Gold not liable for confiscation as revenue failed to prove that gold is smuggled one

Commissioner of Customs Vs Bajrang Ingole (CESTAT Kolkata)

CESTAT Kolkata held that impugned gold cannot be seized u/s 110 of the Customs Act, 1962 as it is a case of town seizure and revenue has failed to prove that gold in question is smuggled one. Accordingly, gold not liable for confiscation.

Facts-

Based upon specific information, the officers intercepted the respondent No.1 on 12.12.2018 along with 1 kg Gold Bar valued at Rs.30,50,000/- and one small size pocket diary being seized from his personal possession vide seizure case dated 12.12.2018.

The so seized gold was examined by M/s.A.B. Kundu Jewellers, an approved valuer, who issued certificate that the recovered yellow metal is made of 24 Karat Gold weighting 1000.000 Grams valued at Rs.30,50,000/- at the prevailing rate on 12.12.2018.

Notably, the revenue is in appeal against the impugned order, wherein the Commissioner(Appeals) exonerated the appellants and held that the gold in question is not liable for confiscation.

Conclusion-

Held that it is a case of town seizure. The purity of gold is 99.5% and having no embossing of foreign mark, in that circumstances, revenue has failed to prove reasonable belief that being the gold in question is smuggled one. In the absence of that the impugned gold cannot be seized under Section 110 of the Customs Act, 1962 and therefore the gold in question is not liable for confiscation and no penalty is imposable on the appellant.

FULL TEXT OF THE CESTAT KOLKATA ORDER

Revenue is in appeal against the impugned order, wherein the Ld.Commissioner(Appeals) exonerated the appellants and held that the gold in question is not liable for confiscation.

2. The facts of the case are that, based upon specific information, the officers of P&I Branch, CC(P), W.B. intercepted the respondent No.1 in Burtolla Street, Burrabazar, Kolakta-700007 on 12.12.2018 along with 1 kg Gold Bar valued at Rs.30,50,000/- and one small size pocket diary being seized from his personal possession vide seizure case 16/IMP/CL/GOLD/P&I/CC(P)/WB/2017-18 dated 12.12.2018.

3. The so seized gold was examined by M/s.A.B. Kundu Jewellers, a approved valuer, who issued certificate that the recovered yellow metal is made of 24 Karat Gold weighting 1000.000 Grams valued at Rs.30,50,000/- at the prevailing rate on 12.12.2018.

4. The representative samples drawn from the seized gold were forwarded to the Chemical Laboratory of Custom House, Kolkata to ascertain the Nature, Composition & Purity of the gold vide Test Memo dated 14.02.2018.

5. In the statement so tendered by the said respondent No.1, it was interalia stated that he is engaged in facilitating melting of 10 Tola Bars believed to be gold of foreign origin just to hoodwink the department and to avoid himself being caught by the department. Subsequently, the statement was again recorded on 13.02.2018 when the earlier statement so tendered was repeated and reiterated before the authority However, as appear from the records of the present case, the said statement has been retracted by the respondent No.1 vide letter dated 15.02.2018 before the office of the Superintendent of Customs. In the said letter, the respondent No.1 had stated the earlier statement so recorded during his custody was not at all voluntary in nature, since he was made to write statement as per dictation of the officials. It was stated therein that he was instructed by one Sri Ramesh Disley to carry the seized gold for the purpose of testing purity and the seized gold bar was melted into Bar form from small pieces gold bar and the seized note book that was seized by the officials was got by him from roadside. Further, Summons were also issued upon the respondent herein for appearance on 26.02.2018, which was replied by the respondent vide letter dated 05.03.2018, whereof it was stated since the said Summons was received by him on 01.03.2018, he could not attend the same. Furthermore, Summon was again issued but the same was returned as not being delivered.

