TaxTMI 
TaxTMI 
2026 (8) TMI 1007
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.... Redemption fine of Rs.4,00,000.00 under Section 125 of the Customs Act, 1962 on payment of appropriate duty. (ii) I impose penalty of Rs.2,00,000.00 on M/s Royal Chains Private Limited under the provisions of Section 112(a) of the Customs Act, 1962. (iii) I impose penalty of Rs.50,000.00 on Shri Kamlesh Kumar Patel, Partner of M/s Amrut Kantilal & Co. under the provisions of Section 112(b) of the Customs Act, 1962." 2.1 An intelligence was received to the effect that smuggled gold bars of foreign origin were being sent to Ahmedabad from Mumbai via Gujarat Mail through employees of Angadia firms namely M/s Amrut Kantilal & Co., 71 Ghanchi Ni Pol, Manek Chowk, Ahmadabad. Acting on the said intelligence search of the said premises of Angadia firms was conducted on 16.11.2013. During this operation total 14 pieces of gold bars of foreign origin totally weighing 2016.90 GMS (7 pieces totally weighing 1014 gms and 7 pieces totally weighing 1002.9 gms) were recovered, on some of these gold bars following was mentioned- "SUISSE, GG, SMB864--, -45, ESSAYEUR FONDEUR or 995.0, GOLD, EGO-8326, RAND REFINERY ETC," 2.2 When the representatives of the M/s Angadia....
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....0.11.2013. 2.6 As DRI entertained a belief that the said goods were covered by Section 123 of the Customs Act and the burden of prove was on the person from whom the said gold bars have been detained and seized and to show that the same were not smuggled goods and appellant failed to produce any evidence to this effect, the same were seized vide seizure memo dated 31.03.2014. 2.7 In absence of production of any documents evidencing illicit import of the said gold bars of foreign origin that are smuggled goods in terms of provisions of Section 239 of Customs Act and are liable for confiscation under Section 111(d), 111(l) and 111(m) of the Customs Act, 1962. Further, appellant was fully aware that the said gold bars seized of foreign origin purchased by them without any valid import documents. The said goods were prohibited and restricted in terms of prevalent policy, they had knowingly dealt with the goods i.e. purchasing, carrying or keeping or in any other manner dealing with the goods which they knew or had reason to believe were liable to confiscation under the provisions of Section 111 of the Customs Act, 1962 and liable for penalty under Section 112(a) of the Act. 2.....
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....basis and the appellant was not engaged in bullion trading but was involved in the manufacture of jewellery from its own stock. The gold bars which were placed under seizure with a proposal for confiscation while placing reliance upon Section 123 of the Customs Act, 1962, alleging that the burden to prove licit import lies upon the person from whose possessing goods were seized, the said section has been incorrectly invoked by the adjudicating authority. As the said goods are not specified goods under Notification No.204-Cus dated 20.07.1984, in such a situation the burden of proof shifts from the person alleging illicit importation to the revenue authorities. Revenue authorities were failed to properly appreciate the purchase documents produced by the appellant evidencing the bona fide domestic procurement of the gold bars in pieces. • The said gold bars were seized under a mere presumption of importer importation and not in circumstances involving any attempt by the appellant to smuggle the same was intercepted in transit while being sent in the ordinary course of business to job workers for manufacture of jewellery. Appellant had also produced purchase invoices evid....
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....ng legitimate import of the sall gold bars of foreign origin. The appellant relied on the judgment of the Hon'ble CESTAT in case of Mahesh B Mali Vs. CCE, Pune cited in 2012 (286) ELT 375 (Tri.Mumbai) wherein it was held that "burden and onus of proof to establish gold was smuggled, was on Customs and not on notice". In that case gold was seized by the police and handed over to the Customs authorities. Whereas in the present case, the gold bars were recovered from the premises of angadia firm which were sent by the appellant. At the time of personal hearing, the appellant has submitted zerox copy c bill of entry No.2784490 dated 23.07.2013 indicating that the goods were imported by Riddhisiddhi Bullions Ltd. and customs duty was paid. They submitted that out of this Import the subject goods were supplied to them and for showing the said supply, the submitted a copy of Tax Invoice issued by Riddhisiddhi Bullions Ltd. to them. From the said documents, co-relation between the gold imported and supplied out of the said quantity to the appellant could not be established. I also agree with the adjudicating authority that gold bars are restricted and subject to RBI Regulations. Howeve....
