TMI Blog2023 (5) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... 108 of Customs Act, 1962, admitted that the gold in their possession was actually a gold of foreign origin, however, it got remelted for erasing the foreign markings but 99.9% purity mark was still got embossed thereupon. They also admitted to have no documents for proving that they were legally possessing that quantity of gold in several number of uneven pieces. These particular admissions, are sufficient to invoke the theory of reverse burden of proof i.e. the burden of proof that the gold recovered is not the smuggled on lies upon Gudipati Subba Reddy and Pathan Jaffar Sadik in terms of Section 123 of Customs Act, 1962. The statement got recorded by customs officer is the material piece of evidence which can be used as substantive evidence connecting the deponent with the contravention of the customs act - there are no reason to reject the statement of both the appellants from whose possession the gold in question was recovered about admitting the gold to be a foreign origin - the findings arrived at by the adjudicating authorities below that Section 123 Customs Act, 1962 has rightly been invoked, is accepted - thus it is held that Section 123 of the Customs Act, 1962 has rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence for India, the most popular quality of gold is BIS 916 instead of 999. Admittedly the recovered gold was of 999 quality. Apparently the melters of the gold have acknowledged that FT gold that is the gold received after melting the ornaments is generally of 95 to 99.5 purity. One of the melter has apparently gone to the extent of admitting that FT gold can never have 999 purity. None of the appellants have placed on record any evidence showing as to how the gold recovered from them was having 999 purity - there are no reason to differ with the findings of the adjudicating authority below that all the appellants had full knowledge of the impugned gold to be the gold of foreign origin and knowingly they were dealing with the same for monetary benefits. Their act gets definitely covered under Section 111 of the Act making the recovered gold liable for confiscation. It is accordingly held that confiscation of recovered/seized gold is rightly ordered. Whether appellants are liable for penalty? - HELD THAT:- It is clear that the appellants in this case had acquired possession of such gold which they could not prove to be of India origin. There has been no denial that they were p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the pocket of his trouser. On getting it unwrapped, one un-evenly shaped yellow metal bar having 999 mark on one side of the bar and two tiny pieces of yellow metal were found in the said packet. 1.2 The recovered pieces were got photographed, Panchanama dated 07.10.2020 was prepared for the said recovery. The recovered pieces of yellow metal got examined by the Gold Appraiser, Shri K. Mallikarjun who after conducting necessary tests issued a certificate dated 08.10.2020 certifying that the metal recovered is gold of 99.9% purity. The recovery from Shri Gudipati Subba Reddy was ceritified to be of 2000 grams valuing at Rs.1,04,00,000/- @ Rs.5,200/- per gram. The recovery from Shri Pathan Jaffar Sadik was certified to be of 500 grams with a value of Rs.26,00,000/-. Both of them admitted the gold to be of foreign origin which they got remelted. Even, while being examined under Section 108 of the Customs Act, 1962 on 07.10.2020 itself, they stated that they have purchased the said gold from M/s. Uday Kranti Sri Bullion (known as UKS Spot, Chennai), however, without any bills by making the cash payment of Rs.1,02,00,000/- and Rs.25,50,000/- by Shri Gudipati Subba Reddy and Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o purchase some ornaments. However, because no deal could struck that he was returning back with the said 500 grams of melted gold. On being enquired, Shri Jadhav Duryodhan acknowledged himself to be engaged in gold and silver melting. He also acknowledged for putting a stamp of 999 mark on the remelted gold, however, as per the customer s wish. 1.5 Later Shri Gudipati Subba Reddy also retracted his statement vide letter dated 18.11.2020 about receiving 2000 grams of gold from Shri Shaik Imtiaz/appellant who while handing over him the melted gold asked him to go to Chennai to exchange the said gold for purchase of readymade gold articles. Since he could not purchase any of such articles that he was returning back with said 2000 grams of melted gold in the car owned by his nephew Shri Atluri Ramanjaneya Reddy. On being examined by the DRI Officers, Shri Shaik Imtiyaz had admitted the contents of said retraction with the mention that he purchased 1011.170 grams of 22 carat gold jewellery from Penava Gold, Mumbai, on 06.10.2020 against the invoice of the same date and purchased gold of 1162.750 grams of gold jewellery from Badradri Bullion and Jewelers vide invoice no. 16 dated 05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Amba Lal Vs. The Union of India and Others reported as 1961 AIR 264, 1961 SCR (1) 933 (S.C.) (ii) J. Suresh, S/o J. Laxminarayana Vs. Commissioner of Customs (Prev.) vide Final Order No. A/30123/2022 dated 16.11.2022. (iii) Balanagu Naga Venkata Raghavendra Balanagu Venkata Siva Kanaka Ratnam Vs. Commissioner of Customs, Vijaywada vide Final Order No. A/30018-30019/2021 dated 15.02.2021 (iv) Deepak Handa Vs. Principal Commissioner of Customs (Preventive) vide Final Order No. 51520- 51521/2021 dated 25.05.2021 4. While rebutting these submissions learned DR has submitted that at the time of search of Shri Gudipati Subba Reddy and Shri Pathan Jaffar Sadik, in the presence of independent witnesses on 07.10.2020, both of them admitted for the metal on their person to be remelted gold of foreign origin as being purchased without any bill. It was specifically mentioned that since the gold was illegally brought into the country, hence was available at comparatively cheaper prices and that they both were aware of this fact. It is further submitted that at the time of recording their initial statements and drawing the Panchanama, none of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 manufactures thereof], watches and any other class of goods which the Central Government may by notification in the Official Gazette specify. From the above, it is clear, that the burden of proof shifts under Section 123, when (a) there must be goods to which the section appliers; (b) the goods must have been seized; and (c) the seizure must be under a reasonable belief that they are smuggled goods. 