Customs, Excise and Gold Tribunal - Bangalore
D.S. Srinivas And Ors. vs Commissioner Of Customs on 13 September, 2002
Equivalent citations: 2002(84)ECC87, 2002(148)ELT946(TRI-BANG)
ORDER S.S. Sekhon, Member (T)
1. One Shri D.S. Srinivas, was found in possession of 49 foreign marked gold biscuits by the Ulsoor Gate Police Station Officers of Bangalore Police on 12.3.98, as he was not able to produce any document at the time of his apprehension. On receipt of intimation from the Inspector of Police and Station House Ulsoor Gate Police Station. The Officers of Customs contacted the Police Officer on 13.3.1998 and inspected the documents. Shri Srinivas was intercepted at 1545 hours on 12.3.98 and they found 49 gold biscuits in a blue coloured jeans bags gold biscuits which were bearing the markings of 'Swiss Bank Corporation'. The Customs Officers after making their enquiries on 17.3.98, informed the Police Inspector, Ulsoor Gate Police Station that since the Gold Biscuits were bearing foreign markings and by virtue of Section 123 of Customs Act, the burden of proof lies on the person who possesses the gold and they would like to make further investigation; the Police Inspector informed them that the seized property shall be handed over to the Customs Department, after obtaining the courts's permission as Shri D.S. Srinivas was arrested for a case registered under Section 41D read with 102 of CRPC and produced before VI Addl. Metropolitan Magistrate and was released on bail Meanwhile. It was also brought on record by the Advocate for the appellants that the said gold had been claimed by M/s. Sheetal Jewellers as received from Indian Overseas Bank by an application made to the Magistrate.
2. Enquiries were thereafter conducted, a show-cause notice was issued to Shri D.S. Srinivas, Shri Lakhanraj, proprietor of M/s. Sheetal Jewellers and one Shri D. Prakash Chand, proprietor of M/s. Prakash Jewellers asking them to show cause, why the gold in question should not be confiscated and penalties imposed on them. After hearing the appellants and considering their submissions, the Commissioner held, as regards the liability of the absolute confiscation of 49 foreign marked gold biscuits under the provisions of Section 111(d) as per his findings in para 28(1) & (m) of the order impugned before us, as under:
(I) On production of this letter (mentioned in para H above) by Shri Lakhanraj of M/s. Sheetal Jewellers, it becomes very crucial to examine the initial statements, the investigation done by the Customs officials and the later statements and letter of M/s. Sheetal Jewellers and Shri D. Prakashchand. It is very clear that till 21.4.98 Shri Lakhanraj and Shri D.S. Srinivas had maintained that gold biscuits seized from the latter was bought from IOB, Bangalore. They were not even aware of the fact even on 21.4.98 that the gold seized and the gold which M/s. Sheetal Jewellers had bought from IOB had different markings. From 12.3.98 when the initial detention was done by police officials to 21.4.98 Shri Lakhanraj had maintained that gold biscuits seized were from the lot bought from IOB, Bangalore. Even on 21.4.98 when Shri Lakhanraj was shown the evidence that the documents submitted were not covering the seized gold, he had no explanation for the same and still insisted that the seized gold was part of gold imported by IOB, Bangalore which he had bought. Later on, on 7.5.98 Shri Lakhanraj in a letter on behalf of M/s. Sheetal, Jewellers citing confusion and passage of time produced fresh evidence to prove the legality of the seized gold and also enlisted help of Shri D. Prakashchand, proprietor of M/s. Prakash Jewellers and Dhanlakshmi Jewellers who deposed that gold brought under Bill of Entry 16354 dated 10.3.98 through Canara Bank was kept in M/s. Sheetal Jewellers' premises without the knowledge of Shri Lakhanraj, who was present in the shop. This fact is very hard to believe; first because keeping of 500 TT gold bars valued around Rupees Two Crores in the almirah without informing the owner of M/s. Sheetal Jewellers is highly unlikely and secondly and more crucially, accepting the fact that Shri Prakshchand had kept the gold in the almirah of M/s. Sheetal Jewellers on 12.3.98, it is not shown beyond doubt why this fact was never deposed in any of the statements prior to 7.5.98, and why the person named Shri Prakashchand was never mentioned prior to 7.5.98. If not on 12.3.98, accepting the fact that gold was kept by Shri Prakashchand in the almirah of M/s. Sheetal Jewellers, Shri Lakhanraj would have definitely noticed additional gold bars on a later date and by enquiry from his office staff known that gold bars bought from Canara Bank were kept by Shri Prakashchand and this fact could have been deposed during any recording of statement or even vide a