TaxTMI 
TaxTMI 
2025 (8) TMI 1571
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...., 110, Mahatma Gandhi Road, NER, Shillong - 793 001, Meghalaya. 1.2. As both these appeals emanate from a common order, they are taken up together for disposal by way of a common order. 2. The facts of the case are that on 24.07.2015, personnel of 24th Assam Rifles, Khudengthabi, Manipur, intercepted one Maruti Van bearing Registration No. MN-06L-6803. On examination of the said vehicle, the personnel of 24th Assam Rifles recovered 20 (twenty) pieces of yellow metal (gold biscuits), wrapped in carbon paper and plastics, from a secret compartment of the rear seat of the said vehicle, amongst other items. Upon being asked, the driver of the said vehicle identified himself as Shri Soibam Subhash Singh, the appellant no. 2 herein, who stated that the said goods were being carried from Moreh to Imphal. The personnel of 24th Assam Rifles were of the belief that the said gold biscuits recovered were of foreign origin and accordingly handed over the said gold biscuits, along with the vehicle in question, to the officers of Customs Preventive, Moreh for further necessary action under the Customs Act, 1962. 3. On receipt of the gold pieces from the 24th Assam Rifles personnel, the o....
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....ts weighing 3320 grams. In his petition, the appellant no. 1 also stated that he had purchased the gold in question from M/s. Sangham Diamonds Pvt. Ltd., Office No. 12, 2nd Floor, Renuka Building,1st Bhatwadi, Opera House, Mumbai 400 004 under Tax Invoices No. SD/JEW/JUN/003/2015-16 dated 05.06.2015, SD/JEW/JUN/004/2015-16 dated 08.06.2015 and SD/JEW/JUN/005/2015-16 dated 11.06.2015. It was further submitted by Shri R. Rajesh Naykar / appellant no. 1 that he had found it risky keep the said gold in Moreh and had decided to bring the said gold from Moreh to Imphal for further dispatch to Mumbai for resale since the price of gold was showing declining trend; that he telephonically directed his brother to hand over the said gold to Shri Soibam Subhash Singh, Driver-cum- owner of Maruti van bearing Registration no. MN-06L-6803 along with the copies of the said tax Invoices on 27.03,2015, as it was impossible for him to personally go from Imphal to Moreh due to vehicle strike on Imphal Moreh Road. It has also been stated that although Shri Soibam Subhash Singh was having the documents evidencing legal procurement of the said gold, due to nervousness and being frightened at the sight of ....
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....e confiscation of the 20 (twenty) gold biscuits collectively weighing 3320 grams valued at Rs.83,00,000/- under Section 111(b) and (d) of the Customs Act, 1962, besides ordering absolute confiscation of the Maruti Vehicle bearing Registration No. MN-06L-6803 valued at Rs.1,50,000/- under Section 115(2) ibid. Penalties of Rs.8,00,000/- each have also been imposed by the ld. adjudicating authority on the appellants herein under Section 112(b) of the Act. 7. Aggrieved by the confiscation of the gold biscuits, Maruti vehicle and imposition of penalties on them, the appellants have filed the present appeals. 8. The Ld. Counsel appearing on behalf of the appellant has made various submissions, which inter alia are as follows: - (i) The appellant no. 1 viz. Shri R. Rajesh Naykar, is a registered jeweller in Moreh, Manipur. under the Manipur Value Added Tax (VAT) with TIN: 14922640149 and holds Certificate of Registration No. 14922512231 under the Central Sales Tax (Registration & Turnover) Rules, 1957. (ii) The appellant no. 2 viz. Shri Soibam Subhash Singh in his bail application dated 24.07.2015, before the Ld. Chief Judicial Magistrate, Chandel, Manipur, claimed....
