TMI Blog2023 (4) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... te is not given to the respondent. Again, the request to cross-examine the assayer was denied. It is produced belatedly and there is no petition filed by learned AR stating reasons to accept the document at the appellate stage. On the totality of these facts, we have to hold that the certificate of the assayer produced by the learned AR cannot be accepted in evidence. Apart from the certificate, the department relies on the statements given by the respondent on 23/24.1.2017. These statements have been retracted later by the respondent. In such circumstances, the department has to place reliable evidence to prove that the gold is smuggled from Sri Lanka. There is no evidence to prove that the gold is smuggled from Sri Lanka or any connection of the gold with Murugan or Batcha. In the absence of foreign markings, there should be cogent evidence to establish that the gold is of foreign origin. The contention of the learned AR that if gold jewellery when converted into bullion will not have 999.9% purity is without any substance. The statement of respondent which has been retracted cannot be the basis for holding that the gold is smuggled unless corroborated by other evidences. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave any valid document for the possession of the gold and it appeared to the department that these two crude gold bars are smuggled into India from Sri Lanka without declaring it to customs with an intention to evade payment of customs duties and that for this reason, the gold bars were liable for confiscation under the provisions of the Customs Act, 1962. The same were seized under mahazar dated 23.1.2017. 3. The statement of the respondent was recorded under sec. 108 of the Customs Act, 1962 on the same day. He stated that one person named Murugan aged 55 years approached him on 22.1.2017 to carry the gold smuggled from Sri Lanka, from Pudupattinam in Ramnad District to be handed over to Batcha @ Pitchai at Chennai for a monetary consideration of Rs.5,000/-. He came by bus and reached Perungalathur on the same day. He called Batcha using his mobile who told him to come to Pallavaram bus stand. While waiting for Batcha at the bus stop, he was intercepted by DRI officers. He admitted to have concealed the smuggled gold in his back pack. He stated that he did not know the address of Murugan and Batcha and that earlier on four or five occasions, he had travelled by bus and handed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tickets obtained from the State Transport Corporation. It was also stated that he maintained a bank account with IOB, Devakottai and later his wife s name was added to the bank account. He earlier worked in Malaysia and Saudi Arabia and submitted a copy of his passport. He did not have PAN and was not an income tax assessee. He did not have any proof of his savings / documents for the licit purchase of gold or to prove that the crude gold bars were not of smuggled nature. 7. The investigation and voluntary statements given by Shri Umarkatta (respondent s wife s uncle) and Shri G.Kannan (goldsmith) clearly proved that the respondent was only a carrier and the retraction made by his letters and the letters of his family members were only an afterthought to mislead the investigation so as to absolve him from the allegations. Though the officers were not able to get clear whereabouts of Murugan or Batcha @ Pitchai, the gold was assayed by Shri G. K. Shankar who certified the two crude gold bars to be of 24 karat and has 999.9 purity which proved the gold to be of foreign origin. 8. In the absence of evidence on the part of respondent to prove that the gold was legally procured a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y consideration. The findings of the Commissioner (Appeals) that the crude gold bars do not have foreign markings and therefore cannot be presumed that they are of foreign origin is erroneous. 12. In para 16 and 17 of the impugned order, it is stated by the Commissioner (Appeals) that the gold bars are not of standard size. It is discussed that from the websites it is seen that the weight of impugned gold bars do not relate to any of the standard size. This observation is factually incorrect. Further, the assayer had certified that the gold bars are of 24 carat and 999.90 purity. On the date of hearing, the learned AR produced a copy of the certificate issued by the Assayer Shri G.K. Shankar dated 24.1.2017. It is submitted by the learned AR that jewellery when converted into bullion will not have 999.9 purity so the case of the respondent that gold jewellery belonging to his family was melted and converted to crude gold bars is false. The Commissioner (Appeals) has relied upon the observation of the Magistrate in the criminal proceedings. The certificate issued by the Magistrate had only stated that the seized goods are crude gold bars (no foreign marking) and not that the gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent was represented by Shri B. Kumar, Senior Advocate assisted by Advocates Shri T. Sudhan Raj and Shri Shruthan. 19. The learned Senior Advocate submitted that the entire Show Cause Notice is based on the statements recorded from the respondent on 23.1.2017 and 24.1.2017. These statements cannot be accepted in evidence for the reason that they have been retracted in clear terms by the letters issued by the respondent on 20.2.2017. On such score, to prove the allegations, the department has to corroborate the said statements with material particulars so as to establish the allegations raised in the Show Cause Notice. In the statement recorded on 23/24.1.2017, it is recorded that one person named Murugan handed over the gold bars to the respondent to be given to Shri Batcha @ Pitchai. The department has not been able to establish the existence of such persons. The department has filed an affidavit before the Hon'ble High Court of Madras in CMA No. 1911/2021 (which is an appeal filed by the department) wherein the Assistant Commissioner has clearly admitted that the investigation revealed that there was no person such as Murugan or Batcha. The investigation agency has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. The learned counsel relied upon the judgment of the Hon'ble High Court of Madras in the case of M/s. Jet Unipex in W.P. No. 5233 of 2016 dated 19.5.2020 to argue that the evidence placed by the department cannot be accepted when the request for cross-examination has been denied. 