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TMI Blog2023 (5) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... For the job work purpose, they have appointed two persons named Mr. Rohit Kumar Suri, who is a co-appellant in this case and also Mr. Harshit Gakhar (Co-noticee) as employees. The business was set up in Imphal (Manipur). 2. Mr. Rohit Kumar Suri had booked one parcel containing 90 bangles through air cargo, Kolkata by Indigo Airlines on 17.05.2019 on behalf of the firm, vide Air Way Bill No. 31270242373, having gross weight of 5.22 kgs. and net weight of 4.960090 Kgs. 3. The DRI had intercepted the parcel after booking, from the possession of Indigo Airlines. The officials had called Mr. Rohit Kumar Suri and in his presence the parcel was opened and it was found to contain 90 bangles. An unsigned original copy of Tax Invoice bearing Number J-00037 dated 17/05/2019 was also found inside the parcel. Mr. Rohit Kumar Suri informed that these jewelleries came from Delhi for finishing work and are now being sent back. As he was not in possession of documents relating to inward/outward movement of the gold dealt by him, the 90 bangles were impounded and later seized under section 110(1) of the Customs Act, 1962. 4. The statements of Mr. Rohit Kumar Suri and Mr. Harshit Gakhar were recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m they cited that the decision Hon'ble Apex Court in the case of Canon India Pvt. Ltd. v. Commissioner of Customs (Manu/SC/0168/2021). We find that this issue has been settled by the decision of the Hon'ble Madras High Court in the case of N. C. Alexender Vs Commissioner of Customs, Chennai, 2022 (381) ELT 148 ( Mad) wherein the Hon'ble Madras High Court has held that officers of the DRI were competent to issue Show Cause Notice under Customs Act 1962 after the amendments to Section 3 of Customs Act 1962, by Finance Act, 2022. The Gist of the above said Order is reproduced below. Show Cause Notice - By DRI officer - Validity of - Pursuant to amendment of Section 3 of Customs Act, 1962 by Finance Act, 2022, officers from Directorate of Revenue are explicitly recognized as Officers of Customs - Group 'B' officers can be appointed as "Officers of Customs" in terms of Section 3(i) of Customs Act, 1962 [presently Section 3(k)] - Show cause notices issued by officers of DRI cannot be assailed in view of validation in Section 97 of Finance Act, 2022 to pending proceedings - Writ petitions liable to be dismissed - Petitioners given liberty to work out their remedy before alternate forum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d legally sustainable. 10. The next ground raised by the Appellants is on limitation. The Appellants contented that the goods in question in this case were impounded/seized on 17.05.2019. When there is a seizure involved, as per Section 110 of the Customs Act, the notice must be issued within six months from the date of seizure, which expired on 16/11/2019 in this case. However, the notice in this case was issued only on 24.03.2020. Hence they argued that the notice was hit by limitation and accordingly not sustainable. 9.1 For the purpose of easy reference, the relevant section under Customs Act 1962, is reproduced below. The Section 110(2) reads as under:- Section 110 (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not valid:- The Appellant stated that neither the 90 gold bangles nor the one kg silver confiscated, have any foreign markings on them. The DRI intercepted the parcel booked by Mr. Rohit Kumar Suri, which was in possession of the Indigo Airlines. When the parcel was opened they found 90 gold bangles having gross weight of 5.22 kgs. and net weight of 4.960090 kgs. The bangles were open ended and has no foreign markings on it. They contended that these bangles were made out of gold received by them from M/s. KSTE, New Delhi. Mr. Karan Sehdev, Proprietor of KSTE in his statement categorically stated that he is the owner of the bangles and he had legally purchased the gold form the Indian market. They have sent the gold to M/s. STM, Imphal for converting the same into jewellery. Accordingly, M/s. STM have converted the gold into bangles and sent back the same in small parcels through air cargo on various dates. The Appellants stated that DRI has not recorded the statement of Mr. Daleep Kumar Verma, Proprietor of M/s. STM, who actually got the job-work of converting the gold into bangles. The Appellant further stated that DRI has alleged that the gold were received by Mr. Rohit Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962. [paras 5, 6] 13.5. They also relied upon the decision of the Tribunal in the case of J Suresh Vs CC ( Prev), Vijayawada, in Appeal No 30571/2021, dated 16.11.2022, wherein it has been held that in the normal trade practice gold biscuits are available weighing 100 grams or 1kg for international trade. In the present case DRI has alleged that gold biscuits each weighing 165 grams have been smuggled into the country from Myanmar. They argued that the weight of each gold biscuit has been taken as 165 grams only to tally the weight of the seized gold. 13.6. The Appellants also relied on the decision of the Tribunal in the case of Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T) wherein the appeal of Revenue was dismissed holding that the jewellery was not bearing any foreign marking, other than the statement of the passenger and no other proof was produced by Revenue to substantiate the claim that the jewellery was smuggled into India. 