TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1087
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....No. 75064 of 2022, has been filed by Shri Shankar Lal @ Shankar Lal Prajapati, against imposition of penalty of Rs. 21,80,000/- under Section 112(b)(i) of the Customs Act, 1962, in the Order-in-Appeal No. 27/CUS(A)/GHY/2021 dated 17.11.2021 passed by the Commissioner (Appeals) CGST, Central Excise & Customs 3rd Floor, GST Bhawan, Kedar Road, Machkhowa, Guwahati- 781001. 1.3. Customs Appeal No. 75152 of 2022, has been filed by Shri Jyotish Pareek against imposition of penalty of Rs. 21,80,000/- under Section 112(b)(i) of the Customs Act, 1962, by Order-in-Appeal No. 32/CUS(A)/GHY/2021 dated 30.12.2021 passed by the Commissioner (Appeals) CGST, Central Excise & Customs 3rd Floor, GST Bhawan, Kedar Road, Machkhowa, Guwahati-781001. 2. The facts of the case are that on 7th of March, 2019, at about 16:00 hrs the officers of DRI, Guwahati Zonal Unit intercepted a truck bearing registration No. MN-01-9905 which had been parked near the CRPF Camp, 9th Mile, Khanapara, Guwahati. The truck was reportedly travelling from Imphal having its occupants Md. Tazuddin of Mayag, Imphal, Manipur, as the Driver and another person Md. Saukat Ali of Lilong, Manipur, sitting in the vehicle helper. A....
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....(b) Confiscation of torn packaging materials used for concealing the 40 gold bars under Section 119 of the Customs Act, 1962, (c) Seizure of Truck Bearing registration No. MN 01 9905 valued at Rs.20,07,361/- under Section 115(2) of the Customs Act, 1962, (d) Imposition of penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962 upon all five noticees (i) Jyotish Pareek, (ii) Saukat Ali, (iii) Shankar Lal, (iv) Kailash Pareek and (v) Md. Tazuddin. 2.6. The said SCN was adjudicated by the Additional Commissioner of Customs (Preventive), N.E.R. Shillong vide his Order-in-Original No. COM/CUS/ADDL.COMMR/03/2021 dated 09th February, 2021, wherein the Ld. Adjudicating authority passed the following order:- (a) Absolute confiscation of 40 pieces of primary gold bars of foreign origin having total weight of 6638.450 grams valued at Rs. 2,18,40,500/- under Section 111(b) and (d) of the Customs Act, 1962. (b) Confiscation of Tata 12-Wheeler Truck bearing Registration No. MN-01-9905 valued at Rs. 20,07,361/- for concealing and transporting foreign gold bars. Actual owner was given option to red....
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....been correctly imposed. 2.9. Being aggrieved by the Orders-in-Appeal, the appellants Shri Shankar Lal Prajapati (Noticee No.3), Shri Kailash Pareek (Noticee No.4) and Shri Jyotish Pareek (Noticee No.5) have filed these appeals before the Tribunal. 3. The Individual roles played by all the five persons as investigated by the DRI officers were as below:- Md. Tazuddin, Driver of the Truck Seized 3.1. He is a resident of Imphal and he had been driving the said truck for about last 6 months reportedly on behalf of some Nathuni Prasad Jaiswal said to be the resident of Manipur. As per his statement recorded on 07.03.2019 before the DRI officers, he along with his helper Shri. Saukat Ali, was about to leave Imphal for Guwahati on 06.03.2019 when some person by name Ibungo (not earlier known to him) mobile No. 9402949451 approached them to carry gold bars for delivery to some person named 'uncle' at Guwahati, against a gratification amount of Rs. 5000/- to which Md. Tazuddin had agreed. Tazudin kept the gold bars concealed within the cavity behind the driver's seat of the Truck. After reaching Guwahati 'uncle' contacted them for taking delivery of the gold. Afterwards, at about....
