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TMI Blog2005 (9) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand only) (5) Shri Jashwant Kanjibhai Patel Rs. 5,000/- (Rupees five thousand only) (6) Shri Arvindhvai Kantilal Patel Rs. 5,000/- (Rupees five thousand only) (7) Shri Bhikhabhai Tulsibhai Patel Rs. 5,000/- (Rupees five thousand only) (8) Smt. Rasilaben Harshadbhai Rathod Rs. 5,000/- (Rupees five thousand only) (9) Shri Satishbhai Amrutlal Patel Rs. 5,000/- (Rupees five thousand only) They are being disposed off by this common order. 2.1 After hearing both sides and considering the material on record it is found: (a) Officers of Crime Branch of the Ahmedabad Police pursuant to an information stopped 8 persons, in two groups, a Lakudi Talao crossing Ahmedabad at about 8 pm on 23-10-1999. On interrogation and verification, after this interception, and these persons disclosing that they were carrying gold, the police officers searched them and found 551 Foreign Brand marled gold bars of 10 tolas (hereinafter referred to TT bars) to be with them as detailed below : (i) Shri Shaileshbai Ratilal Patel, - 100 TT bars kept is 4 plastic packets each of 25 bars having the marking "AGGOR HEARES'" whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.K. Jewellers situated at 13-B, Jeewandeep Building, where the said persons from whom the gold was recovered were taken by the police officers after intercepting them at Lakudi Talao crossing, Ahmedabad. These persons and the gold was admittedly under the police guard from 23-10-99 when the police intercepted these persons up to the final panchanama drawn by the Customs officers on 29-10-99. (d) Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion, Ahmedabad and Shri Shailesh Patel, Proprietor of M/s. S.K. Jeweller another Bullion, dealer of Ahmedbad have owned up the 500 bars seized, on 29-10-99 . (300 TT bars by Shri Shailesh Patel and 200 by Shri Vijay D. Patel). Shri Shailesh Patel had claimed the total 351 TT bars (300 seized and 51 returned to Shri Nandubhai Brijlal Soni by the Customs officers) and Shri Vijay D. Patel had claimed 200 TT bars seized on 29-10-99 and also had disclosed to the officers on 23/24-10-1999 that these 300 bars claimed by Shailesh were sold by Vijay to Shailesh. (e) The Customs Officers started their enquiry in the early hours of 24-10-99 by reaching Jeevandeep building premises after receipt of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 111(a), 111(b), 111(d) and 111(o) of the Customs Act, 1962. (ii) Duty at tariff rate should not be charged from them under Section 28 of the Customs Act, 1962. (iii) Interest should not be charged from them under provisions of Section 28AB of Customs Act, 1962. (iv) Penalty should not be imposed on each of them under the provisions of Section 112(a)/112(b)/114A of the Customs Act, 1962. (v) The articles shown against each in Annexure-D used for concealing the FM Gold TT bars should not be confiscated under Section 118 of the Customs Act, 1962. The Commissioner ordered the confiscation of the 500 TT marked gold, the waist band, shoes and imposed penalty as recorded hereinabove. (f) Since M/s. S.K. Jewellers, M/s. Paras Bullion, and M/s. Patel Bullion, were found to be Proprietary firms and penalty was arrived at and imposed on the proprietor of these firms vide the order impugned therefore the Commissioner held the same to be good for the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, and thereby all of the aforementioned five Noticees, i.e. Noticee Nos. 3, 4, 5, 6 and 7 have rendered themselves liable to penalty as provided under Section 112 of the Customs Act 1962." The above reasons and the findings arrived by the Commissioner, over- looks, a fact, that one Nandubai V. Soni was also found carrying 51 TT bars, concealed in the shoes he was wearing, in a similar manner. He was not even issued the show cause notice, nor the gold found concealed and carried by him seized. It was returned on production of a bill of M/s. Amarpali of Ahmedabad even though it was not in his name. This Nandubai was intercepted by the police, along with the other persons on the same errand on the same date i.e. at about 8 pm on 23-10-1999. The possession of gold by this person was obtained in a similar fashion from the Bullion dealers, as in other cases. The said bullion dealers were carrying TT bars with them and accompanying these carriers. From these facts it is evident that the carriage of the TT bars concealed in the shoes was not a modus operandi adopted to transport concealed smuggled gold, as arrived at by the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of foreign marked gold, legally imported, would be within the knowledge of these carriers of the bullion market Ahmedabad and the fact that M/s. S.K. Jewellers and M/s. Paras Bullion were dealing in foreign marked gold and this was not only the day/trip/errand they had embarked upon. We therefore find these trusted person/carriers/employees to be innocent carriers of TT bars, indulging in the normal course of their trade/profession to be carrying the same from the Bullion dealers premises in Ahmedabad