Custom, Excise & Service Tax Tribunal
P.M. Abdul Nazer vs The Commissioner Of Customs on 11 August, 2011
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Division Bench
Court - I
Date of Hearing: 11.08.2011
Date of decision: 11.08.2011
Appeal No. C/102/2009
(Arising out of Orders-in-Appeal No. 295-296/2008 dated 03.11.2008 passed by the Commissioner of Customs, Cochin)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
Honble Mr. M. Veeraiyan, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
P.M. Abdul Nazer ..Appellant(s)
Vs.
The Commissioner of Customs
Cochin Respondent(s)
Appearance Mr. P.A. Augustian, Advocate for the appellant Mr. Ganesh Haavanue, SDR, for the Revenue Coram:
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member (Technical) FINAL ORDER No._______________________2011 Per: P.G. Chacko In this appeal, the challenge is against absolute confiscation of 34 gold biscuits of foreign origin weighing a 3691 gms. and valued at Rs. 17,42,840/-, and also against penalty of Rs. 3.6 lakhs imposed on the appellant.
2. The above gold biscuits were seized from one Shri. V. Haris by officers of Special Customs Preventive Unit, Kasargod on 17.08.2001. The gold biscuits were found covered with cellophane tapes and kept concealed inside a long cylindrical cloth cover tied around his abdomen. As he could not produce any valid documents to prove licit import of the foreign origin gold biscuits, the same were seized under a mahazar in the presence of independent witnesses. Certain documents were also recovered from the pocket of his shirt. A statement of Shri V. Haris was recorded on 18.08.2001 under Section 108 of the Customs Act, wherein he stated inter alia that he had bought the gold biscuits from Mumbai for one Chalad Nazer by paying foreign currency given by him. He also stated that he had done likewise fifteen times in a period of one year in the past as per directions of the said Nazer and that he got remuneration of Rs. 2500/- per trip. Haris further stated that he was constrained to do so because of his acute financial difficulties. He also disclosed that, on an earlier occasion, he was arrested in connection with seizure of four gold biscuits in Belgaum and detained under COFEPOSA for one year. On 18.08.2001 itself, Haris was arrested and produced before the Judicial Magistrate, Kasargod, who remanded him to judicial custody. On 21.08.2001, the residential premises of Shri Chalad Nazer @ P. Abdul Nazer were searched and certain documents seized. In response to summonses issued to Chalad Nazer, Shri P.A. Nazer S/o Late K.T. Mammood, Ponnankil House, Chalad, Alavil P.O., Kannur, appeared before the Superintendent, Special Customs Preventive Division on 22.08.2001 and gave a statement under Section 108 of the Customs Act. In that statement, he provided certain leads to one Shri P.M. Abdul Nazer who was said to be brother-in-law of Shri V. Haris. On the basis of the address and other particulars furnished by Shri P.A. Nazer, the Customs issued summonses to various addresses of Shri P.M. Abdul Nazer. In response to one of these summonses, Shri P.M. Abdul Nazer submitted an affidavit on 26.09.2001 stating his present residential address and confirming that Shri V. Haris was his brother-in-law. In that affidavait, Shri P.M. Abdul Nazer, however, denied connection with Shri Haris. In response to a subsequent summons issued to him, Shri P.M. Abdul Nazer wrote a letter to the Investigating Officer stating that he had nothing more to add in relation to seizure of gold biscuits from Shri V. Haris. Shri V. Haris was granted conditional bail on 25.09.2001 by the Judicial Magistrate. Subsequently, in a statement dated 15.10.2001 under Section 108 of the Customs Act, Haris stated that the money required for purchase of the 34 gold biscuits was given by his own brother-in-law Shri P.M. Abdul Nazer and not by Shri Chalad Nazer @ P.A. Nazer. He clarified that, earlier, he had implicated Shri Chalad Nazer only to save his brother-in-law Shri P.M. Abdul Nazer. Shri Haris further stated that his brother-in-law Shri P.M. Abdul Nazer had actually given him the money at his residence and that telephone number 769207 which was referred to in his first statement belonged to Shri P.M. Abdul Nazer and installed at his cassette shop. He confessed that he had wrongly implicated Shri Chalad Nazer by connecting him with the said telephone number with intent to save his brother-in-law Shri P.M. Abdul Nazer from the consequence of the customs case registered in connection with the seizure of the 34 gold biscuits. On 