Custom, Excise & Service Tax Tribunal
Sh. Zaki Ishrati vs C.C.E., Kanpur on 28 April, 2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-IV SINGLE MEMBER BENCH Date of hearing/decision: 28.4.2010 Customs Appeal No.752 of 2005 -SM Arising out of the order in appeal No.276/CE/APPL/KNP dated 3.6.05 passed by the Commissioner (Appeals), Central Excise, Kanpur. For Approval and Signature: Honble Shri M. Veeraiyan, Technical Member 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Sh. Zaki Ishrati . Appellant Vs. C.C.E., Kanpur . Respondent
Appearance:
Shri A.K. Jain, Advocate for the appellant Shri I. Baig, Authorised Departmental Representative (SDR) for the Revenue and Coram: Honble Shri M. Veeraiyan, Technical Member Oral Order No.____________________ Per M. Veeraiyan:
This is an appeal against the order of the Commissioner (Appeals) No. 276/CE/APPL/KNP dated 3.6.05. The matter is before the Tribunal for the second time having been remanded to the adjudicating authority vide Final Order No.A/960-61/98-NB dated 28.10.98.
2. Heard both sides extensively.
3.1 The relevant facts, in brief, are that the Central Excise Officers of Agra Division visited the residential premises of Shri Zaki Ishrati, Managing Director of M/s Zarafshan Chemicals (P) Ltd. which was situated within the factory premises. During the search operation conducted in presence of Shri Faiyaz Ahmed, Manager of the Company four gold biscuits marked as JONSON MATEHY 9990 LONDON 10 TOLAS weighing 466.550 gms. were recovered from a drawer of table kept in a room at ground floor portion of the residential premises. Further, 16 pcs. Comprising 8 gold biscuits (each biscuit cut into 2 pcs.), wrapped in a paper and found hidden in grass of south lawn behind the main portion, were also recovered. Of the 16 pcs. comprising 4 gold biscuits bore markings as :
PM 10 Tolas AF 999 Swiss on Essayeur on rest 4 pcs. Fondeur 4 pcs.
and other pieces comprising remaining 4 gold biscuits bore markings as (1) Lungold Silver 9999 Finde Gold Hongkong (2) 9999 (3) 100% Pure Gold Tea Bhange/Gold (4) 9999 (5) 9999 (6) 5000 (7) written in some foreign language not decipherable and (8) 100% pure gold 5000 Tea Bhange/Gold Dealer. The 16 pcs. comprising eight gold biscuits were weighed and found to be 1214.950 gms.
3.2 Shri Narendra Parswani, an Assayer was called who tested the consignment of gold and he valued the same at 7,71,273/-. Gold weighing 1681.500 gms. totally valued at Rs.7,71,273/- was seized.
3.3 The statements of Shri Faiyaz Ahmed, Manager were taken on 10.8.94 and 11.8.94 and he was also arrested. He, in his statements admitted to the smuggled nature of the gold. The statements of Shri Faiyaz Ahmed stand retracted, according to the learned Advocate, by way of affidavit addressed to the Collector, Central Excise, Kanpur. A statement of Shri Zaki Ishrati was taken on 1.12.94 in which he disowned knowledge about 16 pieces of gold recovered from the Garden.
3.4 On the basis of show cause notice, in pursuance of the direction for de novo adjudication, the original authority vide impugned order dated 16.12.04 confiscated the gold absolutely and he also imposed a penalty of Rs.50,000/- on Shri Faiyaz Ahmed and a penalty of Rs.50,000/- on Shri Sayed Zaki Ishrati. On appeal by Shri Zaki Ishrati, Managing Director of M/s Zarafahan Chemical (P) Ltd., Commissioner (Appeals) by impugned order upheld the order of the original authority.
