Case Law Details
R. K. Swami Singh Vs Commissioner of Customs (Preventive) (CESTAT Kolkata)
In the case of R. K. Swami Singh vs Commissioner of Customs (Preventive), the CESTAT Kolkata recently deliberated on penalties imposed under Section 112(b)(ii) of the Customs Act, 1962. The appellant contested the confiscation and penalties related to 12 gold biscuits seized in 2014. The appellant, R. K. Swami Singh, was intercepted by Imphal Customs officers while transporting 12 gold biscuits weighing approximately 2002.26 grams. The appellant failed to produce legal importation documents, leading to seizure under Section 110(1) of the Customs Act on grounds of suspected smuggling. Subsequent adjudication resulted in the confiscation of the gold valued at Rs. 49,74,605 and a penalty of Rs. 10,00,000 under Section 112(b)(ii).
During appeal, Singh refuted the charges, claiming inheritance of the gold from his father and challenging the foreign origin and smuggling allegations. He argued the lack of evidence supporting the reasonable belief that the gold was smuggled or of foreign origin. Singh further contested the validity of his initial statements, alleging they were coerced and retracted during the hearing.
The CESTAT Kolkata scrutinized the evidence, highlighting inconsistencies and the absence of corroborative proof establishing the gold’s foreign origin or illegal importation. Citing precedents and legal principles, the tribunal assessed the sufficiency of the ‘reasonable belief’ required under Section 123 of the Customs Act. It emphasized the necessity for concrete evidence beyond assumptions to justify confiscation and penalties.
Based on the detailed review of facts and legal interpretations, CESTAT Kolkata ruled in favor of R. K. Swami Singh, quashing the penalties imposed under Section 112(b)(ii) of the Customs Act. The tribunal underscored the importance of substantiated ‘reasonable belief’ in smuggling cases and the essentiality of corroborative evidence to support such claims.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The present appeal has been filed against the impugned Order-in-Appeal No. 37/CUS(A)/GHY/15 dated 30.11.2015 wherein the Ld. Commissioner (Appeals) has upheld the Order-in-Original dated 31.07.2015. In the Order-in-Original, the ld. adjudicating authority had ordered:-
(i) Absolute confiscation of the twelve gold biscuits of foreign origin collectively valued Rs. 49,74,605/- (Rupees forty nine lakh seventy four thousand six hundred five) only seized vide case No. 10/CL/IMP/CUS/DPF/DCI/14-15 dated 20.06.14 as detailed in the inventory under Section 111(b) & (d) of the Customs Act, 1962;
(ii) Imposition of a penalty of Rs. 10,00,000/-(Rupees ten lakh) only on Shri R. K. Swami Singh under Section 112(b)(ii) of the Customs Act 1962.
2. The facts of the case are that on 20.06.2014 at about 08:30 hrs, when the appellant was travelling in a van, he was intercepted by the Officers of Imphal Customs. On examination and personal search of his body, the Officers found in his possession 12 pieces of gold biscuits, totally weighing 2002.26 grams approximately. As the appellant was not having any document for the licit importation of the same, the gold was seized under Section 110(1) of the Customs Act, 1962 under the ‘reasonable belief’ that the said gold was smuggled into India without payment of Customs Duty.
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 ordered confiscation of the gold biscuits valued at Rs.49,74,605/-. He also imposed a penalty of Rs.10,00,000/- on the appellant under Section 112(b)(ii) of the Customs Act.
6. On appeal, the Ld. Commissioner (Appeals) has upheld the confiscation and penalty imposed in the Order-in-Original vide the impugned order. Aggrieved against the impugned order, the appellant is before us.
7. In the grounds of appeal and during the course of hearing, the appellant made the following submissions: –
(a) The gold was purchased by his father and he has inherited the gold from his father.
(b) The said gold was not of foreign origin and did not bear any foreign marking on it.
(c) The Department has not adduced any evidence to prove that the gold in question was of foreign origin or smuggled in nature.
(d) He never stated that the gold was given to him by one Shri Ramaswami of Moreh Bazar. The statement given by him on 20.06.2014 and 21.06.2014 were not voluntary and he denied the contents of the same.
(e) The purity of the gold is 995.2 mille, 995.1 mille and 995.0 mille which is below the International Standard of Purity.
(f) Seizure of the gold was illegal because there was no ‘reason to believe’ that the gold in question was smuggled in nature.
