TaxTMI 
TaxTMI 
2026 (8) TMI 1623
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....CUS/WB/2021-22 dated 28.02.2022 came to be dismissed. 1.1. As all these appeals involve a common issue arising out of the same set of facts and proceedings, they were heard together and are being disposed of by way of this common order. The particulars of the present appeals are provided in the table given below:- Sl. No. Appeal No. Appellant Recovery attributed Penalty u/s 112(b) 1. C/75587/2023 Shri Himanshu Khandelwal Nil Rs. 2,25,000/- 2. C/75588/2023 Shri Shiv Dular Soni 01 bar (1000 gms); Rs. 6,900/- Rs. 25,000/- 3. C/75589/2023 Shri Jagdish Soni 02 bars (2000 gms); Rs. 6,000/- Rs. 25,000/- 4. C/75590/2023 Shri Lavkush 01 bar (1000 gms); Rs. 8,000/- Rs. 25,000/- 5. C/75591/2023 Shri Shiv Kumar Soni 02 bars (2000 gms); Rs. 5,000/- Rs. 25,000/- 2. The facts of the case are that on 12.06.2019, officers of the Directorate of Revenue Intelligence (DRI), Kolkata Zonal Unit, reached Hotel Samrat, 144, M.G. Road, Kolkata - 700007, at about 19:50 hours. Search of Room No. 10 of the said hotel did not result in recovery of any incriminating material. Thereafter, the appellant nos. 2 to 5 wer....
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....jewellery premises of appellant No. 1 at Pratapgarh were searched by the DRI, Lucknow Zonal Unit on 08.11.2019, in the presence of his father. The statement of appellant No. 1 was thereafter recorded under Section 108 of the Customs Act on 22.11.2019, wherein he denied any involvement in the alleged smuggling activity, but admitted that he was familiar with the appellant nos. 2 to 5 who have been apprehended in this case. 6. Thereafter, multiple summonses were issued to the appellant no. 1, but he did not cooperate with the investigation. It was also gathered that Shri Himanshu Khandelwal had deliberately stated false facts in order to derail the investigation. 7. The investigation culminated in issuance of a Show Cause Notice dated 28.05.2020 under Section 124 of the Customs Act, 1962, proposing, inter alia, confiscation of the seized gold under Sections 111(b) and 111(d) of the said Act, confiscation of the shoes and wrapping material under Section 119 and of the Indian currency under Section 121, besides imposition of penalties upon the noticees under Section 112(a) and/or 112(b) of the Act. 8. The appellants submitted a consolidated reply dated 06.09.2021 to the notice....
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....shes possession at Kolkata and establishes nothing whatsoever as to how the gold entered India. (ii) It is submitted that this is a town seizure, and that in such cases the burden of establishing unauthorised importation rests upon the Department. Reference is invited to Circular No. 4/149/65-Cus-III dated 14.12.1965 issued by the Central Board of Excise and Customs, which sets out the principles governing the onus of proof in town seizures and is binding upon the Department, and to Boddu Ramaiah, 1987 (32) E.L.T. 355 (A.P.), where confiscation of goods seized in the town was quashed in the absence of evidence of import in contravention of the Act. B. The only source named by the Department does not exist on its own verification (i) The sole supplier named anywhere on the record is 'Johnny'. On 19.11.2019, on the strength of two search authorisations, the officers of the DRI searched the 4th and 6th floors of 4, Adi Banstalla Lane, Kolkata and recorded that no such shop could be located and that no person could identify any such individual. That search was moreover conducted five months after the seizure. It follows that either the statements upon....
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....heir old jewellery to Appellant No. 1 for remaking. Movement Delivery Challan Vouchers Nos. 12, 13, 14 and 15, all dated 11.06.2019, covering the movement of the six bars from Pratapgarh to Kolkata in the hands of Appellants 2 to 5. (ii) The documentary chain set out above traces the gold from the customers to the seizure. The 35 Tunch Forms aggregate 6003.26 gms of pure gold retrieved, against 6000.00 gms seized; six bars of one kilogram each correspond exactly to three bars melted by each of the two named firms; and the Delivery Challan Vouchers of 11.06.2019 cover the movement of that very gold on the day before interception. A reconciliation of this order is not the mark of an afterthought. (iii) The finding that these documents were created after the seizure was recorded without testing them. Not one of the 35 Tunch Forms was verified with the issuing tunch house; not one of the 35 customers was examined, though their names, addresses and identity documents were on record; and neither of the two melting houses was summoned, though both are located in the same lane as the Appellant's own shop. It is respectfully submitted that documentary evidence on....
