TaxTMI 
TaxTMI 
2026 (6) TMI 321
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....i was apprehended by the officials of DRI, Lucknow Zonal Unit along with gold ornaments weighing 946 grams and cut pieces of primary gold weighing 921.7 grams total weighing 1867.7 grams valued at Rs.90,50,385/- on 30.12.2022 at Charbagh Railway Station, Lucknow while he was travelling by Train No.15057 (Gorakhpur Anand Vihar Express) from Gorakhpur to Lucknow. It is the case of the Revenue that when apprehended, Md. Shahbaz Siddique could not produce any document with respect of purchase/import of recovered gold/ gold ornaments. 3. In his statement dated 30.12.2022, Shri Md. Shahbaz Siddiqui stated that he travelled to Gorakhpur to deliver gold jewellery made from smuggled foreign origin gold and in return he received gold pieces from Lal babu and Kishan Verma in Gorakhpur to smuggle the same to Lucknow. The gold jewellery was to be returned to Lucknow after a failed delivery and the same belongs to Suagat Jana and Ammar Hussain of Chauk Lucknow. He confirmed that the recovered jewellery and gold pieces were smuggled from Nepal. Kishan and Rahul told him that the said foreign origin gold was smuggled into India from Nepal. He could not produce any valid document with respect to....
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....d he had given 215.870 grams cut pieces of gold for making jewellery from Gorakhpur. The Adjudicating Authority vide Order-in-Original dated 19.03.2024, absolutely confiscated the gold jewellery and cut pieces of primary gold and imposed penalty on the Respondents by relying on the statements recorded and the CDR. 4. Aggrieved with the Order-in-Original dated 19.03.2024, the Respondents preferred separate appeals before the Ld. Commissioner (Appeals), which has been allowed by Order-in-Appeal No.07-12-CUS/APPL/LKO/2025 dated 10.01.2025. The Ld. Commissioner (Appeals) has held that the case was of town seizure with no foreign markings engraved on the recovered gold bars, the Department could not bring any cogent evidence on record to establish foreign origin of recovered gold and its smuggling into the Country, burden to prove from the Appellants could have possibly arisen only after the Customs had reasonable belief that the gold was smuggled one and therefore, the burden under Section 123 stands discharged. The penalties imposed on the Respondents have also been set-aside in the impugned order. 5. Aggrieved with the impugned order, the Appellants have preferred the present a....
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....he present case would require opportunities to the petitioners to cross-examine those three persons, in the event the respondent proposes to rely upon their statements. If the respondent does not propose to rely upon those statements while adjudicating the show cause notices, then the question of affording an opportunity of cross-examination would not arise. However, for that reason, the petitioners should submit their reply to the show cause notices and at the time of adjudication, make a request to the authority for cross-examination, which shall be considered in accordance with law." 8. Ld. counsel for the other three Respondents, Sri Prakhar Shukla has adopted the arguments of Sri Kartikeya Narain, Advocate and further submitted that penalty under Section 112(b) can be imposed only if improper import of goods is proved, which the Revenue has failed to prove in the present case. So, the findings of the impugned order are correct. 9. Heard both the sides, considered the submissions and perused the appeal records. 10. We find from records that the present case is that of town seizure, where the subject gold bars were seized from Shri Md. Shahbaz Siddiqui while he was trav....
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....ve that the goods were imported after the restrictions against import were imposed. (Amba Lal v. Union of India, AIR 1961 S.C. 264 = 1983 E.L.T. 1321). In Pukhraj v. D.R. Kohli, AIR 1962 S.C. 1559 = 1983 E.L.T. 1360, the Supreme Court said that when the court was dealing with the question as to whether the belief in the mind of the officer who effected a seizure, was reasonable or not, the court was not sitting in appeal over the decision of the said officer. All that it could consider was whether there was any ground which prima facie justified a reasonable belief. That the officer had reasonable belief must be stated in the notice to show cause. It must be adjudicated upon by the authorities under the Act. At the stage of appeal or revision from the orders of the officer adjudging confiscation each successive appellate or revisional authority has also to address itself to this requirement of reasonable belief. The seizing officer either by his own evidence or other materials placed before the adjudicating authority, has to prove to its satisfaction that there was ground for him to reasonably believe that the goods were smuggled goods, that is to say that the goods were i....
