TMI Blog2023 (5) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) TMI 10 - SUPREME COURT] for effecting the seizure on the ground of reasonable belief . However, the said case is distinguishable on the ground, firstly, that the subjected case was during the breathing period of Gold Control Act, wherein possession of primary gold even unmarked had a thrust of burden upon the Assessee. When the Gold Control Act was repealed without a saving clause, the said decision under the Gold Control Act has no relevancy under the Customs Act Currently under the Customs Law, the burden has been thrust upon the Department and the presumption under Section 123 of the Customs Act has no application in the present case, as the gold seized is of Indian origin - the Appellants stated that to form a reasonable belief that the goods are smuggled from Bangladesh, there must be irrefutable evidence to prove that allegation. In the present case there is no such evidence available to prove that the goods were of foreign origin and smuggled into India from Bangladesh. The reasonable belief on which the DRI officers presumed that the gold bars/pieces were of smuggled nature is not supported by any corroborative evidence. There is no document available on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden under Section 123 of Customs Act, to prove that the gold is not smuggled one, does not lie on the Appellants, in this case. Accordingly answer to the question is negative. Whether the retracted statements of the co-accused can be relied upon to establish the guilt of the Appellants, when the procedure prescribed under section 138B of the Customs Act was not followed? - HELD THAT:- The Impugned Order mainly relied upon the statements of the Noticees 1 to 5 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 Bangladesh. 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 coaccused cannot be relied without any independent corroboration. The Tribunal in the cases of PR. COMMISSIONER OF CUSTOMS (PREV.) DELHI VERSUS SH. AHAMED MUJJABA KHALEEFA [ 2018 (5) TMI 1681 - CESTAT NEW DELHI] dismissed the appeal of Revenue holding that jewellery not bearing any foreign marking other than statement of passenger no other pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o passengers namely Shri Rajesh Kumar Yadav(Noticee No.1) and Shri Umanath (Noticee NO.2) travelling by Train No.13009 (Howrah-DDN Doon Express) at 4.55 hrs. On examination of the said two passengers and their subsequent verification resulted in seizure of gold bars/pieces weighing 3999.590 gms. valued Rs.1,67,98,278/-. The said gold bars/pieces were seized by the DRI officers on the reasonable belief that they were smuggled into India from Bangladesh without any legal documents. 2. Samples of the gold bars/pieces were drawn and sent to CRCL, Kolkata for testing. The test report received from CRCL on 27.01.2020 revealed the purity of the gold as under:- Sl. No. Name of Sample Lab No. Date Purity 1 SAMPLE-1 3605/SZD (G)-467 dtd15.01.2020 99.6% 2 SAMPLE-2 3606/SZD (G)-468 dtd15.01.2020 99.5% 3 SAMPLE-3 3607/SZD (G)-469 dtd.15.01.2020 99.6% 4 SAMPLE-4 3608/SZD (G) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by DRI to the following 5 Noticees :- 1. Shri Rajesh Kumar Yadav Noticee No.1 2. Shri Umanath Noticee No.2 3. Shri Manoj Kumar Seth Noticee No.3 4. Shri Balwant Raj Soni Noticee NO.4 5. Shri Anurag Jalan Noticee No.5 7. The said notice was adjudicated by the Adjudicating authority confiscating the gold under section 111 of the Customs Act, 1962. The order for absolute confiscation issued by the Adjudicating authority is as below:- 1. I order for absolute confiscation of: (a) The consignment of gold comprising of 3 complete gold bars, 2 cut gold bars and 4 small pieces of gold, total weighing 3999.590 grams and valued Rs.1,67,98,278/- (One Crore Sixty-Seven Lakh Ninety-Eight Thousand Two Hundred Seventy-Eight) only, recovered from possession of Shri Rajesh Kumar Yadav, Noticee No.1 and Shri Umanath, Noticee No.2 at Gaya Railway Station and seized on 10.01.2020, under Clauses (b), (d) and (p) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e DRI officers claimed that the said smuggled gold was handed over by one Shri Dilip Singh to Shri Rajesh Kumar yadav. However, no statement was recorded from Shri Dilip Singh. (6) The Department contended that as per Section 123 of the Customs Act, 1962, the burden of proving that the gold was not smuggled is on the person who claims the ownership of the gold. In this case the gold is of domestic origin and hence the provisions of Section 123 of the Customs Act, 1962 is not applicable. (7) Shri Rajesh Kr.Yadav and Shri Umanath have retracted their statements and the statement of a co-accused cannot be relied upon to implicate the Appellants in this case. The retracted statement is a very weak evidence and hence it cannot be relied upon. (8) The penalties imposed on the Appellants under Section 112(a) and(b) and 114AA of the Customs Act,1962 are not sustainable as they have no role in the alleged seizure of the smuggled gold at Gaya Railway station. 