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TMI Blog2023 (3) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals), Shri Deepak Handa filed appeal C/52922 of 2016 and Shri Ravi Handa filed C/52923 of 2016. Both these appeals have been disposed of by Final Order No. 51520-51521/2021 dated 25.5.2021. The order, in a nutshell, upheld the confiscation of the primary gold with foreign markings but set aside the confiscation of the gold ornaments and the cash. Consequently, the penalties were also reduced. 2. After the above order, the Commissioner (Appeals) passed the impugned order in respect of the appellant which also involves confiscation of the primary gold, confiscation of the jewellery, confiscation of money and imposition of penalty. In this appeal, the appellant is assailing the following: a) Confiscation of 2776.94 grams of gold valued at Rs. 72,21,040/- seized from the appellant by a Panchnama dated 24.8.2017. This gold includes (i) one kg gold bar of 995 purity with marking 'Argos Heraeuss'; (ii) one kg gold bar of 995 purity with marking " Rand refinery"; (iii) one cut piece of gold of 995 purity weighing 195.23 grams; (iv) a plastic box with jewellery weighing 246.37 grams; and (v) a plastic pouch with jewellery weighing 335.34 grams; b) Confiscation of Indian cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shop of the appellant in Delhi which are the subject matter of this appeal and the impugned order. 8. Investigations were completed and the SCN was issued and it was adjudicated by the Additional Commissioner of Customs who passed the OIO as follows: i. I confiscate the seized gold weighing 15.3890 kg (recovered from Shri Deepak Handa) valued at Rs. 4,60,02,337, seized vide panchnama dated 23/24-8-2017 under section 111(d), 111 (i) and 111(p) read with section 120 of the Customs Act, 1962. ii. I confiscate the seized gold weighing 2776.94 grams (recovered from Shri Kashi Kumar Aggarwal) valued at Rs. 72,21,040/- seized vide panchnama dated 24.8.2017 under section 111(d), 111(i) and 111(p) read with section 120 of the Customs Act, 1962 iii. I confiscate the seized gold weighing 1,118.24 grams (recovered from M/s. Baibhav Ornaments) valued at Rs. 46,83,820/- seized vide panchnama dated 24.8.2017 under sections 11(d), 111(i) and 111(p) read with section 120 of the Customs Act, 1962. iv. I confiscate Indian currency amounting to Rs. 8,86,500 seized vide panchnama dated 24.8.2017 under section 121 of the Customs Act, 1962. v. I confiscate Indian currency amounting to Rs. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced invoice dated 19.8.2017 and a copy of ledger account, copy of Form DVAT-56, copy of GST R2A of M/s. Pinki Chains along with other supporting documents and evidences. f) Revenue has not adduced any evidence to show that the seized gold was smuggled. g) The bills produced show that the gold was legally purchased from the local market. The appellant was only a broker and was not the importer or owner of the seized gold. h) Section 111 (d) of the Customs Act does not apply to town seizures of goods. It applies to those cases where the goods have been imported in violation of any prohibition. i) Section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant. j) Section 111(p) applies only to goods notified under Chapter IVA of the Act and gold is not notified under this section. k) Section 120 applies to those cases where the smuggled goods have been modified in form and it does not apply to the present case. l) Section 121 applies to sale proceeds of smuggled goods and in this case, since the goods them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso confessed to having dealt with the seized smuggled gold to Deepak. What is admitted need not be proved. Reliance is placed on Mohammed Muzzamil vs CBIC [2021(376) ELT 46 (Telangana)]. e) In case of gold notified under section 123 which is seized under reasonable belief that it is smuggled, the burden of proving that it is not rests on the person from who it is seized. 12. We proceed to examine the relevant legal provisions of the Act and then examine each of the four issues viz., the confiscation of the gold bars, confiscation of the jewellery, confiscation of the seized cash and imposition of penalty upon the appellant. Legal provisions 13. The Customs Act, 1962 regulates imports and exports and provides for confiscation of certain goods, imposition of penalty on individuals and also has provisions for arrest and prosecution of the offenders. The provisions relevant to this appeal are sections 2(22), (33) and (39), 111(d), (i) and (p), 112, 120, 121 and 123. These read as follows: Section 2: Definitions (22) "goods" includes - (a) vessels, aircrafts and vehicles; (b) stores; (c) baggage; (d) currency and negotiable instruments; and (e) any other kind of mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on: Provided that where the owner of such goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation. SECTION 121. Confiscation of sale-proceeds of smuggled goods. - Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation. SECTION 123. Burden of proof in certain cases. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the possession of any person,- (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold, and manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the cash is concerned, rests on the Revenue. The burden of proof shifts to the appellant with respect to gold depending on whether it was seized under the reasonable belief that it was 'smuggled goods'. If so, the burden shifts to the appellant and not otherwise. 17. The next important section is 121 which provides for confiscation of the sale proceeds of the smuggled goods. This is the section under which the cash has been confiscated. What is different between sections 111 and 121 is that the former provides for confiscation of smuggled goods whereas the latter provides for confiscation of the sale proceeds of smuggled goods. Naturally, such sale would take place after smuggling and such proceeds will be of Indian origin. On the other hand, if anyone smuggles currency (Indian or foreign) into India, such currency will be 'smuggled goods' themselves. 