TMI Blog2008 (3) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... e mark of "CREDIT SUISSE" against order of absolute confiscation and imposition of penalty under Section 112 of the Customs Act, (ii) Appeal No. C/654/01 is filed by Shri Shailesh D Patel proprietor of S.K. Jwellers claiming ownership of 282 gold biscuits with the mark of 'Argor Brand', 9 gold biscuits with the mark of 'Johnson Mathew' and 9 gold biscuits with the mark of 'PAMP' (totalling 300 gold biscuits), against the order of absolute confiscation and imposition of penalty under Section 112 of the Customs Act, 1962. (iii) Appeal No. C/649/01 is filed by Shri Jaswant K. Patel against the impost of penalty as a carrier of gold biscuits with foreign marks. (iv) Appeal No. C/651/01 is filed by Shri Bhikabhai Patel against the impost of penalty as a carrier of gold biscuits with foreign marks. (v) Appeal No. C/652/01 is filed by Shri Arvind K. Patel against impost of penalty as a carrier of gold biscuits with foreign marks. (vi) Appeal No. C/648/01 is filed by Smt. Rasilben H. Rathod against impost of penalty as carrier of gold biscuits with foreign marks, (vii) Appeal No. C/653/01 is filed by Shri J.D. Patel against impost of penalty as carrier of gold biscuits with for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 118 of the Customs Act, 1962". 3.1 The appellants who claimed the ownership of the seized gold biscuits resisted the show cause notice on the ground that they had purchased these gold biscuits from suppliers and there were bills to that effect, they also resisted the show cause notice on the ground that the seizure of gold biscuits were not effected by the customs but by the police authorities and hence the burden of proof shifted to the customs to prove that these gold biscuits were smuggled. The other appellants resisted the show cause notice for imposition of penalty on the point that they were employees/relatives and friends of the owners of the gold biscuits and were helping to safely carry the gold biscuits. The learned adjudicating authority did not accept the contentions of the appellants and vide his order- in-original absolutely confiscated the gold, imposed penalties on all the appellants on the findings that the appellants have not discharged the burden of proof as provided under Section 123 of the Customs Act, 1962 and the documents relied upon by the appellants were prepared subsequently on the direction of the appellants. In the earlier round of litigati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement and records of the supplier and the appellant also corroborated the licit possession and sale of the 300 gold biscuits. It is the submission that the purchases and sale of gold biscuits by the appellants has been recorded by them in their accounts and accepted by the authorities. He relies upon the order of the Commissioner (Appeals), Income-tax. It is the submission that the I.T. authorities sought to disallow the value of 300 gold biscuits from the purchases of the appellant in appeal no. C/654/01 on the basis of the seizure and the evidence of the Customs authorities in this case but the Commissioner (Appeals), Income-tax has come to the conclusion that appellant M/s. S.K. Jewellers has licitly purchased 300 gold biscuits from M/s. Paras Bullions. It is the submission that, if that is so, then the one governmental authority holds that these 300 gold biscuits were legally purchased while another government authority hold it is not so. It is the submission that much relied upon evidence as regards of the preparation of the bills to S.K. Jewellers is erroneous, as the accountant of the S.K. Jewellers had confirmed that bill was received on 23- 10-1999. It is the submission th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed SDR on the other hand submits that the appellants have not made out any case for them. It was submitted that the appellants do not dispute the fact that the gold biscuits were concealed in the shoes. It was submitted that the appellants did not produce any documentary evidence at the time of interception to indicate that the gold biscuits were in licit possession of the appellants. It was submitted that in the absence of any evidence the provisions of the Section 123 had to be applied and the appellants had to discharge the burden of proof as to licit possession of gold biscuits. It was submitted that it is unacceptable that such reputed bullion traders like M/s. Paras Bullions and S.K. Jewellers were travelling without any documents. It