Custom, Excise & Service Tax Tribunal
Shri Neeraj Agarwal vs Kolkata(Prev) on 17 April, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Customs Appeal No.77874 of 2018
(Arising out of Order-in-Original No.06/Cus/CC(P)/WB/2018-19 dated 30.05.2018
passed by Commissioner of Customs (Preventive), Kolkata)
(1) Shri Neeraj Agarwal
Bansahi Bazar, Mirzapur-231001, U.P.
Appellant
VERSUS
Commissioner of Customs (Preventive), Kolkata
15/1,Strand Road, Kolkata-700001
Respondent
WITH Customs Appeal No.77952 of 2018 (Arising out of Order-in-Original No.06/Cus/CC(P)/WB/2018-19 dated 30.05.2018 passed by Commissioner of Customs (Preventive), Kolkata) (2) Shri Makkhan Lal Bind Lahadi Kalan, PO-Sardar, PS-Dehat Kotwali, Dist. Mirzapur, U.P. Appellant VERSUS Commissioner of Customs (Preventive), Kolkata 15/1,Strand Road, Kolkata-700001 Respondent AND Customs Appeal No.77953 of 2018 (Arising out of Order-in-Original No.06/Cus/CC(P)/WB/2018-19 dated 30.05.2018 passed by Commissioner of Customs (Preventive), Kolkata) (3) Shri Golamber Kumar Lahadi Kalan, PO-Sardar, PS-Dehat Kotwali, Dist. Mirzapur, U.P. Appellant VERSUS Commissioner of Customs (Preventive), Kolkata 15/1,Strand Road, Kolkata-700001 Respondent 2 Customs Appeal No.77874,77952-77954 of 2018 AND Customs Appeal No.77954 of 2018 (Arising out of Order-in-Original No.06/Cus/CC(P)/WB/2018-19 dated 30.05.2018 passed by Commissioner of Customs (Preventive), Kolkata) (4) Shri Vijay Kumar Bind Lahadi Kalan, PO-Sardar, PS-Dehat Kotwali, Dist. Mirzapur, U.P. Appellant VERSUS Commissioner of Customs (Preventive), Kolkata 15/1,Strand Road, Kolkata-700001 Respondent APPERANCE :
Shri Vineet Kumar Singh, Advocate for the Appellant Shri S.Chakraborty, Authorized Representative for the Respondent CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO.75678-75681/2024 DATE OF HEARING : 01.03.2024 DATE OF PRONOUNCEMENT : 17.04.2024 Ashok Jindal :
The appellants have challenged the confiscation of gold recovered during the course of search and imposition of penalties thereon.
2. The facts of the case are that the officers of Customs (Preventive), Burdwan, received an intelligence that a person is travelling in S-11 Coach of Poorva Express and 9.20 hrs. on 18.06.2016. The said Poorva Express reached at Burdwan Railway Station and the officers identified a person whose name was Makkhan Lal Bind, the Appellant No.(2) herein and informed him about their identities, thereafter, served a notice under Section 102 of the Customs Act, 1962 and requested him to come to Burdwan Customs Office. The 3 Customs Appeal No.77874,77952-77954 of 2018 officers searched the Appellant No.(2) in the presence of independent witness and found 5 pcs. (1 Kg. each Piece) of yellow metal in bar form appearing to be gold of foreign origin on which inscription as "PMAP SUISSE" on two bars, "VALCAMBI SUISSE" on one bar, "KALOTI DUBAI" on one bar & "MMTC PAMP" 1 KT on one bar were mentioned. The officers also found Rs.2,150/- Indian currency & a Notary Certificate from the Appellant No.(2). The weight of all bars were found to be 5 kgs., which was valued at Rs.1,53,25,000/-. During the course of interrogation, the Appellant No.(2) informed that he did not possess any licit documents of such gold bars. Thereafter, the said gold bars were seized under Section 110 of the Customs Act, 1962 vide Seizure Memo dated 18.06.2016. Thereafter, Panchnama was drawn and the statement of the Appellant No.(2) was recorded, in which, he has stated that such gold bars were handed over to him by Mr.Sonu Tewari on the instruction of Shri Neeraj Agarwal, the Appellant No.(1), who deals in foreign origin gold and he purchased the gold from Kolkata and sold the same at Mirzapur, Varanasi & Delhi. The Appellant No.(1) also owned a jewellary shop and cinema hall. To unearth the entire racket, the Appellant No.(2) was arrested on 19.06.2016 and was produced before CJM, Burdwan. Thereafter, the seized gold were sent to Chemical Examiner, CRCL, to check the purity of seized gold bars. On behalf of the Appellant No.(2), three cash memos were produced before the CJM on 30.06.2016 issued by M/s Rajshree Jewellers, Banshi Bazar, Mirzapur duly signed by the Appellant No.(1), whose details are as follows :
4
Customs Appeal No.77874,77952-77954 of 2018
(i) Cash Memo No.38 dated 23.10.1999 in the name of Vijay Kumar Bind, Mirzapur for sale of 2 kgs. gold valued at Rs.8,79,600/- ;
(ii) Cash Memo No.36 dated 29.07.1998 in the name of Gulamabar, Mirzapur for sale of 2 kgs. gold valued at Rs.8,70,406/ ;
(iii) Cash Memo No.05 dated 11.05.1998 in the name of Makkan Lal Bind, Mirzapur for sale of 1 kgs. gold valued at Rs.4,97,656/-.
