TMI Blog2024 (5) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... were smuggled into India without any valid documents. Applicability of the provisions of Section 123 of Customs Act 1962 in this case, we observe that Section 123 puts the burden of proving that the gold is not smuggled one on the person who claims ownership of the gold. This section is applicable only when there is a reasonable belief that that the gold in question are smuggled in nature. In this case, the discussion in the preceding paragraphs has established that there is no ground for holding the reasonable belief that the gold are smuggled in nature. When there is no material evidence available on record to establish that the gold bars/pieces were smuggled into India without any valid documents, the provisions of Section 123 of the Customs Act are not applicable. The purity of the gold is 995.2 mille, 995.1 mille and 995.0 mille which is below the International Standard of Purity. Accordingly, we hold that the Order passed by the Adjudicating Authority confiscating the gold bars/pieces mainly on the basis of the statements, is not sustainable in law. Thus, the gold bars/pieces cannot be confiscated based on the retracted statements without any other independent corroborative e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty. 3. A Statement dated 20.06.2014 was recorded from the appellant wherein he stated that the gold was handed over to him by one Shri Ramaswami at Moreh Bazar on 20.06.2014 at 07:00 hrs, for the purpose of transporting the same from Moreh to Guwahati; he was promised to pay an amount of Rs.12,000/- as carrier charges; he has no documents in possession to prove legal procurement of the gold biscuits. 3.1. The appellant was arrested under Section 104 of the Customs Act, 1962 and produced before the Chief Judicial Magistrate, Imphal on 21.06.2014 and he remained in judicial custody till 05.07.2014. Subsequent to his arrest, another Statement dated 21.06.2014 was recorded wherein the appellant stated that he did not know the residential address of Shri Ramaswami whom he met at Moreh Bazar to collect the gold biscuits. 4. In pursuance of the investigation, a Show Cause Notice dated 14.11.2014 was issued to the appellant proposing to confiscate the gold under Section 111(b) and (d) of the Customs Act; penalty was also proposed under Section 112(b)(ii) of the Act. 5. The said Notice was adjudicated vide Order-in-Original dated 31.07.2015 wherein the ld. adjudicating authority has ordere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Customs (Preventive), Shillong [Final Order No. 75300-75302 of 2023 dated 04.05.2023 in Customs Appeal No. 75315 of 2022 CESTAT, Kolkata] iv. Commissioner of Customs, Cochin v. Om Prakash Khatri [2019 (366) E.L.T. 402 (Ker.)] 7.2. The appellant also placed reliance on the following decisions in support of the contention that reasonable belief must be substantiated by irrefutable evidence: - a. Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar [(2015) 11 SCC 628] b. Shantilal Mehta v. Union of India ors. [1983 (14) E.L.T. 1715 (Del.)] 7.3. The appellant relied upon 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 filed by Revenue was dismissed holding that the jewellery does not bear any foreign marking on it and there is no other evidence other than the statement of the passenger produced by Revenue to substantiate the claim that jewellery were smuggled into India. 7.4. In view of the above, the appellant submits that the impugned order confiscating the gold is not sustainable and prayed for setting aside the same. 8. The Ld. Authorized Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of interception by the officers for the licit purchase of the gold. In his initial statement dated 20.06.2014, the appellant had stated that the said gold was handed over to him by one Shri Ramaswami for transporting the same from Moreh to Guwahati. However, later at the time of personal hearing on 31.07.2015, the appellant retracted the statement and contended that it was not given voluntarily. 11. We observe that in the impugned order, the Ld. Commissioner (Appeals) has upheld the confiscation of the gold on the ground that the appellant could not produce any valid document in support of acquisition, possession or transportation of the gold. Thus, the officers have the 'reasonable belief' that the said gold biscuits were of foreign origin and illegally imported into India and hence the gold in question was confiscated. 12. Thus, we observe that the questions to be answered in this case are: (i) Whether evidences available on record are sufficient to have the 'reasonable belief' that the gold bars/pieces were smuggled into India without payment of customs duty? (ii) Under the facts and circumstances of this case, whether the provisions of Section 123 of Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from Indo-Myanmar border. Thus, there must be some other corroborative evidence available to have the reasonable belief that the gold is of smuggled in nature. 