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.... also the claimant has to prove that the Gold Bar in question was legitimately imported into India and then come into their hands. Therefore, the Noticee was required to produce documents evidencing legitimate import of the said Gold Bar of foreign origin in India. I find that M/s Royal Chains Private Limited had purchased gold bars from M/s Abhushan Ornaments Pvt Ltd and M./s Choksi Arvind Jewellers during Aug-13 to Nov-13. They have submitted purchase bills for the same. M/s Abhushan Ornaments Pvt Ltd has its VAT TIN No. 27900706292V and CST No. 27900706292C. Similarly Choksi Arvind Jwellers has its VAT TIN No. 27650404226V and CST No. 27650404226C and their PAN No. AAGCR6146R. I also find that even MMTC, who is authorized by RBI to Import Gold, is not making available the Bills of Entry to the purchaser of the Gold. They are issuing the Tax Invoice to the purchaser. Further for Gold there may be a lot of Purchaser from the MMTC, and it will be very difficult to make available Import documents like Bills of Entry and Invoices to each and every purchaser. Therefore asking for import bills of entry to prove the legitimate import is quite harsh. 7.2 I further find that Rule....
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....ct omission or abetment" by any person in improper import of the said Gold Bar, which has rendered the said imported Gold Bar liable to confiscation is liable to penalty u/s 112(a) ibid. Accordingly, I hold that M/s Royal Chains Private Limited is also liable for penalty under section 112(a) of the Customs Act, 1962. 7.4. I further find that Shri Kamlesh Kumar Patel, Partner of M/s Amrut Kantilal & Co was involved in carrying the restricted goods of M/s Royal Chains Private Limited from Mumbai to Ahmadabad. It was from his possession that the said gold bar of foreign origin was recovered and subsequently seized. He failed to ensure that the gold bars were accompanied by the legal documents. He had knowingly dealt with the said goods i.e. carrying or keeping or in any other manner dealing with the restricted goods which he knew or had reason to believe were liable to confiscation under the provision of Section 111(d) and (m) of the Customs Act, 1962. This act of Shri Kamlesh Kumar Patel has rendered himself liable for penalty under Section 112(b) of the Customs Act, 1962." 4.4 We find that the basic issue for consideration is whether revenue authorities has properly disc....
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....or " diamonds, manufacturer of gold or diamonds" .] watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify. 20. The above provision would clearly reflect that where any goods under this Section have been seized, under the reasonable belief of it being tried to be smuggled, the burden of proof that they are not smuggled goods shall be on the person from whose possession the gold was seized. 21. From the pleadings and the records available, there does not seem to be any strong case made out by the learned counsel for the petitioners to doubt the action on the part of the respondents so far as arresting the petitioners on the ground that they were trying to smuggle the gold into India from Bangkok. The petitioners in the two writ petitions have, in very categorical terms, stated that they have purchased the gold en route to India. However that be so, the petitioners were required to carry the invoice / bill / receipt in respect of the price paid for the said gold. One needs to appreciate the fact that it is not a case where the petitioners tried to smuggle small quantity of gold. In one case, it was 2,00....