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....d jewellery and that there were no markings on the gold bars so sold." (vii) This confirmation by the supplier corroborates the claim of the appellant no. 1 regarding the lawful purchase of gold through verifiable and documented transactions. It is also noteworthy that the gold seized corresponds exactly in weight to the quantity mentioned in the aforesaid invoices, and that the supplier has acknowledged the absence of any foreign markings on the gold bars, nullifying any presumption of foreign origin. (viii) Accordingly, the verification undertaken by the Department establishes the genuineness of the purchase documents beyond reasonable doubt and supports the appellant's claim of lawful acquisition. (ix) Two Show cause notices dated 12.10.2015, and dated 17.03.2016 were issued, within a period of five months, stating different grounds for confiscation U/s 124 of the Customs Act, 1962: First SCN, dated 12.10.2015, has been issued to Shri S Subash Singh, Driver/carrier, proposing confiscation of seized Gold on the grounds that there were no owner or documents in support of the seized Gold, hence seized Gold were unclaimed, foreign origin and illeg....
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....aga Venkata Raghavendra v. Commissioner of Customs, Vijayawada [2021 (378) E.L.T. 493 (Tri. - Hyd.)] • Balwant Raj Soni & ors. v. Commissioner of Cus. (Prev.), Patna [Final Order Nos. 75455-75457 of 2023 dated 18.05.2023 in Customs Appeal No. 75414 of 2022 - CESTAT, Kolkata] • Sarvendra Kumar Mishra & Anr. v. Commissioner of Customs [2021 (9) TMI 405 - CESTAT, Allahabad] • Commissioner of Cus (Prev.), Patna v. Lalit Krishna Agarwal [Final Order No. 77506 of 2023 dated 08.11.2023 in Customs Appeal No. 75499 of 2022 - CESTAT, Kolkata] • Commissioner of Cus., Chennai-III v. Mohammed Ali Jinnah [Final Order No. 40289 of 2023 dated 20.04.2023 in Customs Appeal No. 40099 of 2020 - CESTAT, Chennai] • Ajit Bhosle v. Commissioner of Cus. (Prev.), Kolkata [Final Order Nos. 77019-77022 of 2019 dated 09.08.2019 in Customs Appeal Nos. 75667 to 75670 of 2017 - CESTAT, Kolkata] • Oryx Fisheries Pvt. Ltd. [2011 (266) E.L.T. 422 (S.C.)] • Siemens Ltd. [2007 (207) E.L.T. 168 (S.C.)] 8.1. Further, the appellant no. 1, Shri R. Rajesh Naykar, has made additional submissions vide letter dated 06.08.2025 wherein....
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.... they have categorically stated that there were no markings on the gold sold by them. As five of the gold pieces seized in this case bear the markings of 'THOON' on them, the Ld. Authorized Representative of the Revenue contends that the gold sold by M/s. Sangam Diamonds Pvt. Ltd., Mumbai to the appellant are different from the gold seized in the present case. Thus, he submits that the purchase invoices submitted by appellant no. 1 cannot be considered as evidence of legal purchase of the gold in question. Accordingly, the Ld. Authorized Representative of the Revenue has supported the demands confirmed in the impugned order. 10. Heard both sides and perused the records. 11. Having gone through the documentary evidence available on record, we find that the following issues emerge for our consideration: - (i) Whether the seizure of the gold was based on a 'reasonable belief' as required under Section 110(1) of the Customs Act, 1962 or not. (ii) Whether the seized gold actually bore the "THOON" marking, and if so, whether the marking is sufficient to establish the gold's foreign origin or not. (iii) Whether the burden of proof under Section 123 of ....
