TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1813
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....that on the basis of intelligence gathered that one person by name Shri. Kamal of Andhra Pradesh would be carrying substantial amount of gold smuggled into India from Bangladesh and would be travelling to Santragachi Railway Station for onward travel to Visakhapatnam, the officers of DRI, intercepted one person occupying seat number 62 of Coach No. B 8 of Train Number 22807, Santragachi-MGR Chennai AC Super Fast Express. The said person disclosed his identity as Narru Guru Shantha Siva Kamal of Vijayawada. He was brought to the office of DRI in Kolkata and was searched in the presence of two independent witnesses. During his personal search, he was found to be wearing a waist belt and on opening, it was found to contain 20 numbers of gold biscuits weighing 2,333.02 grams. As the gold biscuits were having foreign markings and the Appellant was not having any documents for the licit purchase of the gold, the said gold was seized under Section 110 of the Customs Act, 1962. 2.1. Representative samples were drawn from five gold biscuits and sent for testing at Custom House Chemical Laboratory, Kolkata. On testing, the gold seized was found to be having purity as detailed below: Ma....
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....ion taken against Shri. Vinodh with respect to seizure of 400 grams of gold and cash amounting to Rs.62,71,000/- is not on appeal before this Tribunal, the said issue is not discussed further. 2.5. Aggrieved against the order of the Additional Commissioner, confiscating the gold and imposing penalty on him, Shri. Siva Kamal filed an appeal before Commissioner (Appeals), Kolkata, who vide the impugned Order-in-Appeal dated 30.10.2024 upheld the confiscation of the twenty pieces of gold and imposition of penalty of Rs. one lakh on him. The present appeal has been filed by the Appellant against the impugned order dated 30.10.2024 passed by the Commissioner (Appeals). 3. The submissions made by the Appellant against confiscation of the gold and imposition of penalty on him are summarized as under: (i) The gold is of Indian origin only and not of foreign origin; (ii) The gold cannot be treated as of foreign origin merely because there are foreign markings on the same; (iii) The gold is not of 999.9 purity, which is normally associated with foreign origin gold. In the present case the purity ranges from 99.7 to 99.8 purity; (iv) All the 20 biscui....
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.....2. In all the above cases, it has been held that it is the responsibility of the seizing officer to establish that the gold is of foreign origin and smuggled in nature, before effecting the seizure (requirement of Section 110 of the Customs Act, 1962). Otherwise, burden cannot be shifted to the person from whom it is seized, as prescribed under Section 123 of the Customs Act, 1962. Also, section 111(d) of the Customs Act, 1962 is not attracted in town seizures. In those cases, the confiscation and imposed penalties were set aside. Accordingly, the Appellant submits that the provisions of the Customs Act, 1962 cannot be made applicable to the gold seized in this case. 3.3. The Appellant submits that the gold in this case was seized on the belief that it was of foreign origin as it contained foreign markings and no documents supporting its licit acquisition were available with the person who possessed the same, at the time of seizure of the gold. The Appellant submits that the gold was certified to be of 24 Carat Purity and of foreign origin by the Govt. Approved Valuer. In this regard, the Appellant submits that 24 carat purity ranges from 995 to 999 milli fineness and in intern....
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....hat the gold in question were smuggled in nature. In support of his contention, the Ld. A.R. reiterated the following decisions: (i) State of Gujarat vs. Mohanlal Jitamalji Porwal and Another.1987 (29) E.L.T. 483 ( S.C.) (ii) Indru Ramchand Bharvani vs. Union of India 1992 (59) E.L.T. 201 (S.C.) (iii) Tirupati Trading Corporation vs. Collector of Customs 1998 (104) E.L.T.618 (Cal.) Calcutta High Court. 4.1. Regarding testing purity of only five gold biscuits, the Ld. A.R. submits that they were only representative samples. The testing of these samples proved that they were of purity between 99.5% to 99.8%, which is enough to establish that the gold is of foreign origin. The remaining 15 gold biscuits were also of the same type having similar foreign markings on it. Hence, it is his submission that the test report received in respect of the five gold biscuits can be adopted for the remaining 15 gold biscuits also. In support of this view, the Ld. A.R. relied on the following decisions: (i) CUS AA 37/2021 & CM APPL. 34847/2023- HIGH COURT OF DELHI, Commissioner of Customs (Export) Vs. Shri Ashwini Kumar alias Amanullah (ii) WP(C) 8902/2....