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....y, 1986, wherein at Serial No.4A of the Schedule, it is mentioned that "gold in all forms including bullion, ingot, coin, ornament, crude jewelry" are goods which can be disposed of by the proper officer, in such a manner as the Central Government may, from time to time, determine. Since the "gold" is one such goods which is notified under Sub-Section (1A) of Section 110, the general provisions as is otherwise stipulated under Section 126 of the Customs Act will not be applicable in the instant case. 28. Further, a Division Bench of the Madras High Court in the case of Malabar Diamond Gallery P. Ltd. vs. Addl. Dir. General, Directorate of Revenue Intelligence, Chennai3, dealing with the term "prohibited goods", held at paragraph No.41 as under, "41. In the light of the decisions and in the context of what is observed above, the expression, in section 2(33) of the Act, "prohibition under this Act" or any other law for the time being, has to be examined with the other provisions in the Customs Act, 1962. Section 2(39) of the Act, defines "Smuggling" in relation to any goods, which means, any act or omission which will render such goods liable to confiscation under s....
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....y other law for the time being in force, then such goods should fall within the definition of Section 2(33) of the Act. 76. A conjoint reading Sections 2(33), 11 or 11A of the Act and other provisions in the Customs Act, 1962, and any other law, for the time being in force, would also make it clear that importation of goods, defined as illegal or prohibited or without complying with the conditions, or in violation of statutory provisions in the Customs Act, 1962 or any other law for the time being in force and in all cases, whether there is either total prohibition or restriction, in the light of the judgmnet of the Apex Court in Om Prakash Bhatia's case, such goods should fall within the definition of Prohibited goods. When import is in contravention of statutory provisions, in terms of Sections 11 or 11A of the Customs Act, 1962 or any other law, for the time being in force and when such goods squarely fall within the definition illegal import, or the other provisions in the statute, dealing with prohibition/restriction, the same are to held as, "prohibited goods" and liable for confiscation. 77. As rightly contended by Mr.A.P.Srinivas, learned counsel for t....
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....ling staff to seize anything liable to confiscation. 25. Section 178A provides for burden of proof. It says : "(i) Where any goods to which the section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized. (2) This section shall apply to gold, gold manufactures, diamonds and other precious stones, cigarettes and cosmetics and any other goods which the Central Government may, by notification in the Official Gazette, specify in this behalf. (3) Every notification issued under sub-section (2) shall be laid before both Houses of Parliament as soon as may be after it is issued." 26. Large scale smuggling of gold or other goods into India may pose a threat to the economic and fiscal interests and policies of the State. Such illicit trade is often carried on by organized international smugglers in the secrecy of the under-world. The more it is organized, the less are the chances of its detection, and greater the difficulty of proving the offences relating thereto. Laws have therefore been ....
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....d, it is not obliged to prove them as part of its primary burden. 32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence' (12th Edn. Article 320, page 291), the "presumption of innocence is, no doubt, presumptio juris : but every day's practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property," though the latter is only a presumption of fact. Thus the bu....
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.... the Collector to show that the gold had been imported into India after restrictions had been imposed in March 1947 on its importation. The High Court rejected this contention and dismissed the petition. The same argument was advanced before his Court in appeal by special leave. This Court also negatived this contention. While conceding that there was no direct evidence that the gold had been smuggled after March 1947, it was held that a finding to that effect could be reached by referring to "the conduct of the appellant in connection with (a) the credibility of the story about the purchase of this gold from three parties, (b) the price at which the gold was stated to have been purchased which was less than the market price and (c) the hurry exhibited in trying to get the gold melted at the refinery with a small bit of silver added so as to reduce the fineness of the gold and thus approximate the resultant product to licit gold found in the market". 38-39 ****** 40. In the case before us, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Co....
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.... These markings available in both the gold bars found on the person of the employee of the respondent, intercepted by the DRI officials. The gold bars, with the recital thereon, is admitted to be that entrusted by the respondent to his employee; the person intercepted. The seizure memo of 24-7-2017, which was prepared at the DRI Regional Unit Patna Office, clearly indicated violation of Sections 7, 46 and 47 of the Act, as the reasons to believe. Section 7 speaks of appointments of customs ports, airports etc. Section 46 requires entry of goods on importation by presenting a bill of entry for home consumption or warehousing as prescribed and Section 47 speaks of clearance of goods for home consumption. Hence, the reason to believe is very clear from the violations alleged and in the present case, there can be no challenge to the goods being sourced from outside the country, which is evident from a mere visual inspection; the Swiss markings were crystal clear to even a layman who does not have any expertise in the matter. The gold bars apparently, from the mere inspection were not sourced from India. 14. Now, we come to the statement recorded under section 108. The lea....