2.1 During the course of Inquiry, summon was issued to Appellant No.(1) to record his statement, who appeared on 02.08.2016 and produced the documents, i.e. Sales Tax Registration Certificate, PAN Card, Certificate of Registration and Allotment of TIN etc. along with three cash memos. The Appellant No.(1) admitted that he has sold 5 kgs. of gold bars in the year 1997-1998 to Appellant Nos.(2), (3) & (4) through the above said invoices.
2.2 Thereafter, the Appellant No.(2) was released from the custody on 30.07.2016 on Bail and on the said date, he stated that his statement dated 19.06.2016 was recorded stating that the same was taken under duress and coercion. He further informed that he has received 2 kgs. of gold bars from the Appellant No.(3), which was purchased by the Appellant No.(3) from M/s Rajshree Jewellers, Mirzapur and 2 kgs. gold bars from the Appellant No.(4) who purchase the same from M/s Rajshree Jewellers and remaining 1 kg. gold bar was bought by him from the Appellant No.(1) in the year 1997. All the Appellants belong to the same village and community and handover the gold to the Appellants to sell the same in the city of Kolkata at a higher price. For this purpose, the Appellants visited to Kolkata, but at Kolkata, Shri Moniram, to whom he visited to sell the gold, refused to 5 Customs Appeal No.77874,77952-77954 of 2018 purchase of the same in the absence of purchase documents and as a result, he returned from Kolkata. The Customs Officers apprehended him alleging that the Appellant No.(2) was in smuggling of foreign origin gold and recorded the statement under coercion. Thereafter, summon was issued to the Appellant Nos.(3) and (4) for recording their statements under Section 108 of the Customs Act, 1962. The Appellant Nos.(3) and (4) appeared before the Customs Officers on 01.09.2016 and stated that they purchased the said gold in the year 1997-1998 from the Appellant No.(1) and handed over the same to the Appellant No.(2) to sell the same at Kolkata at higher price. 2.3 Further, the statement of Appellant No.(1) was also recorded, who has also stated that he has sold the gold in question to the Appellant Nos.(2),(3) & (4) and produced the invoices thereof and also submitted that since the matter relates to 18 years old, he was not having Books of Account as the same was not required to keep in safe for such longer period.
2.4 Thereafter, Shri Moniram Tewari was also interrogated on 03.11.2016 and he informed that three to four months ago, the Appellant No.(2) came to him to sell 5 kgs. gold and produced three photocopies of invoices, but he refused to purchase the same in absence of original invoices and as a result, the Appellant No.(2) went back.
2.5 Further, on conclusion of the Inquiry, a show-cause notice was issued to the Appellants, why 5 kgs. of gold bars of foreign origin, should not be confiscated under Section 111 of the Customs Act, 1962 6 Customs Appeal No.77874,77952-77954 of 2018 and penalties should not be imposed on the Appellants under Section 112 of the Customs Act, 1962.