13.7 The Appellant contended that the confiscation of gold bangles on the ground that it was manufactured out of smuggled gold is not corroborated with any evidence, other than the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said vouchers/invoices were not resumed/considered by DRI officers while recording his statement. 14.4 The one piece silver bar weighing 1000 gram alleged to be of foreign origin, actually bears the marking "MMTC RAMP 1 KILO FINE SILVER 999.0,03104]". This is evident from the Annexure 'I' to show cause notice MMTC is a public sector company. The Government of India are holding 89.93% share in MMTC. It is incorrect to allege that the seized silver bar is of foreign origin when the marking prima facie reveals that it is of Indian origin. 14.5 Sh. Rohit Kumar Suri and Sh. Harshit Gakhar were employee of M/s. STM, Imphal and not owner of the seized goods. Sh. Rohit Kumar Suri and Sh. Harshit Gakhar in their statements dated 17.05.2019 stated that they were employees of M/s. STM and were getting salary of Rs. 12,000/- & Rs. 10,000/- per month respectively. Sh. Harshit Gakhar informed that he came to Imphal only ten days ago. Sh. Rohit Kumar Suri in his statement dt. 07.06.2019 further stated that he was just an employee of Daleep Kumar Verma - Prop. M/s. STM. Shri Karan Sehdev has already claimed ownership of the goods during investigation, but no credence was assigned to it. Thus, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the seizure of the gold on 17.05.2019 . It is a settled law that statements does not have higher evidentiary value than facts on record. 16.2 In support of their claim, they relied upon the following decisions: (i) Triveny Spinning Mills (P) Ltd. & Ors Vs. CCE, Ludhiana [206 (201) ELT 220 (T), wherein it has been held that Confessional statement recorded under section 14 of Central Excise Act, 1944 cannot get higher evidentiary value than contemporaneous records. (ii) Shabnam Synthetics Vs. CCE [2006 (202) ELT 379 (Tri.- Mum), wherein it has been held that documentary evidence to be preferred over statements. (iii) Market Chase Advertising Vs. CCE [2008 10) STR 598 (T)] wherein it has been held that reply to show cause notice supported by documentary evidence to be preferred viz-a-viz statement given under section 14 of CEA. 16.3 In view of the above, they argued that it is incorrect to rely upon statement of co-accused in the instant case without any corroboration. They contended that it is a settled law that statement of co-accused cannot be relied without independent corroboration. 17. The Ld. Authorized Representative for the Department reiterated the points stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n into account the evidences submitted by them about their legal purchase in India. The goods were dispatched along with an Invoice raised by the job worker. All these documents indicate that the raw gold was indeed received by M/S STM, Imphal from M/S KSTE, New Delhi for job work and they were dispatched after completion of the job work by M/S STM, Imphal. There is no evidence available on record to prove that the gold were smuggled from Myanmar. Except the statements of the Co Noticces, which were later retracted, there is no other evidence available to establish the smuggled nature of the gold. In view of the above discussion and relying upon the cases laws cited above, we hold that the gold jewellery which were dispatched under proper Invoice are not liable for confiscation. 19.1 The next ground raised by the Appellant is regarding Burden of Proof as envisaged under Section 123 of Customs Act, 1962 . As per this section, the burden of proving that the goods are not smuggled, lies on the person from whose possession the goods were seized. For the sake of easy reference, the said section 123 is reproduced below: 19.2 SECTION 123 - Burden of proof in certain cases (1) Where a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of gold to M/s. STM, Imphal for job-work and received back 25234.110 grams of gold after job-work from M/s. STM, during the period March 2019 to 17.05.2019. The gold bangles 4960.090 grams sent vide invoice No. J0037 dt. 17.05.2019 to M/S KSTE by M/s. STM was seized by DRI on 17.05.2019. Thus, it reveals that this is not the first time M/S STM are processing the gold and returning the same back to M/S KSTE. On many occasions earlier M/s KSTE have sent gold to M/S STM and received them back after the job work. It cannot be presumed that all the gold jewellery sent after job work on earlier occasions were also made out of smuggled gold. The present consignment covered by Invoice no. J 0037 dated 17/05/2019 was part of the gold received earlier and returned back now after job work. The documents submitted by the Appellants clearly indicate that the gold were purchased from indigenous sources. The provisions of section 123 are not applicable to indigenously procured gold. Hence, we find merit in the argument of the Appellants. 