(g) As there was no evidence available on record to have the belief that the gold was of foreign origin and accordingly, the provisions of Section 123 of the Customs Act, 1962 is not applicable in this case.
(h) The gold has been confiscated only on the basis of the Statements dated 20.06.2014 and 21.06.2014 of the appellant which the appellant has retracted and the retracted statements have no evidentiary value.
(i) In the absence of any corroborative evidence to substantiate the allegation that the gold is of smuggled in nature, the statements alone cannot be relied upon to confiscate the said gold.
7.1. In support of his contention that the gold seized from the appellant is not liable for confiscation, he relied upon the following decisions: –
i. R. K. Angangbi Singh &ors. v. Commr. of Customs (Preventive), Shillong [Final Order Nos. 76536-76539 of 2023 dated 01.09.2023 in Customs Appeal No. 76086 of 2016 &ors.– CESTAT, Kolkata]
ii. Commissioner of Customs, Chennai-III v. Mohammed Ali Jinnah [Final Order No. 40289 of 2023 dated 20.04.2023 in Customs Appeal No. 40099 of 2020 – CESTAT, Chennai]
iii. Daleep Kumar Verma &ors. v. Commissioner 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. hantilal 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 Representative appearing for the Revenue submits that the gold was recovered from the physical possession of the appellant concealed in the waistline of the jeans trousers worn by him; at the time of seizure of the gold, the appellant was not having any valid document in his possession for legal importation of the gold; no licit document could be produced by the appellant in support of legal acquisition, possession and carrying of the gold biscuits on 20.06.2014.
8.1. The appellant has given his Statement 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 Ramaswami of Moreh Bazar on 20.06.2014 at 07:00 hrs for transportation of the same from Moreh to Guwahati for a financial consideration of Rs.12,000/-; after getting the gold biscuits, he concealed the gold in the waistline portion of his trouser pants.
8.2. The Ld. Departmental Representative further submits that subsequent to his arrest, he reiterated the earlier Statement dated 20.06.2014; the appellant was arrested and produced before the Chief Judicial Magistrate, Imphal on 21.06.2014 and remained in judicial custody till 05.07.2014. The appellant has not retracted the statement at the first available opportunity. Hence, it is his submission that the statement given by the appellant can be relied upon to implicate the appellant and confiscate the gold in question.
8.3. The Ld. Authorized Representative further contended that samples of the gold were drawn on 20.06.2014 which were tested at the Government of India Mint, Alipore, Kolkata. The Assay Certificate has confirmed the purity of the gold as 995.2 mille, 995.1 mille and 995.0 mille which is much closer to the International Standards of pure gold and thus, the Department has a reasonable belief that the gold is of foreign origin and smuggled into India without payment of Customs duty; the appellant could not submit any valid document for legal procurement of the gold.
8.4. Accordingly, the Ld. Authorized Representative for the Revenue supports the impugned order confiscating the gold and imposing penalty on the appellant.
9. Heard both sides and perused the appeal
10. We observe that the appellant was carrying the gold at the time of interception by the Officers on 20.06.2014. The appellant was not having any document in his possession at the 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 Customs Act, 1962 are applicable in this case?
(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?
(iv) Whether penalties imposed on the Appellants under section 112(b)(ii) of the Customs Act, 1962 are sustainable in this case?
(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 Customs Act, 1962 are applicable in this case?
12.1. We observe that the gold was seized from the appellant while he was travelling in a van in Imphal. The gold seized was not having any foreign marking on it. Upon testing the samples, the gold was found to be having purity of 995.2 mille, 995.1 mille and 995.0 mille. Thus, we observe that the gold is not Standard foreign origin gold, which is normally having a purity of 999.9mille.
12.2. We observe that the gold pieces/bars were seized from the appellant on the ‘reasonable belief’ that they were smuggled into India. The Hon’ble Supreme Court in the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive), Jamnagar reported in (2015) 11 SCC 628, explained the meaning of the phrase ‘reason to believe’ as under:-
“reason to believe” by opining it to be not the subjective satisfaction of the officer concerned, for “such power given to the officer concerned is not an arbitrary power and has to be exercised in accordance with their strains imposed by law” and that such belief must be that of an honest and reasonable person based upon reasonable grounds. Further, if the authority would be acting without jurisdiction or there is no existence of any material or conditions leading to the belief, it would be open for the Court to examine the same, though sufficiency of the reasons for the belief cannot be investigated.
