Case Law Details
Sunny Kakkar Vs Principal Commissioner of Customs (CESTAT Delhi)
CESTAT Delhi upholds the absolute confiscation of disputed gold as it was reasonably believed to be smuggled and appellant failed to discharge his burden to prove that the golds was not smuggled gold.
Facts-
Appellant filed this appeal to assail OIO passed by the Principal Commissioner of Customs (Preventive), New Delhi whereby he absolutely confiscated 8 gold bars of 1 kg. each of foreign origin valued at Rs. 1,84,16,505.68 u/s. 111(d) of the Customs Act 1962 which were seized from the possession of the appellant. He also confiscated absolutely an amount of Rs. 5,45,000/- seized from Shri Ahadees K. u/s. 121. He also confiscated the packaging materials of no commercial value in which the gold and the currency were concealed u/s. 118 read with Section 119. He also confiscated the Mercedes car bearing registration No. DL ICQ 7525 seized from the appellant u/s. 115(2) which was registered in the name of M/s PRK Diamonds Pvt. Ltd and allowed it redemption on payment of a fine of Rs.10,00,000/-. Penalty of Rs. 50,00,000/- was imposed on the appellant u/s. 112(b) (i) and a penalty of Rs.15,00,000/- on Shri Ahadees u/s. 112(a)(i).
Conclusion-
No documents have been produced till date to show that the gold was legally imported. The circumstances under which the transaction took place in a car without any bills at the gate of the Metro Station further buttress the view that the gold was not legally imported. In view of the above, we find that the undisputed gold is of a foreign origin and was reasonably believed to be smuggled by the officers and was seized and the appellant had not discharged his burden to show that it was not smuggled gold. Therefore, the absolute confiscation of the disputed gold needs to be upheld.
In this case, it is undisputed that the appellant was in possession of the confiscated gold. Even in the appeal before us, the appellant is not disputing this fact. Therefore, he is squarely covered by Section 112(b)(i). The value of the confiscated gold is Rs. 1,84,16,505.68. The penalty imposed is only Rs. 50 lakhs. In the factual matrix of this case, we find that this amount of penalty is reasonable and calls for no interference.
FULL TEXT OF THE CESTAT DELHI ORDER
Shri Sunny Kakkar1 filed this appeal to assail the order in original2 dated 1.12.2017 passed by the Principal Commissioner of Customs (Preventive), New Delhi whereby he absolutely confiscated 8 gold bars of 1 kg. each of foreign origin valued at Rs. 1,84,16,505.68 under Section 111(d) of the Customs Act 19623 which were seized from the possession of the appellant. He also confiscated absolutely an amount of Rs. 5,45,000/- seized from Shri Ahadees K. under Section 121. He also confiscated the packaging materials of no commercial value in which the gold and the currency were concealed under Section 118 read with Section 119. He also confiscated the Mercedes car bearing registration No. DL ICQ 7525 seized from the appellant under Section 115(2) which was registered in the name of M/s PRK Diamonds Pvt. Ltd and allowed it redemption on payment of a fine of Rs.10,00,000/-. Penalty of Rs. 50,00,000/- was imposed on the appellant under Section 112(b) (i) and a penalty of Rs.15,00,000/- on Shri Ahadees under Section 112(a)(i).
2. The facts of the case are that the Directorate of Revenue Intelligence4 received intelligence that a person aged about 26/27 years and around 5‟5” tall will be carrying smuggled gold bars of foreign origin and would hand them over in a white Mercedes car bearing registration No. DL ICQ 7525 near Gate No. 3 of Rajeev Chowk Metro Station on 07.12.2015 around 16.00 hours. Officers kept surveillance in the area and at around 16.15 hours, a person of the description carrying a slinging black bag entered the car and handed over the black bag to another person sitting in the front passenger seat. The other person handed over a pink polythene bag in return. At this stage, DRI officers knocked at the front door of the car by showing their identity cards and asked them to open the doors. Instead, the car tried to speed away but failed due to heavy traffic.Officers took control of the car and the occupants and brought them to the parking space to DRI office. At 17.30 hours, they called two independent witnesses and conducted a search and drew a panchnama. Sitting in the front passenger seat, the appellant introduced himself as Sunny Kakkar (the appellant). The second person introduced himself as Ahadees K and the third person introduced himself as Rajesh Kumar Goswami – the driver of the car. In the presence of the witnesses, the three persons and the car were searched thoroughly. The black bag and the pink colour polythene bag were recovered from the car. The black bag contained 8 yellow metal gold bars and the pink colour polythene bag contained Indian currency. Personal search of the appellant resulted in recovery of three Apple i-phones one vertu mobile phone and one Micromax mobile phone with different sim cards and a wallet with Rs. 9,000/- in it and some credit cards.