2.6 The Revenue alleged that the Appellants have failed to submit the documents of procurement of gold bars of foreign origin at the time of seizure in terms of Section 123 of the Customs Act, 1962. Thereafter, the gold in question is liable for absolutely confiscation and consequently, penalties are also imposable on the Appellants. 2.7 The matters were adjudicated. The gold in question was absolutely confiscated. Penalty on the Appellant No.(1) was imposed to the tune of Rs.20.00 lakhs and for the remaining Appellants, penalties were imposed to the tune of Rs.10.00 lakhs each. 2.8 Aggrieved from the above orders, the Appellants are before us.
3. The ld.Counsel appearing on behalf of the appellants, submits that in this case, the gold in question was seized under Section 110 of the Customs Act, 1962 on 18.06.2016 and in terms of Section 110 (2) of the Act, if the show-cause notice is not issued within six months, the period of investigation can be extended for further period of six months, which as per records, the order of extension of time was passed by the ld.Commissioner of Customs (Preventive) on 15.12.2016, but the same was not communicated to the appellants within six months thereof. In that circumstances, the confiscation of gold in question is illegal. It is his submission that the said order of extension of time in terms of Section 110 (2) of the Customs Act, 1962, was received by them on 21.01.2017, which is beyond six months from the seizure of gold in question. Therefore, the impugned gold cannot be seized. 7
Customs Appeal No.77874,77952-77954 of 2018 3.1 He has further drawn our attention to the Panchanama drawn during the course of investigation, wherein it is submitted that the Appellant No.(2) was carrying photo copies of the invoices certifying procurement of gold through licit means. During the course of apprehension on 18.06.2016 and the Panchanama, it is recorded that some papers were also recovered. No description of such papers were given as these papers are only photo copies of the invoices of the procurement of the said gold. In that circumstances, the burden cast on the Revenue to prove that the gold in question is of foreign origin or smuggled one. He further submits that the alleged inscription mentioned on the seized gold bars were duplicate because the purity of the gold mentioned was only 99.5% wherein the foreign made gold is having purity of 99.9%. Therefore, it is established beyond doubt that the seized gold bars were not of foreign origin as purity is 99.5% as per CRCL. It is further submitted by him that the gold bars bear foreign markings, but the origin of the country has not been mentioned in the show-cause notice. Therefore, it cannot be concluded that the seized gold bars were of foreign origin. Mere foreign marking on the gold bars does not by itself establish the smuggled nature of the gold. It can at the best establish the foreign origin of the goods. To support his contention, he relies on the following judgments:
(i) Naved Ahmed Khan Vs. CC, Bangalore : 2005 (182) ELT 494 ;
(ii) Jitendra Pawar Vs. CC,Raipur : 2003 (156) ELT 622 ;
(iii) CC, (Prev.), Kolkata Vs. Monoranjan Banik : 2004 (165) ELT 237.8
Customs Appeal No.77874,77952-77954 of 2018 3.2 It is his contention that the Revenue has built up its case only on the ground that the seized gold contains marking which belongs to a foreign country, hence the seized gold was of foreign origin and smuggled one whereas mere markings cannot be taken as a proof of the gold of foreign origin because markings and labels are only hearsay evidence as held in the case of State of Maharashtra Vs. Prithviraj Pokhraj Jain reported in 2000 (126) ELT 180 (Bombay). 3.3 He further submits that at the time of filing the Bail Application, the Appellants have produced the copies of cash memos to establish the licit possession of the gold at the first available opportunity before CJM but the said evidence has been ignored by the Adjudicating Authority, which cannot be ignored. To support his contention, he relies on the following judgments :
(i) Krishnakumar Dhandhania : 2007 (219) ELT 736 (Tri.-
Kol.) ;
(ii) CC Vs. Golak Chandra Kamila : 2006 (205) ELT 665 ;
(iii) S.K.Chains Vs. CC, Mumbai : 2001 (127) ELT 415. 3.4 He further submitted that the Revenue relies only on the oral evidence i.e. the statement of the Appellant No.(2) tendered on 19.06.2016 wherein the Appellant No.(2) has admitted that the gold under seizure was foreign origin, otherwise no evidence is available with the Revenue to allege that the seized gold bar was of foreign origin/smuggled gold. Further, the evidence by way of cash memos, was produced at the time of filing of the Bail Application, which was not negated by the Department with the cash memos submitted by the appellants were the forged documents. No enquiry was made with the 9 Customs Appeal No.77874,77952-77954 of 2018 VAT Department to know genuineness of the invoices produced by the appellants.