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....possession of the gold which was clearly imported, going by the markings on it. Even if we ignore the inculpatory statement of receipt of gold bars smuggled from Bangladesh, which statement was retracted, the fact remains that he admitted to the possession of two gold bars with Suisse markings; which definitely was sourced from outside India. That the gold bars were in his possession for onward transmission to the respondent; who had later accepted its ownership, also is admitted. 17. We have already noticed that the reason to believe under which the seizure was made, was also the lack of any document to show that import was made in accordance with Sections 7, 46 and 47 of the Act. It is very pertinent that even the retracted statement merely states that the documents and the bill voucher which accompanied the goods were forcibly taken from him and destroyed by the DRI officials, who carried out interception. It was also stated that there was an assault made and the officials forcefully made him sign many documents. 18. We notice that the retraction, which is produced at Annexure-R/F, was made while the intercepted person was in judicial custody. He retracts from ....
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....rson. Object underlying Section 108 is to elicit the truth from the person who is being examined regarding the incident of customs infringement. Since the objective is to ascertain the truth, the customs officer must ensure the truthfulness of the statement so recorded. If the statement recorded is not correct, then, the very utility of recording such a statement would get lost. It is in this context that the customs officer who is empowered under section 108 to record statement, etc. has the onerous responsibility to see to it that the statement is recorded in a fair and judicious manner providing for procedural safeguards to the person concerned to ensure that the statement so recorded, which is admissible in evidence, can meet the standard of basic judicial principles and natural justice. It is axiomatic that when a statement is admissible as a piece of evidence, the same has to conform to minimum judicial standards. Certainly, a statement recorded under duress or coercion cannot be used against the person making the statement. It is for the adjudicating authority to find out whether there was any duress or coercion in the recording of such a statement since the adjudicating aut....
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....e of the respondent. In which circumstance, the original authority found that the respondent failed to discharge the burden of proof under section 123 of the Act. 23. The First Appellate Authority found that the entire case of the Department spins around the confessional statement of the intercepted person. The First Appellate Authority found that the statement recorded under section 108 was specifically stated to be under duress and there was a finding by the Original Authority that he had not retracted the statement; while, in fact, the statement was specifically retracted. It was found that Section 108 of the Act, though is substantive evidence, some corroboration has to be available before acting upon it, which can be the slightest corroboration. Having found the intercepted person to have retracted his statement and there being no corroboration, it was held to be incapable of any reliance. Reliance was placed also on the retracted statement of the person intercepted that he was, in fact, carrying valid documents, which were destroyed by the DRI official who intercepted and later on arrested him. The retracted statement was found to have absolutely no evidentiary value....
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....anded over the gold to the person intercepted, who also passed on the information that it was smuggled into the country from Bangladesh. Two mobile numbers were indicated to be that of Sonu, which on procurement of consumer application forms (CAF) was found to be belonging to one Shri Chandan Malik and Shri Sachin Gupta. Summons were issued to them and both denied any connection with the seizure, one by a communication directly from him and the other through an advocate. We notice these facts, only for completion, since we have already found that the statement under section 108 insofar as the receipt of gold from Kolkata can be eschewed. However the authority who seized the goods cannot be faulted for not having investigated the facts disclosed in the case. 27. Then we come to the 'Karigar Issue Slip' raised as against one Sohan Verma @ Subh Karigar, which is available along with the relied upon documents, produced at Page 79 of the memorandum of appeal. The name of the Karigar is shown as 'Subh', in the said document dated 22-7-2017. The summons was issued on the Karigar, but the same was returned undelivered with the endorsement "the addressee moved". Aga....