was also submitted that it is on record that all the appellants have stated that they were proceeding towards Mumbai to dispose off these gold biscuits. It was submitted that the appellants had not given any plausible reason for carrying gold biscuits in shoes if these were licitly procured gold biscuits. It was submitted that the appellants subsequently antedated the bills in order to legitimize their activities. The learned SDR took us through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that the burden of proof that the seized goods are not smuggled, lies on the person who claims ownership of the said seized goods [sub-section (1)(b)]. In the case before us two persons have claimed ownership of the seized 500 gold biscuits. In order to appreciate the evidence on records and to come to conclusion whether burden of proof is discharged by the appellants or not (claiming the ownership), we propose to take up the issue by splitting the appeals of the claimant's individually. 7.1 We take up the issue of 200 gold biscuits with mark of 'CREDIT SUISSE". It is seen from records that Shri Vijay D. Patel proprietor of Paras Bullions (in appeal no. C/676/01) has claimed ownership of these gold biscuits. The adjudicating authority in the impugned order has held that the appellant has not discharged the burden of proof by coming to the following findings: "It may be mentioned here that Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion has stated in his statement recorded under Section 108 of the Customs Act, 1962 on 24-10-99 that he had purchased 200 pieces of foreign marked gold bars "CREDIT SUISEE" mark from M/s. Riddisiddhi Bullion Dineshbhai, authorized person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scuits of foreign mark ar about 1900 hours of 23-10-1999 at their premises at Manekchowk. At the time of taking delivery Shri Dineshbhai had given me Xerox copy of one delivery challan dated 23-10-1999." It can be noticed that the appellant Shri Vijay D. Patel on the date of interception had categorically stated that he had purchased these foreign marked gold biscuits from M/s. Riddhi Siddhi Bullions Ltd. on 23-10-1999 and had taken the delivery on that date itself. The authorities on recording the statement of Shri Vijay D. Patel confronted Shri Dinesh Chaganlal Jain authorized person of Riddhi Siddhi Bullion. The officers summoned Shri Dinesh Chaganlal Jain to the office of the Superintendent, Customs (Preventive), H.Q. Ahmedabad on. 24-10-1999 itself and recorded his statement independently under Section 108 of the Customs Act, 1962. The relevant portion of the statement of Dinesh Chganlal Jain as regards the sale of 200 biscuits of foreign mark gold biscuits is read: "On being asked in respect of one document from the seized file mentioned at Annexure A at serial no. 5, page no. 591, bill no. 294/G.L./9/2000 dated 23-10-1999 being bill in duplicate in the name of M/s.. Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mention as regards the marks of gold biscuits on bill no. 294/G.L./9/2000 dated 23-10-1999. On a specific query from the Bench, as to whether officers confronted the appellant and seller about the absence of marks on the bill No. 294/G.L. /9/2000 dated 23-10-1999 and there being no co-relation, learned SDR submitted that the statements of the appellant and authorized person of the seller do not contain any question or clarification being sought on this point. The revenue has not brought on record during the course of recording the statements and investigation that there was a trade practice to mention the marks of gold biscuits on the documents, in the absence of any evidence to that effect, revenue cannot now turn around and say that there is no co-relation between the seized gold biscuits and the purchase bill due to absence of mention of marks on the purchase bill. The emphasis of the adjudicating authority that the challan of Riddhi Siddhi Bullions Ltd. did not contain brand name or marks to co-relate the sale of the seized gold biscuits is without any legal backing. It requires to be mentioned here that after repeal of Gold (Control) Act no elaborate records are required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk to the Assistant Commissioner of Customs, Ahmedabad, vide their letter dated 12th November 1999 and it was also informed by the bank to customs authorities that there 250 nos. gold biscuits were sold vide bill dated 25th October 1999. Even at this stage also the investigating officers did not consider it fit to