18. The third important section is 120 which states that the smuggled goods will be liable for confiscation not withstanding any change in the form. For instance, if one smuggles silver bars and then melts them and converts them into some other form, the mere fact that they were converted makes no difference and they will still be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gold bars had foreign markings. They were seized from the appellant in a follow up operation to the seizure of foreign marked gold bars from Deepak and Surinder. They were found in the premises of the appellant. When the officers questioned the appellant on 25.8.2017, the appellant admitted that he had sold foreign marked gold to Deepak without invoice or receipt and further that he would sell so to Deepak 2 or 3 times a month. The appellant had no receipts or documents to show that the gold was not of foreign origin. In fact, even in the appeal before us, the appellant does not dispute that the gold was of foreign origin. The officers, therefore, had a reasonable belief that they were smuggled goods and accordingly, seized them. The burden of proof is on the person from who they are seized, viz., the appellant to prove that they were not smuggled as per section 123. 25. The submission of the learned counsel for the appellant is that gold can be imported by authorized agencies (such as banks) who can further sell them to others in India. Therefore, it is his submission that the gold was legally imported into India and therefore is not smuggled. There is an ambiguity in the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign markings and were of very high purity is not in dispute. It is also not in dispute that no duty paid documents in the form of Bill of Entry (whether the duty is paid by the appellant or the importer from whom the appellant claims to have purchased) is available. No such document is produced till date even before us. Therefore, the case against the appellant does not in any way get diluted. The fact that the appellant had given his statements on 24.8.2017 and 25.8.2017 but subsequently retracted them when produced before the Ld. CMM was also examined. The statements give out several personal details which are likely to be in the exclusive knowledge of the appellant. It is inconceivable that the officer recording the statement had these details. It suggests that the statements were voluntary. These statements also indicate the appellant's relationship with Deepak Handa and that the appellant would sell gold to Deepak. The retraction does not indicate what part of the statement recorded by the officers was incorrect and what the truth is- his personal details, the fact that he would sell gold to Deepak or the nature of the seized gold. If officers had compelled him to write in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant was in possession was, indeed, duty paid, the documents to show that must be with the appellant and in his exclusive knowledge which he must produce, however no such documents have been produced not only before the investigating officers or the adjudicating authority but even before us. We are therefore, satisfied that the appellant has not discharged his burden of proving that the gold bars and the cut piece were not smuggled. 29. Learned counsel further submitted that Section 111 (d) of the Customs Act does not apply to town seizures of goods. It applies to those cases where the goods have been imported in violation of any prohibition. He submits that Section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant. Section 111(p) applies only to goods notified under Chapter IVA of the Act and gold is not notified under this section. 30. We find that section 111(d) nowhere indicates whether it applies to town seizures or seizures at the ports and airports. All that it states is that 'any goods which are imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and that gold is not notified under this Chapter is not in dispute. Therefore, confiscation under sections 111(i) and (p) are not sustainable. 32. To sum up, we find that the gold bars and piece of gold were correctly held liable for confiscation under section 111(d) by the adjudicating authority and such confiscation was correctly upheld in the impugned order. Confiscation under sections 111(i) and (p) need to be set aside. B. Gold jewellery weighing 581.71 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in original) 33. These gold ornaments were confiscated in the order in original and the confiscation was upheld in the impugned order under sections 111(d), 111(i) and 111(p) read with section 120 of the Customs Act. Section 120 provides that Smuggled goods may be confiscated notwithstanding any change in their form. Further, it also provides that where smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation. It is the case of the department that the seized jewellery was made out of smuggled gold and NOT that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to be noted that an identical view was taken with respect to the cash seized from Baibhav Ornaments and Radhika Jewellers in this Tribunal's Final Order dated 25.5.2021. D. Penalty of Rs. 25,00,000 imposed on the appellant under Section 112 (S.No. (vii) of the operative part of the Order in Original) 35. Penalty under section 112 is imposable for any acts or omissions which render the goods liable to confiscation under section 111 of the Act. This section reads as follows: SECTION 112. Penalty for improper importation of goods, etc.- Any person, - (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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