TMI Blog2023 (12) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... s that goods being imported if not subjected to check up at the customs on their arrival and are cleared without payment of customs duty are treated as smuggled goods . Since the conditions for import of gold as per the notification issued by DGFT and the restrictions imposed by RBI have been violated, the gold in question has to be treated as prohibited goods under Section 2(33). Consequently, it would fall within the definition of smuggling under Section 2(39) which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. Having come to the conclusion that the gold seized of which the appellant claimed to be the owner without any valid documents of purchase, has to be treated as prohibited goods and gold falls under the category of dutiable goods but the appellant failed to prove that the liability to pay the customs duty was discharged and by necessary implication the seized gold are smuggled goods , it is held that the seized goods are liable for confiscation under Section 111(d) whereby goods which are imported or attempted to be imported contrary to any prohibition imposed by or under the Act or any other law for the time bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot allowed - It is found from the records that on 29.01.2015, on the date of search itself, a Certified Jewellery Appraiser was called on spot who tested the recovered gold by touchstone method in the presence of two independent witnesses and certified the recovered gold - reliance placed on the decision of the High Court of Kerala in the case of MAMMU AND ANOTHER VERSUS ASSTT. COLLECTOR OF CENTRAL EXCISE [ 1981 (1) TMI 79 - HIGH COURT OF KERALA AT ERNAKULAM] , where it has been held that, since no definite tests have been prescribed under law, whether an article is gold of particular quality and purity, it has to be borne in mind that the opinion of an expert on this point is relevant under Section 45 of the Evidence Act. The plea is of no significance but an attempt and tactics to delay the adjudication proceedings, particularly in view of the marking on the gold biscuits AL Etihad, Dubai) and the statements recorded under Section 108 of the Act. The issue of confiscation of seized gold under Section 11 upheld - the appellant for his acts of omission and commission have rendered himself liable to penal action under Section 112(b) of the Act - appeal dismissed. - MS. BINU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked gold into their possession. 2.(iii) Shri Shankar Lal Goyal, Prop. of M/s. Raul Jewels, in his statement dated 29.01.2015 recorded under Section 108 of the Customs Act, 1962, inter alia, admitted that on 29.01.2015, he had purchased 1 kg. foreign marked gold bar from M/s. Sai Bullion (known as Teliwala in the market) and from this piece, he gave 48 gms. gold for making of jewellery to Shri Suresh Kumar and rest of 32 gms. in piece form along with one 116 gm. Biscuit, one 50 gm. Biscuit and one 920 gm. Biscuit was sent for melting to Shri Amit Deshmukh through his servant, Shri Ranjit Rawat. He also admitted that he did not have any document for legal possession of the above mentioned gold and purchased the same without any bill. 2.(iv) Shri Tarun Garg, son of the Prop. of M/s. Sai Bullion, in his statement dated 26.06.2015 and 13.07.2015 recorded under Section 108 of the Customs Act, 1962, inter alia, stated that they did not sell cut pieces; that he had not supplied any gold to M/s. Rahul Jewel after 08.12.2014 and further stated that on 29.01.2015, Shri Rahul, S/o Shri Shankar Lal Goyal, Prop. of M/s. Rahul Jewels approached his father for providing a bill for 1 kg. gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions of the learned counsel for the appellant is that the authorities below have erred in presuming that the seized gold was a prohibited item and was liable to be confiscated absolutely, though there was no such proposal in the show cause notice. Secondly, no effective opportunity was granted to present his case and no opportunity to cross examine the witnesses was given. Lastly, he submitted that the seized gold was not tested from the certified goldsmith through Melting Purity Method and the seized gold should have been released on payment of redemption fine to the appellant. 7. On the contrary, the learned authorised representative for the Revenue has relied on the findings of the authorities below, holding that it is an admitted position that goods in question are gold items of foreign marking and the appellant has failed to discharge the onus by proving the source of the foreign marked gold bars by producing valid documents of import. He relied on several decisions, which we will discuss later, on the principle that gold may not be prohibited, but is a restricted item, and would therefore fall within the definition of prohibited goods as per section 2(33) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported, have been complied with; 2(14) dutiable goods means any goods which are chargeable to duty and on which duty has not been paid; 2(39) smuggling , in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113; In this context, it would also be relevant to set out the provisions of section 111 (d) of the Act : Section 111 (d) - any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; 10. The definition of prohibited goods have been the subject matter of interpretation in various decisions. In the case of Sheikh Mohammed Omar Vs Collector of Customs, Calcutta Ors. - 1970(2) SCC 728, the contention raised by the appellant therein that the expression prohibition used in Section 111(d) must be considered as a total prohibition and that the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and Om Prakash Bhatia (Supra) and other decisions, inter-alia observed: 86. If there is a fraudulent evasion of the restrictions imposed, under the Customs Act, 1962 or any other law for the time being in force, then import of gold, in contravention of the above, is prohibited. For prohibitions and restrictions, Customs Act, 1962, provides for machinery, by means of search, seizure, confiscation and penalties. Act also provides for detection, prevention and punishment for evasion of duty. 87 . The expression, subject to prohibition in the Act and any other law for the time being in force. in Section 2(33) of the Customs Act, has wide cannotation and meaning, and it should be interpreted, in the context of the scheme of the Act, and not to be confined to a narrow meaning that gold is not an enumerated prohibited goods to be imported into the country. If such narrow construction and meaning have to be given, then the object of the Customs Act, 1962, would be defeated. 