TMI Blog2018 (10) TMI 1161X X X X Extracts X X X X X X X X Extracts X X X X ..... s, confirming the show cause notice. This particularly, in the absence of the party being able to explain away the confession made - We specifically called upon the learned Additional Solicitor General to show us any confessional statement made by Respondent No.1 and/or other Respondents i.e. Driver, Employees/ Agents to the effect that, the seized confiscated gold is a smuggled gold. However, he was unable to show us any confessional statements in respect of gold made either by Respondent No.1 and/or his Drivers/ Employee/ Agents - the occasion to apply the Supreme Court's decision in the case of K. I. Pavunny V. Asst. Collector would not arise in the present facts - this substantial question of law is answered in the affirmative i.e. in favour of the Respondent-Assessee and against the Appellant-Revenue. Whether the Tribunal is justified in holding that the Respondents have discharged their burden/ onus cast on them in terms of the provisions of section 123 of the Customs Act, 1962 to prove and/or establish that the huge quantity of 575 gold bars seized from their custody is not the smuggled one, inspite of the fact that no legal evidence, such as maintenance of any basic Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Respondents. JUDGMENT (Per M.S.Sanklecha,J.): This Appeal under Section 130 of the Customs Act, 1962 (the Act) challenges the order dated 3rd June, 2005 passed by the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal). 2 This Appeal was admitted on 28th June, 2007 on the following substantial questions of law: (a) Whether in the facts and circumstances of the case and in law, the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) is justified in allowing the Appeal of the Respondents herein and setting aside the order of confiscation of the seized gold, by totally discarding the confessional statements given by the Respondents under the provisions of section 108 of the Customs Act, 1962, which are in the nature of admissible legal evidence, as clearly mandated by the Hon'ble Supreme Court in the case of (i) K. I. Pavunny v/s. The Assistant Collector (HQ), (1997) 3 SCC 721 and (ii) Naresh J. Sukhwani v/s. Union of India (1996) SCC (Cri) 76? (b) Whether in the facts and circumstances of the case and in law, the Tribunal is justified in holding that the Respondents have discharged their burden/ onus cast on them in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession of the 575 gold bars and Indian currency of ₹ 21 lakhs. This led to a reasonable belief on the part of the Officers of the Respondent that the goods are liable for confiscation. Therefore, the 575 gold bars and ₹ 21 lakhs cash found were seized under Section 110 read with Section 123 of the Act. This as gold is a notified good under Section 123 of the Act, while cash was seized in the reasonable belief that it is sale proceeds of smuggled goods; (c) On the date of seizure i.e. 8th March, 2000, the statement of Mr. Anis Ashraf (Driver of Respondent No.1) was recorded under Section 108 of the Act when he stated that the delivery of gold bars was taken from one Mr. Chetanbhai at Mumbai. However, in his subsequent statements, he indicates that gold bars were purchased from Ahmedabad. It was also explained that ₹ 21 lakhs were sale proceeds of gold. These sale proceeds were received from one Mr. Padambhai who withdrew the amounts from Vyasa Bank, Nariman Point, Mumbai; (d) On 9th March, 2000, Respondent No.1 made a statement under Section 108 of the Act to the Officers of Respondents. In his statement, Respondent No.1 stated that 575 seized gold bars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .09 Crores should not be confiscated under Section 111 (d) and (i) of the Act; (b) The Indian currency of ₹ 21 lakhs found in the jeep should not be confiscated as sale proceeds of smuggled goods under Section 121 of the Act. (c) The Armada Jeep in which the seized gold and cash were secreted should not along with other vehicles belonging to Respondent No.1 should not be confiscated under Section 115 of the Act; and (d) Penalty under Section 112 (a) and (b) of the Act should not be imposed. Besides, the other Respondents herein amongst others, were also called upon to show cause why penalty under Section 112 (a) and (b) of the Act should not be imposed upon each of them. (k) The Respondents resisted the show cause notice. At the personal hearing, Respondent No.1 reiterated that the seized gold is not a smuggled gold. Therefore, no issue of its confiscation arises. The burden cast upon him by virtue of Section 123 of the Act, the Petitioner submitted has been discharged. Thus, the notice be dropped; (l) On 1st July, 2002, the Commissioner of Customs (Adjudication) passed an order, confirming the show cause notice dated 6th September, 2000. The abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct arrived at by the Tribunal. Moreover, sub section (4) of Section 130 of the Act, enables the Respondent at the final hearing to urge that the admitted question does not give rise to a substantial question of law. 7 Secondly, the questions which arise for our consideration in this case is in the context of the application of Section 123 of the Act in respect of the goods notified therein. Gold is an item which is notified under Section 123 of the Act and it provides that burden of proof in case of notified goods, would be upon the person from whose possession and/or the person who claims ownership of the goods to prove that the seized goods are not smuggled goods. However, before the aforesaid burden could be cast upon the person who claims to be the owner of the seized goods, the Revenue should be able to establish that the goods seized under Section 110 of the Act, was on a reasonable belief that the imported goods were smuggled goods. Therefore, where seizure is a subject of challenge on the ground of absence of reasonable belief then, the question of burden of proof on the person, claiming to be the owner of the goods, would arise only when the challenge to seizure is, neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, that they