10. The Appellants relied upon the following case laws :- Hon ble Bombay High Court in the case of State of Maharashtra v. Prithviraj Pokhraj Jain reported in 2000 (126) ELT 180 (Bom.) CESTAT, Kolkata in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angladesh. The Adjudicating authority has relied upon the decision of the Hon ble Supreme Court in the case of Gopal Das Uddhav Das Ahuja v. UOI reported in 2004 (176) ELT 3 (SC) for effecting the seizure on the ground of reasonable belief . However, the said case is distinguishable on the ground, firstly, that the subjected case was during the breathing period of Gold Control Act, wherein possession of primary gold even unmarked had a thrust of burden upon the Assessee. When the Gold Control Act was repealed without a saving clause, the said decision under the Gold Control Act has no relevancy under the Customs Act Currently under the Customs Law, the burden has been thrust upon the Department and the presumption under Section 123 of the Customs Act has no application in the present case, as the gold seized is of Indian origin. 16. The Appellants have relied upon the decision of the Hon ble Supreme Court in the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628, which has explained the meaning of the word reason to believe as under:- reason to believe by opining it to be not the subjective satisfaction of the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Order are reproduced below: 19.1 The Appellants stated that Reasonable belief must be at the time when the goods are seized and not subsequent to seizure. 54. The other question which was argued before me was that the customs officer did not act on any reasonable belief when he searched the petitioner s premises on 15-12-1967 and seized the goods. Section 110 opens with the words if the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods . What is the meaning of reasonable belief ? Did the officer entertain reasonable belief in the facts and the circumstances of this case? This is the other question to be decided. The Supreme Court has said that reasonable belief is a pre-requisite condition of the power of seizure that the statute confers on the officer. (See Collector of Customs v. Sampathu Chetty, AIR 1962 S.C. 316). The preliminary requirement of Section 110 is that the officer seizing should entertain a reasonable belief that the goods seized were smuggled. 55. Reasonable belief as required by Section 110 refers to the point of time when the goods in question are seized and not to a stage subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign country either without payment of duty or in contravention of any restriction or prohibition imposed by statute. There was nothing to suggest the foreign origin of the goods. There was nothing to suggest the illegal importation of the goods into the country. 60. The goods must be smuggled goods. The word `smuggled means that the goods were of foreign origin and they had been imported from abroad. Only then does the presumption under Section 123 arise. The goods themselves did not suggest that the petitioner was an old smuggler or a dealer in smuggled goods. If there was such information with the customs, they ought to have disclosed it. The goods themselves did not suggest any illicit importation. Nor was there any inscription on the goods which could be the basis of the reasonable belief that the goods were of foreign origin. There was nothing in the appearance of the goods to suggest that they had been newly manufactured and brought into this country very recently from another country. In a word there was nothing absolutely from which inferences about their origin or recent import could arise. It was not a case where large quantity of gold with foreign markings was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 13 above is negative. 21. The next question to be answered is whether the burden of proving that the goods are not smuggled rest with the Appellants. The Appellants No 1 and 2, Partners of Gandhi Sons have claimed that they have purchased the gold from M/s Chandan Enterprises Delhi under the cover of Invoices 3 and 5 dated 01/01/20 and 03/01/20 respectively. They contended that they have made part payment for the gold purchased from M/s Chandan Enterprises and the balance could not be paid as the gold pieces were seized by DRI. Since gold is not of foreign origin, section 123 is not applicable in this case as the gold bars/pieces were purchased domestically. 22. Section 123 of Customs Act 1962 puts the burden of proving that the gold is not smuggled one, on the person who claims ownership of the gold. For the sake of easy reference, the said section 123 is reproduced below: 22.1 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, gold cannot be absolutely confiscated in the facts and circumstances of the case, therefore, gold is required to be released to the appellants on payment of redemption fine and penalty. He also relied on the decision of the Hon ble Bombay High Court in the case of State of Maharashtra v. Prithviraj Pokhraj Jain reported as 2000 (126) E.L.T. 180 (Bom.). 4. On the other hand Learned AR appearing on behalf of the Revenue submits that in this case Shri Umesh Kumar in his statement has admitted that gold is being smuggled from Nepal by Shri Sanjeeb Kumar, therefore, Revenue has established that gold in question is smuggled one and is of third country origin. The appellants have failed to prove that the gold in question is not smuggled one. In that circumstances, the Revenue has rightly absolute confiscated the Gold in question. 5. Heard the parties. 6. Considering the submissions made by both the sides, we find that the appellants have failed to prove the source of procurement of gold, therefore, we hold that gold is smuggled one but on the same time, Revenue is also failed to prove that gold is of third country origin and smuggled through Nepal. In fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 123 of the Customs Act, 1962 is not available to the Revenue. 