13. We would now consider the latest decision by the jurisdictional High Court in the case of Nidhi Kapoor - dated 21.08.2023 reported in 2023 (8) TMI 1008 , where both the learned Judges have passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e duty is vested in the discretion of the Adjudicating Officer, who needless to state is duty bound to exercise his discretionary powers not only after considering the facts and circumstances of each case before it, but also in a transparent, fair and judicious manner under Section 125 of the Act. In his separate judgement concurring with the aforesaid view, Justice Yashwant Varma observed as under:- 145 . In summation, we note that Section 2(33) of the Act while defining prohibited goods firstly brings within its dragnet all goods in respect of which a prohibitory notification or order may have been Signature Not Verified Digitally Signed By:NEHA Signing Date:21.08.2023 17:00:50 issued. That order could be one promulgated either under Section 11 of the Act, Section 3(2) of the FTDR or any other law for the time being in force. However, a reading of the latter part of Section 2(33) clearly leads us to conclude that goods which have been imported in violation of a condition for import would also fall within its ambit. If Section 2(33) were envisaged to extend only to goods the import of which were explicitly proscribed alone, there would have been no occasion for the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. 14. From the analysis of the statutory provisions, one thing is clear that the Act does not define the expression restricted goods , but the decisions referred to above, have interpreted the expression prohibited goods under Section 2(33) so as to include restricted goods. In terms of the definition of prohibited goods in Section 2(33) even prohibited goods could be imported or exported, subject to compliance with the terms and conditions as prescribed but if import is not done lawfully as per the procedure prescribed under the Customs Act or any other law for the time being in force, in that event the said goods would fall under the definition of prohibited goods . The necessary corollary is that goods being imported if not subjected to check up at the customs on their arrival and are cleared without payment of customs duty are treated as smuggled goods . As observed by the Madras High Court in Malabar Diamond Gallery P Ltd. (supra) The expression, subject to the prohibition under the Customs Act, 1962, or any other law for the time being in force, in Section 2(33) of the Customs Act, has to be read and understood, in the light of what is stated in the entirety of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut gold under restricted category and the RBI Circular has allowed only the nominated agencies and banks to import the foreign marked gold bars, in that view the burden to prove that the gold recovered was not smuggled but was validly procured was on the appellant as per the statutory provisions of Section 123 of the Act, which he failed to rebut by any substantive evidence/documents. Since the conditions for import of gold as per the notification issued by DGFT and the restrictions imposed by RBI have been violated, the gold in question has to be treated as prohibited goods under Section 2(33). Consequently, it would fall within the definition of smuggling under Section 2(39) which will render such goods liable to confiscation under Section 111 or Section 113 of the Act. 16. We would now deal with the contention raised by the appellant that there can be no absolute confiscation in the present case and therefore the gold seized should be released provisionally. In support, he has relied on the decision of this Tribunal in Final Order No.51470/2019 dated 13.11.2019 where seized gold was provisionally released which has been affirmed by the High Court in CUSAA No.229/2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged supplier M/s. Sai Buillion had denied having supplied any gold to the appellant after 08.12.2014 and also stated that on 29.01.2015, Shri Rahul son of the appellant approached his father for providing a bill for one Kg. gold, but they declined as they had not supplied any gold. We also find that in this case as per the statement of Shri Varun Jain of M/s. Kesariya Gems Pvt. Ltd. that they had purchased primary gold from M/s. Rahul Jewel vide invoice no.6 dated 22.04.2014, invoice no.24 dated 11.08.2024 and invoice no.39 dated 30.01.2015 which were paid by cheques, however the sales register did not show these transactions which also reflected that the statement submitted by the appellant was fabricated so as to justify the stock of gold. Moreover, the conduct of non-cooperation of the appellant in the investigation proceedings also cannot be ignored, which is a valid ground for not permitting provisional release of gold. We are supported by the following case laws on the issue of confiscation under section 110A and whether it has to be absolute or can be released provisionally subject to such terms and conditions as may be imposed by the adjudicating officer. 17.(i) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the discretion exercised by the authority, on both subjective and objective satisfaction, as to why, the goods seized, cannot be released, when smuggling is alleged and on the materials on record, we are of the view that the discretion exercised by the competent authority, to deny provisional release, is in accordance with law. When there is a prima facie case of smuggling, for which, action for confiscation is taken, such proceedings taken should be allowed, to reach its logical end, and not to the stiffed, by any provisional release. 17.(iii) The issue whether the goods are liable to absolute confiscation has been dealt by the Supreme Court in Union of India Vs. Raj Grow Impex LLP 2021 (377) ELT 145 (SC) and referring to the provisions of section 125 of the Act, it was observed: 69.1 A bare reading of the provision aforesaid makes it evident that a clear distinction is made between prohibited goods and other goods . As has rightly been pointed out, the latter part of section 125 obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of the provision makes no such compulsion as regards the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 137 . What thus clearly appears to flow from Section 111 is of the power of confiscation being extendable not just in the case of dutiable or prohibited goods but also to goods whose import may have been effected in violation of the conditions prescribed by the Act. This is clearly evident from a reading of Clauses (e), (f), (g), (h), (i), (j), (m),(n), (o) and (p) of Section 111. 18. The submission of the learned counsel that there was no proposal for absolute confiscation in the show cause notice stands nullified in view of the decisions referred above, laying down that it is the discretion of the adjudicating authority to decide with reference to the facts and circumstances and based on relevant considerations. For the reasons given above, we are of the opinion that the authorities below have rightly exercised the discretion in not granting provisional release of the seized goods in terms of Section 110 A read with Section 125 of the Act. 19. In the grounds of appeal, the learned Counsel for the appellant has contended that he has been denied proper opportunity to present his case and no opportunity was granted to cross examine the witnesses. Considering the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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