6. Further, the respondent No.2 i.e. Sri Sachin Gupta, Director of M/s. Akriti Gupta Jewellers Pvt. Ltd., Kolkata vide letter dated 16.02.2018 submitted before the office of the Superintendent of Customs, whereof, it was stated that the gold belongs to the Company M/s. Akrity Jewellers (P) Ltd. and he being in the capacity of Director had claimed the so-seized gold. It was stated that the seized gold bar was procured by him by melting 18 small pieces of gold into a single gold bar. It was also stated that the 18 pieces gold were given by him to Sri Ramesh Disley to melt it and to form it into a single piece. The so seized gold bar was given by Sri Ramesh Disley to Sri Bajrang Ingole to deliver it to the respondent No.2 and on the way, it was intercepted by the P&I Branch. In support of his claim, he had submitted Issue Voucher, Item Register reflecting possession of gold on 1129.9842 grams and purchase viz Tax Invoices Nos.1890/17-18(M/s. Maa Ambey Jewellers) dated 07.02.2018 of 827.630 grams, Tax Invoices Nos.1940/17-18 (M/s. Maa Ambey Jewellers) dated 12.02.2018 of 583.600 grams & Tax Invoices Nos.1619/17-18 (M/s. Maa Ambey Jewellers) dated 05.01.2018 of 500 grams.

7. In course of investigation, Sri Ramesh Disley’s statement was recorded in terms of Section 108 of the Customs Act, 1962 when it was duly stated by him that he is the proprietor of M/s. J.B. Silver & Gold since 05.11.2017. His business is to look after melting of gold and It had been confirmed by the said Sri Disley that he had received 18 small pieces of gold bars from Sri Sachin Gupta of Akriti Jewellers (P) Ltd. vide Issue Voucher No.61 dated 12.12.2018 and he had handed over the seized gold bar to his employee (Respondent No.1) for the purpose of handling over to Sri Sachin Gupta of M/s. Akriti Jewellers (P) Ltd.

8. Further investigation was also caused with M/s. Maa Ambey Jewellers when it is revealed that the Tax Invoices submitted by the Respondent No.2 are genuine and payment was also made for the goods being sold to the respondent No.2.

9. However, the aforesaid Show Cause Notice VIII(10)20/IMP/CL/P&I/CC(P)/WHB/17-18/974-975 dated 07.08.2018 was issued upon the lower authority to the respondents herein proposing confiscation of seized goods i.e. one piece of gold bar having total weight of 1000.00 grams valued at Rs.30,50,000/- in terms of Section 111(b) & (d) of the Customs Act, 1962 and imposition of penalties in terms of Section 112(b)(i) of the Customs Act, 1962 on both the appellants for the alleged act of smuggling of origin gold.

10. The adjudicating authority absolutely confiscated the seized gold and imposed penalty on both the respondents. The said order was challenged by the respondents before the Ld. Commissioner(Appeals), who after examining the defense reply filed by the respondents dropped the charges against the respondents and penalties imposed on the respondents were also set aside. Against the said order, revenue is before me.

11. The Ld.AR for the department submitted as under :-

(a) Shri Sachin Gupta submitted a letter dated 16.02.2018 to the department claiming ownership of the gold and enclosed (i) Trade Licence (ii) Issue Voucher No.61 dated 12.02.2018 (iii) Stock details for the month Jan. 2018 to Feb. 2018 and (iv) Three Purchase invoices from Maa Ambey Jewellers for the month of January 2018 to February 2018.

(b) As per enclosed copy of Stock Register (Stock details for: Our Stock with us & Third party) for the period 0 1.02.2018 upto 02.2018 as submitted by Sachin Gupta vide his letter dated 16.02.2018, it was seen that the purchase of three gold bars (purity not mentioned) on different dates from Maa Ambey Jewellers vide three invoices are clearly reflected and the transactions were found to be genuine.

(c) As on date of seizure i.e. 12.02.2018, the Item Register clearly reflects the Closing quantity, Rate and Value of gold as 9842 gms., 2890.65 and Rs.32,66,391.69 respectively. This document was submitted by Sri Sachin Gupta on 16.02.2018 himself, on his own volition, voluntarily, for claiming the seized gold. Further, in his said letter, he had stated that 18 pieces have been procured from daily transaction of gold of 99.5 purity and handed over to Ramesh Disale for melting to form a single piece so that it could be sold in bar form. However, no inclusion or mention of such 18 pieces of gold could be found in the copy of the Stock Register (closing balance as on 12.02.2018) submitted by Sachin Gupta on 16.02.2018

Hence, there could be no ambiguity whatsoever that as on 12.02.2018 (date of seizure), the Closing quantity, Rate and Value of gold was 1129.9842 gms., Rs.2890.65 and Rs.32,66,39 1.69 respectively with M/s. Akrity Gupta Jewellers.

