TaxTMI 
TaxTMI 
2026 (8) TMI 29
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....ed by the officers of the Directorate of Revenue Intelligence (DRI) to the effect that Shri Vikram Jhunjhunwala/appellant no. 2 was allegedly engaged in the transportation and dealing of smuggled gold of foreign origin. Acting upon the said intelligence, the officers of DRI intercepted appellant no. 2 on 29.10.2020 while he was travelling in a white coloured KIA motor vehicle bearing Registration No. WB 08H 2988. Upon search of the vehicle, one blue coloured bag of the brand 'Skybags' and two rectangular paper cartons wrapped with brown colour adhesive tapes were found, from which the officers recovered 42 pieces of gold biscuits, collectively weighing 6882.84 grams, along with Indian currency amounting to Rs.53,00,000/-. The gold biscuits were believed to be of foreign origin. The appellant no. 2 failed to produce any licit documents evidencing their lawful importation, possession or transportation. The recovered gold biscuits, Indian currency and the vehicle in question, together with certain wrapping materials and items used for carrying the aforesaid items, were seized under the provisions of the Customs Act, 1962 and a Panchnama was drawn in the presence of independent witness....
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....ll the three appellants under Sections 112(a) and 112(b) of the Customs Act, 1962 on the allegations contained therein. 6.1. The appellants contested the proceedings by filing written submissions denying the allegations levelled in the Show Cause Notice. They also participated in the adjudication proceedings. 6.2. Upon consideration of the materials placed on record and the submissions advanced by the noticees/appellants herein, the ld. adjudicating authority concluded that the seized gold biscuits were liable to confiscation under Sections 111(b) and 111(d) of the Customs Act, 1962 and that the seized Indian currency represented the sale proceeds of allegedly smuggled gold, rendering the same liable to confiscation under Section 121 of the Act. Consequently, the ld. adjudicating authority, vide Order-in-Original No.25/ADC/CUS(P)/WB/2023-24 dated 23.08.2023, ordered absolute confiscation of the seized 42 gold biscuits collectively weighing 6882.84 grams and valued at Rs. 3,62,79,449/-, absolute confiscation of the Indian currency amounting to Rs. 88,17,340/-, confiscation of the wrapping materials. He also imposed penalties of Rs.15,00,000/- upon Shri Vikram Jhunjhunwala/appe....
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....gation that the appellant was dealing in 15 Kg gold daily, how it could be that not a single receiver was identified by the investigation, it was submitted. (iv) The appellant admits recovery of the gold and Indian currency from his possession. As it is on records, he is engaged as a broker of gold bullion and collects gold of different shape, size and purity from different Indian Nationals depending upon the buyers' requirement. The Kolkata bullion market has a multi-tier system. Gold bullion is traded through various brokers. Same is the case with money transfer also which is independent of bullion trade. In the business town of Burrabazar, various traders are coming from many parts of India. They do not bring cash with them. Instead, they pay someone in their town and get the cash from a person like the appellant in Kolkata and vice-versa. The Cash recovered from the appellant, is therefore, the money which was to be transferred to someone out of Kolkata and not the sale proceeds as alleged in the SCN. It was pointed out that the SCN names one Netaji at Bangur Avenue to whom the appellant had delivered. But no investigation at said Netaji end has seemingly been cond....
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....e up in support of the hypothesis that the gold was smuggled. The only suggestion provided is that such smuggling of gold from Bangladesh to the state of West Bengal is rampant and there is no enforcement agency to stop such rampant illegal act. The appellant submits that in the given circumstances, a 'reasonable belief' cannot be formed that the questioned gold is smuggled which is the basic ingredient for shifting burden to prove its non-smuggled nature on the owner. The Appellant would like to rely on The Hon'ble High Court at Calcutta in the case of Commr. of Customs (Prev.), W.B., Calcutta Versus Raj Kumar Jaiswal [2006 (204) E.L.T. 561 (Cal.)] (viii) That the seizure is made on assumption and presumption without there being any reason to believe that the goods have been illegally imported into India. The admitted fact that the seized gold are having no marking to show any foreign origin and that the recovery is well within Indian territory, the burden of proof in respect of impugned gold to be illegally imported vis-a-vis the provision of section 123 of the Customs Act, 1962 would be on the department and in failing to discharge initial burden to prove smuggled n....
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.... the appellant not sufficient. (xi) It is further submitted that the gold in question was seized from the domestic area and that the 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. 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 the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar [(2015) 11 SCC 628=2015 (320) E.L.T. 45 (S.C.)], explained the meaning of the phrase '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. (xii) The Hon'ble Delhi High Court in the case of Shanti ....