22.5 The Appellants also relied upon the decision in the case of Balanagu Naga Venkata Raghavendra vs CC Vijayawada 2021 (378) ELT 493 (Tri-Hyd), where in it has been held that the burden under section 123 will not shift on the Appellants when the seizure of gold without foreign markings are seized from city. The relevant portion of the order is reproduced below. 14. The confiscation of the gold by the adjudicating authority was set aside by the Tribunal and on appeal by the Revenue the Hon ble High Court of Kerala, in the above factual matrix, has overturned the decision of the Tribunal. Therefore, it was not merely the purity of the gold in question but also the statements made during the investigation which formed the basis of the reasonable belief of the officers. In the present case, none of the statements recorded by the Department admit to or even suggest that the gold was smuggled gold. It has also not been brought out in the show cause notice that the purity of the seized gold is such that it could only have been of foreign origin. It is true that the conduct of the appellants was suspicious inasm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t report that the gold bars/pieces were of purity 99.5, 99.6 and 99.8 only. Normally foreign origin/foreign marked gold will be of purity 99.99. There is no foreign mark available on the gold seized. They were seized from Shri Rajesh Kumar Yadav and Shri Umanath at the Gaya railway station. The Appellants claimed that the gold bars/pieces were purchased domestically from M/s Chandan Enterprises, Delhi under Invoices 3 and 5 dated 01/01/20 and 03/01/20. The Appellants stated that the the gold bars/pieces in question were sent to Kolkata to the goldsmiths for making of jewellery . The investigation ignored their claim and charged that the Appellants failed to give name, addresses, contact number, of the persons/goldsmiths to whom the said goods were sent for exchanging the same into gold jewellery. The investigation also alleged that at the time of interception of Mr.Rajesh Kuamr Yadav and Mr. Umanath, they were not carrying any papers/document related to purchase of the gold from M/s Chandan Enterprises. However,the Investigation failed to make any inquiry from M/s. Chandan Enterprises about the legal purchase of the gold. 22.7 We observe that the Appellants claimed that the gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e before an authority would require a closure scrutiny. It is therefore, now well settled that the Court must seek corroboration of the purported confession from independent sources. ii) Prakash Kumar Vs. State of Gujarat- (2007) 4 SCC 266 . The confession of co-accused by itself is not sufficient to hold the other accused guilty. It has been held repeatedly by this Court that the confession of a co-accused is a fragile and feeble type of evidence and it could only be used to support the other evidences, if any, adduced by the prosecution. iii) Assistant Collector of Customs Vs. Amrik Singh 2014 (301) ELT 170 (P H) The question arises whether the admission of co-accused under Section 108 of the Customs Act can be basis of conviction of other coaccused. The Ld. Trial Court has rightly held that statement of co accused under Section 108 of the act against the co-accused with a weak type of evidence and conviction of co-accused cannot be based on the uncorroborated statement of co-accused. iv) Anisur Rahaman Vs. Commissioner of Customs (Prev.) West Bengal 2003 (160) ELT 816 (Tri-Kolkata). Non-appearance before DRI Officer in response to summons is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form an opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence. This was mandatory. The statement of any person cannot be relied upon directly as has been held by the Hon.ble High Court in the case of G-Tech Industries Vs. Union of India- 2016 (339) ELT 209 (P H). In the said decision the rationale behind the mandate contained in Section 9D of the Central Excise Act, 138B of the Customs Act, 1962 has been mentioned as below: Para 15- The rationale behind the above precaution contained in clause (b) of Section 9D(1) is obvious. The statement recorded during inquiry/investigation, by the Gazetted Central Excise Officer, has every chance of having been recorded under coercion or compulsion. It is a matter of common knowledge that, on many occasions, the DRI/DGCEI resorts to compulsion in order to extract confessional statements. It is obviously in order to neutralize this possibility that, before admitting such a statement in evidence, clause (b) of Section 9D (1) mandates that the evidence of the witness has to be recorded before the Adjudicating Authority, as in such an atmosphere, there would be no occasion for any trepidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to lend assurance to the Court. In the absence of any substantive evidence it would be inappropriate to base the conviction of the appellant purely on the statements of co-accused. The Appellant is therefore entitled to be acquitted of the charges levelled against him. 31. We find that the Impugned Order mainly relied upon the statements of the Noticees 1 to 5 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 Bangladesh. 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 coaccused cannot be relied without any independent corroboration. 31.1 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 - No efforts made to prove that confessional statements were voluntary - Accused were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 v ..... 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