(d) As per Para 3.7 of Order-in-Original Sachin Gupta again submitted a reminder letter dated 06.03.20 18 praying for release of the seized goods since not returning of the goods is creating severe crunch on him.

As per Para 3.10 of Order-in-Original, Sachin Gupta again submitted a reminder letter dated 15.03.2018 requesting the department to take necessary steps towards releasing the gold and offered his willingness to furnish requisite Bond and Bank Guarantee towards provisional release of the seized gold.

(e) It is, therefore absolutely explicit and unambiguous that Shri Sachin Gupta, subsequent to his letter dated 16.02.2018, DID NOT STATE in any of his said letters dated 06.03.2018 and 15.03.2018 to the department that –

(i) there was any change (inclusion or exclusion of any stock of gold) in the copy of stock register showing closing balance as on 12.02.2018 as submitted voluntarily by him with his letter dated 16.02.2018, staking claim on the seized gold.

(ii) there was any change in the copy of the voucher no.00061 dated 12.02.2018 (purportedly the basis of issuing 18 pcs. Gold of 99.5 purity from daily transaction to Ramesh Disale) which was submitted to the department by him on 16.02.20 18, staking claim on the seized gold.

(f) In obedience to the Order dated 12.06.2023 passed by this Tribunal, the Ld. Advocate of the Respondent submitted a letter on 22.06.2023 along with enclosures. It can be observed that there is gross discrepancy between the documents submitted by Shri Sachin Gupta along with his letter dated 16.02.2018 vis-à-vis the documents submitted by the Ld. Advocate on behalf of the respondent on 22.06.2023, which are enumerated hereunder:-

(i) In the copy of Item Register enclosed with the letter on 22.06.2018 it can be seen that on 12.02.2018 (i.e. date of seizure), there is an additional entry (outwards) shown in the name of Ramesh Disale for 1000 gms gold, the closing balance of gold I sshown as 129.9842 gms., no rate is shown and the value is shown as 3,75,739.16.

This is totally at varience from the original records (as mentioned at “c” above) and points to clear manipulation of records, an insertion which is totally different from the originally submitted document, and has been done in order to legitimize/show supply of 1000 gms. gold to Ramesh Disale (Stock Journal I.V. 076/17- 18). There has been an addition of this Vch No. against the name of Ramesh Disale for 1000 gms. Therefore, in view of the grounds as mentioned as at “e” above, it is abundantly clear and explicitly supportive of the contention that the documents now submitted on 22.06.2023 before this Tribunal is a clear manipulation of records to justify an act of smuggling.

(ii) In the photocopy produced by Mr. Sachin Gupta on 16.02.2018 of the voucher no.00061 dated 12.02.2018 for 1000 gms gold to Ramesh Disale (Smith Issue Voucher) the typed description of goods SILVER was replaced with Gold in handwriting. No other insertion/entry is seen.

In the document submitted before this Tribunal on 22.06.2023, it can be seen that there is an insertion in the voucher – i.e. 0076 just before 00061 and this insertion has been deliberately an dmaliciously made to legitimize the supply of 1000 gms. gold to Ramesh Disale (Stock Journal I.V. 076/17-18). This is again totally at variance from the documents originally submitted by Mr. Sachin Gupta on 16.02.2018 to claim the gold. Therefore, in view of the grounds as mentioned as at “e” above, it is abundantly clear and explicitly supportive of the contention that the documents now submitted on 22.06.2023 before this Tribunal is a clear manipulation of records to justify an act of smuggling.

Therefore, it is crystal clear that the respondents have not been able to comply with the directions issued at Para 6 & 7 of the Order dated 12.06.2023 of this Tribunal, not submitted the original documents and instead submitted manipulated/fabricated documents. It is humbly prayed that this issue may kindly be looked into.