call the concerned bank officials and confront them nor any statement was recorded It is seen from the records that Shri Dinesh Chaganlal Jain, authorized signatory of Riddhi Siddhi Bullion Ltd., in his statement before authorities on 24-10-1999 gave the time, date, place and quantity of the gold biscuits purchased from ABM-Amro bank, which is not questioned by the revenue till date. It is further seen from the statement that the authorized signatory had deposed that the 250 gold biscuits of foreign marks were delivered to M/s. Riddhi Siddhi Bullion Ltd. by delivery order dated 23-10-1999 and M/s. ABM-Amro has issued a regular Invoice/Bill to M/s. Riddhi Siddhi Bullion Ltd., on 25-10-1999, a fact, which is not disputed by the revenue by adducing contrary evidence. This evidence in form of statement of the seller of the gold biscuits to current appellant is a primary evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Ashwinbhai Ishwarlal Patel, residing at 14, Shubhan Sukan Apptt., Vithalbhai Patel Colony, Naranpura, "Ahmedabad, shown to have been issued by M/s. Paras Bullion to M/s. Patel Bullion has categorically stated in his statement recorded under Section 108 of Customs Act, 1962 on 6-12-99 that his maternal nephew Shri Devang A. Patel who is a friend of Shri Vijaybhai D. Patel had phoned him on 24-10-99 and informed him about the recovery or gold biscuits by Police and on being called by him he had gone to the residence of Shri Vijay D. Patel on 24-I 0-99 and as directed by him i.e. Shri Devang A. Patel, he had prepared the bill No. 11931 dated 23-10-99 on 24-10-99. The above facts have been corroborated by Shri Devang A. Patel himself in his statement dated 7-12-99. Both S/Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion and Shailesh R. Patel have admitted to have not issued/received any bill, voucher or delivery challan in regard to the aforementioned 300 pieces of foreign marked gold bars covered by the said bill No. 11931 dated 23-10-99. Shri Shailesh R. Patel has not made payment either in cash or cheque for the said 300 pieces of foreign marked gold bars. The above fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 454 nos. of gold biscuits from K.L. Choksi and 570 nos. of gold biscuits from other bullion dealers. It is seen from records that Shri Vijay D. Patel produced documents to show that M/s. Paras Bullion had purchased these said gold biscuits with foreign marks for which bills were available. It is seen that M/s. Paras bullions had purchased 454 nos. of gold bars with foreign marks from M/s. K.L. Choksi vide Bill No. 5936 dated 21-10-1999, 5981 dated 23-10-1999 (at page no. 11 of main paper book) and Bill no. 5960 dated 22-10-1999 (at page no. 13 of main paper book), and also different bills and purchased 570 nos. of gold biscuits with foreign marks from M/s. Amrapali Industries Ltd., (Bullion Division) vide bill no. 3983/99 dated 9-9-1999 (at page no. 12 of the main paper book) and bill no. G/3135/99 dated 16-9-1999 (at page no. 14 of the main paper book). The investigating officers summoned Shri Nareshbhai Keshavlal Choksi the proprietor of M/s. K.L. Choksi, on 24-10-1999 to verify the authenticity of deposition of Shri Vijay D. Patel and recorded his statement in their office under Section 108 of the Customs Act, 1962. Shri Nareshbahai K.L. Choksi had categorically stated that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.K. Jewellers by Paras bullions stated that the said bill was given by Shri Dewang Patel at about 1930 hrs on 23-10-1999 near Shailesh Bhais' residence and also stated that he does no know whether Shri Shailesh R. Patel was aware of the bill or not. The investigating authorities recorded statement of Shri Dewang Patel on 6-11-1999, who stated that he had himself handed over the bill no. 11931 dated 23-10-1999 to Shri Satish A. Patel, the part-time accountant of M/s. S.K. Jewellers on 23-10-1999 itself. It is seen from records that investigating authorities after recording statement of Shri Ashwin I. Patel on 6-12-1999, recorded a further statement of Shri Dewang Patel on 7-12-1999 Shri Dewang Patel stated that Shri Ashwin I. Patel had prepared the bill no. 11931 dated 23-10-1999 for 300 gold biscuits and was delivered by him to part-time accountant on 23-10-1999 at 1930 hrs. It can be seen from the records that the part-time accountant in his statement recorded under Section 108 of the Customs Act, 1962 stated the said bill no.11931 dated 23-10-1999 was received by him on 23-10-1999 at 1930 hrs itself, a fact