3. Personal search of Shri Ahadees resulted in recovery of his wallet containing Rs. 465/-, a driving licence and a card and one HTC 826 mobile phone. Search of the driver Shri Rajesh Kumar Goswami did not result in any recovery.
4. Searches of the car resulted in recovery of registration papers of the car in favour of M/s PRK Diamonds Pvt. Ltd., Karol Bagh, insurance policy paper, driving licence of the appellant and PAN card of M/s PRK Diamonds Pvt. Ltd.
5. An expert Jewellery Appraiser was called who examined the yellow metal bars in the bag. These were packed in a polythene bag marked “BIS Jeweller LLC PO Box 81644, Office Number 21, 2nd floor, Opposite City Hotel, Gold Souk, Deira, Dubai – UAE”. The 8 yellow metal bars with the markings “DIJLLAH GOLD UAE1 KILO GOLD 995.0” with serial numbers A 032796, A 032797, A 032812, A 032796, A 032797, A 032922, A 032929, A 032931 and A 032928. The expert Appraiser assessed the material as foreign origin gold of 995 purity totalling weighing 8 kg.
7. The Indian currency notes in the pink polythene packed were Rs. 500×1090 pieces = Rs. 5,45,000/-.
8. Neither the appellant nor Shri Ahadees produced any document in support of the licit import and possession of the gold bars. The appellant explained that Shri Ahadees gave him the gold in the black bag and he had, in return, handed over the currency in the pink polythene bag. Under the belief that the car, the gold and the cash were liable for confiscation, they were seized. Statements of the appellant, Shri Ahadees and the driver Shri Goswami were recorded.
9. In his statement dated 8.12.2015 the appellant said that he had joined his father‟s business in gold jewellery in the year 1997 and that he opened a company in the name of M/s PRK Diamonds Pvt. Ltd., Karol Bagh which would purchase diamonds in wholesale and sell to different retailers. In November 2015, one Shri Mushtaq, suggested to him to start business of smuggled gold and introduced him to one Shri Harish of Dubai and gave his mobile number. Shri Harish called him from Dubai and told him that he would send gold through his man and after selling it in the market the appellant should hand over the sale proceeds to him. Earlier, on 1.12.2015 and 5.12.2015 Shri Harish had sent him 8 kg. gold each time. At the time of receiving gold he would pay some amount to the person who handed over the goods and he would pay the rest after selling the gold.
10. Further, on 7.12.2015 he received a call from Shri Harish who told him that Shri Ahadees would be contacting him on 7.12.2015 and hand over and another 8 kg gold and accordingly, he waited in the car along with his driver. Shri Ahadees gave him the gold and he, in turn, gave some amount in the plastic bag after which they were intercepted by officers of DRI.
11. When DRI offices knocked on the door of the car, they tried to speed away but failed and were brought to DRI office where the Panchnama was drawn.
12. In his statement dated 8.12.2015 Shri Ahadees said that he knew Shri Harris of Dubai who called him from Dubai in the last week of November 2015 and offered Rs. 20,000/- per consignment in his business of smuggling foreign origin gold. Thereafter, on 5.12.2015 he got a call from Shri Harris, received a bag from a person sent by Shri Harris and handed it over to Shri Sunny Kakkar in his Mercedes car near the gate of BLK Hospital, Pusa Road and received Rs. 5 lakhs from Shri Sunny Kakkar. Again, he received a call from Shri Harris who told him to collect a packet containing 8 kg gold from his man and hand it over to Shri Sunny Kakkar. Accordingly, it was decided to meet on 7.12.2015 at 4.00 P.M. near exit gate No. 3 of Rajeev Chowk Metro Station. He handed the packet with 8 kg gold to Shri Sunny Kakkar and received a pink bag containing Rs. 5,45,000/- when DRI officers intercepted and brought them to the parking space of DRI office where the Panchnama was drawn. He went through the statement which Shri Sunny Kakkar given on 8.12.2015 and confirmed the contents with respect to his role on the smuggled gold.