to a safe destination as per the requirement of the Bullion dealers, in the normal course of their profession. They are not found to have dealt with TT bars, knowingly that the said bars were non-duty paid and therefore liable to confiscation. They cannot be held liable to penalty as held by the Commissioner. Penalty on these trusted perscns/employees/carriers is therefore is to be set aside and their appeal allowed. (h) As regards Shri Satishbai A. Patel, the Commissioner has found that while working as an accountant of M/s. S.K. Jewellers he has been preparing the bills for the said firm and as admitted that Shri Devang A. Patel had given him Bill No. 11931, dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this appellant is to be set aside and his appeal allowed. (i) As regards the reasons to arrive at a penalty on Devang A. Patel, Proprietor of M/s. Patel Bullion, the Commissioner records in para 46 of the order as follows : "46. It may be mentioned here that consequent upon the recovery of gold by Police from the said Shri Vijay D. Patel and Shri Shailesh R. Patel along with the aforementioned persons, Shri Devang A. Patel had tried to get the bills prepared for the 500 gold, biscuits of foreign markings recovered from the abovementioned Noticees by Police on 23-10-1999 as is evident form his own statement dated 7-12-99 and the statement dated 6-12-99 of Shri Ashwinbhai I. Patel just to legalise, as an afterthought, the sale/purchase of the aforementioned 500 gold biscuits of foreign mark placed under seizure on 28/29-10-99. Further, Shri Devangbhai Patel has claimed the ownership of the 200 pcs of 'CREDIT SUISSE' mark gold TT bars seized from Shri Vijay D. Patel vide his statement dated 6-11-99. He has further stated therein that on 23-10-99 they had prepared packets of the aforesaid 200 gold TT bars and that they had kept 90 pcs of gold ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to penalty under Section 112 of the Customs Act, 1962." On considering the reasons, as arrived at for imposition of penalty on Devang Patel, we cannot find the backing of law or facts to uphold the same. On the ground that Devang A. Patel has made attempts to produce documents for the 200 gold TT bars and the reliance on the statements of Vijay D. Patel dated 23-10-99 and his employees to conclude that the ownership of the 200 bars rested with Mr. Vijay Patel of M/s. Paras Bullion and that he said gold was not delivered to M/s. Devang A. Patel, as claimed and therefore an offence under the Foreign Trade (Development and Regulation) Act, 1992 and the Customs Act, 1962, as the cause to arrived at to penalty on Devang Patel is not upheld. Even assuming that a false claim was made by Devang in a proceeding under the Customs Act, 1962, such an effort cannot result in confiscation of the goods per se. For producing forged/fabricated false documents in a proceeding under the Customs Act, 1962 may call for a prosecution under Section 132 of the Customs Act, 1962, it cannot be a reason to arrive at a penalty under Section 112 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments produced in defence was not credible and in para 45 has concluded as follows : "45. In view of the above facts and circumstances, I am fully convinced that the seized 500 foreign marked gold T.T. bars weighing 58.320 kgs valued at Rs. 2,70,00,000/- were imported into India in contravention of the provisions of Foreign Trade (Development and Regulation) Act, 1992 and Baggage Rules, 1998 framed under Section 79 of the Customs Act, 1962. The restrictions imposed under Foreign Trade (Development and Regulation) Act, 1992 are deemed to have been imposed under Section 11 of the Customs Act, 1962. Gold can be imported into India through the following routes : (i) by passenger (as per provisions of Notification No. 171/94, as amended). (ii) By MMTC Ltd, the Handicraft and Handloom Export Corporation, State Trading Corporation, PEC Ltd. or any other agency authorised by RBI as per provisions of Notification No. 117/94, as amended. I find from the records that the Noticees have not produced any evidence to prove that the gold biscuits of foreign mark under seizure were imported through any one of the three routes described ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being questioned on their credibility the TT bars supplied by them cannot be found to be non-duty paid or/and cleared from an unauthorised port without payment of duty and thus liable to confiscation under Section 111D of the Customs Act, 1962. The Commissioner has positively rejected credible documents on flimsy grounds of a xerox copy not being legible etc. The order of confiscation of the 500 bars of gold can be set aside only on this ground. (k) It was further submitted on behalf of the Appellant by the ld. Counsel, Shri Sanjanwala, that since no Notice is issued of M/s. K.L. Choksi, M/s. Amarpali and M/s. Ridhisidhi Bullion who had purchased the gold from authorised dealers (Banks in this case) and admitted having sold the same to the Applicant, the show cause notice against the Applicants cannot be sustained. Since the obligation to pay the