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.... by the personnel of Assam Rifles and later handed over to Customs, meaning that the Customs officer did not act on his independent belief but merely accepted the seizure done by another agency. The Hon'ble Supreme Court in Union of India v. Mohammed Nawaz Khan, (2021) 10 SCC 100, held that the authority effecting the seizure must demonstrate a subjective satisfaction based on objective material, failing which the seizure is invalid. 12.6. We observe that even after accepting the gold from personnel of the Assam Rifles, the Customs officers did not derive any subjective satisfaction that the gold was of foreign origin and smuggled. The seizure inventory fails to disclose any material evidence justifying a 'reasonable belief' for seizure of the gold. In this regard, we observe that the mere finding of gold does not render it liable for seizure unless there is cogent and positive evidence proving its foreign origin as the first condition, as precursor to seizure. The Hon'ble Supreme Court, in Gian Chand v. State of Punjab (1962 AIR 496), has categorically held that mere suspicion is not sufficient to justify seizure, and the prosecution must provide substantive evidence of foreign....
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.... no 'reasonable belief' in this case for seizure of the gold in question in terms of Section 110(1) of the Customs Act, 1962. Thus, the issue no. (i) framed at paragraph 11 of this Order is answered in the negative. Issue No. (ii) Whether the seized gold actually bore the "THOON" marking, and if so, whether the marking is sufficient to establish the gold's foreign origin or not. 13. We find that in the instant case, 5 out of the 20 seized gold bars bore the marking "THOON", which has been construed to be of foreign marking by the Ld. Adjudicating authority for confiscation of the gold in question under the Customs Act. 13.1. It is observed that the appellant no. 1 had questioned the said "THOON" markings before the ld. adjudicating Authority, who directed for physical verification of the seized gold, which was conducted on 22.04.2019 at Imphal Customs Office. It was found that out of total 20 (twenty) pieces of gold biscuits under seizure, only five pieces of gold bear markings - THOON' and the remaining fifteen pieces of the seized gold do not have any markings. 13.2. In this regard, the appellant no. 1 has contended that the gold biscuits were melted and THOON....
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....a to town or a person coming from an international border, I hold that simply possession of foreign marking gold without a bill does not lead to the conclusion that it is smuggled." 13.6. The Hon'ble Bombay High Court in the case of State of Maharashtra v. Prithviraj Pokhraj Jain [2000 (126) E.L.T. 180 (Bom.)] has held as under: - "19. The burden was, therefore, on the prosecution to prove that the goods were smuggled. For this the prosecution relied upon the evidence of Hebbar who stated that he believed the goods to be smuggled, because watches and watch straps were of foreign origin, the import of which was heavily restricted and prohibited and they were found in huge quantity. The foreign origin of the watches is tried to be shown from the foreign markings on the watches. The question whether the foreign markings of goods can be treated as admissible in evidence was considered by Naik J. in Criminal Appeal No. 3 of 1966, decided on 22nd December, 1966. Among the property involved in that case were some gold slabs. The slabs bore the marking "Johnson Mathey 9990 London". Naik J. observed in his judgment that the markings do not speak for themselves and that evidence ....
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....ods 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." 14.1. In this regard, we observe that for shifting the onus on the person who claims the ownership of gold, it is required to be proven first that the gold under seizure were of foreign origin and once foreign character is proved, only then the onus is shifted on the person who claims the ownership, to show that the same were not smuggled. In this regard, it is relevant to cite the judgement of the Hon'ble Supreme Court in Ganesh Das v. Collector of Central Excise [1994 (70) ELT 441 (SC)] wherein it was held that before the burden shifts to the person from w....
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....y the Police and thereafter the possession was shifted to the Customs Officer held that the pre-requisite of seizure is not satisfied. Accordingly, it is held that the circumstances as required under the Customs Act are not satisfied and consequentially the whole burden or onus to establish the smuggled nature of gold is on the Revenue." 14.5. Thus, we hold that the burden of proof under Section 123 of the Customs Act does not shift to the appellant no. 1, who has claimed the ownership of the gold in this case. Accordingly, we answer the issue framed at paragraph 11(iii) supra, in the negative. Issue No. (iv): Whether the documents produced by the appellant no. 1 evidences licit purchase of the gold from domestic sources or not. 15. We observe that appellant no. 1 has produced evidence regarding legal purchase of the gold by means of three tax invoices dated 05.06.2016, 08.06.2015 and 11.06.2016. It is his submission that the appellant no. 2, namely, Shri Soibam Subhash Singh, was carrying the said invoices, but was unable to produce the same due to nervousness and/or fright. The said invoices are reproduced below for the sake of ready reference: - 15.1. We observe that....
