Custom, Excise & Service Tax Tribunal
Kiran Vishwanath Patil vs -Shillong(Preventive) on 7 May, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH - COURT NO. 2
Customs Appeal No. 75684 of 2020
(Arising out of Order-in-Original No. CCP/NER/10/2020 dated 06.05.2020 passed by
the Commissioner Customs (Preventive) 110 Mahatma Gandhi Road, NER, Shillong-
793001)
M/s. Kiran Vishwanath Patil, : Appellant
S/o. Vishwanath Patil,
Village-Tavadarwadi (Dhangaon), Tal. Palus,
P.O. (A/P)-Dhangaon, P.S.-Bhilawadi, Dist Sangli,
Maharastra-416 303
VERSUS
Commissioner of Customs (Preventive), : Respondent
NER, 110, Mahatma Gandhi Road,
Shillong-793001
APPEARANCE:
Shri Debaditya Banerjee, Advocate
Shri S. Bhattacharya, Advocate for the Appellant
Shri Tariq Sulaiman, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.76309/2025
DATE OF HEARING: 20.02.2025
DATE OF PRONOUNCEMENT: 07.05.2025
ORDER:[PER SHRI K. ANPAZHAKAN] This Appeal has been filed by Shri.Kiran Vishwanath Patil (herein after referred as the appellant) challenging the penalty imposed on him vide the Order-in-Original No. CCP/NER/10/2020 dated 06.05.2020 passed by the Commissioner Customs (Preventive) 110 Mahatma Gandhi Road, NER, Shillong-793001.
Page 2 of 13Appeal No.: C/75684/2020-DB
2. The facts of the case are that on 22.10.2018, the Train Checking Party of Government of Railway Police (GRP), Guwahati has recovered five gold bars weighing 7998.650 grams, from the appellant, who was travelling in coach A-1 of Train No.12346 DN Saraighat Express. The appellant could not produce any document in respect of the said gold bars and hence the GRP handed over the said gold bars to Anti Smuggling Unit, Guwahati Customs Division, for further action under the Customs Act, 1962. The GRP also handed over the Test Reports of the seized gold conducted by SB Assaying and Hallmarking Centre, Guwahati. The Test Reports certified the gold bars having purity of 99.51%.
2.1. In his statement dated 22.10.2018, the appellant stated that the said gold bars were given to him by two boys at Amber Hotel, Guwahati, as per the direction of Sethji, whose phone number is 7044958007. He doesn't know the real name and address of Sethji. He would be instructed by Sethji over phone as to whom and where he has to deliver the gold bars. He was arrested and remanded to judicial custody. Later follow up enquiries were conducted at Patna and Kolkata.
2.2. On completion of the investigation, a SCN was issued, inter alia, proposing penalty on the appellant for his role in the commission of the alleged offence. After due process, the said notice was adjudicated and the gold seized was confiscated vide the impugned Order-in-Original dated 06.05.2020. In the said OIO passed. a penalty of Rs. 52,55,000/- was imposed upon the Appellant. Aggrieved against the imposition of penalty, the appellant has filed this appeal.
Page 3 of 13Appeal No.: C/75684/2020-DB
3. The Appellant submits that the alleged contraband goods were being transported inland, i.e., from one state to another, and the same was being transported with licit documents for the purpose of making gold ornaments from the same. The Appellant was unaware as to whether the said gold was initially procured from foreign soil, but it is a well known fact that since medieval times, gold had been imported and exported. Although the age of the said gold was not investigated, the Police Personnel along with Customs Officers had, using the their own surmise and conjectures, tried to categorize the said gold as foreign make and had tried to arraign the Appellant for an offence that was not at all committed by him. Although the said Appellant had licit documents to substantiate the fact that the said gold was being transferred inland, yet the Ld Adjudicating Authority had failed to appreciate the same and passed the said order of confiscation and imposed penalty on him, which is not sustainable in the eyes of law and should be dismissed in limine.
3.1. The appellant submits that the said gold was received by the Customs officials directly from the Police Personnel and not from the custody of the Appellant. Hence, the onus as required under Section 123 of the Customs Act, is not on the appellant. In support of this contention, the appellant palced his reliance on the judgement of Hon'ble Supreme Court in the case of Gopal Das Ahuja Vs UOI (2004) 7 SC. 3.2. The appellant submits that no sample was drawn and no preliminary tests were conducted before effecting the seizure, thereby violated the procedures enshrined in Section 100 of the CrPC. Thus, the initial burden to prove that the gold was Page 4 of 13 Appeal No.: C/75684/2020-DB not of smuggled in nature is not on the appellant. In support of his contention, the appellant placed his reliance on the following decisions:
(i) UOI -vs- Imtiaz Iqbal Pothiawala (2019 (365) ELT 167 (Bom))
(ii) CC(P), WB -vs- Raj Kumar Jaiswal (2006 (204) ELT 561 (Cal)).
