Customs, Excise and Gold Tribunal - Mumbai
Nanalal K. Jain And Ors. vs Cc (Prev.) on 13 August, 1999
Equivalent citations: 2000(88)ECR36(TRI.-MUMBAI), 2000(124)ELT401(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. These appeals are by Nanalal K. Jain (appeal 124/95), Sagarmal Jain (appeal C/125/95) and Shah K.P. & Co. (appeal C/126/95) against the common order of the Collector of Customs (Preventive) Bombay. In that order, the Collector has ordered confiscation (without any option of redemption) of 20 bars of gold weighing 2333 grams and 116 bars (chorsas) of silver weighing 128.602 kgs. under Clause (d) of Section 111 of the Act and of currency of Rs. 56,450/- under Section 121. He has also imposed penalties of Rs. 2.50 lacs each on Sagarmal Jain, Nanalal Jain, the two partners of Shah K.P. & Co. The gold, silver and currency were seized from the premises of the partnership firm Shah K.P. & Co.
2. We shall deal with each of these issues separately. The gold and silver were seized at the premises of the partnership firm during a search by the officers of Customs. Show cause notices were issued proposing confiscation of gold and silver on the ground that they were smuggled and that the burden of proving that they were not smuggled has not been discharged and the currency was the sales proceeds of the smuggled gold.
3. We shall first deal with the gold. The notice relied upon the statements of Sagarmal Jain and Nanalal Jain, the two partners. Sagarmal Jain was present at the time of search and in his four statements, he has said that he purchased the gold without duty paying documents from brokers who deal with the gold in the market; that the payment was in cash and there were no entries made in the records. The gold was given by a broker Madan, whose address he does not know. He could not produce any proof of purchase. Nanalal disowned any knowledge of the gold. Subsequent to the seizure, the partnership firm by its letter dated 2.9.1993 raised a claim that the gold in question was legally brought into India by a person name Aboobaker Abdulla, who cleared it after payment of Customs duty and that it was given to the firm by Aboobakar for sale. This is the stand that is now being adopted by the advocate for the appellants to say that it has been proved that the gold was not smuggled and that it has been legally imported. It is also contended by him that in similar circumstances, the same Collector who has passed the order impugned in these appeals, has ordered release of gold. He has also ordered release of foreign mark gold found at the premises of Sagarmal Jain without there being any evidence of its legal importation.
4. The gold and other goods were seized on 18.3.1993. Sagarmal Jain could not produce evidence at that time of lawful importation of the goods. He did not name Aboobakar as the purchaser. Nor was he able to show any entries in his account books relating payment for the gold. Nanalal Jain, the other partner also professed ignorance of this gold. The initial conduct of these two appellants therefore does not lead one to conclude that the gold was acquired by the partnership firm from Aboobakar. This person enters the scene only on 2.9.1993 more than two weeks after the seizure. The failure of Sagarmal Jain to produce evidence of lawful importation of the gold, or of its being given for sale by Aboobakar initially is significant. He is not able to explain why he did not do so. Let us assume for a moment that the first statement of Sagarmal Jain was a result of pressure from the Customs authorities. Even so, he had enough time to correct himself once he recovered from the pressure or other circumstances under which he gave the statement. He has not done so. There is nothing on record to show that the statement was given under pressure. Equally significant is the statement of Nanalal Jain that he was unaware of these activities. One would expect that in a partnership firm both partners are aware of what goes on. If we accept that Nanalal was only a sleeping partner, the question that comes up is the failure to show the possession and acquisition of gold in the records of the firm. It is difficult to escape the conclusion that the story with regard to obtaining of gold by Aboobakar was contrived and has been put up as a belated defence. In any event, the burden of proving that the gold was not smuggled is upon the person from whose possession it was seized, since gold was included in Section 123 of the Act as one of the articles in respect of which there is a presumption as to the smuggle nature of it. There is no ground available as to why this presumption should not be applied. Since that burden has not been discharged, it has to be held that the gold was smuggled. However, we note the alternative prayer that its import is not prohibited and that therefore an "option had to be given under Section 125 for its redemption. The departmental representative is not able to tell us why such an option should not be given.
5. We next turn to silver. Here again it is the statements of persons concerned which had weighed the Collector in ordering the confiscation. Sagarmal Jain had said that 116 silver chorsas were manufactured out of silver bricks smuggled into India. Now silver is not notified under Section 123 of the Act. The question now would be whether Sagarmal Jain's statement and the attendants of his statements. The silver bullion is notified under Section 123 of the Act. The goods are described as 'chorsas' which were explained to us as small slabs of silver obtained from silver slabs which is less than the weight of ingots. The Collector has applied the provisions of Section 123 of the Act to the silver.