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....rdingly, the verification undertaken by the Department establishes the genuineness of the purchase documents beyond reasonable doubt and supports the appellant's claim of lawful acquisition. 15.4. Further, a perusal of the Test Report furnished by the Revenue also indicates that the gold pieces in question have their Karat (Avg.) as '23.9' and purity in the range of 994.5 to 996.3. For ease of reference, the relevant portion of Annexure-I to the said Test Report dated 11.03.2016 is reproduced below: - 15.5. From the Test report reproduced above, we observe that the purity of gold is not 999, which is normally associated with pure 24 carat gold of foreign origin. Thus, we find merit in the submission of the appellants that the gold pieces have been made after melting of old jewellery whose purity is less than 999. Thus, the sale invoices along with the purity of gold less than that associated with 24 carat gold, establish the licit purchase of the gold by appellant no. 1 from M/s. Sangham Diamonds Pvt. Ltd., Mumbai. 15.6. In view of the above, we hold that the documents produced by the appellant no. 1 evidence licit purchase of the gold in question from domestic sources. Ac....
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....Moreh along with his witnesses where it was found that 5(Five) biscuits bore markings of "THOON". Although, Shri R Rajesh Nayakar later alleged that the markings were made post seizure, he kept silent on about the seals on the packet which were found intact. 47. Shri R. Rajesh Naykar has produced three Tax invoices for purported purchase of 3325.49 gms of gold from M/s Sangham Diamonds. I observe that the three invoices are printed on letter head and TAX INVOICE is printedon computer separately. The invoice nos are serially printed as 003 dated 5/6/15,004 dated 08/06/15 and 005 dated 11/06/15. It is improbable that a firm dealing in Diamond Import Export in a busy metro had issued only five invoices in three months and that it had no other sales for six days between 5/6/15 to 11/6/15 other than to M/s RN Trading. It raises a doubt regarding their credibility. Further, the last purported purchase was made in 11/6/15 and the seized gold of 3320 gms was being transported back on 24/7/15. It is short period to consider any trend for deciding to send it back to Mumbai for resale. I also find that the premise of M/s RN Trading was verified but no signboard of any such shop could....
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....e up for consideration before this Tribunal in the case of Balwant Raj Soni & ors. v. Commissioner of Cus. (Prev.), Patna [Final Order Nos. 75455-75457 of 2023 dated 18.05.2023 in Customs Appeal No. 75414 of 2022 - CESTAT, Kolkata], wherein it was held as under: - "31. We find that the Impugned Order mainly relied upon the statements of the Noticees 1 to 5 to establish the foreign origin nature of the gold. Other than the statements, there is no other evidence available on record to show that the gold were smuggled into the country from Bangladesh. It is incorrect to rely only on the statements of the co-accused without any corroboration, to prove the smuggled nature of the gold. It is a settled law that the statement of the co-accused cannot be relied without any independent corroboration. 31.1 In the case of Commissioner of Customs (Preventive), Lucknow vs Shakil Ahmad Khan, it has been held that confiscation based on retracted statements not sustainable. The gist of the order is reproduced below: Smuggling Burden of proof Retracted confessional statements of co-accused No efforts made to prove that confessional statements were voluntary Accused were no....