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....e in the market. The gold was seized far away from the Bangladesh Boarder. The seizure was effected not at the airport or sea port and the person in possession of the gold was not intercepted in any port while arriving from abroad. Further, the Appellant submitted that the root of import of the gold i.e. who imported the gold, when it was imported, who handed it over to the Appellant etc. are not made known before or even after seizure. It is his submission that the department did not prove that the gold was imported from Bangladesh in contravention of the provisions violating the conditions prescribed for importation of gold. He contended that mere absence of documents cannot make the gold in question as smuggled gold. In addition the certificate of purity of gold reflecting 99.7 and 99.8 is after seizure, but not before affecting seizure. Accordingly, he submitted that the seizure and related confiscation of the gold and consequent imposition of penalty on the Appellant is legally not sustainable. 6.1. Thus, we observe that the issues to be decided in this appeal are as under: 1. Whether the seizure of the gold was based on a 'reasonable belief' as required under Sect....
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....that led to the seizure of the gold. 7.3. A perusal of the Panchanama drawn in this case reveals the following: 1. The DRI officials explained the panchas that they have a specific intelligence that one person namely Kamal of Andhra Pradesh would be carrying substantial quantity of gold smuggled into India from Bangladesh. (Para 1 of Page 1 of Panchanama) 2. Initially Sri. Narru Guru Santha Siva Kamal denied carrying the gold, but on repeated questioning, he admitted that he is carrying gold biscuits smuggled into India (Last lines of Para 3of page 1 of 4 of Panchanama) 3. Thereafter, personal search of Sri. Narru Guru Santha Siva Kamal was conducted in the presence of panchas and in the presence of one Gazetted Officer of the DRI. 20 (twenty) nos. of yellow coloured, metallic biscuits all having foreign marking engraved on them, believed to be gold of foreign origin wrapped with brown coloured adhesive tapes were recovered. (Para 3 on Page 2 of 4 of Panchanama) 4. On demand Sri. Narru Guru Santha Sivakamal could not produce any licit documents in support of his acquisition /possession/carrying/transporting/ or dealing with the said recovery o....
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....on who smuggled it from Bangladesh and handed over the smuggled gold to the appellant. d. Though it is mentioned that the personal search of Sri. Siva Kamal was conducted in the presence of one gazetted officer of DRI, the panchanama does not have the endorsement of the said gazetted officer and it has only the signature of intelligence officer who is not gazetted officer. e. Had it been a fact that Shri. Siva Kamal told that he is carrying gold biscuits smuggled into India, then there is no necessity for the officers to question about production of document of licit acquisition. f. It is mentioned that the DRI officers informed the panchas that assaying was done by Govt. Approved valuer which means that the assaying was not done in the presence of the panchas as well the person who possessed the gold. It is also seen that the certificate was not enclosed to the panchanama. g. It is mentioned in the panchanama that the valuer certified the purity of the gold as of 24 carat and the gold is foreign origin. It is a fact that 24 carat gold in fineness ranges from 995.0 mille finness to 999.9 mille fineness and generally gold with fineness of 999.9 mi....