12.3. In view of the above, we observe that to form a ‘reasonable belief’ that the goods are smuggled into India, there must be irrefutable evidence to prove that allegation. In the present case there is no such evidence available to prove that the goods were of foreign origin and smuggled into India. In this case we find that the gold was seized at the outskirts of Imphal which is far away 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. (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. Section 123 says :
“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, diamonds, manufactures of gold or diamonds, watches and any other class of goods which the Central Government may by notification in the Official Gazette specify.”
56. In Babulal Amthalal Mehta v. Collector of Customs, AIR 1957 S.C. 877, while considering the provisions of Section 178A of the Sea Customs Act, 1878, it was observed;
“Though the word `smuggling’ is not defined in the Act, it must be understood as having the ordinary dictionary meaning, namely, carrying of goods clandestinely into a country.”
Where Section 123 cannot be invoked it would be for the customs authorities to prove that the goods were imported after the restrictions against import were imposed. (Amba Lal v. Union of India, AIR 1961 S.C. 264 = 1983 E.L.T. 1321). In Pukhraj v. D.R. Kohli, AIR 1962 S.C. 1559 = 1983 E.L.T. 1360, the Supreme Court said that when the court was dealing with the question as to whether the belief in the mind of the officer who effected a seizure, was reasonable or not, the court was not sitting in appeal over the decision of the said officer. All that it could consider was whether there was any ground which prima facie justified 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 entire inquiry and the order passed therein would be vitiated. In Collector of Customs v. Sampathu Chetty (supra) the Supreme Court under the old Sea Customs Act of 1878 said :
“The entire evidence in the possession of the seizing officer would be and has to be before the officer adjudicating the confiscation under Section 182 of the Sea Customs Act. No doubt, on the language of Section 178A the presumption of the goods being smuggled arises only when the seizure is made by an officer entertaining a reasonable belief that the goods are smuggled, and in that sense the reasonable belief of the seizing officer is a pre-requisite for the statutory onus to arise. It is also true that at the stage of adjudication the reasonableness of the belief of the officer effecting the seizure that the goods are smuggled would be the subject-matter of investigation by the adjudicating officer. Nevertheless it is manifest that at the stage of the adjudication (when only the rule of evidence laid down by the section comes into operation) the very facts which led the seizing officer to effect the seizure, as distinguished from their significance as affording a reasonable belief for the seizing officer to hold that the goods are smuggled, are before the adjudicating officer. These facts which justified the seizing officer to reasonably believe that the goods were smuggled would certainly import a rational connection between the facts on which the presumption is raised and the fact to be proved, so that whatever other constitutional infirmity might attach to the impugned provision, the lack of rational connection is not one of them.”
It would be necessary, therefore, before any person could be called upon to prove that the goods seized from him were not smuggled goods, that the customs officer making the seizure must proceed upon the foundation of a reasonable belief inspired in him by some definite material by way of some definite information or otherwise so that he could be said to have seized the goods in a reasonable belief that they were smuggled goods. (Bapalal v. Collector of Central Excise, AIR 1965 Gujarat 135). The question is whether the record before me shows that there was a reasonable belief in the mind of the seizing officer that the goods were smuggled goods. It does not appear to me that he had entertained any reasonable belief at the time of seizure. Neither the board 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 the exercise of the powers given to the customs officers arbitrarily and without any foundation at all, to the harassment of the general public. The customs officer must have some definite materials by way of some definite information to form the foundation of his reasonable belief (M.G. Abrol supra).
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 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 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 goods. 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.”
12.5. From the decisions cited above, we observe that the ‘reasonable belief’ on which the 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 without payment of customs duty. 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 the ‘reasonable belief’ that the gold bars/pieces were smuggled into India without any valid documents.
12.6. Regarding 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. 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 Ramaswami of Moreh Bazar on 20.06.2014 at 07:00 hrs for transportation of the same from Moreh to Guwahati for a financial consideration of Rs.12,000/-, but, later, at the time of personal hearing on 31.07.2015, the appellant retracted his statements and contended that the statements were not voluntary. The Appellants stated that the retracted statements do not have evidentiary value. We observe that the findings in the impugned order are based mainly on the basis of the statements of the appellant, without any independent, corroborative evidence. We observe that there was no evidence available on record to have the reasonable belief that the gold was of foreign origin and accordingly, the provisions of Section 123 of the Customs Act, 1962 is not applicable in this case. 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.