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....of the seized gold and Indian currency besides imposing penalties upon the appellants under the provisions of the Customs Act, 1962. He submits that the recovery of the gold biscuits from the conscious possession of appellant no. 2 is not in dispute and that the appellants admittedly failed to produce any licit documents in the instant case evidencing the lawful importation, acquisition or possession thereof. It is contended that the burden cast under Section 123 of the Customs Act, 1962 squarely rested upon the person from whose possession the notified goods were recovered and, in the absence of discharge of the statutory burden by the appellants, the authorities below rightly concluded that the seized gold was liable to be absolutely confiscated under the provisions of the Act. 8.1. He further submits that the statements recorded under Section 108 of the Customs Act, 1962 clearly establish the manner in which the gold was allegedly procured, transported and dealt with by appellant no. 2 and the respective roles played by appellant nos. 1 and 3 in facilitating the said activities. According to him, the statements recorded during the course of investigation are voluntary in natu....
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....ration is whether the seized gold biscuits have rightly been held liable to absolute confiscation under the provisions of the Customs Act, 1962. Having regard to the nature of the goods in question, the statements recorded during investigation, primarily, we proceed to examine the applicability of Section 123 of the Act. 12.1. Upon a careful consideration of the rival submissions and the materials available on record, we find ourselves in agreement with the concurrent findings recorded by the authorities below insofar as the confiscation of the seized gold is concerned. It is an admitted position that 42 gold biscuits, collectively weighing 6882.84 grams, were recovered from the conscious possession of appellant no. 2/Shri Vikram Jhunjhunwala at the time of interception. Gold being notified goods under the provisions of Section 123 of the Customs Act, 1962, the statutory burden squarely rested upon the appellants to establish the licit importation or lawful acquisition and possession thereof. However, despite adequate opportunity, no documentary evidence whatsoever has been brought on record to substantiate the lawful import, procurement or possession of the seized gold. The fai....
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....interference and is, accordingly, affirmed. Confiscation of Indian Currency 13. The next question pertains to the confiscation of the Indian currency amounting to Rs. 88,17,340/- under Section 121 of the Customs Act, 1962 on the allegation that the same constituted the sale proceeds of smuggled gold. It is also pertinent to note that the records reveal that appellant no. 2/Shri Vikram Jhunjhunwala had relinquished his claim over the seized gold and the Indian currency, as specifically recorded by the adjudicating authority in paragraph 43(b) of the Order-in-Original dated 23.08.2023. 13.1. During the course of investigation, the statements recorded from various persons revealed that Gold bullion is traded through various brokers. Same is the case with money transfer also which is a part of the bullion trade. In the business town of Burrabazar, various traders are coming from many parts of India and the sale proceeds of the gold are kept in cash. We find that the appellant's job was to collect and keep safe the gold bars and the sale proceeds. Thus, we find that the Cash recovered from the appellant was the money which was the sale proceeds of the gold sold earlier. There i....
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....ndings, we uphold the penalty of Rs.15,00,000/- (Rupees Fifteen Lakhs only) imposed on Shri Vikram Jhunjhunwala / appellant no. 2, under the Sections 112(a) and 112(b) of the Customs Act, 1962 vide the impugned order. Penalty on Shri Bijay Kumar Jhunjhunwala (Appellant No. 1) 15. We now turn to the penalty imposed upon Shri Bijay Kumar Jhunjhunwala/appellant no. 1 under Sections 112(a) and 112(b) of the Customs Act, 1962. The principal allegation against appellant no. 1 is that, being the father of appellant no. 2, he was aware of the latter's activities and had consciously abetted the alleged smuggling of gold. However, upon a careful scrutiny of the materials available on record, we find that except for the statements recorded during the course of investigation, no independent or corroborative evidence has been brought on record to establish his active involvement in the transportation, possession, concealment, sale or purchase of the seized gold or the alleged sale proceeds thereof. 15.1. Mere awareness of the activities allegedly undertaken by appellant no. 2, assuming the statements to be correct, cannot, by itself, attract the rigours of Sections 112(a) and 112(b....
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....nt no. 2 and is alleged to have carried out certain acts under the instructions of his employer, it cannot, ipso facto, be inferred that he had knowingly concerned himself with goods liable to confiscation or had consciously abetted the alleged acts of smuggling. Penal liability under Section 112 is undoubtedly of a serious nature and cannot be fastened merely on surmises or on the basis of an employer-employee relationship, in the absence of cogent and corroborative evidence establishing the requisite knowledge and active complicity. The Revenue has not been able to place any independent material before us to demonstrate that appellant no. 3 had any proprietary interest in the seized gold or Indian currency or that he consciously associated himself with the alleged illicit activities beyond the ordinary discharge of his duties as an employee. 16.2. Having regard to the facts and circumstances of the case and taking a lenient view considering the limited role attributed to appellant no. 3, we are of the opinion that Revenue has failed to establish, by means of cogent or corroborative evidence, the ingredients necessary for imposition of penalty upon him under Sections 112(a) and....