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....ave been imported without payment of customs duty. Place of seizure far away from border. No expert or trade panel /satisfactory investigation pointing to foreign origin or smuggled nature of goods- Opinion of officer that goods are of foreign origin and smuggled, therefore would be liable to confiscation cannot be accepted - confiscation set aside. C. In the case of BALAJI TRADING CO versus COMMISSIONER OF CUSTOMS (PREV) it was held Seizure of good-Reasons to believe-Panchanama /Seizure Order based upon only three factors namely (i) Prima Facie examination of goods; (b) opinion of local traders and inscription on some bags-said reasons not adequate for exercising of power under Section110 of the Customs Act, 1962. D. In the case of Nand Kishore Modi versus Commissioner of Customs (Prev) West Bengal it was held that - in view of the above observations and settled position of law, every piece of gold person in India considered to be of smuggled nature and the possessor of such gold has to discharge the onus under Section 123 of the Customs Act, 1962. However, it may be a requirement from a person in a customs area who imported gold as baggage. In the instant case t....
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.... belief' in this case for seizure of the gold in question in terms of Section 110(1) of the Customs Act, 1962. Accordingly, by relying on the ratio of the decisions cited above, we answer to the question (i) and (ii) raised in para 6.1 supra, in the negative. 8. Issue 3:Whether the foreign markings available on the gold biscuits is sufficient to establish smuggled nature of the gold and consequently liable for confiscation? 8.1. As per the panchanama drawn in this case, we find that there were foreign markings on the gold biscuits. The officers concluded that the gold in question were smuggled in nature and seized the gold bars mainly on the ground that they had foreign markings on them. In this regard, we observe that it is a settled law that foreign markings on gold bars do not, by themselves, establish the smuggled nature of the gold. We observe that the place of seizure is Railway station, which is located in the midst of the city of Kolkata where gold with foreign markings are freely available in the market. The gold is seized far away from the Bangladesh Border. The seizure is not at the airport or sea port and the person in possession of the gold was not intercepted in....
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....sidered 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 would be hearsay evidence. There was nothing to indicate that the markings were really done by Johnson Mathey in London. No presumption can arise in regard to the markings, unless there is evidence to show that those markings were made by a particular company in the ordinary course of business. A Division Bench of the Gujarat High Court has also taken a similar view in Asstt. Collector of Customs, Baroda, v. M. Ibrahim Pirjada, 1970 Criminal Law Journal, 1305. There, the Gujarat High Court has held that mere markings cannot be taken as proof of the fact of foreign origin of the goods as such markings and labels would be hearsay evidence. With respect, I agree with the above view." 8.4. We also find that there are no specific findings in the impugned order to prove that such markings, even if present, prove illicit importation. It has not been ascertained by the investigation as to t....
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.... of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T) dismissed the appeal of Revenue holding that jewellery not bearing any foreign marking other than statement of passenger no other proof produced by Revenue to substantiate the claim that jewellery were smuggled into India. 31.3 In view of the above discussion and relying upon the the decisions cited above, we hold that the gold bars/pieces cannot be confiscated based on the retracted statements alone. Accordingly answer to question no (iii) is negative." 8.6. Further, in the case of 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], it has been observed that: - "6. In fact, during the course of investigation, it is a fact on record that boondi silver and silver jewellary were recovered from the shop of the respondent. So, the question arises that in the absence of any seizure of Port or Airport or not having any foreign markings on the goods seized from the respondent, how the officers came to the conclusion that the goods are third country origin goods. Therefore, first, o....
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....appellant / Revenue and in favour of the respondent. We make it clear that in this appeal we have not addressed the issue as to whether the Show Cause Notice issued by DRI is valid and proper." 8.8. We have perused the decisions relied upon by the Ld. A.R. that foreign marking available on the gold is sufficient to established foreign origin of the gold. In this regard, we observe that the gold cannot be treated as of foreign origin merely because there are foreign markings on the same. In the present case, the gold is not of 999.9 purity, which is normally associated with foreign origin gold. In the present case the purity ranges from 99.7 to 99.8 purity. Further, all the 20 biscuits were not tested for purity by the Chemical Examiner, but only 5 biscuits were tested for purity and the said test report cannot be attributed to the remaining 15 biscuits. Thus, the purity of the remaining 15 biscuits have not been tested by the department. We also observe that the gold was seized in the midst of the town, of Kolkata where gold with foreign markings is freely available in the market. The gold is seized far away from the Bangladesh Boarder. The seizure was not at the airport or sea ....