import duty, if any, is on the importers and not on the subsequent purchasers. The other submission is since adjudicating authority has dropped the charges under Sections 111(a), 111(b) and 111(d) cannot be sustained. Section 111(d) is concerned with the Prohibited Goods and the gold is no longer a prohibite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. S.K. Jewellers M/s. K.L. Choksi M/s. Amrapali Ind. Ltd. 320 570 110 480 210 90 210 90 Total 890 590 300 300 These transactions are covered by Sale Bills and have been confirmed under Section 108 of the Customs Act, 1962 by Shri Naresh K. Choksi Proprietor of M/s. K.L. Choksi in his statement dated 24-10-99 and by Shri Yashwantbhai A. Thakkar, Managing Director of M/s. Amarpali Industries Ltd. Branch-wise gold in balance sold by M/s. Paras Bullion to M/s. S.K. Jewellers and found in search Customs from the Appellant and his employees. Brand Balance sold by M/s. Paras Bullion to M/s. S.K. Jewellers As per the Customs Panchanarma ARGOR 282 282 PAMP SUISEE 9 9 JOHNSON 9 9 MATHEW TOTAL 300 300 (iv) These tallies in toto with the Police Panchanama dated 23-10-99 and Customs Panchanama dated 28/29-10-99. All the 300 gold bars have thus been tallied brand-wise piece by piece. (All the above mentioned Sale Receipts are part of the Show Cause Notice and appear Sr. No. 26 to 30 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cast on the appellants. On 25-10-99, the police had also called the Income tax Department at 13B, Jeevan Deep Building, Narayan Pura, Ahmedabad who started their investigation independently, Shri Sanjanwala ld. Sr. Advocate, relied upon the order passed by the CIT (A), Ahmedabad dated 24th Sept., 2002 in support of their arguments and maintain that all the documents which are produced before the Income tax Authority also. On close scrutiny of the said documents, Income tax Appellate Authority has clearly come to the conclusion that the gold bars completely tally and the accounts produced were genuine. The appellants pleaded that full support should be derived from the Order of Income tax, Commissioner (Appeals) in which after due consideration of the accounts books and the material facts about acquisition and payment for the gold transacted by M/s. S.K. Jewellers and also separately in the case of M/s. Paras Bullion, it was established and held that gold TT bars were procured/taken by and on a system known as Jhangad system and payments were effected to the seller by the noticees only after selling the same. It was pointed out that there is ample proof to support the 'Jhangad' sys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case, sales could be effected during the course of the day, and it is admitted by the Accountant that the entries are not made as and when each transaction takes place, but are made in a consolidated fashion, subsequent to the transactions, on a given day; there is no statutory requirement of the entries to be made in account books and thereafter effect sales/delivery as is the case under the Central Excise Act, 1944 procedures which mandates to make entries in the RG-1, PLA register and other books and thereafter effect delivery. Then the Commissioner (Customs) appears to be led by the concept of stock ledger account maintenance under the Central Excise Law, where it has been statutorily provided to enter even the time of removal to arrive at finding of manipulated accounts. No such statutory provision of an entry in stock ledger book before delivery is applicable to a bullion dealer in the year 1999 for TT bars. The mind set under former Gold (Control) Act and Central Excise Act entertained by the Officers of the Department, has led to a conclusion to doubt the account books. We do not share the doubts of Commissioner (Customs) and mind set. We w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on prior information, the said 8 persons remained voluntarily along with the gold at the office of M/s. S.K. Jewellers under a Police guard during the period 23-10-99 to 29-10-99. No Police guard has ever been proved to have been sought by M/s. S.K. Jewellers or others, for these office premises of theirs anytime in the past or subsequent to 23-10-99. Why should a guard be placed if goods/person are not under detention? The panchanama therefore drawn by the Customs Officers is under the supervision of the police officer and the entire 'panchanama' is a suspect document. While the Appellants want to rely on the rulings in case of Gianchand v. State of Punjab - 1983 (13) E.L.T. 1365, the ld. DR is strongly contesting the application of the said ruling and relies on various case law of this Tribunal and of other higher courts. Since we are arriving at our findings that the entire 551 gold TT bars which were found by the police on 23-10-99 stand accounted for in the books of Bullion dealers and have been claimed by M/s. Paras Bullion and M/s. S.K. Jewellers, to be duty paid gold, acquired by them in the normal course of their business, and the said gold was been transported along ..... X X X X Extracts X X X X X X X X Extracts X X X X
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