15.10.2001, Shri P.M. Abdul Nazer appeared before the Investigating Officer and gave a statement under Section 108 of the Customs Act, wherein he stated details of his journeys and stay at places like Mumbai, Ajmeer, Ernakulam, Bangalore etc. during the months of August, September and October 2001 after the seizure of 34 gold biscuits from his brother-in-law Shri V. Haris. He revealed that he was involved in two cases, one registered by Special Customs Preventive Unit, Kannur and the other registered by the Central Bureau of Investigation. He admitted that phone No. 769207 belonged to him and was installed at his cassette shop at Kannur. He admitted that he had made frequent phone calls to a foreign currency dealer as well as a foreign goods dealer, both stationed at Calicut. He also admitted that he had given Rs. 3 lakhs to Shri V. Haris for purchase of gold. Shri P.M. Abdul Nazer was arrested on 15.10.2001 itself on the basis of reasonable belief that the whole money for the purchase of the 34 foreign gold biscuits seized from his brother-in-law Shri V. Haris was arranged by Shri Abdul Nazer. He was produced before the Judicial Magistrate and was remanded to judicial custody. Eventually he was enlarged on bail. In a subsequent statement given to the Investigating Officer, Shri P.M. Abdul Nazer stated inter alia that money had been arranged by him for Shri V. Haris before his departure to Mumbai. He stated that he had gone to Mumbai several times and had many dealings in foreign goods. He admitted his visit to Mumbai on 10.08.2001 just before the seizure and immediately after the seizure also, though he denied meeting Haris there.
3. The gold biscuits under seizure were, upon detailed examination by the Chemical Examiner, found to be of 99.8% purity.
4. After concluding the investigations, the Commissioner of Customs, Calicut issued show-cause notice dated 11.02.2002 for confiscating the gold biscuits under Section 111 (d) and Section 121 of the Customs Act and for imposing penalties on Shri V. Haris and Shri P.M. Abdul Nazer under Section 112 of the Act. Both the noticees contested the proposals. Shri P.M. Abdul Nazer (present appellant) stated inter alia that he was not in any way concerned with carriage or concealment of foreign currency or gold by Shri V. Haris and that he had no relation with the gold seized from Shri V. Haris. A further reply was filed by his advocate making critical references to the statement recorded from Shri P.M. Abdul Nazer and claiming support from certain judicial pronouncements to the plea against confiscation and penalty. In adjudication of the dispute, the original authority ordered absolute confiscation of the 34 gold biscuits of foreign origin under both Section 111(d) and Section 121 of the Customs Act and imposed a penalty of Rs. 3.6 lakhs on the appellant. Appeals filed against the order-in-original were dismissed by the Commissioner (Appeals).
5.0. Heard both sides. Learned counsel for the appellant, apart from reiterating the grounds of this appeal, submitted that there was no evidence of any connection between the appellant and any smuggling of foreign currency or gold biscuits into India. It was submitted that the case of the department was that foreign currency was smuggled into India and the gold biscuits under seizure were sale proceeds of smuggled foreign currency. It was claimed that there was no evidence to establish this case of the department. In any case, according to the learned counsel, absolute confiscation of the gold biscuits was not warranted in view of liberalization of the Government policy relating to import of gold. Counsel submitted that an option for redemption of the gold biscuits on payment of a reasonable amount of fine should have been given in this case. In this connection, the learned counsel relied on the following decisions:
1) Yakub Ibrahim Yusuf Vs. CC, Mumbai 2011 (263) E.L.T. 685 (Tri.-Mumbai)
2) Order dated 05.10.2010 of the Honble High Court of Kerala in W.A. No. 1711/2010 (Reji Cheriyan Vs. CC, Kochi)
3) P. Sinnasamy Vs. CC, Chennai 2007 (220) E.L.T. 308 (Tri.-Chennai)
4) Krishna Kumari Vs. CC, Chennai 2008 (229) E.L.T. 222 (Tri.-Chennai)
5) S. Rajagopal Vs. CC, Trichy 2007 (219) E.L.T. 435 (Tri.-Chennai)
6) M. Arumugam Vs. CC, Tiruchirapalli 2007 (220) E.L.T. 311 (Tri.-Chennai) 5.1. Learned counsel also challenged the penalty and its quantum. According to him, the amount of penalty imposed on the appellant is disproportionate to the value of the confiscated goods. In this connection also, he referred to some of the aforesaid decisions.