12. He also relied on the following decisions:-

13. On the other hand, the Ld. Advocate for the respondents submits as under:-

1. At the preface it is strongly urged that the appeals so preferred by Revenue against the said O/A dated 14.08.2020 Is not maintainable for reasons which shall be discussed in detail herein below.

2. To begin, the respondents would like to draw reference to the National Litigation Policy which was introduced vide Instruction No. 390/Misc./163/2010-JC, dated 20-10-2010 whereof in para 5 & 6, it is directed that:-

“5 . The Board has decided that appeals in the Tribunal shall not be filed where the duty involved or the total revenue including fine and penalty is Rs. 1 Lakh and below. Similarly in the case of High Courts appeals should not be filed in cases where the duty involved or total revenue including fine or penalty is Rs. 2 lakhs and below. While deciding the thresholds mentioned above, the duty involved shall be the decisive element. For example, in a case involving duty of Rs. 1 lakh with mandatory penalty of Rs. 1 lakh besides any other penalty imposed under the relevant provisions of Law, no appeal shall henceforth be filed in the Tribunal as the duty involved is within the monetary limit of Rs. 1 lakh. Similarly, if the duty involved in a case is Rs. 2 lakhs with equal mandatory penalty and any other penalty imposed under the Law in force at the relevant time, no appeal shall be filed before the High Court.

6. Adverse judgments relating to the following should be contested irrespective of the amount involved :

(a) Where the constitutional validity of the provisions of an Act or Rule is under challenge.

(b) Where notification/instruction/order or Circular has been held illegal or ultra vires.

(c) Where audit objection on the issue involved in a case has been accepted by the Department.”

In the present case, no duty is charged upon the respondents herein, therefore, in light of the instruction cited above, the decisive factor shall be the penalty, as the words “total revenue” only includes duty, fine and penalty not the value of the goods and also that the SCN was issued only to impose penalty upon the respondents herein. Since, the penalty quantum isless than Rs. 10 Lacs, no appeal is maintainable before this Hon’ble Forum

3. Board vide its distinct Circular has also clarified the words ‘case’ vide its Instruction F.No.390/Misc/163/2010-JC, dated 26-12- 2014 in para 4, which reads as follows:-

“4 . The Instructions mentioned above used the word “case”. However, the same was not defined. The term “case” needs to be interpreted in the context of National Litigation Policy which aims at reduction of litigation. In respect of a composite order which disposes of more than one appeal/SCN and the Department contemplates filing of appeal, every appeal would be a “case” and should be subjected to the threshold limit prescribed. To illustrate, if the Tribunal passes one composite order disposing of more than one appeal filed before it, and if the Department being aggrieved is required to file more than one appeal against the said Tribunal order, then each appeal shall be subject to the monetary limit prescribed.”

4. Presently for customs case, Board vide its distinct Instruction F. 390/Misc/163/2010-JC, dated 17-12-2015 has directed revenue not to prefer any appeal below Rs. 10 Lacs. in CESTAT. Now that the in the facts and circumstances of the present the penalty so imposed upon the respondents herein is less than the threshold limit, in light of the said instruction, no appeal should, have been preferred. As such when the appeal itself is not maintainable than the same stands of no merit. Hence, the appeal so preferred by the department holds no good. In support of the same the respondents would like to draw reference to Final Order No. 75034-75035/2023 and Final Order No. 75052-75056/2023.

5. In a similar situation, in the case of Buhariwal Logistics reported in 2016 (332) ELT 278 (Del) it has been inter alia held in Para 13 that penal quantum is the determining factor to prefer Para 13 read as follows:-

“13. As regards the second preliminary objection, the appellant is in appeal against the deletion by the CESTAT of the penalties of Rs. 20 lakhs levied on respondent No. 2 and Rs. 10 lakhs on respondent No. 1. Therefore, notwithstanding the fact that the CESTAT may have, by the impugned order, set aside the penalties, as far as the Department is concerned, the amount involved for the purpose of determining the monetary limit would be the penalties as determined by the order-in-original. Since the penalty amounts are Rs. 10 lakhs and more, the second preliminary objection is rejected.”