21. The learned counsel submitted that though the gold has been seized on a reasonable belief that it is smuggled gold, there is no material to show that the gold is smuggled in nature. Admittedly, the gold bars do not have any foreign markings. The presumption under sec. 123 of the Customs Act, 1962 would not apply at all as the gold does not have any foreign markings. Moreover, the seizure is not made at any point of import. The respondent was intercepted at a public place which is a bus stand. The reasonable belief is based only on the so called secret information and the said information has no evidentiary value unless established with evidence. 22. The learned counsel referred to the Annexure to the Show Cause Notice issued under Section 124 of Customs Act, 1962 dated 21.7.2017. The certificate which is produced by the learned AR and said to have been issued by assayer is not mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be taken on merits without going into the jurisdictional issue of DRI. 27. We therefore proceed to examine the merits of the case. The allegation in the Show Cause Notice is that the gold seized from the respondent is gold smuggled into India without declaring it to Customs for avoiding payment of customs duties. The first issue that requires to be analyzed is whether the gold is of foreign origin. Admittedly, the gold does not have any foreign markings. It is the case of department that the gold assayer Sh. G.K. Shankar has issued certificate that the purity of the gold is 24 karat and of 999.9%. It is contended by department that only foreign gold would have such high purity. It is seen mentioned in the mahazar dated 23.1.2017 that the gold was assayed by the assayer on the same day. However, the said document is not made part of relied upon documents for the purpose of issuing Show Cause Notice. The learned counsel for respondent has submitted that the respondent was not served with copy of this document. The said contention was raised before the Commissioner (Appeals) also. On the date of hearing of this appeal by us, the learned AR has produced a copy of this document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Customs officers ought to have obtained a report from a competent agency like the Government Mint. The decision in the case of Customs Vs. Dina Aruna Gupta reported in 2011 (274) ELT 323 (Del.) is relied by the respondent to assail the certificate of assayer. The relevant para reads as under:- 31. The prosecution has examined PW-3 Shri Ramesh Chand Aggarwal, the goldsmith and the valuer who had tested the gold bars allegedly recovered from the possession of the accused. Whether PW-3 Shri Ramesh Chand Aggarwal was possessed of any qualification in the matter of testing gold was liable to be proved by the prosecution. The certificate issued by the PW-3 Shri Ramesh Chand Aggarwal i.e. Ex.PW-1/F does not disclose the method on the basis of which he had tested the gold and had reached to the conclusion that it was gold of 24^ purity. 32. Normally, the test applied for testing gold is furnace test but the same was not applied or resorted to in the present case. There is no evidence on record that PW-3 Sh. Ramesh Chand Aggarwal was possessing any proficiency in the matter of testing gold. The certificate/report Ex.PW-1/F does not contain any data. Whereas the certificate mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate stage. On the totality of these facts, we have to hold that the certificate of the assayer produced by the learned AR cannot be accepted in evidence. 32. Apart from the certificate, the department relies on the statements given by the respondent on 23/24.1.2017. These statements have been retracted later by the respondent. In such circumstances, the department has to place reliable evidence to prove that the gold is smuggled from Sri Lanka. There is no evidence to prove that the gold is smuggled from Sri Lanka or any connection of the gold with Murugan or Batcha. 33. The department has mechanically applied section 123 of the Customs Act, 1962, which reads as under:- 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to find out the purity of the Gold, which is also one of the determining factors. It is not clear as to how he has reported the purity of the gold without testing. The original authority comes to the conclusion that the impugned gold is of foreign origin by alluding to a website which said that purity can be 995 onwards. Valuer is expected to arrive at the purity and value of the Gold in a scientifically established manner. If his services were required only to value the Gold, the same can be arrived on the basis of day-to-day Bullion rates announced by various exchanges. In addition to the above, fact remains that the Gold did not have any foreign markings; it has not been established that the same has been smuggled. The circumstances would certainly create reasons to believe that the impugned gold could be a smuggled one necessitating further probe. It does not constitute reasonable belief to seize the goods under Section 123 of the Customs Act, 1962. We find Tribunal in the case of Ram Nath Sah 2007 (219) ELT 546 (Tri Kol) held that:- I find that the seizure report does not indicate any foreign marking on the gold. The purity is also not of 999 generally found with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as smuggled from Sri Lanka and no corroborative evidence was produced by the DRI. More so, it was certified by the Court that the gold bars do not have foreign markings. AA has proceeded on wrong premises that the impugned crude Gold bars are of foreign origin. There was no positive evidence except the statement of the appellant. The retracted statement has not been corroborated with findings/evidence/statements of others i.e. the person supposed to have handed over the same to the appellant for transporting and the person who was supposed to receive. The burden of proof has not been discharged by the department. It has been proved that there was a violation of principles of natural justice by not allowing cross examination. Respectfully following the ratio of the Hon ble Supreme Court in M/s.Oudh Sugar Mills Vs. UOI, I am constrained to set aside the order of the adjudicating authority confiscating the impugned gold and imposing penalty on the appellant. It is ordered to release the two crude gold bars weighing 3.097 kg to the appellant Mohammed Ali Jinnah. 39. After appreciating the facts and evidence discussed above, we are of the opinion that the view arrived by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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