letter, before Customs authorities after investigation made him aware on 21.4.98 of the fact that seized gold was not covered by documents submitted till date. Hence it is very clear that Shri Lakhanraj of M/s. Sheetal Jewellers was trying to dispose of smuggled gold bars through Shri D.S. Srinivas who was caught by the police official around 2.30 PM on 12.3.98. This fact of timing is also corroborated by the statement of Shri B.H. Srinivasmurthy M/s. Rajat Jewellers who has deposed that Shri D.S. Srinivas had sold him one 10 Tola gold biscuits of "Swiss Bank Corporation" marking around 1.30 PM. When Shri D.S. Srinivas was caught, Shri Lakhanraj produced the available legal document with him to prove legitimacy of the seized gold in form of Bill of Entry and purchase invoice from IOB, Bangalore. These documents were proved to be not pertaining to the seized gold by investigation on the basis of markings on the seized gold bars and gold bars sold by IOB, Bangalore. When this evidence was shown to Shri Lakhanraj, he enlisted the help of Shri D. Prakashchand, who gave a statement that he had collected 500 TT gold of marking "Swiss Bank Corporation" on 12.3.98 imported through Canara Bank and kept the same in the almirah of M/s. Sheetal Jewellers, Bangalore. Shri Lakhanraj produced those documents once again as proof of legitimate import. It is obvious that had Shri D. Prakashchand refused to lend his name for the statement, Shri Lakhanraj would have enlisted help of some other acquaintance to get corroboration in form of statements to prove licit import and blamed his memory and confusion to cover his faux pas. In terms of Section 123 of the Customs Act, the burden of proof required to establish that the seized gold biscuits are not smuggled gold biscuits had not been discharged satisfactorily by the person to whom the show cause notice had been issued. The production of a duty paid document namely Bill of Entry No. 16354 dt. 10.3.98 at a later date is an afterthought to establish that the seized gold has been properly imported and it does not fit in with the statements already given by the concerned persons and an independent corroboration by the statement of Shri B.H. Srinivasmurthy, Proprietor of M/s. Rajat Jewellers on 16.4.98. The case law of R.P. Industries v. Collector of Customs, Ahmedabad cited during the personal hearing does not help in this case as facts of this case are different from the case law cited above. This is not a case relating to discrepancy between documentary evidence seized during search and statements recorded, as the document relating to purchase of gold from M/s. Canara Bank was not seized during search but produced later as an afterthought to legitimize the import of seized gold bars in question which was not covered by the earlier documents relating to gold bought from M/s. IOB as stated in the recorded statements. Hence the 49 foreign marked gold biscuits under seizure totally weighing 5715.36 gms valued at Rs. 23,00,000 has to be treated as smuggled gold brought into India in contravention of the provisions of Section 11 of the Customs Act, 1962 thereby rendering the said gold biscuits liable to confiscation under Section 111(d) of the Customs Act, 1962. Further the blue colored jeans bag, seizure used to conceal and carry the said 49 foreign marked gold biscuits is liable to confiscation under Section 119 of the Customs Act, 1962.
"(M) Shri Lakhanraj, Shri D.S. Srinivas and Shri Prakashchand have vide their replies and during the personal hearing stressed on the time factor. They have argued and stressed the fact that Shri Prakashchand had taken delivery of "Swiss Bank Corporation" marked gold bars from Canara Bank, Bangalore at Air Cargo Complex at 1.45 OM and handed over the gold to M/s. Sheetal Jewellers at 2.00 PM. Part of this consignment was handed over to Shri D.S. Srinivas who was caught at 3.45 PM by police officials. But I am not at all considering documents submitted on 7.5.98 as evidence for the reasons very clearly explained in para 28(1) of this order. As these documents are not relied upon, the statements and occurrences on record show very clearly that seized gold bars are smuggled into India and are liable for confiscation. As attempt had been made to legitamise the gold import by producing a duty paid document (i.e. Bill of Entry No. 16354 dt. 10.3.98 filed by Canara Bank) at a later date which does not fit in, in view of the statements made and explained in findings vide para 28(1). As stated earlier, the burden of proof required under Section 123 of the Customs Act, 1962 regarding licit import of gold biscuits under consideration has not been discharged by the persons concerned to whom the show cause notices had been issued to establish that the 19 gold bars seized had been properly imported.