6. Further, it is also submitted that Circular/Instruction are not binding upon the Courts/Tribunal, the above Circular/Instructions cited are direction/instructions upon the revenue which is always supposedly to be followed by revenue. In this regard, the case of Auro Weaving Mills reported in 2017 (345) E.L.T. 350 (H.P.) whereof in para 15, 16 & 17, it has been held as follows:-

“15. It is more than settled that the circulars issued by the Board are binding on the department and the department cannot be permitted to urge that the circulars issued by the Board are not binding on it. This has so been held in a series of decisions of the Hon ’ble Supreme Court and reference in this regard can conveniently be made to NavnitLal C. Javeri v. K.K. Sen – AIR 1965 SC 1375, Ellerman Lines Ltd. v. CIT – (1972) 4 SCC 474, K. P. Varghese v. ITO – (1981) 4 SCC 173, Union of India v. AzadiBachaoAndolan – (2004) 10 SCC 1, CCE v. Usha Martin Industries – (1997) 7 SCC 47 = 1997 (94) L. T. 460 (S. C.), Ranadey Micronutrients v. CCE – (1996) 10 SCC 387 = 1996 (87) E. L. T. 19 (S.C.), CCE v. JayantDalal (P) Ltd. – (1997) 10 SCC 402 = 1996 (88) E. L. T. 638 (S. C.), CCE v. Kores (India) Ltd. – (1997) 10 SCC 338 = 1997 (89) E. L. T. 441 (S.C.), Paper Products Ltd. v. CCE – (1999) 7 SCC 84 = 1999 (112) E. L. T. 765 (S. C.) and Dabur India Ltd. v. CCE – (2004) 13 SCC 107 = 2003 (157) E.L.T. 129 (S.C.).

16. In Commissioner of Customs v. Indian Oil Corporation Ltd. – (2004) 3 SCC 488 = 2004 (165) E.L.T. 257 (S.C.), the Hon’ble Supreme Court after examining the entire case law culled out the following principles : (SCC p. 497, para 12)

“(1) Although a circular is not binding on a court or an assessee, it is not open to the Revenue to raise a contention that is contrary to a binding circular by the Board. When a circular remains in operation, the Revenue is bound by it and cannot be allowed to plead that it is not valid nor that it is contrary to the terms of the statute.

(2) Despite the decision of this Court, the Department cannot be permitted to take a stand contrary to the instructions issued by the Board.

(3) A show cause notice and demand contrary to the existing circulars of the Board are ab initio bad.

(4) It is not open to the Revenue to advance an argument or file an appeal contrary to the circulars.”

17. Similar reiteration of law can be found in a latter judgment of the Hon’ble Supreme Court in Union of India and others v. Arviva Industries India Limited and others – (2014) 3 SCC 159 = 2007 (209) E.L. T. 5 (S.C.) = 2008 (10) S. T.R. 534 (S.C.).”

7. Now if the case is supposedly to be decided on merit than the following contentions may kindly be taken into consideration-:

i. That a question has been posed before Shri Sachin Gupta asking him that if the 1000 grams of gold biscuit was obtained from 18 cut pieces then how was the same obtained when it has been specifically quoted by Shri Sachin Gupta that he had purchased gold from M/s Maa Am bay jewelers. To this the claimant contends that though the gold was purchased in bar form but in the course of trade various cut pieces were obtained from those gold bars/biscuits for the purpose of selling them to the customs. As a result of which at the claimant was left with 18 residual cut pieces from those gold biscuits. Therefore, the said 18 were sent for melting and conversion to 1kg bar.

ii. Though the Ld. AR raises a query with regard to error in the Serial Nos of the Issue Vouchers so tendered by the claimant it is ought to be stated that those documents being internal documents and not statutory documents may have undergone an error.

iii. That no panchnama has been drawn or relied upon in the instant case which shows that the seizure so conducted is very much vitiated in nature. Hence, the reasonable belief so formed by the seizing officer is also disputed in the present case thereby making the goods liable for release at once.