6.0. Learned SDR submitted that the gold biscuits under seizure were prohibited goods within the first part of Section 125 of the Customs Act as held by the Honble Calcutta High Court in the case of CC Vs. Uma Shankar Verma 2000 (120) E.L.T. 322 (Cal.). He further pointed out that, even under the liberalized policy of the Government, there were certain restrictions on import of gold and that such restriction would also amount prohibition for purposes of Section 111 of the Customs Act and, therefore, the absolute confiscation of the gold biscuits in this case was justifiable. In this connection, reliance was placed on the Honble Kerala High Courts decision in Kerala Commercial Corporation and Others Vs. Additional Collector of Customs, Cochin 1984 (15) E.L.T. 325 (Ker.). Learned SDR also referred to the antecedents of the appellant and submitted that he could not be given any option for redeeming the gold biscuits in the facts and circumstances of this case. It was particularly pointed out that the appellant had, in an affidavit dated 26.09.2001, disowned the gold biscuits. Nevertheless, it was evident from the statement of V. Haris that the gold biscuits were bought for the appellant with the money supplied by the latter. On these facts, the absolute confiscation of the gold was justified by the counsel who, in this connection, also relied on the Honble Madras High Courts judgment in Commissioner Vs. Samynathan Murugesan 2009 (247) E.L.T. 21 (Mad.). Counsel pointed out that a special leave petition filed against the said judgment was dismissed on merits by the Honble Supreme Court vide Samynathan Murugesan Vs. Commmissioner 2010 (254) E.L.T. A15 (S.C.).
6.1. Learned SDR also referred to the seizure mahazar and submitted that the manner in which the gold biscuits were concealed on the person of V. Haris would indicate that the goods were smuggled. The appellant could not successfully rebut the oral evidence of Shri Haris who clearly stated that the gold biscuits had been procured from Mumbai for the appellant with the currency supplied by him. Hence the absolute confiscation of the gold was only liable to be sustained. In this context, SDR relied on the Honble Supreme Courts judgments in the cases of UOI Vs. Rajendra Prabhu 2001 (129) E.L.T. 286 (S.C.) and State of Maharashtra Vs. Natwarlal Damodardas Soni 1983 (13) E.L.T. 1620 (S.C) and also the Tribunals decision in the case of MD. Akhtar Vs. CCE, Patna 2009 (238) E.L.T. 304 (Tri.-Kolkata). Learned SDR also argued in support of the penalty imposed on the appellant.
7.0. We have carefully considered the submissions. The facts noted in the mahazar dated 18.08.2001 are not in dispute. 34 gold biscuits of foreign origin were recovered from V. Haris who had concealed the goods around his abdomen. He stated under Section 108 of the Customs Act that he was bringing the gold biscuits from Mumbai as instructed by the appellant and also that the money for purchasing the same was supplied by the appellant. When the appellant was confronted with this statement of Haris, he admitted under Section 108 of the Customs Act that he had given Rs. 3 lakhs to his brother-in-law Haris. The appellant further stated that he arranged another sum of Rs. 2 lakhs to be given to Haris through Chalad Nazer. In a subsequent statement, however, the appellant stated that the above amounts were supplied to Haris as required by him (Haris). Nevertheless, from the statements recorded under Section 108 of the Customs Act in this case, it is clearly seen that the appellant was in constant telephonic communication with one Shankar of Mumbai around the time when the gold biscuits were collected by Haris at Mumbai and that these goods were supplied to Haris by Shankar. It is also evident that Haris was only a carrier of the contraband. Neither Haris nor the appellant could produce any documentary evidence of licit import/acquisition of the gold biscuits. On the other hand, concealment of the gold biscuits by Haris would ipso facto disclose that the goods with foreign markings were smuggled into India. Nobody has claimed the goods on the strength of any title or other right over it. As a matter of fact, in his affidavit dated 26.09.2001, the appellant disowned the gold biscuits thus:
