Case Law Details
Manik Chand Soni Vs Commissioner of Central Tax (CESTAT Hyderabad)
CESTAT Hyderabad held that imposition of penalty on allegation of foreign origin gold set aside as department failed to examine the documents nor have given any specific findings on the defence of the assessee. Thus, order set aside and matter remanded back.
Facts- The case, in brief is that the Officers of customs intercepted certain consignment being transported by Courier Company at Domestic Air Cargo Complex, Hyderabad and, inter alia, found gold and gold jewellery belonging to different persons being transported by the Courier Company. Under reasonable belief that some of these gold and gold jewellers were of foreign origin and smuggled in nature, the said goods were seized. The Officers further examined the accompanied documents and also investigated the matter further.
On conclusion of investigation, show cause notice was issued to various persons, including the present appellant, in which proposal was made to confiscate 100 gms of gold bars of foreign origin belonging to appellant and also for imposition of penalty. On adjudication, Additional Commissioner (Original Authority) has, inter alia, confiscated absolutely 100 gms of foreign origin gold valued at Rs. 5,07,200/- belonging to the appellant and also imposed penalty of Rs. 1,01,000/-.
Conclusion- It is very important to understand the source of gold from which the Kada was made to come to the conclusion whether the seized gold was of smuggled nature or of foreign origin and therefore liable for confiscation or not. Incidentally, it is also not clear how Department claimed it as foreign origin gold bar when the seizure was that of bangle or kada. When there is possible explanation given by the appellant for legitimate purchase of 999 purity of gold from a verifiable source, the Department should have verified the correctness of gold purchased. It is also observed that in his statement dated 19.11.2020 recorded by Officers post seizure but before the issue of the show cause notice, the appellants have clearly said that they have been purchasing gold from these two suppliers. Therefore, in order to establish that the gold under seizure was of offending nature, it will be crucial to examine his claim in the facts of the case, as well as evidence on record. The Commissioner (Appeals) has not examined these documents nor has even any specific findings on this defence of the appellant. Even the Original Authority has also not gone into this aspect of the case.
Therefore held that the impugned order is liable to be set aside and the matter is required to be remanded back to the Original Authority for re-adjudication after evaluating all the evidence submitted by the appellants including the two invoices claimed to have been already submitted to Department in the course of investigation.
FULL TEXT OF THE CESTAT HYDERABAD ORDER
Shri Manik Chand Soni (hereinafter referred to as appellant) is in appeal against the Order-in-Appeal dated 29.11.2023 (impugned order) whereby the Commissioner (Appeals) has confirmed the Order against the appellant and others passed by the Original Adjudicating Authority vide Order dated 24.06.2022.
2. The case, in brief is that the Officers of customs intercepted certain consignment being transported by Courier Company at Domestic Air Cargo Complex, Hyderabad and, inter alia, found gold and gold jewellery belonging to different persons being transported by the Courier Company. Under reasonable belief that some of these gold and gold jewellers were of foreign origin and smuggled in nature, the said goods were seized. The Officers further examined the accompanied documents and also investigated the matter further. On conclusion of investigation, show cause notice was issued to various persons, including the present appellant, in which proposal was made to confiscate 100 gms of gold bars of foreign origin belonging to appellant and also for imposition of penalty. On adjudication, Additional Commissioner (Original Authority) has, inter alia, confiscated absolutely 100 gms of foreign origin gold valued at Rs. 5,07,200/- belonging to the appellant and also imposed penalty of Rs. 1,01,000/-.
3. The Learned Advocate for the appellant has mainly contested that the Department was furnished with all the necessary evidence and documents including the invoices of M/s Augment Enterprises Pvt Ltd., and M/s Preeti Jewellers from where they have purchased the gold of 999 purity and which were being sent for job work in the form of “Kada”. Therefore, they had reasonably explained that they had purchased 999 purity gold. They also submitted that the Department has not proved that there was any foreign marking on the gold seized by them or were made out of any smuggled gold. Their main line of argument is that the source of purchase of gold has not been rebutted or taken into consideration by the Adjudicating Authority or Commissioner (Appeals).
4. On going through the Order-in-Original, I find that at para 31(v), the Original Authority has merely observed that the appellant have not proved that gold under seizure was not foreign gold through documentary evidence. He has not given any detail as to how he has arrived at that conclusion and what evidence he has analysed, especially when in his submission dated 28.06.2021, the appellant have explained the source of purchase at para 6. Even, in the show cause notice at para 3.0(i), the appellant’s source of purchase has been acknowledged. Therefore, from the Order of the Original Authority, it is no where clear whether this evidence of purchase of gold, from M/s Augment Enterprises Pvt Ltd., and M/s Preeti Jewellers was verified or analysed by either Investigating Team or Adjudicating Authority.
5. In the facts of the case, it is very important to understand the source of gold from which the Kada was made to come to the conclusion whether the seized gold was of smuggled nature or of foreign origin and therefore liable for confiscation or not. Incidentally, it is also not clear how Department claimed it as foreign origin gold bar when the seizure was that of bangle or kada. When there is possible explanation given by the appellant for legitimate purchase of 999 purity of gold from a verifiable source, the Department should have verified the correctness of gold purchased. It is also observed that in his statement dated 19.11.2020 recorded by Officers post seizure but before the issue of the show cause notice, the appellants have clearly said that they have been purchasing gold from these two suppliers. Therefore, in order to establish that the gold under seizure was of offending nature, it will be crucial to examine his claim in the facts of the case, as well as evidence on record. The Commissioner (Appeals) has not examined these documents nor has even any specific findings on this defence of the appellant. Even the Original Authority has also not gone into this aspect of the case.
6. Therefore, in the facts of the case, the impugned order is liable to be set aside and the matter is required to be remanded back to the Original Authority for re-adjudication after evaluating all the evidence submitted by the appellants including the two invoices claimed to have been already submitted to Department in the course of investigation. After examining the evidence on record, or any other admissible additional evidence, he can pass proper Order. It is clarified that I have not expressed any opinion on merits of the case. The Original Authority is also directed to decide this matter within 3 months from the date of receipt of this order subject to the appellants producing the required documents, which they have claimed to have already submitted to the Department along with any additional evidence in support of their submissions. The impugned order is set aside and matter is remanded back to Original Authority.
7. Appeal allowed by way of remand.
(Dictated and Pronounced in open court)
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