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....ion to any proceeding under the Act, other than a proceeding before a court, as they apply in relation to a proceeding before a court. The provision therefore governs adjudication proceedings, and the procedure it prescribes is mandatory. (ii) In the present case the statements of Appellants 2 to 5 were relied upon against Appellant No. 1, and the statement of Appellant No. 1 was relied upon against Appellants 2 to 5, without any of them being examined and without any opinion being formed as required by the section. The request for such examination was made expressly and was refused. (iii) The refusal proceeds upon Kanungo & Co. v. Collector of Customs, Calcutta, Civil Appeal No. 468 of 1970, decided on 07.02.1972, reported in AIR 1972 SC 2136 and 1983 (13) E.L.T. 1486 (S.C.). It is submitted that the decision does not govern the question at all, for three reasons. (iv) First, the question decided there was whether the principles of natural justice require that persons who have furnished information be produced for cross-examination. It was answered in the negative. The ground urged here is not a plea of natural justice at large; it is a plea of statutory....
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....ments of Appellants 2 to 5, and what remains against each of Appellants 2 to 5 is the statements of the others. It is settled that the statement of a co-noticee, uncorroborated by independent evidence, cannot form the basis of a finding of involvement in smuggling: Jaswinder Singh v. Collector of Customs, 1996 (83) E.L.T. 175 (T); Punam Chand Bhotra v. Collector of Customs, 1993 (63) E.L.T. 237 (T); Commissioner of C. Ex. v. Tokyo Electronics, 2007 (212) E.L.T. 86 (T); and Gopal Prasad v. Commissioner of C. Ex., Cus. & S.T., 2018 (362) E.L.T. 309 (T). (ii) The call detail records relied upon establish telephonic contact between Appellant No. 1 and his own karigars, who were travelling on his instructions with his stock under his delivery challans. That contact was never in dispute. Call records establish connection; they do not establish the content of any conversation, and they are equally consistent with the case of either side. Similarly, the entries in the hotel register establish frequency of travel to Kolkata, which is the Appellants' own case, Kolkata being the centre to which karigars travel for jobwork and for current designs. (iii) It is further subm....
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....nly against a person who acquires possession of, or is concerned in carrying, keeping, concealing or otherwise dealing with, goods which he knows or has reason to believe are liable to confiscation. Knowledge is a necessary ingredient and must be established. Against Appellants 2 to 5 there is no material independent of their own statements and those of one another. They are artisans of modest means who carried one or two bars entrusted to them by their employer under his delivery challans. No independent finding of knowledge was recorded against any of them. Against appellant no. 1, the penalty rests upon the same statements and upon call records which establish nothing beyond contact. 10.1. Without prejudice to the above submissions, the Ld. Counsel for the appellants, on their own motion, drew attention to two judgments of the Hon'ble jurisdictional High Court, namely Commissioner of Customs (Prev.), Kolkata v. Shri Anil Kumar Soni & Anr., CUSTA 30 and 31 of 2025, decided on 31.03.2026, and Rajendra Kumar Damani v. Union of India, decided on 15.05.2024, submitting that the ratio of the said cases is inapplicable to the facts of the present case. It is submitted that both ....
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....% was held to answer to international bullion standards and, being wholly unexplained, supported the inference of smuggling. The fineness reported here is explained on the record: the Tunch Forms show customer-wise assay of old jewellery of approximately 74% to 83% purity and the melting-house affidavits show its conversion into pure bars. Where the process is documented, the inference does not arise. Reconciliation of quantity No reconciliation was possible, no source records existing. The 35 Tunch Forms aggregate 6003.26 gms of pure gold retrieved, against 6000.00 gms seized, and six bars of one kilogram each correspond exactly to three bars melted by each of the two named firms. Payment and customer trail There were no payment records whatsoever. Delivery Challan Vouchers Nos. 12 to 15 dated 11.06.2019; the Stock Register recording receipt, purity, jobwork charges and return; jobwork charges reflected in the Income Tax Return and Balance Sheet; and notarised affidavits of 35 customers with attested identity proof. The Department's case as to source The carrier's initial version was that the gold was of foreign origin and no domestic sourc....
