TaxTMI 
TaxTMI 
2026 (9) TMI 1134
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....pecific requirement for allowing cross-examination. Furthermore, the law established by the Hon'ble Supreme Court and various High Courts as discussed above is that in the event, any material is relied upon by the authorities, any witnesses are examined by the authorities, upon a request made by the show cause noticee, the said relied upon documents are to be provided to the noticee and the witnesses that have been examined and whose statements are being relied upon by the authorities shall be subject to cross-examination by the noticee. The law does not mandate that in each and every case, cross-examination is required to be provided. We are of the view that it is incumbent upon the noticee to seek cross-examination of the witnesses, and if such a request is made, it is mandatory for the authorities to provide such cross-examination. In the event, such cross-examination is not possible, the adjudicating authority in his order has to specifically note down the reasons as to why the witnesses could not be subjected to cross-examination. Such reasons could be as specified in Section 138-B such as death of the witness, the witness being incapable of giving evidence, the witness not be....
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.... Appeals are allowed and the Tribunal is directed to de novo hear the matter expeditiously, preferably within a period of three months from the date of receipt of certified copy of this judgment." 2. From the above, it is evident that the Hon'ble High Court has observed that the Tribunal has to come up with the findings that the Appellants have made a request for cross examination or not. If the Appellants have sought for cross examination then only the Tribunal could have held that the procedural prescribed under Section 138-B of the Act was not followed by the learned Adjudicating Authority. However, if the Appellants have not asked for the cross examination then the findings of the Tribunal with procedural prescribed under Section 138-B of the Customs Act, 1962 was not followed, would be incorrect. During the course of the hearing the learned Counsel appearing on behalf of the Appellants submitted that they have not made any specific request for cross examination before the learned Adjudicating Authority. Thus, we find that the Appellants have not sought for cross examination in this case. Accordingly, we hold that finding of the Tribunal that the Adjudicating Authority has n....
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....020. M/s Mahaveer Bullion Traders New Delhi, after perusing the Invoices in question, stated that they placed an order for purchase of 4 kg gold from M/s Bajrang Bullion; however, the signature on sale invoices produced by M/s Bajrang Bullion is not his signature. Shri Bhuvanesh Chand Agarwal, of M/s Shriji Traders, Lucknow, stated that invoices produced by the Bajrang Bullion, were issued by him but signatures on such invoices is not his signature. The investigation culminated with the issue of the impugned Show Cause Notice dated 23.02.2021, which was adjudicated by the impugned order, proposing to confiscate the seized Gold under Section 111 of the Customs Act 1962 and to impose penalty under Section 112, ibid. hence, these appeals." 4. Learned Advocate Shri Vineet Kumar Singh appearing for the Appellants submits that they had purchased the gold in question from legal sources has been accepted by the sellers i.e. M/s Mahaveer Bullion Traders, New Delhi and M/s Shriji Traders, Lucknow; however, they said that the signatures on invoices are not theirs; the seized gold had no foreign marking or serial number; the purity of the gold was 99.92, 97.81,99.26 & 89.34, and not 99.9%, ....
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....er payment of GST; the invoices submitted by the Appellant was not negated by the Department. It is a well-settled proposition of law that confessional statements need independent corroboration; in the instant case, the voluntary character of the statements themselves being in doubt, the same cannot be the basis of holding the guilt against the Appellants, more so, as the purity of the gold is below 99.99%. He submits that the Appellants have substantiated the licit purchase of the seized gold by submitting Invoices, stock Register & purchase register of the gold; the Appellant has discharged the burden of proof under Section 123. The statements relied upon by the Appellants should be held to be not reliable; it was held in Puni Dhapa Lokeswara Rao 2009 (248) ELT 141 (Cal.) that circumstantial evidence proves that the statement recorded under section 108 of the Customs Act 1962 was not voluntary; the onus to establish that the gold seized from the Appellant was smuggled into India shifts to the Department. 7. Learned Counsel submits also that the Department made a detailed inquiry from the seller of the gold bullion but nothing incrementing came from the inquiry; none of the doc....
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....ase of Vinod Solanki vs. Union of India 2009 (233) E.L.T. 157; it was held by the apex Court in the case of Sevvantilal Karsondas Modi Vs State of Maharashtra & Another 1979 SCC (2) 58 that "confession made before Customs officer as a result of coercion cannot be basis of conviction under section 135(1) (a) (b) of the Customs Act. That at any rate, it was incumbent upon the opposite party to corroborate the confession from independent sources, which has admittedly not been done in the present case"; he relies also on Mohtesham Mohd. Ismail vs. Spl. Director 2007 (220) E.L.T. 3 SC. 9. He submits that in the impugned case, Revenue has not been able to substantiate the charge of smuggling save and except by the statements recorded under Section 108; such statement also loses its evidentiary value as Revenue has failed to examine the persons in the course of adjudication proceedings, as held Supreme Court in the case of Andaman Timber Industries 2015 (324) E.L.T. 641 (SC). The documentary evidence regarding licit procurement of gold bars through GST paid invoices submitted by the Appellant would prevail over the oral evidence, which is retracted. There is also no confession by the A....