which has been corroborated by Shri Dewang Patel in his statements dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also at the time of the inquiry that he brought them with him into India in 1947, no other acceptable evidence has been adduced. In the circumstances, the question of onus of proof becomes very important and the decision turns upon the question on whom the burden of proof lies. This Court has held that a customs officer is not a judicial tribunal and that a proceeding before him is not a prosecution. But it cannot be denied that the relevant provisions of the Sea Customs Act and the Land Customs Act are penal in character. The appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been corn- miffed by a person under the said Acts, summon and examine witnesses, decide whether an offence is committed, make an order of confiscation of the goods in respect of which the offence is committed, make an order of confiscation of the goods in respect of which the offence is committed and impose penalty on the person concerned, see Ss. 168 and 171A of the Sea Customs Act and Ss.5 and 7 of the Land Customs Act. To such a situation, though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962 does not indicate that, it has to be proved by the person on the spot, that the goods are not of smuggled nature. Secondly, it is now settled law that provisions of Section 123 of the Customs Act, 1962 are of procedural nature. If the provisions of Section 123 are of procedural nature, then it is for the person who claims ownership of the goods, to produce evidence at any given stage of the proceedings. Three Judges Bench of the Hon'ble Supreme Court of India in the Balumal Jamnadas Batra v. State of Maharashtra as reported at [1983 (13) E.L.T. 1558 (S.C.)] has held as under "It is true that lighters and flints were notified as provided in Section 123(2) in the Official Gazette of 26-8-1967. Nevertheless, as the provisions of Section 123(1) of the Act only lay down a procedural rule, they could be applied when the case came up for trial before the Presidency Magistrate who actually decided it on 15-7-1969. Indeed, the complaint itself was filed on 30-10-1968. It is immaterial that the appellant was found in possession of the goods on 21-4-1967". (Emphasis Supplied) In the case before us we find that the appellants when intercepted with seized go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccosted by them. But in my opinion, these circumstances taken either singly or cumulatively are insufficient to raise any such presumption in favour of the prosecution. The fact that the accused carried these slabs in three d packets by keeping them in the inside pocket of the underwear can hardly be said to be in any way unusual. Even an innocent person would carry valuable things in this manner or take care to keep them as secure as possible, especially in Bombay where pickpockets are known for their dexterity". (Emphasis Supplied) It seems that the Customs department itself accepts the mode of transportation of gold biscuits in shoes, which is evident from the remarks on the Baggage receipt no. 0296644 dated 1-3-2007, which is endorsed by the Customs officials as produced along with the miscellaneous application. 11. We had asked the learned DR, whether the investigating officers had shown the seized gold biscuits to the seller to verify, that, the very same were sold, the answer was in negative. It is se from records that revenue has not adduced any evidence, even remotely, to indicate that the seized gold biscuits were of smuggled nature, while appellants hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pursuance of the order dated 8-3-2007 of the Hon'ble Supreme Court [2007 (210) E.L.T. 321 (S.C.)]. The relevant portion of the important directions/observations of the Hon'ble Supreme Court is reproduced. "The Commissioner of Customs, inter alia, has gone into the entire materials brought on records by the parties. It has taken into consideration a number of circumstances in arriving at the findings. The Tribunal however, as noticed herein before, inter alia, not only proceeded on the basis that one of the carriers had been let off but also purported normal fashion of transport of gold bars for which no evidence was brought on record. Tribunal should have dealt with the findings that there existed serious discrepancies in the bills or vouchers." 15.1 Certain relevant facts require to be highlighted. 