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.... named was not found to exist on the Department's own search. Course of conduct thereafter A third statement recorded almost a year later reiterated the earlier statements. The allegations were disputed at the first available opportunity in the reply to the show cause notice and have been disputed consistently since. Documentary defence No contemporaneous documentary trail of licit acquisition was produced. A complete contemporaneous trail was produced before the Adjudicating Authority and remains untested and unrebutted. Position at the receiving end The premises searched yielded gold, coins, granules and cash. The business premises of Appellant No. 1 were searched on 08.11.2019 and nothing incriminating was recovered. Currency under Section 121 Rs. 1.74 crore, admitted on oath to be the sale proceeds of smuggled gold. Rs. 25,900/- in aggregate, which on the Department's own theory represented remuneration and travelling expenses, and not the proceeds of any sale. (ii) In Rajendra Kumar Damani the confession was the case, and it was a confession to a smuggling enterprise corroborated by scale, by concealment infrastructure and b....
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...., therefore, no contemporaneous documentary trail connecting those documents with the very gold which was seized. The mere existence of documents pertaining to transactions or quantities of gold cannot, in the absence of a satisfactory nexus, establish that the particular gold bars under seizure were covered by those documents. (iv) It was further submitted that the adjudicating authority had, upon examination of the material on record, rightly found that the documents produced by appellant No. 1 were an afterthought and had been brought into existence subsequent to the seizure with a view to provide a colour of legitimacy to the seized gold. The alleged Tunch Forms and connected documents did not constitute reliable evidence of the lawful source of the specific six gold bars seized in the present proceedings. (v) The statements of Appellants 2 to 5 recorded under Section 108 of the Customs Act, 1962 contain material disclosures regarding the manner in which the gold had been received and was being transported. The statements, recorded in the course of a statutory investigation, referred to the role of Appellant No. 1 and the circumstances in which the gold was al....
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....and considered their submissions. 13. The facts which are not in dispute are that on 12.06.2019, the appellant nos. 2 to 5 were intercepted, at about 07:50 p.m., by the Offices of the DRI at Hotel Samrat, 144, M.G. Road, Kolkata - 700 007 when the six (06) pieces of gold bars in question were recovered from their possession, along with certain amounts of Indian currency. The statements of the appellant nos. 2 to 5 were recorded on 13.06.2019, 25.06.2019 and 17.12.2019. They were also arrested and sent to judicial custody. The Test Memo / Report proved that the purity of the gold in question was between 99.5% to 99.7%. 13.1. A search was also conducted at the jewellery shop of the appellant no. 1 where he was not available; only his father was available. 13.2. The statement of the appellant no. 1 was recorded, for the first time, on 22.11.2019. When his statement was recorded, the appellant no. 1 inter alia stated that he is in the business of jewellery since 2017; he also admitted that he was familiar with the appellant nos. 2 to 5 who were apprehended in this case, but did not know their residential addresses and could not recollect their phone numbers. He denied his role....
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....m the possession of the appellant nos. 2 to 5, which was not done in this case. In the circumstances, we find that all the documents produced by the appellants in the reply to the Show Cause Notice are not admissible at this stage. Accordingly, the appellant no. 1 cannot claim ownership of the gold in question. 18. In view of the above, we hold that the gold in question has been rightly absolutely confiscated by the authorities below. 19. We further take note of the fact that various penalties have been imposed on the appellants herein under Section 112(b) of the Customs Act, 1962. While a penalty of Rs.2,25,000/- has been imposed on the appellant no. 1, penalties of Rs.25,000/- each have been imposed on the appellant nos. 2 to 5. 19.1. Considering the fact that the appellant nos. 2 to 5 were engaged in carrying gold of foreign origin without any licit document for the same, we find that the penalties of Rs.25,000/- imposed on each of them do not require any intervention by this Tribunal. Accordingly, the same are affirmed. 19.2. With regard to the penalty of Rs.2,25,000/- imposed on the appellant no. 1, we find that it has been alleged that the appellant no. 1 has trie....