The blue coloured jeans bag was also ordered to be confiscated under the provisions of Section 119 and a penalty of Rs. 5 lakhs was imposed on Shri Lakhanraj for the reasons recorded hereinabove and para (J) recorded herein below:
(J) Shri Lakhanraj, Proprietor of M/s. Sheetal Jewellers, Bangalore is found concerned in smuggling of foreign marked gold biscuits, inasmuch as he received, kept and sold smuggled foreign marked gold biscuits which are prohibited for import under Section 11 of the Customs Act, 1962 read with Section 3(2) and 3(3) of the Foreign Trade (R&B) Act, 1992 and Para 5.1 of Chapter-V and 15.2 of Exim Policy 1997-2002, which are liable for confiscation under Section 11(d) (sic) [111 (d)] of the Customs Act, 1962 thereby rendering himself liable for penal action under Section 112(b) of Customs Act, 1962.
A penalty of Rs. 2 lakhs on Shri D.S. Srinivas was imposed for reasons as found in para K of the impugned order produced herein below:
(K) Shri D.S. Srinivas is found concerned in smuggling of foreign marked gold biscuits inasmuch as he received, kept and sold the said smuggled foreign marked gold biscuits, which are prohibited for import under the sections mentioned in para (J) above and thereby he has rendered himself liable for penal action under Section 112(a) of the Customs Act, 1962.
And a penalty of Rs. 3 lakhs was imposed on Shri Prakashchand for reasons as found in paras 'I & J' herein above and 'L' as reproduced hereinbelow:
L. Shri Prakashchand, proprietor of M/s. Prakash Jewellers and Dhanlakshmi Jewellers, has given false statements on Lakhanraj to legitimize the smuggled gold bars which are liable for confiscation under Section 111(d) of the Customs Act, 1962 and has thereby rendered himself liable for penal action under Section 112(b)(ii) of the Customs Act, 1962 for abetment in the offence We have considered the submissions and heard both sides and find:
(a) The Customs Officers received an intimation from the Police Inspector Ulsoor Gate Police Station vide a letter dated 12.3.98 intimating the seizure of gold biscuits seized from Shri D.S. Srinivas and only thereafter they visited the said Police Station and made enquiries about the seized gold. They have drawn a separate Mahazar and conducted independent investigations and recorded the statements. Therefore, we find that this is not a case of seizure made by police and its transfer to Customs. It is a case of fresh seizure by the Customs Authorities who after making detailed enquiries have entertained a belief to seize the gold. Therefore, the provisions of Section 123 of Customs Act are very clearly applicable in the facts of this case and the burden of proof as per this Section would shift on the person from whose possession the gold has been seized or and any other person who claims the gold thereof. The law as settled by the Supreme Court in the case of Gian Chand and others will not come to the rescue of the appellants herein. Similarly other case law also does not help them.
(b) The appellants herein, including Shri Lakhanraj has explained the gold, found and seized, to be part of a consignment received by them from Canara Bank and have produced lot of documents to substantiate that this gold belongs to and is part of the consignment received by them from Canara Bank, which was duty paid and which was brought to the shop of Shri Lakhanraj by one Shri Prakashchand. They have also relied upon the documents that the gold which Indian Overseas Bank was receiving was having other brands also. However, the statements of Shri Vasudeva Bhat, Senior Manager of Indian Overseas Bank was contrary to this stand and has been relied upon by the Commissioner. The appellants do not appear to have cross-examined Shri Vasudeva Bhat Senior Manager of Indian Overseas Bank. Therefore, his statements have to be admitted. In any case, the documents with Indian Overseas Bank and the inquiries made with the bank revealed that they had not supplied gold with Markings "Swiss Bank Corporation" as found on the seized gold. Whether Indian Overseas Bank received gold with "Swiss Bank Corporation" markings or "Credit Suisse" or any other marking is not the issue in this case. The issue is whether 49 bars with "Swiss Bank Corporation" markings, were supplied by Indian Overseas Bank as claimed by letter of Advocate, at any time prior to 12.3.98 to Shri Lakhanraj of M/s. Sheetal Jewellers and whether Shri Lakhanraj delivered a part or full consignment supplied by Indian Overseas Bank to Shri D.S. Srinivas viz. 50 gold biscuits, for selling them in Bangalore market and, if so at what time it was supplied is the matter to be determined.