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....k as mentioned in their aforesaid statements. But Jyotish Pareek was reportedly out of station for a business trip at that point of time. On search of his residence and shop, nothing incriminating was found by the DRI officers. Subsequently, as per summon Jyotish Pareek appeared before the DRI officers on 28.06.2019. Jyotish Pareek 3.5. He stated that he could not attend the previous summons as he had gone to Surat to buy sarees. He stated that he goes to Guwahati every year to visit Kamakhya Temple and this year he had gone by train on 18.06.2019 and he returned on 26.06.2019. DRI officers showed some photographs and Shri Jyotish Pareek identified his friend named 'Yeha' who is a resident of Myanmar. He also stated that he once visited Myanmar and once Dubai. In his further statement on 29.06.2019, he stated that Shankar Lal and Kailash Pareek had gone to Guwahati on 02.03.2019. He used to talk with them over phone. As per his statement, Kailash wanted to buy a truck to put in a transport company. He also stated that Shankar Lal and Kailash Pareek had talked with one person named Saukat Ali regarding a person who wanted to sell his truck. He stated that he also had a talk wi....
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.... into India, but as has been held by the Hon'ble Apex Court in the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628 = 2015 (320) E.L.T. 45 (S.C.), to form a 'reasonable belief' that the goods are smuggled into India, there must be irrefutable evidence to prove that allegation; in the present case, there is no such evidence/facts available to prove that the goods were of foreign origin and smuggled into India. It is pointed out that in this case, the gold was seized from Guwahati, travelling from Imphal, which is far away from Indo-Myanmar border. Thus, it is contended that there ought to have been some other corroborative evidence available to have the reasonable belief that the gold was smuggled from foreign country. 4.3. In this regard, the appellants have also cited the purity of the gold in question. It is their submission that upon testing of samples of the gold, it was found that the said gold bars had the purity of 995.1 mille to 996.7 mille. It is submitted that this level of purity proves that the gold is not standard foreign origin gold, which normally has purity of 999.9 mille. Thus, it is the appellan....
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....tifies the penalties as having been rightly imposed on the appellants for their role in the alleged offence of smuggling of gold bars. Accordingly, he prayed for upholding the penalties imposed on the appellants. 5.1. By way of written submissions filed on 12.09.2025, the Ld. Authorized Representative of the Revenue has also made various submissions, wherein it has been inter alia submitted that: - (i) No document could be produced by the said four persons in respect of legal importation, acquisition, possession and / or transportation of the said seized gold. (ii) In his statement dated 29.06.2019, Shri Jyotish Pareek, admitted inter alia that he was involved in this clandestine act of dealing in smuggled gold and used to talk about gold to Md. Saukat Ali since he wanted to do business of gold. 5.2. The respondent has also placed reliance upon various case-laws in respect of the issues involved, which are as follows:- On the issue of burden of proof on the person from whom the smuggled gold is seized & on the issue that reasonable belief of the officers for seizing smuggled gold not questionable: * State of Gujarat vs. Mohanlal Jitamalji Porwal ....
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....the appeal documents. 7. We observe that the appellants herein have filed the appeals against the penalties imposed on them. The appellants are not claiming the ownership of the gold. It is observed from the records that the appellants have been implicated in the alleged offence of smuggling of gold biscuits on the basis of their own statements and the statements given by the co-accused. Thus, in the present case, the following issues emerge for our consideration: - (i) Whether the evidences available on record indicate that the appellants were involved in the alleged offence of smuggling of gold bars, or not. (ii) Whether the burden of proof under Section 123 of the Customs Act, 1962, can be shifted to the appellants in the absence of any conclusive evidence proving the foreign origin of the gold, or not. (iii) Whether the imposition of penalties under Section 112(b)(i) of the Customs Act, 1962, is legally justified, or not. Issue No. (i) Whether the evidences available on record indicate that the appellants were involved in the alleged offence of smuggling of gold bars? 8. It is a fact on record that the said 40 gold bars were seized from a tru....
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....of the reasons for the belief cannot be investigated. 8.3. We find that the Hon'ble Delhi High Court in the case of Shanti Lal Mehta v. Union of India & Ors. [1983 (14) E.L.T. 1715 (Del.)], has elaborately dealt with town seizures and the evidences required to have the 'reasonable belief' that the goods are smuggled in nature, in such cases. The relevant portion of the said decision is reproduced below: - "54. The other question which was argued before me was that the customs officer did not act on any reasonable belief when he searched the petitioner's premises on 15-12-1967 and seized the goods. Section 110 opens with the words "if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods". What is the meaning of "reasonable belief"? Did the officer entertain reasonable belief in the facts and the circumstances of this case? This is the other question to be decided. The Supreme Court has said that reasonable belief is a pre-requisite condition of the power of seizure that the statute confers on the officer. (See Collector of Customs v. Sampathu Chetty, AIR 1962 S.C. 316). The preliminary ....