were not smuggled goods, is not discharged. This we note from the questions framed is only in view of the absence of legal evidence, such as maintenance of Books of Accounts, Registration with the Sales Tax, Income Tax etc. to show legal purchase of the gold. (ii) We specifically asked the Revenue how the absence of the above could lead to the conclusion that the goods i.e. gold in the possession of Respondent No.1 is smuggled. The response of the Revenue was that the factors listed in the question are only illustrative of no evidence to establish licit ownership/possession of gold bars. (iii) We are of the view that in the absence of evidence in the form of regular Books of Account, Registration under the Income Tax and Sales Tax, etc., cannot ispo facto lead to the conclusion that the seized gold bars, are smuggled gold bars. These may lead to proceedings for breaches of other Acts but it does not follow from it that the gold bars are smuggled goods. In fact, if a person in possession of the stolen gold is able to establish that it had come into India after a proper declaration and compliance of the Act, no confiscation under the Act, can arise. Proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates that the money was borrowed, he is unable to state the name of the persons who lent him the money. It is further submitted that there were differences in bills issued for sale of gold by M/s. Paras Jewellers and M/s. Pavan Bullions, then those used for sale to other persons. There were also discrepancies in the statements regarding delivery of gold either in Ahmedabad or in Mumbai. It is emphasized that the Respondent No.1 had made telephone calls to Dubai. All the above facts, according to the Revenue, would establish that the seized gold bars were smuggled and the Respondent No.1 had failed to discharge the burden cast upon him under Section 123 of the Act. (viii) On the other hand, Mr. Nankani, learned Senior Counsel for Respondent No.1, submits that: (a) the question as admitted does not give rise to any substantial question of law as the view taken is one on facts and a possible view. Therefore, no interference is warranted; (b) In any case, the burden of proof cast upon Respondent No.1 under Section 123 of the Act, stood discharged on not only giving details of the source of gold bars but also giving evidence of source of source. Therefore, confiscation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not pursue investigation further with M/s. Paras Jewellers and M/s. Pavan Bullions and the other concerned entities. Thus, not pursuing the further investigation, would imply that the Officers of the DRI were satisfied with the explanation given by Respondent No.1 and that of Mr. Bhupendra Thakkar on behalf of M/s. Paras Jewellers and M/s. Pavan Bullions. The impugned order, particularly, records the fact that the discrepancies were noted by Commissioner with regard to the bill book. However, it holds that it is not of much consequence in view of the fact that these discrepancies were also found in respect of bills issued to other customers. So far as the inconsistency in the statement of the Driver of Respondent No.1 is concerned viz; the place from where gold was taken possession of i.e. Ahmedabad or Delhi, is one plea of inconsistent evidence. The subsequent statement of taking possession of gold from Ahmedabad, in fact, is in accordance with documents on record and corroborated with the statement of Mr. Bhpendra Thakkar and Mr. Devang Patel. The fact that M/s. Pavan Bullions were not found at the given address when visited, is to be considered in the light of the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present facts, the Respondent has discharged the burden of proof imposed upon him under Section 123 of the Act. (xiii) Being of the view that the above observations would apply to the present facts, we enquired of the Revenue of its stand in respect of the applicability of the above principle to the present facts. Mr. Sethana, learned Counsel for the Revenue responded by stating that it will not apply to the present facts as it does not deal with Section 123 of the Act. It is submitted that in terms of Section 123 of the Act, the burden is upon the Respondent and that has to be discharged up to the hilt. We are unable to understand the above submission. Section 123 of the Act, statutorily imposes a reverse burden of proof i.e. not upon the person (Revenue) who assert that the gold in possession of the Respondent No.1 is smuggled gold but on the person (Respondent No.1) who is found in possession of goods notified under Section 123 of the Act. However, this reverse burden of proof does not do away with the manner of discharging the burden of proof. Thus, the manner of discharging the burden of proof by shifting of the onuswould be as applicable to all other civil proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proof would depend upon appreciation of the facts by the Authority concerned as there is no absolute standard of burden of proof. In civil cases, discharge of burden of proof would be varying degrees of probability. Therefore, if the Tribunal is satisfied that burden is discharged and the finding is not perverse, then no case for interference in second appeal is, warranted. (xvi) In this case, we find that the impugned order of the Tribunal has on appreciation of facts, come to a conclusion that the Respondent No.1 herein has discharged his burden under Section 123 of the Act, that the 575 gold bars seized on 8th March, 2000 were not smuggled gold. This finding of fact has not been shown to us, to be perverse. Thus, it is a possible view on the available facts and the evidence produced by Respondent No.1; (xvii) In the above view, this question being one of finding of fact, based on appreciation the evidence, would not justify our interfering with the impugned order of the Tribunal; (xviii)Accordingly, Question No.(b) is answered in the affirmative i.e. in favour of the Respondent and against the Appellant. 9 In the above view, both Questions (a) (b) are an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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