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....uld have reasons to believe that that such goods are liable to confiscation under the Act; once such seizure is done, Section 123 of the Customs Act, 1962 shifts the burden of proof to prove that goods are not smuggled on the person from whom the goods are seized. The jurisprudence distilled on the such seizures, particularly outside the Customs Area or specified areas, envisages that * Reasonable belief is a pre-requisite for seizure; the proper officer should have reasons to believe that the goods are smuggled goods before seizing them under Section 110; * the reasonable belief cannot be based on presumption; a case of suspicion or speculation is not one of reasonable belief; Section 123 kicks in only when Section 110 is satisfied and that "reasonable belief" exists and can be explained before the adjudicating authority or tribunal or court, as the case may be * if Revenue fails to prove reasonable belief, then the goods would not be liable to be seized in the first place; * If there was no reasonable belief, then the onus cannot be shifted on the person from whom the goods were seized; * wrong invocation of Section 110, leaves no scop....
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.... as required by Section 110 refers to the point of time when the goods in question are seized and not to a stage subsequent to the act of seizure. (M.G. Abrol v. Amichand, AIR 1961 Bom. 227). The condition precedent that there was such a reasonable belief anterior to the seizure must exist before the presumption under Section 123 can be invoked. Section 123 says. ............................................................................................. 56. In Babulal Amthalal Mehta v. Collector of Customs, AIR 1957 S.C. 877, while considering the provisions of Section 178A of the Sea Customs Act, 1878, it was observed; "Though the word `smuggling' is not defined in the Act, it must be understood as having the ordinary dictionary meaning, namely, carrying of goods clandestinely into a country." Where Section 123 cannot be invoked it would be for the customs authorities to prove that the goods were imported after the restrictions against import were imposed. (Amba Lal v. Union of India, AIR 1961 S.C. 264. In Pukhraj v. D.R. Kohli, AIR 1962 S.C. 1559 the Supreme Court said that when the court was dealing with the question as to whether the belief....
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....hen only the rule of evidence laid down by the section comes into operation) the very facts which led the seizing officer to effect the seizure, as distinguished from their significance as affording a reasonable belief for the seizing officer to hold that the goods are smuggled, are before the adjudicating officer. These facts which justified the seizing officer to reasonably believe that the goods were smuggled would certainly import a rational connection between the facts on which the presumption is raised and the fact to be proved, so that whatever other constitutional infirmity might attach to the impugned provision, the lack of rational connection is not one of them." It would be necessary, therefore, before any person could be called upon to prove that the goods seized from him were not smuggled goods, that the customs officer making the seizure must 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....
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....tten to queen mother. On her behalf a reply was received that she had given certain ornaments to the petitioner for polishing, remaking etc., though not for sale. But this was done later on. The letter was written on 3-7-1967. The reply was received on 24-7-1967. But at the time of seizure all that the officer had before him were 2 packets of diamonds and 5 ornaments. Neither the diamonds nor the ornaments had any foreign markings or label to suggest to the customs that these were smuggled goods. In the search list these two packets of diamonds are described as "appearing to be diamonds". This shows that the customs officer did not believe them to be diamonds on any reasonable ground. The ornaments had no foreign label or making. They were ordinary ornaments as are worn in this country. There was nothing peculiar about them. Nothing extraordinary. On this material could 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 tha....
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....oods. At the time of seizure what happened was this. The petitioner was present at the shop. He told the customs officer that they were duly entered in his account books but his accountant had gone to the income tax officer. The officer did not wait for the man to arrive to explain the entries to him. He seized the goods and took them away. This was not a case of reasonable belief. It was a case of suspicion. A case of speculation. A case of guess work. 63. As a result, Section 123 did not apply to the case. There was no reasonable belief. No presumption could be raised under Section 123. There was no obligation on the petitioner to prove that the goods were not smuggled. The burden of proof was wrongly cast on him. The entire inquiry was vitiated. 64. For these reasons the writ petition is allowed. The order of confiscation of the goods is set aside. The order of the Addl. Collector of Customs dated 14-08-1968 the order of the Central Board of Excise and Customs dated 18-91971 and the order of the Central Government dated 30-5-1972 are quashed. The respondents are directed to return to the petitioner items 6 to 11 and 16 of the search lists forthwith. The parties....
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....he seized primary gold was smuggled gold which is essential to shift the burden on to the accused under Section 123. The case of Om Prakash Khatri (supra) was different inasmuch as in that case while the foreign markings were missing on the gold in that case the carriers had admitted that they were carrying smuggled gold for Shri Khatri and that it was smuggled through Kerala and they were carrying it to Bombay and marks and numbers have been deleted to avoid being caught. They also admitted that they avoid air travel as there is a high risk of being caught. Coupled with these statements was the fact the gold of very high purity. The ratio of this judgment does not apply to the present case and the facts are quite different. 15. In view of the above, we find that the officers of the Department had no reasonable belief that the gold was smuggled and therefore they have not discharged their responsibility of forming reasonable belief under Section 123 without which the burden of proof will not shift to the person from whom the gold is seized." 18. We further find that the Tribunal in the case of Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [....
