TaxTMI 
TaxTMI 
2026 (8) TMI 1008
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....ered from the business premises of M/s RK Gold, Town Kotha Road, Visakhapatnam on 05.03.2022. 3. The officers proceeded on the premise that the seized gold was of foreign origin and had been smuggled into India and that the Indian currency represented sale proceeds of smuggled gold. Penalties were also imposed upon the persons concerned. The original authority ordered absolute confiscation of the gold and currency and imposed penalties upon the noticees. The appeals filed before the Commissioner (Appeals) were rejected. Aggrieved by the said orders, the appellants had approached this Tribunal. 4. As the appeals arise out of same investigation, seizure and adjudication and involve common questions of law and fact, they are being disposed of by this common order. 5. The facts, in brief, are that on 04.03.2022, officers of the Directorate of Revenue Intelligence (DRI), Kolkata, intercepted Shri Narru Guru Santha Siva Kamal (in short 'Kamal') and recovered 20 gold biscuits weighing approximately 116 gm each. A statement of Shri Kamal was recorded by the DRI officers at Kolkata. In his initial statement, he allegedly stated that the gold recovered from him belongs to Shri Manch....
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....l outcome of the Kolkata proceedings materially affects the evidentiary foundation of the present case. 11. The appellants contended that the department had not established that the 4 gold biscuits seized from the premises of M/s RK Gold were smuggled goods. It was submitted that foreign inscriptions or markings, by themselves, could not conclusively establish foreign origin or illegal importation. 12. Shri Vinodh claimed that the four gold biscuits formed part of 8 gold biscuits purchased from M/s Narlion LLP, Yanam, under Tax Invoice No.02 dt.04.03.2022. The invoice value was stated to be Rs.39,61,168/- apart from GST @ 3% amounting to Rs.1,18,835/-. It was further submitted that the consideration payable to M/s Narliaon LLP had been remitted through RTGS to its bank account. The appellants have also produced copies of the relevant GSTR-3B return reflecting availment of input tax credit corresponding to the said tax invoice. It was explained that the invoice could not be produced during the search because it had been received by the accountant, who was not available at that time. The appellant claimed that they had attempted to produce evidence of lawful purchase before inv....
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....ncealed in the premises. According to them, the information was itself based on the statement of Shri Kamal, which did not specifically state that gold had been supplied to Shri Vinodh in February, 2022 or that any balance stock was lying in his premises on 05.03.2022. 18. The appellants question the voluntariness of the statement recorded from Shri Vinodh pointing out that multiple statements were recorded from him within a short period after the search and seizure. It was submitted that the statements were contrary to the documentary evidence of purchase and payment subsequently produced and could not be treated as conclusive evidence without independent corroboration. The appellants prayed that the confiscation of the 4 gold biscuits and Indian currency be set aside and that the penalties be annulled. 19. Learned AR has supported the impugned order and submitted that gold is a notified commodity under section 123 of the Customs Act. It has been argued that the seized gold bore foreign markings and was recovered from the business premises and the circumstance could rise to a reasonable belief that it was smuggled. Once such reasonable belief exists, the burden shifted to th....
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....covered from the business premises associated with Shri Vinodh. In these circumstances, it cannot be said that the officers had no material whatsoever for forming a prima facie belief at the stage of seizure. The legality of the initial seizure, however, does not determine the final liability of confiscation. A seizure based upon reasonable belief must ultimately be followed by an adjudication based upon reliable evidence and the statutory burden of proof. We, therefore, do not accept the broad contention that the seizure was void ab initio merely because the panchanama did not contain an elaborated exposition of the officer's reasoning. More important question is whether the department established the liability of the goods and currency to confiscation. 26. Gold is a notified commodity for the purpose of section 123 of the Customs Act. Where gold seized in reasonable belief that it is smuggled, the burden of proving that it is not smuggled lies upon the person from whose possession it was seized or the person claiming ownership. Section 123 does not require the department to prove every link in the smuggling chain in the same manner as a criminal prosecution. At the same time, ....
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....inal order in the Kolkata case does not, as a matter of strict res judicata, automatically decide the status of the separate gold seized at Visakhapatnam. Nevertheless, it has considerable evidentiary value because Visakhapatnam officers admittedly initiated investigation on the strength of initial statements recorded from Shri Kamal in the Kolkata case. When the proceedings founded upon that seizure ultimately ended in unconditional release of the gold, the initial statement could not thereafter be treated as unimpeachable or conclusive evidence in the connected Visakhapatnam proceedings. 30. The department was required to independently establish that the four gold biscuits recovered at Visakhapatnam represented balance stock of gold from an earlier smuggled consignment allegedly supplied by Shri Kamal. No document regarding any specific supply, payment, date of delivery or quantity corresponding to the 4 seized gold biscuits has been identified. 31. The earlier statements attributed to Shri Kamal were broad and general. The statements indicate that he spoke for having carried gold on several occasions, but did not specifically identify a consignment supplied in February, 20....
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....om the concerned bank that the payment was fictitious or unrelated. There is also no finding that the invoice number was fabricated; that M/s Narlion LLP denied its issuance or that the GST credit was based upon a non-existing transaction. In the absence of such enquiry, the documentary defence could not lawfully be rejected merely because it was produced after the search. 35. We, therefore, find that the appellants discharged the burden caused upon them to the extent reasonably possible by producing a verifiable chain of domestic procurement. The department failed to rebut that chain through independent investigation. 36. The confiscation of Indian currency must be examined separately. Section 123 does not cause any burden upon the possessor of Indian currency. The department must establish the requirements of section 121 of the Customs Act. For confiscation under section 121, it must be shown that smuggled goods were sold by a person having knowledge or reason to believe that the goods were smuggled and that the sale proceeds are identifiable. A mere shortage in books of accounts, possession of substantial cash or an admission or unaccounted business income does not automat....