TMI Blog2013 (6) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... rkings were sufficient to create reasonable believe that the gold being of foreign origin, in the absence of any evidence of their valid import was smuggled gold. The burden thus under Section 123 (1) was on the appellant to prove that the goods were either non-foreign origin or were validly purchased. - Decided against assessee. - Customs Appeal No.364 of 2010, Customs Appeal No.1 of 2012 - - - Dated:- 13-9-2012 - Sunil Ambwani And Aditya Nath Mittal, JJ. JUDGMENT 1. We have heard Shri A.K. Jain and Shri Rajeev Chaddha, for the appellant. Shri S.P. Kesarwani appears for the respondent. 2. The Customs Appeal No.364 of 2010 under Section 130 of the Customs Act, 1962 arises out of an order dated 28.4.2010 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi dated 28.4.2010 by which the CESTAT dismissed the appeal against the order of the Commissioner (Appeals) upholding confiscation of the gold treating them as gold with foreign marks, and holding that the appellant has failed to prove the illicit nature of the gold. The Commissioner (Appeals) by his order dated 28.4.2010 dismissed the appeal against the order of the Addl. Commissioner, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also called on the spot, tested the purity of the recovered gold biscuits and reported in his statement before the officers that the purity of the 20 biscuits/pcs. gold weighing 1681.500 gms. Was 99.99%. He also stated the total value of gold biscuits pcs. thereof as Rs.7,71,273/-. On being queried, Sh. Faiyaz Ahmad could not produce any evidence showing lawful import or acquisition of the recovered gold biscuits and pcs. of gold biscuits or permission of the Reserve Bank of India as required for import of recovered gold biscuits. Since no documents/evidences showing the licit import of recovered gold biscuits pcs. of gold biscuits, could be produced, the officers under the reasonable belief that the recovered gold had been smuggled and thus liable to confiscation under the Customs Act, 1962, seized the 1681.500 gms. gold valued at Rs.7,71,273/- under Sec. 110 of the Act ibid. Besides admitting the recovery and seizure of contraband gold biscuits pcs. thereof as mentioned above, Sh. Zaki Ishrati Managing Director of M/s Zarafshan Chemicals (P) Ltd. 10-B, Saresh nagar, Agra, in response to summons issued upon him, in his voluntary statement dated 01.12.94 admitted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purity in casual way but did not stress upon cross-examination of the assayer. 6. The case was adjudicated by Addl. Commissioner, Customs and Central Excise, Kanpur. By his order in original dated 10.4.1996 he directed seizure of 1681.500 grams of gold biscuits and pieces thereof, absolutely, under Section 111 (d) and also personal penalty of Rs.50,000/- on Shri Faiyaz Ahmad and Shri Zaki Ishrati under Section 112 of the Customs Act, 1962. 7. The appeals filed by Shri Faiyaz Ahmad and Shri Zaki Ishrati before the Commissioner (Appeals), Allahabad were dismissed on 20.2.1997. The CEGAT, New Delhi decided the appeals against the order of the Commissioner (Appeals), Allahabad vide its final order dated 28.10.1998 and remanded the case back to Adjudicating Authority with directions to re-adjudicate the case after examining the matter afresh, particularly with reference to the retracted statement dated 12.8.1994 of the Manager and after providing an opportunity to the appellants. 8. During the pendency of the remand proceedings Shri Faiyaz Ahmad died on 18.11.1998. Shri A.K. Jain appearing for Shri Zaki Ishrati has challenged the proceedings on the ground of irregularities commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptions of foreign language. The concealment of these gold pieces and the foreign marking were found sufficient to create a reasonable belief of gold being of foreign origin, which in the absence of any evidence for their import by the party becomes smuggled gold. The Adjudicating Authority observed that once this reasonable belief is the basis for seizure under Section 110, the burden lies upon the appellant to prove that they are not smuggled nature of items notified under Section 123 (2) of the Customs Act, 1962. No valid proof of the non-foreign original of these goods was brought on record and thus the department's case of foreign original of the seized goods was unrebutted and proved. 12. The Adjudicating Authority found that Shri Zaki Ishrati and Shri Faiyaz Ahmad, Manager of Zarafahan Chemical (P) Ltd. had in response to the summons appeared before the Superintendent, Central Excise, Agra on 1.12.1994 and in their statements recorded separately under Section 108 of the Customs Act, 1962 stated that the four gold biscuits bearing foreign marks seized on 10.8.1994 from the premises at 10B Suresh Nagar, Agra were part of five gold biscuits, which they had purchased from M/s K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were recorded under Section 108 of the Customs Act, 1962 before the Gazetted Officer. The wrong mention of the provision namely Section 14 of the Central Excise Act, would not render the statements inadmissible or take away their evidenciary value. 17. On the question of admissibility of the statements the Adjudicating Officer relied upon KI Pavunni v. Asstt. Collector, Central Excise, Collectorate, Cochin, 1997 (90) ELT 241 (SC); Bhagwan Singh v. State of Punjab, AIR 1952 (SC) 214 and Balbir Singh v. State of Punjab, AIR 1957 SC 216 in which the Supreme Court held that confession can form the basis for conviction. If it is retracted, it must be tested whether the confession is voluntary. The burden of proof that the confession was not voluntary and was obtained by threat or coercion is on the accused. If the retracted confession is believed to be voluntary and true, it may form the basis of a conviction but the rule of practice and prudence required that it should be corroborated by independent evidence. 