12.8. The Tribunal in the cases of Principal Commissioner of Customs (Prev.), Delhi Vs. Ahmed Mujjaba Khaleefa [2019 (366) ELT 337 (T)] dismissed the appeal of Revenue holding that the jewellery does not bear any foreign marking on it and there is no other evidence other than the statement of passenger produced by Revenue to substantiate the claim that jewellery were smuggled into India. The relevant part of the said decision is reproduced below: –
“7. Ld. Advocate appearing for the respondent justified the impugned order. He drew my attention to the findings of the Commissioner (Appeals) in paras 11 and 12 in which he has observed that the goods seized from the passenger did not bear any foreign marking and that the jewellery was only of 18 carat purity. He also drew my attention to para 16 in which the Commissioner (Appeals) has recorded that other than the statement of the appellant, there is no other evidence to establish that the seized goods were smuggled and that the appellant has brought the goods from Dubai. Accordingly, he submitted that the goods are not liable for confiscation. He also reiterated the stand of the respondent that the said goods were handed over to the passenger at the Delhi Railway Station for handing over to a friend at Mumbai. The purchase bills for the jewellery within India was also 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 Act, 1962. The Commissioner (Appeals) in the impugned order has held the goods to be not liable for confiscation for the following reason.
“16. Similarly in the instant case there is nothing on record except the statement of the appellant to show that the seized goods were smuggled. The said statement is not corroborated by any other evidence to establish that the appellant has brought the seized goods from Dubai. I am of the view that the ratio of the above said case law is available to the appellant.
17. The only circumstantial evidences existing in the instant case are that the pax arrived at IGI Airport, New Delhi on 1-2-2013 and took a taxi to the railway station on the same day itself in the close proximity. The evidences in the form of railway ticket, flight ticket, etc. certainly indicate that the said pax did travel from Dubai to New Delhi on the said flight on 1-2-2013 and to Railway Station on the same date. However, the said fact per se does not categorically indicate that the pax had actually carried the seized goods from Dubai as allegedly averred by the pax. There is no other evidence to prove the averments made by the pax in any other form. On the contrary, I find that the pax had contested the same by submitting that the said gold jewellery was handed over to him at outside IGI Airport, New Delhi to be carried to Mumbai. The appellant has also submitted the copies of the invoices/bills against which the above jewellery was purchased from within India to substantiate his case. Hence, a plausible contention has been made out by the Appellant. However, the issue is whether the seized gold jewellery could be proved that they were actually brought by the pax as disclosed, which I am of the considered view that the same is not proved”.
10. It is seen that there is no foreign marking on the jewellery. Revenue has not placed any proof to substantiate that the jewellery was smuggled into India other than the statement of the passenger. In the facts and circumstances of the case, I find no reason to interfere with the findings of the impugned order which is sustained for the reason mentioned therein. In the result, Revenue appeal is rejected.”
12.10. In view of the above discussion and relying upon the decision cited above, we hold that the gold bars/pieces cannot be confiscated based on the retracted statements without any other independent corroborative 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 established as smuggled in nature and hence they are not prohibited goods. The gold bars/pieces were seized at Imphal, away from the Indo-Myanmar international border. The appellant was carrying the gold which he claimed that they were domestically purchased by his father and he inherited the same. We observe that the investigation has not brought in any evidence to counter this claim. Hence, we find merit in the argument of the appellant that penalty is not imposable on him under Sction 112(b)(ii) of Customs Act, 1962. Accordingly, the answer to question no. (iv) in paragraph 12 above, is in the negative.
13. In view of the above, we summarize the answers to the questions raised in paragraph 12 of this Order as under:
(i) The evidences available on record are not sufficient to have the ‘reasonable belief’ that the gold bars/pieces were smuggled into India without payment of customs duty. Accordingly, the smuggled nature of the gold bars is not established.
(ii) Under the facts and circumstances of this case, the provisions of Section 123 of Customs Act, 1962 are not applicable in this case, since it is not established that the gold is of foreign origin.
(iii) The retracted statements of the appellant cannot be relied upon to confiscate the gold in question in this case.
(iv) Penalties imposed on the appellant under Section 112(b)(ii) of the Customs Act, 1962 is not sustainable.
14. In view of the above discussion, we set aside the impugned order and allow the appeal filed by the appellant.
(Order pronounced in the open court on 29.04.2024)
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