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....as with him and that he had not brought it by mistake. If the original copy of the invoice was with him, we wonder as to what was the document which was accompanying the goods as stated by Noticee No. 1. Here, we have to observe that Noticee No. 1 did not have a case in the retracted statement that the original invoice was with him. The vague statement was that there were documents which were destroyed by the officers, who intercepted him. Even Noticee No. 2 does not say that he had given the original invoices to Noticee No. 1, who was carrying the gold to Kolkata and back to Ranchi, as was the story set up by Noticee Nos.1 and 2. 30. Noticee No. 3 was one of the Directors of Saheli Gems and Jewellers Pvt. Ltd. and so was Noticee No. 4, who was the founder of Saheli Gems and Jewellers and the father of Noticee No. 3. According to them, the payment for the seized gold was made in installments of Rs. 5,50,000/- on 2-8-2017 Rs. 32,00,000/- on 28-8-2017 and Rs. 11,00,000/- on 31-8-2017. The last two of such installments having been made after the three statements of Noticee No. 2, the owner/respondent, was recorded by the DRI. Noticee No. 3 deposed that he had delivered the go....
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....on, then and only then would the burden of proof under Section 123 be discharged and the goods seized from Noticee No. 1 be absolved of the confiscation proceedings under the Customs Act. The falsity of the story projected by the owner of the gold bars, is one another circumstance standing against the claim raised by the owner and in favour of the confiscation proceedings. 33. The invoice dated 21-7-2017 cannot be accepted as genuine for the very many reasons pointed out by us. If the gold bars belonged to Noticee No. 2 and he purchased it from Noticee No.s 3 & 4; as is the story put forth, then it was purchased without due caution. In that circumstance when the gold bars are seized under the Customs Act and proceedings for confiscation is initiated, it is for the purchaser; Adinath Jewellers, or the seller; Saheli Gems and Jewellers, to prove that the gold was validly imported into the country from abroad, in accordance with the provisions of the Customs Act. Whoever be the owner, the gold being one manufactured outside the country, if it is seized in the same form, the owner who raises a claim for release of the said gold should establish unequivocally before the Authori....
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....on and has recorded its conclusion in paragraph 26 holding that the respondent and the two conoticees have submitted that the smuggled/procured gold in question is made out of old gold jewellery purchased in cash and the said fact has not been denied by the revenue by any cogent evidence, therefore the gold in question is not liable for confiscation and the same is required to be released. Further the tribunal holds that the revenue has failed to establish the fact that the cash recovered from the respondent and the two co noticees are the sale proceeds of the smuggled gold and therefore the cash seized cannot be confiscated and the same is required to be released. Further the tribunal holds that no penalties are imposable on the respondent and the two co noticees. 24. What is important to note is that though the respondent took a plea that the gold bars was made out of old gold jewellery purchased in cash it was a very faint plea which was raised by the respondent and the co noticees. Assuming such a plea was required to be considered, the onus is on the respondent and the co noticees to establish with documents that the gold which was seized was from and out of the old g....
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....ity and considering the quantity which has been seized, it can never be the case of the respondent or the other two co noticees that they have done the melting process at their residence as such melting requires expertise and also use of several chemicals. Thus, the observations of the tribunal have to be held to be without any basis or foundational facts or documents. This decision has been affirmed by Hon'ble Supreme Court as reported at [2025 (394) E.L.T. 46 (S.C)] 4.9 We also find that Delhi Bench of this Tribunal in similar cases constantly taking similar views in favour of the confiscation of the seized gold. Some of the decisions are as follows:- Suresh Bhonsle [(2024) 14 Centax 241 (Tri.-Del)] 21. Much emphasis has been laid by the appellant on the veracity of the test report by the jewellery appraiser and the request for re-testing. In this regard we find that the appellant had approached the Delhi High Court for retesting in Writing Petition No. 9174/2017 which was disposed of vide order dated 17-10-2017, granting liberty to the appellant to agitate the issue before the adjudicating authority. As per the common practice, jewellery appraiser is call....