iv. In the grounds of Appeal No. (i), it is agitated that since the seized goods was in the possession of Shri BajrangIngole, burden to prove in terms of Section 123 lies upon him.It is submitted that Section 123 (a) (ii) of the Customs Act, ’62 clearly states that burden also lies on any other person, other than the person from whose possession, the goods were seized, claims to be the owner, to prove that the goods is not smuggled. Therefore, the procurement details being submitted by the claimant i.e. Shri Sachin Gupta, (respondent) is legally tenable in the cause of discharge of burden under Section 123 of the Customs Act, 1962.In support of this contention reliance is place in the case of T.V. Mohammed reported in 2014 E.L.T 73(Kar) which clarifies Section 123 of the Customs Act, 1962.

v. In the Grounds of Appeal No. (ii), it is inter-alia agitated that statement recorded under Section 108 of the Customs Act, 1962 is admissible evidence and retraction of the same is an afterthought, hence, retraction cannot interfere with the evidentiary value, which the Ld. Commissioner (Appeals) has failed to appreciate. To this, reference is drawn to paragraph 16 and 17 of the Order-in-Appeal dated 14.08.20, whereof the Appellate Authority has dealt with the facts and circumstances leaving to the conclusion thereby denying such statement as a piece of evidence towards the allegation of smuggling and proposition to confiscate the seized goods.

vi. In the grounds of Appeal No. (iii), it is inter-alia agitated that Shri BajrangIngole, in his so-called retraction dated 15.02.2018 states that he has been made to write several statement regarding so-seized note book where as the fact of the matter is nothing has been written about the so-seized note book by Shri BajrangIngole either in his statement dated 12.02.2018 or his statement dated 13.02.2018.To this, it is submitted that such a ground is absolutely beyond the periphery of the Show Cause Notice and is a resultant afterthought and hence, the said ground is not maintainable. Reliance is placed in the case of Toyo Engineering reported in 2006(201) E.L.T. 513(SC) and also in the case of Sudarsan Jana reported in 2017(357) L.T 656 (Tri-Kol).

vii In the grounds of Appeal No. (iv), it has been inter­alia agitated that the Shri BajrangIngole has never appeared before the Custom Authorities and his retraction is typed and not hand written and also that the he had only expressed his fluency in Hindi and had only written in the Original Statement in Hindi and therefore, his subsequent retraction is appeared to be tutored and not genuine. To this, at the first instance, it is submitted that such ingredients of the said Grounds of Appeal being alleged to be tutored and not genuine in regard to retraction dated 15.02.2018 is not a part of the SCN, whereof it has been proposed that the so-seized goods is liable to be confiscated and penalty is supposedly to be imposed upon the respondent Hence, the said grounds are not at all maintainable. Moreover, reference is drawn to paragraph 17 of the Order-in-Appeal which clearly shows dealing with the retraction statement of Shri BajrangIngole. Also for argument sake, even if such statement is considered to be valid piece of evidence there is no evidence in the SCN to corroborate the same and the said statement being retracted, it is well settled principle of law as held in the case of Shakil Ahmed Khan reported in 2019 (366) ELT 634 (All) that confiscation and penalty based upon only on retracted statement is not legally sustainable.

viii. In the Grounds of Appeal No. (v), it is inter-alia agitated that 18 pieces of gold bar being melted and formed into one single gold bar cannot attract Zero loss and/or difference in purity percentage. To this, it is submitted that such a Grounds of Appeal is essentially an assumption and cannot at all form a basis towards confirmation of the proposed confiscation. Reference is drawn to paragraph 20 of the Order-in-Appeal whereof such change in form is dealt and answered by the Ld. Commissioner of Customs (Appeals). It is also submitted that Shri RameshDisaley has himself accepted the fact the he has melted the said 18 pcs. of gold bar in his voluntary statement. Accordingly, the said ground is not maintainable. To add further, it is urged that from the very beginning it has been stated that the 18 gold cut pieces were melted and not refined. So melting the cut pieces just once to form the same into a single piece of bar can only cause negligible difference in purity and not much.