19.6 The Appellants relied upon many decisions to support their case. In the case of Sanjeeb Kumar @ Pappu Kumar vs Jt CC, Lucknow, 2019 (369) ELT 1177 ( Tri-Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein in Para 19 which is extracted below wherein the Hon'ble High Court observed as under - "19. The burden was, therefore, on the prosecution to prove that the goods were smuggled. For this the prosecution relied upon the evidence of Hebbar who stated that he believed the goods to be smuggled, because watches and watch straps were of foreign origin, the import of which was heavily restricted and prohibited and they were found in huge quantity. The foreign origin of the watches is tried to be shown from the foreign markings on the watches. The question whether the foreign markings of goods can be treated as admissible in evidence was considered by Naik J. in Criminal Appeal No. 3 of 1966, decided on 22nd December, 1966. Among the property involved in that case were some gold slabs. The slabs bore the marking "Johnson Mathey 9990 London". Naik J. observed in his judgment that the markings do not speak for themselves and that evidence would be hearsay evidence. There was nothing to indicate that the markings were really done by Johnson Mathey in London. No presumption can arise in regard to the markings, unless there is evidence to show that those markings were made by a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r gold to the bearer of the letter and both the letter and the gold were recovered from his son Shri Naga Venkata Raghavendra (Appellant in Appeal No. 30495 of 2017). Both the appellants had travelled by train from Trissur to Vijayawada. Naga Venkata Raghavendra was acting suspiciously when the Officers approached him. Subsequent statements were contradictory to each other. These factors by themselves cannot, in our considered opinion, constitute the basis for forming a reasonable belief that the seized gold was smuggled. Therefore, the Officers did not have a reasonable belief in the first place to assert that the seized primary gold was smuggled gold which is essential to shift the burden on to the accused under Section 123. The case of Om Prakash Khatri (supra) was different inasmuch as in that case while the foreign markings were missing on the gold in that case the carriers had admitted that they were carrying smuggled gold for Shri Khatri and that it was smuggled through Kerala and they were carrying it to Bombay and marks and numbers have been deleted to avoid being caught. They also admitted that they avoid air travel as there is a high risk of being caught. Coupled with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.-Mum), it has been held that documentary evidence to be preferred over statements. (iii) In the case of Market Chase Advertising Vs. CCE [2008 10) STR 598 (T)], it has been held that reply to show cause notice supported by documentary evidence to be preferred viz-a-viz statement given under section 14 of CEA. 21.2 We find that the Impugned Order mainly relied upon the statements of Rohit Kumar Suri and the Harshit Gatkhar to establish the foreign origin nature of the gold. Other than the statements, there is no other evidence available on record to show that the gold were smuggled into the country from Myanmar. The silver bar is of Indian origin. It is incorrect to rely only on the statements of the co-accused without any corroboration, to prove the smuggled nature of the gold. It is a settled law that the statement of the co-accused cannot be relied without any independent corroboration. 21.3 In the case of Commissioner of Customs (Preventive), Lucknow vs Shakil Ahmad Khan, it has been held that confiscation based on retracted statements not sustainable. The gist of the Order is reproduced below: Smuggling - Burden of proof - Retracted confessional statements of co-accused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees], whichever is the greater; [(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher : Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;] [(iii) in the case of goods in respect of which the value stated in the entry made und ..... 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