12.4. We find that the Hon ble Delhi High Court in the case of Shanti Lal Mehta v. Union of India ors. [1983(14)E.L.T. 1715 (Del.)], has elaborately dealt with town seizures and the evidences required to have the 'reasonable belief' that the goods are smuggled in nature, in such cases. The relevant portion of the said decision is reproduced below: - 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. (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a reasonable belief. That the officer had reasonable belief must be stated in the notice to show cause. It must be adjudicated upon by the authorities under the Act. At the stage of appeal or revision from the orders of the officer adjudging confiscation each successive appellate or revisional authority has also to address itself to this requirement of reasonable belief. The seizing officer either by his own evidence or other materials placed before the adjudicating authority, has to prove to its satisfaction that there was ground for him to reasonably believe that the goods were smuggled goods, that is to say that the goods were imported into the country and imported at a time and place when they were restricted or prohibited from being imported. If the adjudicating authority is not satisfied that the goods were seized on a reasonable belief Section 123 cannot be invoked and in that event it would be for the customs authorities to prove that the goods were smuggled and Section 123 in that event would have no application. If, therefore, Section 123 is wrongly applied and the presumption thereunder is raised, without the condition precedent thereunder having been satisfied, the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd on appeal, nor the Central Government applied their mind to this question. Two reasons : 57. Applying the principles of these cases to the facts of the present case what do we find? Two reasons were given in support of the reasonable belief. One is that the customs authorities received some information. What is that information? It was never disclosed to the petitioner. Nor was it disclosed to the adjudicating authorities. Very vague words such as `on information received are used in the show cause notice. The information on which the customs authorities act must be definite information. No one suggests that they must disclose the name of the informant. That would be detrimental to investigation and against public interest. The least they can do is to give the gist of the information so that the person from whom the goods are seized knows the nature of the information received by the customs. To hold otherwise would mean that the customs officer can act on any information, wishy-washy though it may be, received from the underworld the nature of which the man in the over-world will not be entitled to know. The words reasonable belief used in Section 110(1) are intended to check t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 found hidden in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 123 of Customs Act 1962 in this case, we observe that Section 123 puts the burden of proving that the gold is not smuggled one on the person who claims ownership of the gold. This section is applicable only when there is a reasonable belief that that the gold in question are smuggled in nature. In this case, the discussion in the preceding paragraphs has established that there is no ground for holding the reasonable belief that the gold are smuggled in nature. When there is no material evidence available on record to establish that the gold bars/pieces were smuggled into India without any valid documents, the provisions of Section 123 of the Customs Act are not applicable. Accordingly, answers to question nos. (i) and (ii) in paragraph 12 above are in the negative. (iii) Whether the retracted statements of the appellant can be relied upon to establish the guilt of the Appellant and confiscate the gold in question in this case? 12.7. We observe that the appellant has given two statements on 20.06.2014 and 21.06.2014, in his own handwriting in the presence of two independent witnesses wherein he had categorically stated that the gold was handed over to him by one Shri Ramas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso submitted to substantiate his case. 8. After hearing both sides and on perusal of record, it appears that Shri A.M. Khaleefa was intercepted by DRI Officer at Nizamuddin Railway Station, New Delhi. From his possession four packets of gold jewellery was recovered in the DRI Office, totally weighing about 2015 grams whose value was estimated to be about Rs. 47 lakhs. The seized goods are in the form of gold jewellery of 18 carat purity, some of which studded. The jewellery does not bear foreign marking but the passenger in his statement has admitted that the said jewellery were brought by him from Dubai in the Indigo Flight and after arrival in the Delhi Airport, he has proceeded by taxi to Nizamuddin Railway Station from where he was intercepted. The case of Revenue is that in terms of Section 123 of the Customs Act, 1962, the passenger has failed to explain the possession of the smuggled goods and as such are liable for confiscation. But the respondent rebutted the allegation. It is his submission that other than the statement of the passenger there is no evidence to show that the seized goods were smuggled. 9. Gold is an item which is notified under Section 123 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve evidence. Accordingly, the answer to question no. (iii) at paragraph 12 above is in the negative. (iv) Whether penalties imposed on the Appellants under Section 112(b)(ii) of the Customs Act, 1962 are sustainable in this case? 12.11. Regarding penalty imposed under Section 112(b)(ii) of the Customs Act 1962, the appellant stated that the gold was purchased by his father and he inherited the gold from his father. There is no evidence on record to show that the gold bars/pieces were of foreign origin and smuggled into the country. In the absence of any evidence to establish that the gold bars/pieces were smuggled ones, no penalty is imposable under Section 112(b)(ii) of the Customs Act, 1962. The appellant cited various decisions of the Tribunals and High Courts to support this claim. We find merit in the argument of the Appellants. Section 112 of the Customs Act, 1962 details the circumstances under which penalty is imposable under this section. Under Section 112(b), penalty is imposable when the person is found to be dealing with goods for which prohibition is in force or the goods are liable for confiscation. The gold bars/pieces found in possession of the appellant were not es ..... X X X X Extracts X X X X X X X X Extracts X X X X
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