6.1 Reverting to the facts of the present case, I observe that at the time of interception and preparing of Panchanama about recovery of gold from Shri Gudipati Subba Reddy and Shri Pathan Jaffar Sadik, they both in their statement as was recorded under Section 108 of Customs Act, 1962, admitted that the gold in their possession was actually a gold of foreign origin, however, it got remelted for erasing the foreign markings but 99.9% purity mark was still got embossed thereupon. They also admitted to have no documents for proving that they were legally possessing that quantity of gold in several number of uneven pieces. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint of adjudication The appellants have taken a plea that the seizure in question is admittedly a town seizure and since there were no foreign markings on the gold, hence, it has wrongly been confiscated under Section 111 of the Customs Act and penalties have wrongly been imposed under Section 112(a) and (b) of the Act. But in the light of the above discussion that the admissions by Shri Gudipati Subba Reddy and Shri Pathan Jaffar Sadik is a substantive piece of evidence to prima facie belief that the gold recovered from them was of foreign origin, the burden was now upon both of them to prove it otherwise. I observe that both of them though had made retraction of their earlier statements but it was a delayed retraction. Shri Gudipati Subba Reddy retracted his statement almost after 45 days and Shri Pathan Jaffar Sadik retracted after nearly 15 days. It is observed that they could not have proved the plea of their earlier statements being recorded under coercion and threat. The original adjudicating authority has in detail, discussed the said failure of both these appellants. I do not find any reason to differ from those findings. 7.1 In addition, they both admittedly are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that even the retracted version receives no cogent proof rather it is highly insufficient to prove that the recovered gold was actually of Indian origin or was being traded by legal means. 7.3 I further observe that appellant Shri Pinninti Ganesh and Shri Pinninti Nagaraju had admitted dealings of sale and purchase of gold from Shri Gudipati Subba Reddy and Shri Pathan Jaffar Sadik with the clear admission that both of them used to deal into smuggled gold which is why that gold used to be sold on cheaper prices and Shri Pinninti Ganesh and Shri Pinninti Nagaraju were in regular dealings of sale and purchase of gold with them. None of them have retracted their statement nor any other evidence has been produced on record to falsify their admission. The only document which has come up on record is in the form of two invoices, one issued by M/s. Penava Gold and another from M/s. Badradri Bullion Jewelers. But the description of gold in those invoices does not match to the description of the gold recovered. Above all, the pieces of gold recovered were got photographed by the DRI Officers. The scanned images are very much in the show cause notice. Perusal thereof shows that each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. For instance, if any goods were imported and the duty has been paid on them, whether one carries them thereafter openly or concealed, section 111(i) does not apply. Until the duty is paid, they cannot be kept concealed. In case of prohibited goods, if the conditions subject to which the goods can be imported are fulfilled, they cease to be prohibited goods and they can be carried openly or concealed as one pleases. In case of gold during the period in question, if gold had been imported by a designated authority, it would not have been a prohibited good (since the condition of import was fulfilled) and if duty has also been paid, it would not have been a dutiable good. Thereafter, if the designated authority, in turn, sold the gold to anyone and such person carried them, concealed in a secret jacket or false bottom of a suitcase or shoes, section 111(i) would not apply. However, In this case, there is no evidence that the goods in question were imported by the designated organizations who alone could have imported the gold. Therefore, the confiscated gold is prohibited good and since it has been found concealed in the newspaper wrapping inside the waist pouch, it is held that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge the said burden of the appellants. Hence, I find no reason to differ with the findings of the adjudicating authority below that all the appellants had full knowledge of the impugned gold to be the gold of foreign origin and knowingly they were dealing with the same for monetary benefits. Their act gets definitely covered under Section 111 of the Act making the recovered gold liable for confiscation. It is accordingly held that confiscation of recovered/seized gold is rightly ordered. 8. Third point of adjudication From the entire above discussion of facts, evidences and circumstances, it is clear that the appellants in this case had acquired possession of such gold which they could not prove to be of India origin. There has been no denial that they were purchasing the gold at the cheaper rate which rather corroborates that they were in possession of smuggled gold. Section 112(b) of the Act is wide enough to penalise even a person acquiring possession or in anyway dealing with the goods which he knows or has reason to believe are liable for confiscation under Section 111. Thus it is held that the appellants had rendered them liable for imposition of penalty. I do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld rather accept the bolder construction based on the view that Parliament would legislate only for the purpose of bringing about an effective result. Later in the case of Mohan Kumar Singhania Vs. Union of India reported as AIR 1992 SC 1, the law is stated as: while interpreting a statute the consideration of inconvenience and hardship should be avoided and that when the language is clear and explicit and the words used are plain and unambiguous, we are bound to construe them in their ordinary sense with reference to other clauses of the Act or Rules as the case may be, so far as possible, to make a consistent enactment of the whole statute or series of statutes/rules/regulations relating to the subject-matter. Added to this, in construing a statute, the court has to ascertain the intention of the law making authority in the backdrop of the dominant purpose and the underlying intendment of the said statute and that every statute is to be interpreted without any violence to its language and applied as far as its explicit language admits consistent with the established rule of interpretation. 9. In view of the entire above discussion, three of the questions of adjud ..... 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