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....uch 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." 9.1. Admittedly, in the case on hand, the appellants herein are not claiming the ownership of the gold. They were not available in the vehicle which carried the gold bars. It can be seen that other than the statements, there is no other corroborative evidence available on record to implicate them in the offence. For shifting the onus on the person who claims the ownership of gold, it is required to prove first that the gold under seizure were of foreign origin. Once foreign character of the gold is proved, then only the onus is shifted on the person who claims the ownership, to show that the same were ....
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....at it is evident that Md. Saukat Ali and Md. Tazuddin have involved themselves in acquiring, possessing, concealing and transporting the said gold bars respectively for pecuniary benefits which they knew or had reasons to believe were liable for confiscation under section 111(b) and (d) of the Customs Act, 1962. 9.2. Thus, we observe that the Ld. Adjudicating authority has considered Shri. Tazuddin and Shaukat Ali as the persons involved in the alleged smuggling of gold and not the appellants herein. In the findings, the Ld. Adjudicating authority alleged that Shri Jyotish Pareek @Jyotish Kumar Pareek was the main mastermind behind this operation. However, the lower authorities have not brought in any evidence to substantiate this allegation. It is alleged in the impugned order that Shri Jyotish Pareek had been dealing and conniving with Saukat Ali to acquire the seized 40 pieces of Gold bars of foreign origin from across the border from Myanmar for a period of 6 months. However, from the statement dated 28.06.2019 of Shri Jyotish Pareek given before the DRI, Jaipur, we find that he has categorically stated that he wanted to buy a truck from Saukat Ali so that he can engage it i....
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.... regard, we also find that a similar view has been expressed in the case of Sarvendra Kumar Mishra & Anr. v. Commissioner of Customs [2021 (9) TMI 405 - CESTAT, Allahabad]. The relevant observations of the Tribunal, Allahabad in the said order are as under: - "14. Having considered the facts and circumstances, we find that admittedly this is a case of town seizure wherein, the impugned gold was intercepted, initially taken possession of by the officer of GRP and then handed over to the Customs. Admittedly, the gold did not have any tell-tale foreign markings and it was merely accused that the markings were removed to hoodwink investigation. The place where seizure took place is not Customs Area. Hon'ble Supreme Court in the case of Gian Chand & Ors( Supra), wherein in case of seizure by 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." 9.7. Thus, we hold that the burden of proof under Se....
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....s decisions of the Tribunals and High Courts to support this claim. We find merit in the argument of the Appellants. Section 112 of the Customs Act, 1962 details the circumstances under which penalty is imposable under this section. Under Section 112(b), penalty is imposable when the person is found to be dealing with goods for which prohibition is in force or the goods are liable for confiscation. The gold bars/pieces found in possession of the appellant were not established as smuggled in nature and hence they are not prohibited goods. The gold bars/pieces were seized at Imphal, away from the Indo-Myanmar international border. The appellant was carrying the gold which he claimed that they were domestically purchased by his father and he inherited the same. We observe that the investigation has not brought in any evidence to counter this claim. Hence, we find merit in the argument of the appellant that penalty is not imposable on him under Sction 112(b)(ii) of Customs Act, 1962. Accordingly, the answer to question no. (iv) in paragraph 12 above, is in the negative." 10.2. In the instant case, the appellants have been alleged to be the intended purchasers/buyers of the gold in q....
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....s supposed to be sold to Shri Gagan Karel, as per the statement recorded from Shri Pawan Prasad. We observe that except the statement dated 16.06.2015 of Shri Pawan Prasad, there is no other evidence available on record to implicate the Appellant in the alleged offence. Since the statements of Shri Pawan Prasad and Smt. Monika Yadav are the only evidences against the Appellant, an opportunity for cross-examining them should have been granted to the Appellant, to verify the claims made by the said persons in their respective statements. In the present case, the ld. adjudicating authority has given only one opportunity of cross-examination of Shri Pawan Prasad and Smt. Monika Yadav on 19.12.2016 and on the said date, both of them had not appeared. The ld. adjudicating authority has not given any further opportunity to cross-examine them and passed the impugned order by relying upon the statements recorded earlier. It is a settled position of law that in such circumstances, when statements recorded from the co-accused are the only evidence to implicate another person in that offence, the said statements cannot be relied upon against the person ( the appellant in this case) without giv....
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....within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;] (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater; (iv)in the case of goods falling both under clauses (i) and (iii), to a penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest." 8.1.....