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....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. (Bapalal v. Collector of Central Excise, AIR 1965 Gujarat 135). The question is whether the record before me shows that there was a reasonable belief in the mind of the seizing officer that the goods were smuggled goods. It does not appear to me that he had entertained any reasonable belief at the time of seizure. Neither the board on appeal, nor the Central Government applied their mind to this question. Two reasons : 57. Applying the principles of these cases to the facts of the present case what do we find? Two reasons were given in support of the reasonable belief. One is that the customs authorities received some information. What is that information? It was never disclosed to the petitioner. Nor was it disclosed to the adjudicating authorities. Very vague words such as `on information received' are used in the show cause notice. The information on which the customs authorities act must be definite information. No one....
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....ould 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 because the goods were not accounted for at that time does not necessarily mean that the goods were smuggled goods. Unaccounted goods may be stolen goods. Reasonable belief could be entertained either on the basis of some external indicia or on the basis of some internal information that the goods had been illegally imported into India from Nepal or some other foreign country either without payment of duty or in contravention of any restriction or prohibition imposed by statute. There was nothing to suggest the foreign origin of the goods. There was nothing to suggest the illegal importation of the goods into the country. 60. The goods must be smuggled goods. The word `smuggled' means that the goods were of foreign origin and they had been imported from abroad. Only then does the presumption under Section 123 arise. The goods themselves did not suggest that the petitioner was an old smuggler or a dealer in smuggled goods. If there was suc....
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....applied by this Tribunal in R.K. Swami Singh vs. Commissioner of Customs (Preventive), Shillong (2024) 18 Centax 459 (Tri-Cal), Neeraj Agarwal vs. Commissioner of Customs (Preventive), Kolkata (2024) 18 Centax 539 (Tri-Cal) and Shri Balwant Raj Soni vs. Commissioner of Customs, Patna in Customs Appeal No.75414/2022 [Final Order Nos.75455-75457/2023 dated 18.05.2023 (Tri.-Kol.]. 11. Applying the aforesaid test in the present case, we find that the seizure was made on the basis of statement of Shri Md. Shahbaz Siddiqui. On perusal of the statement as reproduced in the SCN, we find that the fact of smuggling was not stated by Shri Md. Shahbaz Siddiqui on the basis of his own knowledge but on the basis of what was told to him by Shri Kishan and Rahul Verma. While the Revenue is heavily relying on the statement of Shri Md. Shahbaz Siddqui and its evidentiary value, we cannot lose sight of the fact that the statement of Shri Md. Shahbaz Siddiqui, at best, constitutes a hearsay statement, as what was stated by him was only hearsay. At the same time, Shri Kishan Verma in his first statement recorded on 30.12.2022 at Gorakhpur, nowhere admitted his involvement in smuggling or foreign ori....
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....s during the relevant period, but on the basis of the same it cannot be concluded that the subject gold is of foreign origin and was smuggled into India by the Respondent, unless the subject matter of conversation in call records is brought on record, which admittedly has not been done in the present case. A bench of this Tribunal in Shafeek P.K. vs. Commissioner of Customs, Cochin 2015 (325) E.L.T. 199 (Tri-Bang.) has held that it is the subject matter of conversation and not the call records itself, which is material to prove the charge, as under: - "11.3. Otherwise also, we find that the entire case of the Revenue rests upon the sole retracted statement of Shri Antony Morris. Even if according to the Revenue, the said retraction was only a mechanical retraction and as an afterthought, inasmuch as no force was used to obtain the same, we find that as per the settled law, statement of a co-accused cannot be held as sufficient to nail another person, unless there is an independent corroborative evidence to that effect. The adjudicating authority has nowhere doubted that the appellant was in Dubai during the period of seizure and had only visited India during the last week ....
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....y inquiry or proceeding under this Act shall be relevant for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains, - (a) When the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable or (b) When the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interest of justice. (2) The provisions of sub-section (1) shall so far as may be apply in relation to any proceeding under this Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court." It is apparent that both the provisions are identical. 13. This court while upholding the validity of Section 9D of the Central Excise Act, 1944 interpreted its provisions as under :- "12. Bare....