13. On 12.5.2016 another statement was recorded in which Shri Ahadees confirmed that Shri Harris referred to by him is the same one as referred to by Shri Sunny Kakkar as Shri Harish who is an Indian who has been staying in Dubai for the last 15 years. He met Shri Harris through Mustaq whose Mobile No. 9560790231 is actually registered in the name of one Shri Jibin who used to reside with him in Chattarpur, New Delhi but he is using the Sim card from October 2015 and he provided this number to Shri Sunny Kakkar who advised him to contact him only on mobile No. 7289970347 although he had another number.
14. Shri Rajesh Kumar Goswami, driver gave his voluntary statement on 8.12.2015 confirming the incidents which happened on 7.12.2015 which resulted in seizure under the Panchnama.
15. Officers of DRI obtained the call details of the recovered numbers and found that Vodafone connection 7289970347 which was recovered from Shri Sunny Kakkar and which was being used for communication with Shri Ahadees for smuggling operations was registered in the name of one Shri Beisenbek Kaskyrbayev a Kazakhstani national but no such person was found at the given address. Enquiry with the Foreigners Regional Registration Officer, New Delhi showed that Shri Beisenbek left India on 21.4.2015 and was not in India when the connection was obtained in his name. Call details obtained from the telecom operator showed that there were calls between this number of Shri Sunny Kakkar and the number of Ahadees on 1.12.2015, 5.12.2015 and 7.12.2015 – the three days on which they had carried smuggled gold as per their statements. The present case pertains only to the gold seized on 7.12.2015. Based on these investigations it appeared that the 8 kg gold seized on 7.12.2015 was of foreign origin, smuggled into India and gold is not freely importable. It also appeared that as per Section 123 of the Customs Act the burden of proving that the gold was not smuggled rested on the person from who it was seized.
16. The show cause notice was issued to the appellant on 2.6.2016 by the DRI calling upon the appellant to explain as to why the 8 kg gold bars seized from him should not be confiscated under Section 111(b) and Section 111(d) and the Mercedes car registered in the name of M/s PRK Diamonds Pvt. Ltd. should not be confiscated under Section 115 and penalty should not be imposed under Section 112. A show cause notice also called upon Shri Ahadees to explain why the seized Indian currency of Rs.5,45,000/- being the sale proceeds of smuggled gold should not be confiscated under Section 121 along with pink polythene bag of no commercial value why penalty should not be imposed under Section 112.
17. The appellant filed an interim reply on 4.2.2017 denying the allegations made in the show cause notice. He asserted that the gold was legally imported into the country on payment of duty as per the information provided to him by Shri Ahadees and, therefore, the same was not liable for confiscation. He also contested the proposal to impose penalty. He further submitted that the car must be released unconditionally as per Section 110 read with Section 124 because M/s PRK Diamond Pvt. Ltd., in whose name the car is registered, was not issued a show cause notice. On 24.5.2017 he submitted another reply again asserting that he bought legally imported gold for sale from Shri Ahadees and that DRI officers forcibly extracted statement from him. He further asserted that as per the show cause notice smuggling of 8 kg gold also took place on two earlier occasions but DRI had not carried out any investigation into those cases of smuggling.
18. He also asserted that the gold bars belonged to him and it was incumbent upon Shri Ahadees to provide the documents pertaining to the legal import of the gold bars given to him. He again asserted that the car must be leased unconditionally.
19. Shri Ahadees, in reply dated 27.10.2017 submitted that some secret information said to have been received by DRI cannot be accepted as gospel truth and despite specific information and DRI failed to draw panchanama at the place of interception. The statement recorded under Section 108 cannot be infer guilty beyond reasonable doubt of the appellant. He also argued that the currency of Rs.5,45,000/- is not commensurate with the gold recovered from Shri Sunny Kakkar hence cannot be said to be the sale proceeds of the recovered gold. He submitted that he was successfully running the business of consultancy in aviation and the currency recovered from him is not exhorbitant in his business.
