case of reasonable belief. It was a case of suspicion. A case of speculation. A case of guess work. 63. As a result, Section 123 did not apply to the case. There was no reasonable belief. No presumption could be raised under Section 123. There was no obligation on the petitioner to prove that the goods were not smuggled. The burden of proof was wrongly cast on him. The entire inquiry was vitiated. 64. For these reasons the writ petition is allowed. The order of confiscation of the goods is set aside. The order of the Addl. Collector of Customs dated 14-08-1968 the order of the Central Board of Excise 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 a....
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....heft become smuggled goods. Moreover, smuggling as defined under Section 2(39) of the Act, is an act or omission which will render goods liable to confiscation under Section 111 of the Act for import and 113 of the Act for exports. On reading of Sections 111 and 113 of the Act, not keeping proper books of account or not being registered with the income-tax and/or Sales Tax Authorities, is not an omission which renders the goods liable for confiscation i.e. smuggled goods. 15. We further find that Hon'ble Supreme Court in the case of Tata Chemicals Ltd Vs Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628, which has explained 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 lea....
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....as smuggled. Therefore, the Officers did not have a reasonable belief in the first place to assert that the seized primary gold was smuggled gold which is essential to shift the burden on to the accused under Section 123. The case of Om Prakash Khatri (supra) was different inasmuch as in that case while the foreign markings were missing on the gold in that case the carriers had admitted that they were carrying smuggled gold for Shri Khatri and that it was smuggled through Kerala and they were carrying it to Bombay and marks and numbers have been deleted to avoid being caught. They also admitted that they avoid air travel as there is a high risk of being caught. Coupled with these statements was the fact the gold of very high purity. The ratio of this judgment does not apply to the present case and the facts are quite different. 15. In view of the above, we find that the officers of the Department had no reasonable belief that the gold was smuggled and therefore they have not discharged their responsibility of forming reasonable belief under Section 123 without which the burden of proof will not shift to the person from whom the gold is seized." 17. We further find that ....
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....al pronouncements, we find that Revenue needs to prove the smuggled nature of goods with cogent evidence. It is another matter that the persons involved may have committed any offence, in respect of the gold carried, punishable under any other law for time being in force. It itself does not make goods liable for confiscation under Customs Act and persons involved liable for penalty. The Revenue requires to prove that the gold is of smuggled nature even when it is notified under Section 123.We further find that Revenue did not establish that silver valued at Rs. 3,20,738/- and cash amounting Rs. 16,50,000 are sale proceeds of the smuggled goods. Therefore, we find that neither the seized goods are liable for confiscation under Section 111 nor the persons involved are liable for penalty under Section 112. The provisions of Section 123 are not attracted. 19. The next issue to be seen is as to whether in the facts and circumstances of the case, the appellants have discharged the Burden of Proof as envisaged under Section 123 of Customs Act,1962. Though, in view of our discussion as above, we are of the considered opinion that the reasonable belief under Section 110 not being establi....
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....iven opportunity to cross-examine Shri Abhishek Kumar and Shri Ritesh Kumar. We find that there is merit in the submissions of the appellant on the transactions made by them through banks in respect of the purchase of gold and the issuance of invoices under GST populating the details in GSTN-1. We find that the claim cannot be brushed aside on the basis of an investigation stated to have been conducted by the DRI at the back of the appellants and particularly, when copy of the same was not provided to the appellants. We find that the presumption or burden under Section 123 is not absolute. Initially, yes, the burden is on the accused from whom the notified goods are seized. But once that burden is discharged by that person, it is to be rebutted or proved wrong by the Revenue. Account details, financial transactions and GSTN returns cited by the appellants could have been easily corroborated and verified. Revenue has not done the same. Instead, they rely on an investigation said to have conducted by DRI, at the back of the appellants and copy of which is neither given to the appellant nor part of the proceedings. Therefore, we are of the considered opinion that not only the claim of....
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....that he could rely on the statements of Shri Abhishek Kumar & Shri Ritesh Kumar, who are co-accused, to conclude that the impugned gold was liable for confiscation. We find that the mandate not having been followed statements of the Shri Abhishek Kumar & Shri Ritesh Kumar cannot be held to be voluntary in nature and hence reliable, more so, looking in to the fact that the cross examination of the same was also not allowed. We find that Hon'ble Apex Court held in the case of Surinder Kumar Khanna- Vs. Intelligence Officer, DRI- 2018 (362) ELT 935 (SC) 14 - "In the present case it is accepted that apart from the aforesaid statements of co-accused there is no material suggesting involvement of the appellant in the crime in question. We are thus left with only one piece of material that is the confessional statements of the co-accused as stated above. On the touchstone of law laid down by this Court such a confessional statement of a co-accused cannot by itself be taken as a substantive piece of evidence against another co accused and can at best be used or utilized in order to lend assurance to the Court. In the absence of any substantive evidence, it would be inappropriate t....
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.... alleged smuggling of the impugned Gold are very general in nature. It would be very naïve to expect that the accused would confess the most minute details, even if they actually smuggled the impugned goods. What is intriguing is that the officers did not even put the relevant and pertinent questions to unearth or establish the act of smuggling. As such, it is not open for the department to draw conclusions from a general statement to particularize the details about the impugned goods. As admittedly, the gold having no foreign markings, the onus would be on department to prove the smuggled nature of the same. This onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, it cannot be conclusively relied upon. 25. In view of the above discussion we find that in the instant case, presence of reasonable belief is not established as the seizure took place at a place 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 and that ....