15.2 Two bullion dealers along with six other persons were intercepted by the police with 551 gold bars with foreign marks when they were proceeding to Mumbai. The bullion dealer Shri Vijay D. Patel, Proprietor of M/s. Paras bullion along with his two assistants Shri Bikabhai D. Patel and Shri Nathubhai D. Patel were found carrying 90, 55, and 55 gold bars respectively. Ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Gold, diamond are items of small volume but of high value and hence highly prone to smuggling. If gold or diamond are brought from a foreign country whether by legal import or by smuggling, price for the same in foreign exchange has to go out of the country, legally or through other means. If the gold or diamonds are smuggled, the money has to go mostly illegally. While the nation may require the foreign exchange for purposes like import of fuel, purchase of defence equipments, etc., the needs of individual could be different. Some people might be interested in investing in idle assets like gold. Therefore, in respect of items which are prone to smuggling, the unusual step of shifting the burden of proving that the gold or diamonds seized from the custody of persons is provided for. 17.2 Our nation faced acute shortage of foreign exchange in 1991 and was about to default in payment of foreign debts and narrowly escaped humiliation by making the payment by pledging gold which was in the possession the Government. 17.3 If the Section 123 notified is seized abandoned then naturally the question of burden of proof does not arise except when somebody claims ownership. When th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d people carry personally and also with the help of the carriers huge quantity of gold without bills and travel to a place looking for the perspective buyers. 16.2. Shri Sailesh R. Patel claimed to have purchased 300 gold bars from Shri Vijay D. Patel on 23-10-99. Shri Sailesh R. Patel in his statement dated 24-10-99 has clearly stated that no bill was issued and no payment was made. Shri Vijay D. Patel has in his statement dated 24-10-99 also claimed only about oral agreement for sale. There is a dispute as to whether the bill was issued on 23-10-99 and delivered to the part-time accountant on the very same day but was prepared on 24-10-99 as a cover up operation by antedating it to 23-10-99. In the over all circumstances, it appears that the claim that the bill was prepared on 23-10-99 is an after thought. If it was prepared on 23-10-99 no valid reason has been given as to why a bill said to have issued by Paras Bullion was not carried along with the consignment. It would not have been burdensome to carry such a piece of paper and they would not be exposed any risk. Was it out of ignorance or out of deliberate design? In respect of 51 gold bars which was in possession of Shri Nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness premises even the proprietors/partners do not enter the premises with their shoes on. The gold and shoes are not appropriate companions. In view of this also, the claim that gold is being concealed in shoe for the sake of safety as a practice is not acceptable. 19.4 There have been many cases of smugglers using shoes for concealment of gold and other precious articles and have been nabbed by customs authorities in the airports. Concealment in shoes was not found to be a practice but only as part of malpractice. 19.5 A passenger claims to have come through the airport concealing his gold in the shoes and declaring to the customs Mumbai Sahar airport and then getting a certificate in the baggage receipt dated 1-3-07 issued for payment of duty that the gold was concealed for safety purposes in the shoes. The passenger, perhaps, feared that some robbers may rob him while he was travelling in the aircraft! Some customs officer has also willingly or unknowingly obliged the said passenger and given such a certificate. In my opinion, the customs officer has gone beyond his normal call of duty/role in certifying that the gold was transported for safety purposes. It can be onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision taken by them will have no bearing as to whether the gold bars have been acquired in conformity or in contravention of the provisions of the Customs Act. If a person indulged in bootlegging, gambling, etc., and earned money the income-tax will collect tax due and it is for the concerned department to take appropriate action for violations of other laws. It is a different matter that income-tax department might alert the other concerned agency. 