(c) At the first flush, after seizure, the response by appellants Shri Lakhanraj was, to make a claim with the Magistrate through his advocates that the gold under seizure by the Police was part of his stock in trade received from Indian Overseas Bank. The subsequent details of the said gold having been part of the stock in trade as obtained from Canara Bank was made at a belated stage. Gold is not a commodity, where the brands marked on the foreign marked gold biscuits would or could get mixed up Or that Shri Lakhanraj did have more than 50 bars in his stock in trade when, he handed over the gold to Shri D.S. Srinivas for selling it in the Bangalore market. Or that Shri Lakhanraj will not remember/recall the stock handed over to Shri Srinivas correctly. We cannot appreciate the plea being canvassed, that Shri Lakhanraj would not remember/forget the facts, when he went to the Police Station. The fact of the gold being part of a consignment from Canara Bank received with the assistance of his friend Shri Prakash Chand would be fresh in his mind, if the belated version is true. A gold dealer in normal course would have immediately correlated 50 bars, out of so many other bars having received from Canara Bank on the very same date, not even a few hours before the seizure was effected by the Police. How and why he should not do so cannot be explained naively as is being made out on behalf of Shri Lakhanraj. If the gold found with Shri D.S. Srinivas was the part of the lot received from Canara Bank and brought by his friend Shri Prakash Chand from the Customs & Bank at about 1.30 PM. to 2.00 PM. Then in the normal course that would have been the first explanation/claim of Shri Lakhanraj. Thus we concur with the learned Commissioner's finding, that the claim of the seized gold to be part of the consignment received from Canara Bank was an after-thought and is not a fact. Since, Shri D.S. Srinivas and Shri Lakhanraj have failed to satisfactorily account for the possession of 49 bars of gold seized by the police, having the marking "Swiss Bank Corporation" and also have failed to prove its duty paid character. We conclude that the onus cast under Section 123 of the Customs Act 1962 is not satisfactorily discharged by any body in this case. Consequently, 49 bars with "Swiss Bank Corporation" marking have to be considered as smuggled gold, liable for confiscation. Confiscation as arrived at by the learned Commissioner is therefore, to be upheld,
(d) We find that the Commissioner has relied upon the statement of Shri B.H. Srinivasamurthy who is also in the gold trade in Bangalore and in his statement he has very clearly and categorically admitted as follows:
I have to say, on 12.3.98 at 1.30 PM he approached me with gold biscuits. There are different gold biscuits like UBS Swiss Corporation. You showed me the Panchanama dated 12.3.98 written by Police. I have purchased some gold biscuits of Swiss Bank Corporation. 10 Tolas 9990 I paid Rs. 47,150 in cash to Shri Srinivas on 12.3.98 at the time of buying gold. Till date he has not given any bill for that gold biscuits, given to me on 12.3.98. Further, I have not purchased gold biscuits from Shri D.S. Srinivas.
This material evidence would indicate that the gold biscuits with "SBC" marking were in possession of Shri D.S. Srinivas earlier to 1.30 PM on 12.3.98. The clearances of gold biscuits by M/s. Canara Bank Ltd., with "Swiss Bank Corporation" marking was, as per the evidence produced, not earlier to this time. The Statement of Shri Srinivas Murthy is very relevant to establish the possession of 50 bars of gold biscuits in all with "Swiss Bank Corporation" marking, out of which one gold biscuit was sold to Shri Srinivas Murthy at about 1.30 PM. on 12.3.98 and the remaining 49 were left with Shri D.S. Srinivas which were subsequently seized by the Police on 12.3.98. Since these 49 biscuits are found to be smuggled and the 50th biscuit in the hands of Shri Srinivas Murthy was also part of this consignment, that biscuit should also be considered to be smuggled. No details could be given by the learned DR whether any separate action was initiated against Shri Srinivas Murthy under the Customs Act, 1962 for acquiring possession of the 50th biscuit, which was sold to him for Rs. 47,150 and that also without a bill. Be it as it may, the fact that action has not been taken against Shri Srinivas Murthy cannot dilute the value of his statement as regards the consideration of Rs. 47,150 as sale price, for the receipt of 50th biscuit, at about 1.30 PM on 12.3.98 and the fact of Shri D.S. Srinivas having given the same from 50 biscuits given to him by Shri Lakhanraj before 1.30 PM on 12.3.98.
(e) When we find that 49 biscuits are liable for confiscation and we are upholding the confiscation, we find that Shri D.S. Srinivas having indulged in acquiring possession of and on disposing of smuggled gold and Shri Lakhanraj of having supplied the said smuggled gold to Shri Srinivas, we find both of them liable for penalty under Section 112(b) as arrived at by the learned Adjudicator. We find no reasons to interfere with the penalty imposed.
(f) As regards the penalty on Shri Prakash Chand, on the charge of giving a false statement and attempting to legitimise the smuggled gold bars for the reasons as arrived at by the Commissioner extracted hereinabove, to find him liable for penalty under Section 112B(ii) of the Customs Act, 1962, cannot be upheld by us. The penalty on Shri Prakash Chand is required to be set aside and is fully allowed.
3. In view of our findings, the appeals of Shri D.S. Srinivas and Shri Lakhanraj, proprietor of M/s. Sheetal Jewellers are hereby dismissed. The appeal of Shri Prakash Chand as regards penalty against him is allowed. Ordered accordingly.