6. In his statement Sagarmal Jain had said that the silver was "given to me by a dalal in market who did not give any duty paying document or any bill. He said that this 116 silver chorsas weighing 128.602 kgs. were given to me by a dalal who did not give any document or bill..."? I admit the gold and again say that silver chorsas weighing 128.602 kgs. were manufactured from silver bricks smuggled into India without any duty payment document." This is the sum total of his admission with regard to silver.
7. We next turn to the Indian currency. Here again the only evidence is the admission of Sagarmal Jain that Indian currency is the sale proceeds of smuggled gold. It is now settled law that for currency to be seized under Section 121 of the Act, it has to be established that it is in fact the sale proceeds of smuggled gold and the decision requires that for this there must be evidence to conclude that they were smuggled goods which was sold and the fact of sale must be established. None of these ingredients is present in his statement. On the assumption that Sagarmal's statement is admissible in evidence, we do not know how much the gold which were sold, when it was sold and by whom to whom. A single sentence stating that the amount was sale proceeds is entirely insufficient. The confiscation ordered under Section 121 of the Act of the currency therefore cannot be upheld.
8. Penalties under Section 112(b)(i) of the Act have been imposed on Sagarmal Jain and Nanalal Jain both of them are partners of the firm. The Collector does not indicate any reason for imposition of penalty on Nanalal Jain. Nanalal Jain was not present when the officers came to the shop. What was seized from his house was only the four cut pieces of gold and currency amounting to Rs. 56,450/-, both of which have been ordered to be released by the Collector. Nanalal Jain has disclaimed any knowledge of the gold or silver seized from the shop, attributing the dealings in them to Sagarmal Jain, the other partner. There is no specific material in the Collector's order for imposition of penalty on Nanalal Jain. He appears to have imposed a penalty on him only for the reason that he was a partner in the firm. This fact alone is insufficient to impose penalty and does not satisfy the ingredient of Clause (b) of Section 112 of the Act. There is no material to show that Nanalal Jain purchased the gold or silver or dealt with them in any other manner specified in that clause. We therefore hold that the penalty was not imposable on Nanalal Jain and set aside that penalty.
9. We are not able to accept the submission that no penalty is imposable on Sagarmal Jain. We have already held gold and silver liable to confiscation and it is not denied that Sagarmal Jain had held that gold and silver. On the facts of the case, we however reduce the penalty imposed on him to Rs. 1.00 lac.
10. Appeal C/126/95 of Shah K.P. & Co., the partnership firm is not clear to us why its appeal was required to be filed when each of the two partners have separately filed appeals. In our view, that appeal is not maintainable.
11. The contention is that the silver is not bullion having been melt it down to smaller pieces or "chorsas" and therefore the burden imposed by Section 123 of the Act of proving that it was not liable to confiscation does not fall on the person from whose possession it was seized. We are not able to accept this submission. He relies upon the decision of the Bombay High Court in S.C. Roy and Ors. v. Kantilal Nanchand & Co. and Ors. 1985 (22) ELT 784 : 1989 (21) ECR 63 (Bom). We do not see how this decision is of any help. It says that silver statues in "thalis" and "kadas" are not bullion. In coming to this conclusion the Court has taken the effect the note of the evidence of three witnesses who trade in silver that these goods cannot be considered to be bullion and also referred to the production of such articles before the Court. The decision therefore is limited to the articles in question and would not help in deciding whether the "chorsas" are bullion or runs the fact that there is a reference to "chorsas" having been obtained by melting the silver in the Collector's order is again of no assistance. It is possible that the "chorsas" were imported as such. The "Chorsas" were stated to be block of silver smaller than ingots or large bars. This is undoubtedly rather incomplete description. We are however not able to say on the basis of this submission that the "chorsas" are not bullion and hence excluded from the scope of Section 123 of the Act. It would therefore follow that it was up to the person from whose possession they were seized to prove that they were not smuggled. This has not been done. The confiscation of the silver has therefore to be confirmed. In this case, too, however, the import of silver is not prohibited and it is permitted to be imported by passengers and other Clauses (sic) of persons. It was therefore open for the Collector to extend the option of redemption on payment of fine. Taking into account the margin of profit at the relevant time, we permit the redemption of the gold and silver on payment of fine of Rs. 3.50 lacs.
12. Accordingly appeal C/126/95 is dismissed. Appeal C/124/95 allowed. Appeal C/125/95 allowed in part.