22.1 It is not the case of each of the carrier, in addition to having the gold concealed in the peculiar manner, has chosen to carry the relevant papers, showing legal possession of the gold. Their masters who accompanied also did not carry the relevant papers evidencing legal possession. 22.2 If the police have not intercepted, and the customs have not come into the picture can it be reasonably presumed that after disposal of the gold in Mumbai market, Shri S.R. Patel, Shri Vijay D. Patel that we expect them to prepare bills and regularize the transaction or not to account them at all? 23. The following emerges : (a) The concealment of gold bars in shoes cannot be considered as a trade practice but only as a practice fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived the 500 gold bars and if he has raised the invoice on Shri S.R. Patel for the 300 gold bars claimed to have been sold to him and if Shri S.R. Patel carried such invoice then the situation would have been totally different. In such a situation the questions like whether sale was on credit basis or whether the gold bars are carried in suit cases or bags or concealed in shoes or whether they maintained the accounts in a particular form and for whom these consignments were meant in Mumbai, etc. become irrelevant. In such a situation these persons also would have been allowed to go with the gold bars as was done in the case of Shri Nattubhai Brijial Soni. The gold bars have been seized under the reasonable belief that they are smuggled goods. Their story is unbelievable. Each omission and conduct appears condonable but cumulatively, their conduct and the entire circumstances taken together shows that they were not on any genuine business mission but on certain clandestine activities. 24.3 In the light of the above, in my considered opinion, the claimant- owners have not discharged their burden of proof in terms of Section 123 of the Customs Act. Therefore, confiscation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 200 gold biscuits with the mark of credit Suisse. Shri Vijay Dasrathbhai Patel in his statement submitted that the gold biscuits were purchased from M/s. Riddhi Siddhi Bullion Ltd. On 23-10-99. The investigation was conducted from M/s. Riddhi Siddhi Bullion Ltd. and Shri Dinesh Chhaganlal Jain on M/s. Riddhi Siddhi Bullion Ltd. in his statement stated that 350 nos. of gold biscuits of foreign marked were sold vide bill dated 23-10-99 to Vijay Dasrathbhai Patel. During the search of the premises a duplicate copy of Challan dated 23-10-99 was found in the records of M/s. Riddhi Siddhi Bullion Ltd. In respect of sale of 350 gold biscuits, the contention is that Shri Dinesh Chhaganlal Jain of M/s. Riddhi Siddhi Bullion Ltd. also disclosed the source of 350 gold biscuits. During the investigation he disclosed that the biscuits were procured from ABN AMRO bank and from M/s. Anjali Exim Pvt. Ltd. In view of this statement of Shri Dinesh Chhaganlal Jain, it is stated that gold biscuit was procured legally and the same were sold to Shri Vijay Dasrathbhai Patel, therefore, it cannot be said that gold biscuits in question are smuggled in nature. In respect of remaining gold biscuits, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplier of the gold biscuits to the appellant. The appellant Shri Vijay D. Patel, proprietor of M/s. Paras Bullion claimed the ownership of 200 gold biscuits on the ground that the same were purchased from M/s. Riddhi Siddhi Bullion Ltd. on 23-10-99 and M/s. Riddhi Siddhi Bullion Ltd. corroborated this fact that they had sold 350 no. of gold biscuits under bill dated 23-10-99 to Shri Vijay D. Patel. M/s. Riddhi Siddhi Bullion Ltd. also disclosed the source of procurement of 350 gold biscuits as the same were purchased from ABN AMRO Bank and M/s.. Anjali Exim Pvt. Ltd. The enquiries conducted from ABN AMRO Bank also disclosed that the 250 no. of gold biscuits were sold on 20-10-99 to M/s. Riddhi Siddhi Bullion Ltd. In respect of 300 gold biscuits, Shri Shailesh Kumar Ratilal Patel of S.K. Jewellers claimed the ownership, the same were purchased from M/s. Pavas Bullion. Shri Vijay D. Patel of M/s. Paras Bullion admitted that the gold biscuits in question were sold to S.K. Jewellers. M/s. Paras Bullion was disclosed the source of procurement of biscuits in question the 450 of gold biscuits from M/s. K.L. Choksi and 570 number of gold biscuits were procured from other bullion dealer wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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