ix. In the Grounds of Appeal No. (vi), it is inter-alia agitated that since the claim of ownership of the claimant (Shri Sachin Gupta) is solely based upon an issue voucher dated 12.02.2018, existence of the same is necessarily required to conclude the claim of the ownership of the seized goods. To this, it is submitted that such fact in detail has been dealt with by the Ld. Commissioner (Appeals) in paragraph 19 of the Appeal, hence, for the sake of brevity; the same finding is not repeated. It is also agitated that such a ground is not at all a part of the SCN or the Order-in-Original whereof the seized goods was proposed to be confiscated

x. In the Grounds of Appeal No. (vii), it is inter-alia agitated that “Shri Sachin Gupta, never procured any documentary (or otherwise) evidence as to the source of procurement of the said 18 pieces of gold of 99.5% purity”. To this, it is submitted that such a ground is absolutely falsely based. Since with the procurement of the invoices along with issue invoice dated 12.02.2018, clearly shows that the goods was having 99.5% purity. It is also submitted, it was never into question in dispute whether the goods is having 99.5% purity or not because such standard of purity was never been disputed by the claimant.

xi. In the Ground of Appeal No. (viii), it   has been inter-alia alleged that “clearly, Shri Sachin Gupta created a false story about a non-existent employee to cover up the story a non­existent/forged voucher. It is pertinent to mention that in consistency in fact are not extremeimportance and relevance before any fact finding authority”. To this, it is submitted that the fact of presence of issue voucher and/or Shri Nitin Karley one of the employee of the claimant comes from a statement referred to in paragraph 3.9 of the SCN. Necessarily, it requires to be submitted that in the process of adjudication and thereafter, although time and again the said statement was specifically prayed by the claimant was never supplied, one RTI application dated 09.03.2021, being preferred before the office of the Ld. Adjudicating authority whereof specifically such statement was prayed to be supplied, in reply dated 27.10.2021in paragraph-2, it was informed that no such statement is available with the department. Hence, the very basis of alleging a voucher to be forged and/or existence of Shri Nitin Karleystand in false basis. (Copy of the said RTI application along with reply thereto are enclosed hereto for your kind perusal).

xii. In the Grounds of Appeal No. (ix), it has been inter-alia alleged that the statement of Shri Ramesh Disaley, was never corroborated by Shri BajrangIngole. Moreover, it is stated that the ownership claim of the claimant (Shri Sachin Gupta) was never proved to the satisfaction of department by conclusive evidence. To this at the first instance, reference is drawn to paragraph 20 of the Order-in-Appeal. Moreover, it is submitted that such a ground is falsely based and content of mis-representation of fact and is also otherwise contrary to the statutory provisions. Similarly, the Grounds of Appeal No. (x) is denied, disputed.

In view of the discussions made hereinabove, the respondents herein most humbly prays that the instant appeal may kindly be rejected with consequential relief in favour of the respondent.

14. Heard the parties, considered the submissions.

15. On going through the records placed before me, the seizure Memo dated 12.02.2018 depicts the description of the gold in question as under:-

Yellow metal believed to be gold of foreign origin having inscription of 2(two) Swastika symbol in one side of the bar collectively Weighing 1000 gms.

The Seizure Memo is extracted below:-

16. Further a test report was also obtained which shows that the gold contain is 99.5% of weight. The same is also extracted below:-

17. On going through the facts of the case, as it is a case of town seizure, where no marking is embossed on the gold which is coming out from the seizure memo itself that there is a Swastika symbol and purity is only 99.5%, in that circumstances, the question arises how the reasonable belief has been found to form the opinion that the gold in question is smuggled one.

18. To decide the issue this Tribunal in the case of Shri Balwant Raj Soni & Others v. Commissioner of Customs (Preventive), Patna vide Final Order No.75455-75457/2023 dated 18.05.2023 has examined the issue and observed as under:-

“19. The Appellants also relied upon the decision of the Hon’ble Delhi High Court in the case of Shanti Lal Mehta Vs UOI and Others reported in 1983(14)EL T1 715 (DEL), which elaborately dealt with Town seizures. The relevant portion of the 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 subsequent to the act of seizure. (M.G. Abrol v. Amichand, AIR 1961 Bom. 227). The condition precedent that there was such a reasonable belief anterior to the seizure must exist before the presumption under Section 123 can be invoked.”