3.5 It is his submission that the confessional statements need independent corroboration and in this case, the voluntary characteristic of the statements being in doubt, the same cannot be the basis of holding the guilt against the appellant because purity of gold is 99.5%. Thus, the circumstantial evidence is not compatible with the guilt of the accused. To support his contention, he relies on the decision in the case of Commissioner of Customs (Preventive) Vs. Puni Dhapa Lokeswara Rao : 2009 (248) ELT 141 (Cal.).
3.6 It is his submission that the seized gold was procured through a licit means and the Appellant No.(1) has submitted the copies of cash memos, the seller of the gold, which has been accepted. Therefore, the Appellant (1) has discharged the burden of proof under Section 123 of the Customs Act, 1962 and onus shifted on the Revenue to establish that the gold seized from the Appellant No.(2) was smuggled one. 3.7 It is further submitted that the detailed inquiry was made by the Revenue from the seller of the gold and nothing incriminating was found during the course of inquiry and from the statement of the Appellant Nos.(3) & (4). Therefore, the case of the Revenue is on the basis of assumptions, presumptions, surmises and conjectures, therefore, the entire proceedings lacks of legal sustainability. To support his contention, he relies on the following judgments :
(i) Sitaram Sao Vs. State of Jharkhand : 2007 (12) SCC 630 ;10
Customs Appeal No.77874,77952-77954 of 2018
(ii) Mridul Agarwal Vs. Commissioner of Customs, Lucknow : 2018 (362) ELT 847 (Tri.All.) ;
(iii) Shantilal Mehta Vs. UOI and Others : 1983 (14) ELT 1715 (Del.) ;
(iv) CCC (P) Vs. Prabhash Kumar Jalan, CESTAT, Kolkata Bench, Final Order No.75500/2021 dated 27.08.2021 ;
(v) Shri Sarvendra Kumar Mishra Vs. Commissioner of Customs Vide Final Order No.70198-70199/2021 dated 06.09.2021 ;
(vi) Nand Kishore Modi Vs. Commissioner of Customs (Preventive), West Bengal : 2015 (325) ELT 781 ;
(vii) Rajesh Pawar Vs. Union of India : 2014 (309) ELT 600 (Cal.) ;
(viii) Commissioner of Customs (Prev.), Kolkata Vs.Ashok Kumar Agarwal : 2017 (348) ELT 555 (Tri.-Kolkata). 3.8 He further submitted that the case of the Revenue is only on the basis of statements made by the Appellant No.(2) and the same was retracted by the Appellant No.(2) from the first opportunity. Therefore, the said statements does not have any evidentiary values in the eyes of law when the documentary evidence was contradictory to such statement , which proves that the statement was recorded under duress. To support his contention, he relies on the following judgements :
(i) Saakeen Alloys Private Limited : 2014 (308) ELT 655 (Guj.) ;
(ii) Union of India Vs. Kisan Ratan Singh : 2020 (372) ELT 714 (Bombay).11
Customs Appeal No.77874,77952-77954 of 2018 3.9 Therefore, he prays that the impugned order is to be set aside and the gold in question be released to the appellants.
4. On the other hand, the ld.A.R. for the Revenue supported the impugned order and denied the genuineness of the invoices produced by the appellants by saying that one of the gold bars is having inscription as "MMTC PAMP" as MMTC-PAMP being a joint venture Company between MMTC Limited, a Government of India Undertaking and PAMP SA Switzerland commissioned in January, 2008 and the gold having inscription "MMTC PAMP" came into existence after January, 2008. Therefore, the claim of purchase of gold is not factually correct. In that circumstances, the invoices produced by the appellants are not admissible documents. In that circumstances, the gold is liable for absolutely confiscation and penalties on the appellants are also to be imposed.
5. Heard both sides and considered the submissions.
6. In this case, the ld.Counsel for the appellants have raised a preliminary objection with regard to the facts of extension of time under Section 110 (2) of the Customs Act.