4.1 Learned Advocate for the appellant challenges the order of the Commissioner (Appeals) on various grounds. First and foremost, he challenges the finding that the gold is of foreign origin. In this regard, he submits that the authorities below have failed to appreciate the evidence produced by the appellant, namely , a letter dated 19.1.2004 from Swarnkar Sangh, a letter dated 22.1.2004 from Shree Sarafe Committee and a letter dated 10.1.2004 given by Agra Jewellers Association in support of their contention that the equipment available in India, except those in mint are not capable of testing purity of .999; gold described in Tolas cannot be considered as foreign origin. He also relies on the reply of Shri Narendra Parswani , an assayer dated 30.12.03 with reference to the letter of the Advocate of the appellant dated 26.12.03 wherein Shri Parswani clarified that he has mentioned the gold as foreign origin merely on the basis of marking and that gold bearing foreign marking need not necessarily be of foreign origin. According to him, he gave opinion only on the value of the seized gold.
4.2 He relies on the decision of the Honble Kerala High Court in the case of Pakeer Muhammed Firoskhan 2010 (252) ELT 363 and the decision of the Tribunal in the case of Ramcharan Soni vs. C.C. (Prev.), Patna - 2001 (136) ELT 811 to submit that touchstone method is not a foolproof method for ascertaining the purity of the gold and therefore, the reliance placed by the authorities below on the certificate of the assayer to come to a conclusion that the gold was of foreign origin is erroneous.
4.3 He also relies on the decision of the Honble Supreme Court in the case of BPL Pharmaceuticals Ltd. vs. C.C.E., Vadodara 1995 (77) ELT 485 to submit that existence of foreign marks does not necessarily imply that the goods are of foreign origin.
4.4. He also submits that during the relevant period, the gold was not in any restricted list of imports. He also submits that the appellant was running the factory manufacturing liquid gold.
4.5 The Department has relied upon the statement of Shri Zaki Ishrati dated 1.12.94 and when the statement did not be contain signature of the officer who has reportedly taken the statement and therefore, not a statement validly taken under Section 108 of the Customs Act.
4.6 He also submits that though the show cause notice invoked Section 123 of the Customs Act with reference to the seized gold, the order of the original authority does not refer to Section 123 at all.
4.7 learned Advocate submits that the retraction was sent to the office of the Collector. They have evidence for receipt of the same in the office of the Collector. The learned Advocate also relies upon several judgements of the Tribunal and the Bombay High Court to claim that the retracted statements should not be relied upon.
5.1 Learned SDR strongly supports the order of the Commissioner (Appeals) and draws my attention to the fact that the 4 gold biscuits were seized from a drawer of the table and the rest were seized from the lawn where the same were kept in a concealed manner. These circumstances should be taken into account. He also submits that the gold seized were having foreign markings and inscriptions in foreign language and the gold has been seized under a reasonable belief that they were smuggled in nature and that in terms of the Section 123 of the Customs Act, the burden of proof that they were not smuggled is on the person from whom the gold was seized.
5.2 The opinion of Shri Narendra Parswani was taken on the spot. The value of any commodity naturally depends upon the purity/condition of the goods. As a Government approved valuer, it cannot be said that he did not take into account the purity of gold while giving his opinion on vaue. At any rate, it is not merely the assayers report which was relied upon to conclude that the gold biscuits were of foreign origin.
5.3 Regarding the non-availability of the signature of the officer in the statement given by Shri Zaki Ishrati, he submits that the same does not in any way diminish the validity of the statement. The statement was in his own hand-writing and the same has been given before the officer and at any rate, the same were handed over to the officer and therefore, the voluntary nature of the statement cannot be doubted.
5.4 Regarding the retraction of the statement of Shri Faiyaz Ahmed, he submits that the same is an after-thought and was not sent to the investing officer before whom the statement was given and the same cannot be considered as retraction. He also submits that so-called retraction addressed to the Collector was not available in the office of Collector as held by the original authority.
6.1 I have carefully considered the submissions from both sides and perused the records. I notice that gold biscuits were seized not only from the drawer of the table of the Managing Director, Shri Zaki Ishrati but also from the lawn adjacent to the resident of the appellant. It is surprising to see the valuables like gold biscuits were found in the lawn. Perhaps, the lawn was also considered to be safety locker. Shri Zaki Ishrati, has denied knowledge or concern about 16 pieces of gold seized from the garden as such from his statement dated 1.12.94. However, the learned Advocate for the appellant submits that the appellant has claimed ownership of the said gold found in the lawn before the adjudicating authority and the Commissioner (Appeals). I also notice that the 4 gold biscuits were containing marking as JONSON MATEHY 9990 LONDON 10 TOLAS. The other biscuits bore similar writings and marks with reference to the weight, purity and country of origin either in English or other foreign lanugage. Under these circumstances, as the gold has been seized under reasonable belief that they were smuggled in nature, the burden was squarely on the appellant to prove that they were licitly procured by them. No such reliable evidence has been let in.