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....2024) 14 Centax 255 (Tri.-Del)] 9. ..... It is also seen that once there is an admission by the appellant himself, nothing further is required to be proved to the contrary. The Supreme Court in Surjeet Singh Chabbra v. Union of India [1997 (89) E.L.T. 646/1996 taxmann.com 71 (S.C.)] held that confession made by the appellant binds him. We also place reliance on another decision in Commissioner of C. Ex. v. M/s Systems and Components Pvt. Ltd. [2004 (165) E.L.T. 136 (SC)/2004 taxmann.com 1156 (SC)] where it has been held that it is a basic and settled law that what has been admitted need not be proved. In view of the above, we are convinced that there is sufficient corroborative evidence to demand the duty on gold said to have been brought by the appellants during the previous visits. Consequently, the demand is confirmed for the extended period. Sunny Kakkar [(2023) 5 Centax 261 (Tri.-Del)] "33. Section 123 shifts the burden of proof from the Department to the person from whom the goods have been seized in respect to gold and certain other goods which are notified. Undisputedly, the bars in question were of gold and they had foreign markings and were pack....
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....ination of Shri Ahadees by the learned counsel for the appellant also confirm the facts pertaining to this seizure and also that on previous two occasions smuggled gold was transacted between the appellant and Shri Ahadees. The mobile phone recovered from the appellant and which was used to communicate with Shri Ahadees was also obtained in the name of Shri Kaskyrbayev a Kazakhi national who was not even in India at the time the SIM card was issued which corroborates the clandestine nature of the transaction in the confiscated gold. 35. Thus, the seizure of the gold from the possession of the appellant as recorded in the Panchnama and admitted in the statement which is also affirmed the appeal before us by the appellant itself is undisputed. It is also undisputed that it had foreign markings and has been certified by the jewellery expert to be of foreign origin. The only question which remains is if it was legally imported or smuggled and the burden of proving that it was legally imported rests upon the appellant. There is not even an assertion in the application before the learned CMM by the appellant that he had legally imported the gold. Therefore, we find no force....
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....h he knows or has reason to believe are liable for confiscation under Section 111. Thus it is held that the appellants had rendered them liable for imposition of penalty. I do not find any infirmity in the findings of the adjudication authorities below while imposing penalty upon the appellant. Even with respect to the appellant Shri Atluri Ramanjaneya Reddy, the owner of the Hyundai Xcent in question, I do not find any reason to differ from the findings arrived at by Original Adjudicating Authority in Para 17.6 of the Order-in-Original under which have been upheld by the Commissioner (Appeals). 8.1 Such a narrow construction of this expression, in my opinion, will emasculate these provisions and render them ineffective as a weapon for combating gold smuggling. As was pointed out by the Hon'ble Apex Court in the case of Balkrishna Chhaganlal Soni v. State of West Bengal (1974) 3 SCC 567: AIR 1974 SC 120 = 1983 (13) E.L.T. 1527 (S.C.), Rule 126 P(2)(i) (present Section 112(b) of the Act) penalizes a person who has in his possession or under his control any quantity of gold in contravention of any provision of this Part, and the court cannot cut back on the width of the lang....
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....ute is to be interpreted without any violence to its language and applied as far as its explicit language admits consistent with the established rule of interpretation." 4.12 In case of Sunny Kakar referred earlier, following was observed: 37. The last question to be answered is regarding the penalty under Section 112(b)(i) of Rs. 50 lakhs imposed upon the appellant. We find that as per Section 112(b) any person who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111 is liable to penalty. In case of prohibited goods this penalty shall not exceed the value of the goods or Rs. 5000/- whichever is greater. In this case, it is undisputed that the appellant was in possession of the confiscated gold. Even in the appeal before us, the appellant is not disputing this fact. Therefore, he is squarely covered by Section 112(b)(i). The value of the confiscated gold is Rs. 1,84,16,505.68. The penalty imposed is only Rs. 50 lakhs. In the factual matrix of this case, w....