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....2023 dated 20.04.2023 in Customs Appeal No. 40099 of 2020 - CESTAT, Chennai]. The relevant observations of the Tribunal in the said case are as follows: - "38. The evidence put forward by the department to allege that the gold is smuggled from Sri Lanka is too flimsy to be accepted. The Commissioner (Appeals) in para 34 has held as under:- "34. In view of the above findings, it is held that the essential things for confiscation namely proof of the gold having been smuggled into India was not proved. The investigation has assumed that the impugned gold was smuggled from Sri Lanka and no corroborative evidence was produced by the DRI. More so, it was certified by the Court that the gold bars do not have foreign markings. AA has proceeded on wrong premises that the impugned crude Gold bars are of foreign origin. There was no positive evidence except the statement of the appellant. The retracted statement has not been corroborated with findings/evidence/statements of others ie the person supposed to have handed over the same to the appellant for transporting and the person who was supposed to receive. The burden of proof has not been discharged by the department. It h....
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....rkings on the gold bars so sold." 16.8. The above confirmation by the supplier further corroborates the claim of the appellant no. 1 regarding the lawful purchase of gold through verifiable and documented transactions. In this regard, the supplier has acknowledged the absence of any foreign markings on the gold bars, nullifying any presumption of foreign origin. 16.9. Considering the above facts, the order of confiscation of the said vehicle carrying the gold in question under Section 115(2) also appears to be devoid of merit. 16.10. From the above, we are of the considered view that the confiscation of the seized gold and vehicle under Sections 111(b), 111(d) and 115(2) of the Customs Act, 1962, in this case is legally not sustainable. Accordingly, we find the answer to the issue framed at paragraph 11(v) supra, to be in the negative. Issue (vi): Whether the imposition of a penalty under Section 112(b) of the Customs Act, 1962, is legally warranted, or not. 17. Regarding the imposition of penalties on the appellants under Section 112(b) of the Customs Act, we take note of the fact that the gold in question is not liable for confiscation and the appellants were havin....
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....b) and (d) of the Act is set aside. 19.1. As the gold in question is found to be not liable for confiscation, we hold that the vehicle used for transportation of the gold cannot also be held liable for confiscation. Accordingly, the order of confiscation of the Maruti vehicle bearing No. MN-06L-6803 under Section 115(2) of the Customs Act, 1962 is also set aside. 19.2. In view of the above observations, as the confiscation of the gold is not sustained, we also hold that the penalties imposed on the appellants are not sustainable and hence, the same are set aside. 20. Additionally, we have also examined the prayer of the appellant no. 1 herein by way of written submissions filed on 06.08.2025, seeking refund of the value of the seized gold at the average market price prevailing on the date of its disposal, as approved by the Joint Pricing Committee, along with payment of interest at the rate of 12% per annum on the aforesaid amount from the date of disposal till the date of actual refund, in the light of disposal of the seized gold during pendency of the present appeal. In this context, the appellant no. 1 has cited CBIC's Instruction No. 11/2022-Customs dated 08.09.202....
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....plus the duty payable thereon (Rs. 33.04 lacs + 47.07 lacs = Rs. 80.11 lacs). It is also not the stand of the respondent that such goods were available in the Indian market at that time at a lesser price. Therefore it is now the obligation of the respondent to return at least Rs. 80.11 lacs - 47.07 lacs, the amount of duty payable thereon. As the applicant has been deprived of the use of the goods worth Rs. 33.04 lacs the respondent is under a legal obligation now to refund that amount to the applicant. The respondent cannot now be permitted to take the advantage of his own wrong and contend that the value of the goods should be determined only at Rs. 48.50 lacs inclusive of its value and the amount of duty payable thereon because they could be sold at that price only. We also cannot accept the contention of the learned Counsel for the respondent that if the applicant has suffered any loss as a result of the wrongful act of the respondent then he should file an action in tort and this Court cannot order payment of any amount in these applications. No doubt it would be open to the applicant to initiate such an action if it feels that the loss suffered by it is more than Rs. 33.04 la....