20. Personal hearing was fixed for several dates. The adjudicating authority changed and the new adjudicating authority (who passed the impugned order) fixed personal hearing on 27.9.2017 but neither the appellant nor Shri Ahadees appeared. A second personal hearing was fixed on 10.10.2017 during which Shri Ashutosh, Advocate appeared on behalf of the appellant and sought cross-examination of Shri Ahadees. Shri Nitin Johsi, Advocate appeared on behalf of Shri Ahadees and said that his client could not appear on that date and sought an adjournment. Third personal hearing was fixed on 24.10.2017 but again nobody appeared on behalf of Shri Ahadees. Fourth personal hearing cum cross examination before the adjudicating authority was fixed on 9.11.2017 and Shri Ashutosh, Advocate of the appellant appeared and cross examined Shri Ahadees record of the cross examination is as follows;
Q.1 Are you permanent resident of Kerala? What is your age and qualification?
Ans: Yes, I am 28 years old and graduate in BCA from Bangalore.
Q.2 Are you married? Do you have any children?
Ans: Yes and I am having one son aged about two years.
Q.3 How many times you have been to Dubai?
Ans: I have been twice to Dubai and after this case and before that I have never been abroad.
Q.4 How did you arrive at the place of your interception?
Ans: I came by a taxi.
Q.5 I put to you that the gold handed over by you to Shri Sunny Kakkar was told to be duty paid gold?
Ans: No, I did not know that what were the contents in the bag handed over by me to Shri Sunny Kakkar.
Q.6 Was the bag open or locked?
Ans: It was open.
Q.7 Did you ask the person who gave you the bag as to what it contained?
Ans: No I did not ask. The person is from my native place and he asked me to hand over the bag to Shri Sunny Kakkar.
Q.8 Can you tell the name and address of that person who handed over the bag to you?
Ans: I do not know the person‟s name and address who handed over the bag.
Q.9 Did you know Sunny Kakkar earlier also before the alleged incident?
Ans: Yes I had handed over packets to him earlier on twice occasions.
Q.10 Do you have any altercation with Shri Sunny Kakkar?
Ans: No
Q.11 I put it over to you that what you have stated above in respect of the packet is wrong and that with a view to run away from your liability, if any, you are making wrong statements and passing on the same to Shri Sunny Kakkar?
Ans: No, whatever I stated is true and correct.
Q.12 Is it correct that the bag from which gold was recovered was in your possession before intercepted by DRI?
Ans: Yes the bag was in my possession and it was handed over to Shri Sunny Kakkar before the DRI intercepted us.
21. Thereafter, the impugned order was passed.
22. Learned counsel for the appellant, at the outset, submitted that the entire recovery of the gold itself is doubtful because allegedly the transaction took place in a car at Rajeev Chowk Metro Station but the panchnama was drawn in the parking lot of DRI office. On a specific query from the bench if the appellant was contesting the recovery of the gold itself, learned counsel affirmed it. However, the prayer of the appellant in the appeal itself shows that the appellant is seeking the gold recovered from his possession to be released to him unconditionally. He further prayed that the vehicle recovered from his possession also should be released to him unconditionally. We, therefore, find no basis for the appellant to challenge the recovery of the gold when the entire prayer in this appeal itself states that the gold and the car were recovered from him. We also note that in the reply to the show cause notice before the adjudicating authority also the appellant never contested the recovery of the gold but only were legally imported into India.
23. The following other submissions were made by the learned counsel for the appellant :
(i) The principles of natural justice were violated as no opportunity was granted to the appellant to represent the case by way of filing an oral and written arguments after the culmination of cross examination of Shri Ahadees K. On a specific query from the Bench as to whether the date fixed for cross examination was only for cross examination or cross examination and personal hearing learned counsel fairly submits that it was for both. On a further query as to any written request was made for further opportunity to make written submissions after the cross examination he submits that no such request was made before the original authority.
(ii) The appellant had retracted his statement made before the officers of DRI when he was arrested and produced before the learned Chief Metropolitan Magistrate on 8.12.2015 and therefore, the statement cannot be relied upon as a voluntary statement.
(iii) There was a procedural lapse on the part of the proper officer by not passing order under Section 110 of the Customs Act and, therefore, the subsequent proceedings are void ab initio. The seizure under Section 110 is a condition precedent to issuing the show cause notice.
(iv) The case has been made out only on the basis of statements and, therefore, cannot be sustained.
(v) There is no investigation by the DRI in relation to the alleged foreign nature of the gold and the country of origin of the gold.
(vi) The DRI officers have not examined the foreign markings of the gold and there was no test report ascertaining the nature of the gold.