7. We find that it is an admitted fact that the gold in question was seized on 18.06.2016 under Section 110 of the Customs Act, 1962. Further, Section 110 (2) of the Act states that any goods, which was seized under Section 110 (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized, provided that the Principal Commissioner of Customs may, on sufficient reasons being shown, be extended such 12 Customs Appeal No.77874,77952-77954 of 2018 period to further period notwithstanding six months and informs the persons from whose such goods were seized before setting up the period so specified.
8. On going through the said proviso of Section 110 (2), it is stated that the Commissioner of Customs was duty bound to record the reasons in writing for extending the time for further six months and the same has to be communicated to the persons, from whose such goods were seized. As per the proceedings conducted by the Commissioner of Customs (Preventive), Kolkata, although such order was passed on 15.12.2016 and the same was sent to the Appellant No.(2) from whom the said gold was seized through speed post, but no date has been recorded by the adjudicating authority of communication thereof to the Appellant No.(2).
9. During the course of proceedings, the appellant filed an Affidavit claiming that the said order of extension of time under Section 110 (2) was received by them only on 17.01.2017, which is beyond period of six months in terms of Section 110 (2) of the Act. On that ground alone, the gold is required to be released to the appellants unless contrary is proved by the Revenue, but nothing contrary have been proved by the Revenue. In that circumstances, on this ground alone, the gold is not liable to be confiscated.
10. We find that during the course of investigation, Panchanama was drawn and in Panchanama while seizing the gold, some papers were also recovered from the possession of the Appellant No. (2), but the details of those papers were neither supplied or mentioned in the Panchanama nor recorded in the relied upon documents. 13
Customs Appeal No.77874,77952-77954 of 2018
11. On the other hand, the claim of the appellants is that those same papers were the photo copies of the invoices of procurement of gold by the appellants from the Appellant No.(1), who is the seller of gold to the Appellant Nos.(2), (3) & (4) and the Appellant No.(1) has also admitted the facts that he has issued invoices in question of procurement of the impugned gold. In that circumstances, unless and until, the contrary is proved, the evidence produced by the appellants is admissible.
12. We further take note of the fact that as per the examination report of CRCL, the purity of gold was found 99.5%. Although the gold is having a foreign markings that does not establish that the gold is foreign gold as the foreign marking gold contains purity of 99.9%. In that circumstances, the Revenue has failed to make the reason to believe that the gold in question is smuggled in nature.
13. The said issue has examined by the Hon'ble High Court of Delhi in the case of Shantilal Mehta (supra), wherein the Hon'ble High Court has observed as under :
"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 14 Customs Appeal No.77874,77952-77954 of 2018
(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. 15
Customs Appeal No.77874,77952-77954 of 2018 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 16 Customs Appeal No.77874,77952-77954 of 2018 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 17 Customs Appeal No.77874,77952-77954 of 2018 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? 18
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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 19 Customs Appeal No.77874,77952-77954 of 2018 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."
14. As the purity of gold was 99.5%, although there is an inscription of gold being of foreign origin, which does not establish that the gold in question is of smuggled in nature. Moreover, one of the gold bar is having marked as "MMTC PAMP" that the gold bar cannot be of foreign origin and smuggled one, which itself breaks the case of the Revenue. The Revenue is also relying the marking of "MMTC PAMP" Indian marks, therefore, how can it be alleged that the gold in question is of foreign origin and smuggled one, therefore, we hold that the Revenue has failed to make out a case of reasonable belief that the gold in question 20 Customs Appeal No.77874,77952-77954 of 2018 is smuggled one. Consequently, the provisions of Section 123 of the Customs Act, 1962 are applicable to the facts of the case.
15. The case of the Revenue is based only on the basis of statement of the Appellant No.(2) during the course of interrogation on 19.06.2016, no further corroborative evidence has been produced by the Revenue in support of their allegation that the gold in question is of foreign origin and smuggled one. Without corroborative evidence, the statement of the Appellant No.(2) dated 19.06.2016 is inadmissible.
16. In that circumstances, we hold that the gold in question cannot be held liable to be confiscated. Consequently, the order for confiscation of gold in question is set aside. As the gold in question is not liable for confiscation, therefore, no penalties can be imposed on the appellants.
17. In view of this, we set aside the impugned order and allow all the appeals filed by the appellants with consequential relief.
(Pronounced in the open court on 17.04.2024) Sd/ (Ashok Jindal) Member (Judicial) Sd/ (K.Anpazhakan) mm Member (Technical)