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.... 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 secondly once foreign character is proved, then the seizure must have been affected under reasonable that the gold is smuggled,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 whom the goods were seized, it must first be established that the goods were of foreign origin and mere suspicion or presence of certain disputed markings is not sufficient. Further, the Hon'ble Supreme Court in Commissioner of Customs v. Abdul Gani [2012 (278) ELT 474 (SC)] has reiterated that reasonable belief must be backed by sufficient evidence of foreign origin. If there are no foreign markings or documentation, the Customs authorities cannot simply assume that the gold in question were of smuggled in nature. 9.3. It is a fact that in the present case, the investigation has not brought i....
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....ty under Section 112(b)(ii) of the Customs Act, 1962 on the appellant is justified. 10.1. Regarding the imposition of penalties on the appellants under Section 112(b) of the Customs Act, we take note of the fact that in view of the discussions in the preceding paras, it has been held that the gold in question is not liable for confiscation. In the absence of any cogent evidence establishing the smuggled character of the gold, the appellant cannot be held liable for abetting any offence under the Customs act, 1962. In these circumstances, we find that the ingredients enshrined in Section 112(b) of the Customs Act, 1962 are not applicable to the present case for imposition of penalties on the appellants. Accordingly, we hold that the penalties imposed on the appellants are not sustainable. Thus, we answer the issue (v) raised in para 6.1 supra in the negative. 11. To summarize, the issues framed in paragraph 6.1 (supra) stand answered in the following manner: (i) There is no reasonable belief existing in this case for seizure of the gold in question under Section 110 of the Customs Act, 1962. (ii) The gold recovered from the appellant was neither established t....
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.... We have also perused the relevant case laws cited by the appellant in this regard. 13.2. We find that the Hon'ble Apex Court in the case of Northern Plastics Ltd. Vs Collector of Customs [1999 (113) E.L.T .3 (S.C)] has held that :- "9. It was contended by Mr. Dave that the applicants are not liable to pay any duty as the goods were not cleared by the respondent and they were subsequently confiscated and sold by the respondent and, therefore, the applicants cannot be said to have imported the goods. On the other hand, it was contended by Mr. C.S. Vaidyanathan, learned Additional Solicitor General that the import of the goods was by the applicants and as soon as the said goods landed on the land mass of India proper amount of duty, became payable thereon. In our opinion, Mr. Vaidyanathan, is right in his submission particularly, when full impact has to be given to the order passed by us declaring retention and confiscation of the goods to be illegal. Mr. C.S. Vaidynathan, learned Additional Solicitor General, however, further submitted that value of the goods as shown in the import documents was only Rs. 33.04 lacs and as the duty and the Warehousing charges payable are ....
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....erest at such a high rate and considering the facts and circumstances of the case it would be in the interest of justice if the respondent is directed to return the amount of Rs. 33.04 lacs with interest at the rate of 12% from 1-2-1989 till the date of payment as the Collector by its order dated 31-1-1989 had held that the goods were properly described and the import was legal." 13.3. Further, in the case of Ratan Lal Jain Versus Union of India [2017 (349) E.L.T. 468 (Cal.)], a similar view has been taken by the Hon'ble High Court. The relevant portion of the said judgement reads as under: - "6. On the basis of the evidence, it appears that the aggregate value of the goods at the time of seizure could not have been more than Rs. 26,65,600/-. The Seizure List was prepared on 7th February, 1999. The order of adjudication in favour of the plaintiff was passed on 16th December, 1999. The Adjudicating Authority directed unconditional release of 33320 kgs. of betel nuts valued at Rs. 47,95,200/- in favour of the plaintiffs and in case the goods have already been sold by auction, the sale proceeds thereof would be refunded to the rightful claimants. The order of adjudication ....