(vii) No show cause notice was issued to M/s PRK Diamond Pvt. Ltd. and, therefore, the seized Mercedes car is liable to be released unconditionally.
(viii) Section 112 of the Customs Act is not applicable to the appellant as the appellant had not done or omitted to any act or omission which would render the goods liable for confiscation under Section 111.
(ix) The penalty imposed on the appellant is too harsh and unreasonable.
24. Learned authorised representative for the Revenue supports the impugned order and made the following submissions:
(i) The Appellant was provided sufficient opportunities to defend their case. They were offered personal hearing as well as cross examination of co-noticee Shri Ahadees K as requested by them. The Appellant attended the personal hearing and cross examined Shri Ahadees. The impugned order was passed after taking into consideration all the defences brought out in their reply to show cause notice, their submissions during personal hearing, and the outcome of the cross examination. The principles of natural justice were therefore, followed.
(ii) The Appellant admittedly did not have any documents to show licit possession of the impugned foreign origin gold bars. He also admitted in his voluntary statements recorded under Section 108 that the gold bars were smuggled and that they were not brought into India through any legal channel. In fact, he himself disclosed that the gold was sent by some person named Harish from Dubai. Investigation established that the appellant was knowingly involved in purchase of smuggled gold for monetary benefit.
(iii) Appellant failed to produce any proof or document in support of his claimed retraction at the earliest opportunity. It is settled law that retraction from statements tendered under Section 108 of the Customs Act 1962, if any, needs to be addressed to the same authority. No such retraction in the instant case took place.
(iv) Unscrupulous and covert activities resorted by the Appellant like(a) using mobile number of a fictitious person that was obtained using forged/fake documents, (b) choosing to take delivery of precious goods like gold bars at a public place rather than a safer place like his office/shop, and (c) ordering his driver to speed away the vehicle after seeing the DRI Officers on the day of interception i.e. on 07.12.2015 go to establish his mens rea behind the illegal acts of acquiring and disposing of the smuggled gold. All these activities have been revealed during investigation and proved with undeniable documentary/corroborative evidences.
(v) The Appellant tried to pass the onus to prove the legal importation of the seized gold to the co-noticee Shri Ahadees K. He contended that he received the gold from Shri Ahadees K under good faith that the gold was legally imported and cleared after duty payment. However, it was for him to ensure this aspect after which only he could have accepted the offer. Secondly, statement of the co-noticee Shri Ahadees K. to the effect that he supplied gold to the Appellant earlier on two occasions also, which he has confirmed during cross examination, has demolished in entirety the claim of the Appellant that he received the gold in good faith and that he was under impression that the gold was legally imported and cleared after duty payment.
(vi) Call Details Record of the Appellant goes to prove that he was in constant touch of the co-noticee Shri Ahadees K and Shri Harris a.k.a. Harish of Dubai in the past also. This indicates that the Appellant was part of the conspiracy with intention to commit an offence and had been engaged in disposal of the smuggled gold in the market for monetary consideration.
(vii) As gold is an item covered under Section 123 of the Customs Act 1962, the burden to prove that it is not smuggled lies on the person from whose possession it is seized. In case of failure of discharging such burden by the person possessing gold, the gold is liable to be considered as smuggled. Also, possession of foreign origin gold by any person or entity without any valid document shall tantamount to possession of smuggled gold.
(viii) Gold is a restricted item for the purpose of import in as much as gold is not allowed to be imported, except by the authorized persons or nominated agencies for specified purpose. This read with definition of „prohibited goods‟ under Section 2(33) of the Customs Act 1962 unfailingly establishes that import of gold by person other than authorized person/nominated agency falls within the definition of prohibited goods liable for confiscation under Section 111(d) of the Customs Act 1962.
(ix) Conveyance/Vehicle/Carriage used as a means of transport in the smuggling of any goods is liable to confiscation under Section 115(2) of the Customs Act 1962 unless the owner of the Conveyance/Vehicle/Carriage proves that it was so used without the knowledge or connivance of the owner himself, his agent, and the person in charge of the Conveyance/Vehicle/Carriage.
(x) A person in conscious possession and control of smuggled goods liable for confiscation becomes liable for penal action under Section 112(b) of the Customs Act 1962.