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....of Cus. & C. Ex., New Delhi), 1999 (113) E.L.T. 3 (S.C.) (Northern Plastics Ltd. v. Collector of Customs and Central Excise), 2002 (140) E.L.T. 3 (S.C.) (Shilps Impex v. Union of India) and an unreported decision of this Court in WP No. 951 of 2013 [Ahsan Waris v. Commissioner of Customs (Preventive) & Ors.] decided on 5th March, 2014 [2014 (305) E.L.T. 78 (Cal.)] and submitted that the plaintiff would be only entitled to get the price of the goods as declared and accepted in the seizure list by the department. This submission is made on the basis of ratio laid down in the aforesaid decisions. In WP No. 951 of 2013 the learned Single Judge of this Court after considering some of the decisions cited today also held that the authorities concerned are bound to pay the value of the goods assessed at the time of seizure and not the value which it fetched from the sale of the said goods. After the seizure is declared to be illegal by the adjudicating authority in absence of any rebuttable evidence and contrary evidence to dislodge the testimony of the witness, I feel that the plaintiff is entitled to a decree for a sum of Rs. 26,65,600/- and accordingly a decree is passed for the aforesa....
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.... annum thereon, from the date of disposal till the date of actual refund, in terms of CBIC's Instruction No. 11/2022-Customs dated 08.09.2022, read with Instruction No. 27/2021-Customs dated 03.12.2021. (Order pronounced in the open court on 20.08.2025) ============= Document 1 HANDINGTAKING OVERCERTIFICATE OF APPREHENDED PERSON AND BECOVERED This is to corty that the under mentioned person and reeavored ttoma have hoon handod Customs Department of Moron as on P4 Jul 2016 at 18 2,0 hrs who was entrying 20 Nullum of Golden biscuits pluces (Woight 3.320 Kg) from: March to Imnatal andt vore apprehendod by A soy of 24 Astam RiflongKhudongthabi Chock Post). A Sorbam Subhash Singh, non 26 vs. 2/ Solbuen Gutani Singh, resident of Village Naransoina Mamang Loital, PO+P& .. Moirang, Dint ~ Blahnipur(Manipur). Detalis_of Recovered Items Gokion biscuit piace 20 Numbers (wnianr 3,320 kw,, Number Voh Silver colored Maruti van , roud No. MINOOL GROS PAN card - 02 Numbers Aanar Card - 01 Number Voter I/Gard = 01 Number voh ragd Gard - 01 Number Onving Ilconce - 01 Number Amway Business Owner cant - 01 Number Zakon.ovechy Handed over by NO Inspector Customa Prev....
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.... # PER CTS. 1 | GOLD 166.32+1 | **** 35,84,350.00 Add V.A. TAX 1.00 % . 35844.00 TOTAL 36,20,194.00 TOTAL RUPEES THIRTY SIX LAKHS, TWENTY THOUSAND, ONE HUNDRED NINETY FOUR ONLY. VAT TIN NO. 27231014975 VAT TIN NO. 27231014975 AATCS 2120 D GOODS SOLD & DELIVERED AT MUMBAI POR SANGHAM DIAMONDS PVT.LTD. uncar the Maharashtra Value Added Tax Act, 2002 is in force en the date on which sale of goods specified in this tax invoice is made by me/us and that the transaction of sale covered by this tax invoice has been affected by me/us and it shall be accounted for in the turnover of sales while filing of return and the due tax, if any, payable on the sale has been paid er shall be paid. DIRECTOR/AUTH.SINGHTRE HETTRYnityF) Document 4 Sangham Diamonds Put. Ltd. DIAMOND EXPORTER, IMPORTER & MFG. 59 Office No. 12, 2nd Floor, Renuka Bidg., 1st Bhatwadi, Opera House, Mumbal - 400 004. 11 Tel .: +91 22 3394 9562 Email : [email protected] TAX INVOICE TO. M/S.R.N. TRADING MORNING BAZAR ROAD, W/NO. 3 MOREH MANIPUR 14922640149 V 14922512231 c IN.NO .: SD/JEW/JUN/004/2015-16 DATE : 08/06/2015 PAN. : AHTPN 8760 G 1 DIA/COL....