18. The Adjudicating Officer, thereafter, considered the judgments of the Supreme Court in Kashmira Singh v. State of Madhya Pradesh, AIR 1952 SC 159 and Vallabhdas Liladha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the statement and I am convinced with the findings observe that this statement does not anyhow affect the case. The concealment of the gold in the grass and the marking in foreign language inscribed on them are sufficient to create a reasonable belief that the goods were of foreign origin and brought into India and thus the burden lies on the Appellants to prove that the goods were not smuggled into India, but the Appellants have lawful possession of the same. The Appellants could not produce any document showing their lawful possession, further they have stressed only on the points, which were not relevant of the case. On going through the entire case records and submission of the Appellants, I am of the opinion that foreign gold in question was not imported into India by lawful means and thus the confiscation of the same is upheld and once it is proved, the Appellants have rightly been penalized." 21. The CESTAT considered the circumstances in which the gold biscuits were recovered. On the knowledge or concern about 16 pieces of gold seized from beneath the grass of the garden, it observed that under the circumstances in which the gold was seized, and on formation of reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was unaware as to how it reached there. He as Managing Director of the Company feigned about the gold recovered from the lawn and stated that he was not concerned with the same. Subsequently, he claimed that the entire gold seized in the recovery proceedings including gold from the lawn belongs to him. This contradictory statement was also strange and was treated to be a circumstances in the failure to discharge the burden that the gold biscuits were legally procured. 25. The application for rectification of the alleged mistakes in the CESTAT order dated 28.4.2010 filed by Shri Zaki Ishrati, the appellant was rejected by the CESTAT after discussing the facts on following reasoning:- "7. From the above, the following emerges:- a) The order was dictated in the open Court in the presence of representatives from both sides. The order is also subject to further appellate remedy as provided under the law. b) A wrong application dated 1.6.2010 was admittedly filed which was received on 8.6.2010 and a correct application was subsequently filed which was received on 14.6.2010. There are wide variations in the contents and tenor of the applications received on 8.6.2010 and 14.6.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss gold. The panchnama did not mention the word 'fine gold'. The assayer in his report had mentioned the pieces of gold as 'fine gold'. The assayer did not indicate the country or origin in assessing purity as 0.999/-. Quite a few pieces did not indicate foreign origin and thus report is unreliable. At the time of personal hearing the assayer was not allowed to be cross-examined inspite of request. 27. Shri A.K. Jain submits that inspite of repeated and continuous requests, the seized gold was not sent to the Government of India's Mint to ascertain its purity as well as country of its origin. The statement of late Faiyaz Ahmad dated 11.2.1994 did not bear the signature of Central Excise/ Customs Officer. He submits that the purity of gold cannot be ascertained by 'kasauti check' and the expression 'tolas' is never used in gold biscuits of foreign origin. 28. Shri Jain has relied upon the circumstances in which Shri Narandra Kumar Parswani, the valuer; Shri Vikas Gupta and Shri Radhey Krishna Verma, panch witnesses, Vimal Chandra Jain and Praveen Kapoor were not summoned for cross-examination. In order to prove that the pieces of gold were of foreign origin, the Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31. We have perused the records, and considered the submissions. 32. In Noor Aga v. State of Punjab Anr., (2008) 16 SCC 417, the Supreme Court considered the explanation to Section 35 (1) of the Narcotic Drugs and Psychotripic Substances At, 1985. It was held that the words 'reason to believe' is question of fact. In para 37 the Supreme Court held:- "37. It is the consistent view of this Court that "reason to believe", as provided in several provisions of the Act and as defined in Section 26 of the Penal Code, 1860 on the part of the officer concerned is essentially a question of fact. The procedures laid down under the Act being stringent in nature, however, must be strictly complied with." 33. In Union of India v. Padam Narain Aggarwal Ors., (2008) 13 SCC 305, the Supreme Court discussed the object and enquiry under Section 108 of the Customs Act and held in paragraphs 39, 40 and 41 as follows:- "39. As already noted in the earlier part of the judgment, Sections 107-09 confer power on Custom Officers to examine persons, to summon them to give evidence and to produce documents. Section 108 which is a material provision, reads thus: "108. Power to summon persons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 108 of the Customs Act does not contemplate any magisterial intervention. The power under the said section is intended to be exercised by a gazetted officer of the Customs Department. Sub-section (3) enjoins on the person summoned by the officer to state the truth upon any subject respecting which he is examined. He is not excused from speaking the truth on the premise that such statement could be used against him. The said requirement is included in the provision for the purpose of enabling the gazetted officer to elicit the truth from the person interrogated. There is no involvement of the magistrate at that stage. The entire idea behind the provision is that the gazetted officer questioning the person must gather all the truth concerning the episode. If the statement so extracted is untrue its utility for the officer gets lost." (emphasis supplied) It is thus clear that statements recorded under Section 108 of the Act are distinct and different from statements recorded by Police Officers during the course of investigation under the Code." 34. The scope of Section 123 of the Customs Act, 1962 was discussed by the Supreme Court in Union of India Ors. v. Rajendra Pra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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