25. We have considered the submissions made by both sides and perused the records of the case.
26. The questions which need to be answered in this case are:
(i) Were the 8 gold bars correctly confiscated under Section 111(b) and 111(d)?
(ii) Is the confiscation of Mercedes car under Section 115 and its redemption on payment of fine of Rs. 10 lakhs correct?
(iii) Was the fine of Rs. 50 lakhs correctly imposed on the appellant under Section 112(b)(i)?
27. We note that the confiscation of the cash under Section 121 and imposition of fine on Shri Ahadees have not been assailed before us.
28. The undisputed facts of the case are that the 8 bars of gold weighing 1 kg each were seized from the possession of the appellant. The bars were packed in a polythene bag with address of a jeweller from Dubai. Each of the bars had the markings of the manufacturer of the gold in Dubai and were serially numbered. This gold were examined by the officer who determined them to be gold of 995 purity and of foreign origin.
29. Learned counsel for the appellant’s first submission was that since the interception was Rajeev Chowk, Metro Station and the Panchnama was drawn subsequently in the parking space of DRI office the seizure itself is doubtful. This submission cannot be accepted for the simple reason that the appeal itself prays “to release the impugned gold to the appellant, which was recovered from his possession unconditionally.” It was also the appellant’s submission before the adjudicating authority that the gold was seized from him. Therefore, the appellant cannot now claim on the one hand, the seizure of the gold was doubtful and on the other hand claimed the seized gold on the ground that it was claimed the confiscated gold on the ground that it was seized from him.
30. It is also undisputed that the Mercedes car was seized from the appellant which the appellant prayed may be released.
31. The question which now arises is if the seized gold was correctly confiscated. Section 111 provides for confiscation of the goods which are improperly imported into country. Clause (b) and (d) of which reads as follows:
Section 111 – The following goods brought from a place outside India shall be liable to confiscation:-
(a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of section 7 for the unloading of such goods;
(b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of section 7 for the import of such goods;
(c) 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”.
32. As per Section 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.Therefore, if the gold bars in dispute are held liable for confiscation under Section 111 they will fall under the category of smuggled gold as per Section 2(39). Another important section in this regard is Section 123 which reads as follows:
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 is made from the possession of any person, –
(i) on the person from whose possession the goods were seized; and
(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;
(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.
(2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.
33. Section 123 shifts the burden of proof from the Department to the person from whom the goods have been seized in respect to gold and certain other goods which are notified. Undisputedly, the bars in question were of gold and they had foreign markings and were packed in a bag with the address of the jeweller in Dubai. The bars were examined by an expert and were held to be foreign origin gold of 995 purity. All these gave the officers reasonable belief that the gold bars were of foreign origin. Since import of gold is restricted, if foreign origin gold bars were legally imported it was incumbent upon the importer and any other person to whom they may have been sold to show documents that the gold was legally imported. This responsibility is cast upon the appellant as per Section 123. The gold was seized and after its assessment statements of the appellant were recorded in which he explained that he procured the gold from one Shri Harish of Dubai who told him that Shri Ahadees would contact him and give him the gold bars and accordingly, he was waiting at Rajeev Chowk Metro Station whether transaction took place. He had, at no point of time, produced any document to show that the gold was legally imported. According to his statement, the arrangement which he had with Shri Harish was that he would send gold through one of his persons (Shri Ahadees in this case) and after selling the gold he would pay Shri Harish. At the time of receiving the gold he would pay only some amount to the person handing over the gold. In this case, the amount which he paid in a pink polythene bag was Rs. 5,45,000/- to Shri Ahadees. These statements were corroborated by the statement of Shri Ahadees. Neither Shri Ahadees nor the appellant have at any point of time produced any document to show that the gold was legally imported by them or that it was purchased by them from somebody who had legally imported it.
34. Learned counsel for the appellant submitted that on 8.12.2015 the appellant had retracted his statement and, therefore, it cannot be relied upon. We have gone through the statements made before the learned CMM by the appellant in his application for bail which is at page 109 to 112 of the appeal book. The application only states that the statement was not made by the appellant. However, there is nothing in the statement made before the learned CMM explaining the nature of the gold seized from the appellant. In the absence of any other explanation, the statements made by the appellant and Shri Ahadees before the officer must be accepted as correct. These statements corroborate each other and with the panchnama. The cross-examination of Shri Ahadees by the learned counsel for the appellant also confirm the facts pertaining to this seizure and also that on previous two occasions smuggled gold was transacted between the appellant and Shri Ahadees. The mobile phone recovered from the appellant and which was used to communicate with Shri Ahadees was also obtained in the name of Shri Kaskyrbayev a Kazakhi national who was not even in India at the time the SIM card was issued which corroborates the clandestine nature of the transaction in the confiscated gold.