I respectfully submit that I have absolutely no information with me to be passed on regarding the said gold biscuits or its seizure. I further submit that I am not in any way concerned with the said gold biscuits or its seizure. There is no evidence of any valid claim of Haris or anybody else on the gold biscuits. In these circumstances, the absolute confiscation of the goods under Section 111(d) of the Customs Act has only to be upheld. This view gets support from the Honble Madras High Courts decision in Samynathan Murugesan case (supra) wherein certain gold ornaments found concealed in T.V. set imported by Murugesan were absolutely confiscated by the Commissioner and the decision of the Commissioner was upheld by the Honble High Court holding that Murugesan did not belong to the category of persons who could bring gold at concessional rate of duty and that the gold ornaments were imported in violation of Import (Control) Order, 1955 read with Section 3 of the Import and Export Control Act, 1947. Dismissing the SLP filed by Murugesan against the High Courts judgment, the Honble Supreme Court held thus:
Applying the ratio of the judgment in the case of Om Prakash Bhatia V. Commissioner of Customs, Delhi, reported in 2003 (155) E.L.T. 423 (S.C.) = 2003 (6) S.C.C. 161, to the facts of the case, we find that, in the present case, the assessee did not fulfil the basic eligibility criteria, which makes the imported item a prohibited goods; hence, we see no reason to interfere with the impugned order. The special leave petition is, accordingly, dismissed. 7.1. In the case of Md. Akhtar (supra), gold was found concealed in shoes and same was seized and ultimately confiscated absolutely under the Customs Act and this action was approved by the Tribunal by relying on the Supreme Courts judgment in Sheikh Mohd. Omer Vs. Collector of Customs, Calcutta and Others 1983 (13) E.L.T. 1439 (S.C.). Md. Omer had claimed to be only a carrier and had not claimed ownership of the gold. He also could not produce any documentary evidence of licit nature of the gold. The Tribunal held that the gold was to be treated as prohibited for purposes of Section 111(d) of the Customs Act and hence absolute confiscation under Section 125 of the Act could not be questioned. This view was upheld by the Apex court. In the case of Uma Shankar Verma (supra), the Honble Calcutta High Court held that gold was a prohibited item within the first part of Section 125 of the Customs Act. Thus the caselaw cited by the learned SDR is enough to demolish the appellants attempt to show that the 34 gold biscuits in this case were to be treated as restricted items redeemable under Section 125 of the Act.
7.2. The Tribunals decision in Yakub Ibrahim Yusufs case allowing redemption of gold against payment of fine is not applicable to the facts of the present case. No different are the other decisions of the Tribunal cited by the learned counsel. The order of the Honble Kerala High Court in Reji Cheriyans case does not provide any ruling of general applicability. That decision, rendered on the facts and circumstances of that case, is also not applicable to the instant case.
7.3. Having found justification for absolute confiscation of the 34 gold biscuits in question, we sustain the absolute confiscation ordered by the lower authorities. It goes without saying that V. Haris from whose possession the gold biscuits were seized is the person physically associated with the contraband. There is preponderance of evidence on record to indicate that Haris was carrying the gold biscuits at the instance of the appellant for a monetary consideration. The appellant also could not adduce evidence of licit nature of the goods. Hence he can be held to have rendered the goods liable to confiscation under Section 111(d) of the Act. The challenge against penalty, in this appeal, also cannot be accepted. However, the learned counsel for the appellant has been able to show that the quantum of penalty imposed by the lower authorities is excessive. A penalty of Rs. 3.6 lakhs is disproportionate vis-a-vis the value of the goods (Rs. 17,42,840/-) determined by the authorities. In the facts and circumstances of this case, the quantum of penalty can be reduced to Rs. 1 lakh, and it is ordered accordingly.
8. The appeal is disposed of in the above terms.
(Operative part of this order was pronounced in court on 11.08.2011) (M. VEERAIYAN) (P.G. CHACKO) MEMBER (TECHNICAL) MEMBER (JUDICIAL) iss