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.... 123 are not attracted. Even if assuming that it does, we find that search of Search of the premises of Bajrang Bullion Traders, Gorakhpur and statement of Sri Sharad Chand Agrahari on 04/09/2020, revealed that he had purchased gold weighing 9525.010 gm from registered traders of gold bullion through licit manner and payment of such purchases were made through banking channel; the gold carried by Shri Manoj Kumar Nishad & Shri Rajan Kumar Sahni was covered by Voucher No 644 & 645 dated 03/09/2020. The investigation conducted at M/s Mahaveer Bullion Traders New Delhi, revealed that they are in business contact with Shri Sharad Agrahari; they placed an order for purchase of 4 kg gold from M/s Bajrang Bullion. However, they stated that the signature on sale invoices produced by M/s Bajrang Bullion is not his signature. He also handed over the copies of invoices issued by them. Similar were the results of enquiry conducted at Shri Bhuvanesh Chand Agarwal, of M/s Shriji Traders, Lucknow. 20. These investigations are not conclusive enough to establish that the impugned gold was smuggled. Interestingly, both M/s Shriji Traders, Lucknow and M/s Mahaveer Bullion Traders New Delhi did not....
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....mpugned goods. As admittedly, the gold having no foreign markings, the onus would be on Department to prove the smuggled nature of the same. This onus was not discharged. Moreover, the provisions of Section 138B of the Customs Act have not been complied with and therefore, the sanctity of the statement recorded under section 108 has been lost and consequently, they cannot be conclusively relied upon. 22. The Appellants have submitted the evidence regarding local purchase of the gold. They have submitted evidence regarding purchase of gold and contended that the supplier has filed GST Part-2A and the details of the GST payments are available in the portal for ready reference evidence regarding payment of IGST available in the GST Portal and the invoices issued by the supplier available in GST Portal also extracted below:- 23. We also find that /s. Bajrang Bullion Traders have sold 3999.830 grams of gold to M/s Mahaveer Bullion, New Delhi vide Voucher No.644 & 645 both are dated 03.09.2020. It is an admitted fact that Shri Manoj Kumar Nisad and Shri Rajan Kumar Sahani were carrying the voucher No.644 & 645 dated 03.09.2020 at the time of seizure of the gold. Shri Sarad Chand Ag....
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....fiscation does not arise. In view of the above we, set aside the confiscation of the gold in question. 26. Regarding the penalties imposed on various Appellants, we find that the penalties have been imposed on allegation that the concerned persons directly or indirectly involved in dealing with the smuggled gold. In view of the above discussions and findings, we observe that there is no evidence available to hold that the gold in question were smuggled in nature. As confiscation of the gold is not upheld, we hold that no penalty is imposable on the persons concerned. Accordingly, we set aside all the penalties imposed in the impugned order. 27. In result, we set aside the impugned order and allow all the six appeals filed by the Appellants with consequential relief, if any, as per law. (Order pronounced in open court on - 15.09.2026) ============= Document 1 Goods and Services Tax Government of India, States and Union Territories & SHARAD CHAND AGRAHA 09AEXPC75BE1ZZ 17 @ English Dashboard > Returns > GSTRZA GSTIN - 09AEXPC7582E1ZZ FY - 2020-21 B2B Invoices - Supplier Details +1 + earch: Search ... Instantly download records up-to 500 usin....
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.....00 3,04,800.00 0.00 0.00 0.00 1 0 644 03/09/2020 1,04,64,800.00 1,01,60,000.00 3,04,800.00 0.00 0.00 0.00 1 0 » - 19 @ English BACK FY - 2020-21 & SHARADI CHAND AGRAHA 09AEXPC75BRE5ZZ 20 @ English Legal Name - SHARAD CHAND AGRAHARI Return Period - August Trade Name - M/S BAJRANG BULLION TRADERS Dashboard > Returns > GSTR2A Document 2 शà¥à¤°à¥€à¤°à¤¾à¤® गोलà¥à¤¡ टंच सेनà¥à¤Ÿà¤° पà¥à¤°à¤¥à¤® तल, दà¥à¤•à¤¾à¤¨ नं. 25/26, अमà¥à¤¬à¥‡ गहना बाजार, हरबंशगली, घंटाघर, गोरखपà¥à¤° (उ०पà¥à¤°à¥¦) पà¥à¤°à¥‹à¥¦- विशाल कà¥à¤®à¤¾à¤° दिनांक ०१/६२०२० कà¥à¤°à¤®à¤¾à¤‚क 254 गोलà¥à¤¡ à¤à¤£à¥à¤¡ सि....