19.2 Smuggled goods — Reasonable belief cannot be based on presumption.

“58. The second reason for entertaining a reasonable belief is that the seized goods were not accounted for by the petitioner on 15-2-1967 when the officer seized the goods from his possession. The seized goods consisted of 20 items of ornaments and diamonds. Out of these six items were released before the show cause notice was issued. One item was released at the adjudication stage. Six items were released by the Board on appeal. Only 7 items have been confiscated. These consist of 2 packets of diamonds and 5 ornaments. The petitioner claimed that they belonged to the queen mother of Nepal. A letter was written to queen mother. On her behalf a reply was received that she had given certain ornaments to the petitioner for polishing, remaking etc., though not for sale. But this was done later on. The letter was written on 3-7-1967. The reply was received on 24-7-1967. But at the time of seizure all that the officer had before him were 2 packets of diamonds and 5 ornaments. Neither the diamonds nor the ornaments had any foreign markings or label to suggest to the customs that these were smuggled goods. In the search list these two packets of diamonds are described as “appearing to be diamonds”. This shows that the customs officer did not believe them to be diamonds on any reasonable ground. The ornaments had no foreign label or making. They were ordinary ornaments as are worn in this country. There was nothing peculiar about them. Nothing extraordinary. On this material could any reasonable man entertain a belief that these were smuggled goods

59. The belief must be such as any reasonable man in the circumstances of the case would entertain about the existence or non-existence of a thing. Simply because the goods were not accounted for at that time does not necessarily mean that the goods were smuggled goods. Unaccounted goods may be stolen goods. Reasonable belief could be entertained either on the basis of some external indicia or on the basis of some internal information that the goods had been illegally imported into India from Nepal or some other foreign 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 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 trousers of the accused as happened in Hukma v. State of Rajasthan, AIR 1965 S. C. 476.

61. In fact there is a finding by the Board in favour of the petitioner supporting his contention that there could be no reasonable belief in the mind of the officer when he seized the On the penalty of Rs. 25,000/- imposed on the petitioner the Board observed : “there is no definite evidence to show that the appellant knew or had reason to believe that those items were smuggled. In the absence of this evidence the penalty imposed is not justified. The Board accordingly remits the personal penalty in full”. If the petitioner did not know that the goods were smuggled, how could the customs officer reasonably believe that the goods were smuggled. The petitioner knew better.

62. The customs officer merely thought that as the goods had not been accounted for these are smuggled goods. At the time of seizure what happened was this. The petitioner was present at the shop. He told the customs officer that they were duly entered in his account books but his accountant had gone to the income tax officer. The officer did not wait for the man to arrive to explain the entries to him. He seized the goods and took them away. This was not a case of reasonable belief. It was a case of suspicion. A case of speculation. A case of guess work.

63. As a result Section 123 did not apply to the case. There was no reasonable belief. No presumption could be raised under Section 123. There was no obligation on the petitioner to prove that the goods were not smuggled. The burden of proof was wrongly cast on him. The entire inquiry was vitiated.”

20. From the above discussion, we observe that 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 record to establish that gold bars/pieces were smuggled into India from Bangladesh. The impugned order has concluded that the said gold bars/pieces were smuggled into India only on the basis of assumptions and presumptions without any concrete evidence to substantiate this claim. Hence, we hold that material evidence available on record does not establish that the gold bars/pieces were smuggled into India without any valid documents. Accordingly, answer to question (i) above in para 13 above is negative.”

19. It is apparent from the records itself that it is a case of town seizure. The purity of gold is 99.5% and having no embossing of foreign mark, in that circumstances, revenue has failed to prove reasonable belief that being the gold in question is smuggled one. In the absence of that the impugned gold cannot be seized under Section 110 of the Customs Act, 1962 and therefore the gold in question is not liable for confiscation and no penalty is imposable on the appellant.

In view of this I do not find any infirmity in the impugned order. The same is upheld and the appeals filed by the revenue are dismissed.

(Order pronounced in the open court on 03.11.2023.)