35. Thus, the seizure of the gold from the possession of the appellant as recorded in the Panchnama and admitted in the statement which is also affirmed the appeal before us by the appellant itself is undisputed. It is also undisputed that it had foreign markings and has been certified by the jewellery expert to be of foreign origin. The only question which remains is if it was legally imported or smuggled and the burden of proving that it was legally imported rests upon the appellant. There is not even an assertion in the application before the learned CMM by the appellant that he had legally imported the gold. Therefore, we find no force in the submission of the appellant that his statement under Section 108 cannot be relied upon.
35 The other submission made by the learned counsel for the appellant is that nature of the gold is that he had requested Shri Ahadees to supply legally imported gold and, therefore, it should be considered so. This submission cannot be accepted for the reason for the simple reason that there was no documents at the time of seizure to show that the gold was legally imported. No documents have been produced till date to show that the gold was legally imported. The circumstances under which the transaction took place in a car without any bills at the gate of the Metro Station further buttress the view that the gold was not legally imported. In view of the above, we find that the undisputed gold is of a foreign origin and was reasonably believed to be smuggled by the officers and was seized and the appellant had not discharged his burden to show that it was not smuggled gold. Therefore, the absolute confiscation of the disputed gold needs to be upheld.
36. As far as the Mercedes car is concerned, it is undisputed that the transaction took place in the car at Rajeev Chowk, Metro Station and when the officers tried to stop it the appellant asked his driver to speed away but failed. The car and the gold were brought to the office of DRI by the Panchnama was dropped in the parking lot. The Mercedes car was seized from the appellant himself. He is also the Director of the company M/s PRK Diamond Pvt. Ltd. It is undisputed that this company is owned by the appellant and his wife. It has been argued by the learned counsel for the appellant that the owner of the car M/s PRK Diamond Pvt. Ltd. has not been served with a notice and, therefore, the confiscation is not legal. On a specific query from the Bench, learned counsel fairly submits that M/s PRK Diamond Pvt. Ltd. is the company owned by the appellant and his wife although it is a separate legal entity. We find that there is no appeal by M/s PRK Diamond Pvt. Ltd. pleading that the car to be released to it. On the other hand, the appellant himself has prayed for the release of the car to him. Learned counsel for the appellant submits that as the Director of company and also as the person from whom the car was seized the appellant was entitled to seek release of the car. In other words, the learned counsel for the appellant agrees that the appellant represents the company M/s PRK Diamond Pvt. Ltd. Since the show cause notice was issued to the appellant proposing confiscation of the car, we find no force in the argument that notice should have been issued to M/s PRK Diamond Pvt. Ltd. It is not open to the appellant to represent M/s PRK Diamond Pvt. Ltd. to seek release of the car but claim that he does not represent M/s PRK Diamond Pvt. Ltd. when it comes to receiving show cause notice and answering it. The car was allowed redemption on payment of fine of Rs. 10 lakhs. We are of considered opinion that this is a reasonable amount of redemption fine imposed, if the appellant chooses to redeem the car.
37. The last question to be answered is regarding the penalty under Section 112(b)(i) of Rs. 50 lakhs imposed upon the appellant. We find that as per Section 112(b) any person who acquires possession of or 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 is liable to penalty. In case of prohibited goods this penalty shall not exceed the value of the goods or Rs. 5000/- whichever is greater. In this case, it is undisputed that the appellant was in possession of the confiscated gold. Even in the appeal before us, the appellant is not disputing this fact. Therefore, he is squarely covered by Section 112(b)(i). The value of the confiscated gold is Rs. 1,84,16,505.68. The penalty imposed is only Rs. 50 lakhs. In the factual matrix of this case, we find that this amount of penalty is reasonable and calls for no interference.
38. In view of the above, we uphold the impugned order and dismiss the appeal.
(Pronounced in open Court on 06.02.2023)
Notes:
1 appellant
2 Impugned order
3 the Act
4 DRI
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