6.2 I am unable to rely on the views expressed in the letters given in 2004 by Swarnkar Sangh, Shree Sarafa Committee and Agra Jewellers Association. The submissions that the gold carrying foreign mark need not be necessarily of foreign origin may be theoretically possible if some forgery was done. However, in the present case, the authorities below came to the conclusion that the seized gold were of foreign origin on the ground that the appellant has failed to discharge the burden of proof as contemplated under Section 123 of the Customs Act.
6.3 Apart from marking in the gold as recorded by the authorities below, the statement of Shri Faiyaz Ahmed was clearly incriminating in nature. Learned Advocate submits that Shri Faiyaz Ahmed sent retraction in the form of telegram and also in the form of affidavit filed in person before the Magistrate and the same were sent to the Collector of Central excise, Kanpur. It was also submitted that the retraction was sent within two days and the same cannot be ignored. These submissions have to be viewed in the overall context including the circumstances in which the gold was seized. His subsequent retraction claimed to have been addressed to the Collector of Central Excise cannot be , in my considered opinion, treated as retraction of the statement given by him. The retraction of any statement should be addressed to the officer to whom the statement was given. The so called retractions addressed to the Collector of Central Excise, Kanpur are at the most could be considered as a representation or complaint. Under these circumstances, the controversy whether the said communications were received in the office of the Collector of Central Excise or not need not be gone into. It is also apparent that Shri Faiyaz Ahmed was arrested and produced before the Magistrate. I have not been shown that any complaint was made by him to the Magistrate at the time of remand before the Magistrate about the involuntary nature of his statement. Under these circumstances, the reliance placed on the statement of Shri Faiyaz Ahmed is justified. The judgement relied by the learned Advocate in this regard are not relevant to the facts of this case.
6.4 As regards the statement of Shri Zaki Ishrati, it is not disputed by the Department that the officer recording the statement has not appended his signature in the statement. Under these circumstances, the claim of the learned Advocate for the appellant placing reliance on several judgements that the statement cannot be treated as statement under Section 108 is to be accepted. However, the fact remains that the statement which can be considered as letter or a communication from Shri Zaki Ishrati was made in his own hand and apparently delivered to the investing officer. If it is taken as a report to the investing officer, the validity of the report and its evidentiary value cannot be underestimated. Therefore,the reliance placed on the statement/report dated 1.12.94 of Shri Zaki Ishrati is also justified.
7. Learned Advocate also submitted that they produced evidence regarding purchase of gold while giving statement on 1.12.94. A receipt No.170 dated 6.7.94 from M/s Khetri Ram Deshraj for purchase of five numbers of biscuits was produced and it was claimed that one of the biscuit was already used in the manufacture of liquid gold and the balance were seized. In the said statement, Shri Zaki Ishrati has clearly stated that as regards the recovery of gold pieces with foreign markings from back side of the building under the grass, I have to state that I have no concern or knowledge of the recovered gold in any way as to how where it reached there. As already mentioned by me , these documents have been produced on 1.12.94 only and did not cover the entire gold seized. Further, the Managing Director feigned ignorance about the gold recovered from the lawn. In fact, he has stated that he was not concerned with the same. However, subsequently, it has been claimed by the Managing Director that the entire gold seized including those recovered from the lawn belonged to him. This contradictory stand also looks strange. It is thus a clear case of failure to discharge the burden that the gold biscuits were licitly procured by him.
8. In view of the above, the order of the Commissioner (Appeals) in upholding the confiscation of the gold treating them as foreign mark gold and holding that the appellant has failed to prove the licit nature does not call for any interference.
9. The appeal is, therefore, rejected.
(M. Veeraiyan) Technical Member scd/ 8