3.3. The appellant submits that the search conducted on him was not done as per the provisions of Section 102 of Customs Act, 1962, in as much as he was never asked to exercise his right to be searched in the presence of a Gazetted Officer of Customs, or wished to be produced before a Learned Magistrate, which clearly indicates that the said search was conducted in an illegal and unlawful manner, and the Revenue department failed to establish the fact that the said Appellant is in any way instrumental in the illegal importation of gold. In support of his contention, the appellant placed his reliance is placed on the judgment passed by the Hon'ble Bombay High Court in the case of UOI -vs- Jasmine Jayantilal Thadeshwar (2020) (372) ELT 817(Bom).
3.4. The appellant submits that there were no evidence to prove that the gold so seized were of foreign origin. Thus, it is his submission that the said gold has been seized without having any 'reasonable belief' that the said gold were of foreign origin. The appellant relied on the decision in the case of Rara Brothers V. M.L. Dey [2000(126) E.L.T.425, wherein it has been held that when there is no reasonable belief that that the goods are liable to confiscation, seizure cannot be effected.
3.5. The appellant submits that there is no foreign marking in the gold and the same is indigenously Page 5 of 13 Appeal No.: C/75684/2020-DB procured. Also, the purity percentage of the gold seized is not 99.9%. The gold bars were purified version of the of gold which was locally procured over the course of time. Thus, the appellant submits that the seizure and subsequent confiscation of the gold is legally not sustainable. In support of his claim, the appellant relied upon the decision in the case of S.K. Chains V. Commissioner of Customs (Prev.), Mumbai [2001(E.L.T. 415 (Tri-Mum.)]. 3.6. The appellant submits that the Ld Adjudicating Authority has relied upon his statement to implicate him in the offence He submits that he had retracted his statement vide his Affidavit cum Declaration dated 26.06.2019, on the very first available opportunity. In his Affidavit, the appellant submitted that he has brought the said gold bars under proper documents from Admednagar (Maharashtra) to Guwahati for making ornaments. Accordingly, he submits that the retacted statement cannot be relied upon against him. It is his further submission that the adjudicating authority failed to follow the provisions of Section 138B of the Customs Act, 1962 and hence the said statement is not an inadmissible evidence. Thus, the penalty imposed on him by relying on the said statement is liable to be set aside.
3.7. In view of the above submissions, the appellant prayed for setting aside the penalty imposed on him.
4. The Ld. A.R. submitted that the gold was seized from the possession of the appellant by the police personnel and later handed over to customs authorities for initiating action under the customs act. All subsequent proceedings were initiated by the proper officer of customs, under the Customs Act, Page 6 of 13 Appeal No.: C/75684/2020-DB 1962. Thus, there is no illegality in the seizure of the gold. The Ld. A.R. submits that the appellant was not having any document for the licit purchase of the gold at the time of his interception. As the gold was of foreign origin, the onus is on the appellant to prove that the said gold was not smuggled in nature. As the appellant has not discharged the obligation cast upon him as per section 123 of the Customs Act, 1962, the Ld. adjudicating authority confiscated the seized gold. Also, penalty has been imposed on the appellant for his role in the offence. Accordingly, he supported the penalty imposed on the appellant.
5. Heard both sides and perused the appeal documents.
6. We observe that penalty has been imposed on the Appellant for his role in the alleged offence and the evidences available on record to substantiate the allegations. For the sake of ready reference, the role played by him and the evidences available to substantiate his role in the alleged offence, as indicated in paragraphs 28 to 30 of the impugned order, is reproduced below: -
28. Shri Kiran Vishwanath Patil in his reply to the SCN has also claimed that he was carrying a Transfer Voucher No.0-201 dated 20.10.2018 issued by M/s Kalpadruma Gems & Jewels India Ltd., Ahmednagar, Maharashtra in respect of the 5 gold bars which was not taken into record by GRP.
This is examined as under:
i) The Seizure List dated 22.10. 2018 of the GRP, which was prepared in the presence of two witnesses, does not mention the above-said voucher.
ii) Shri Kiran Viswanath Patil did not mention about this said Transfer Voucher while subscribing Page 7 of 13 Appeal No.: C/75684/2020-DB his voluntary and questionnaire statement on 22.10.2018.
iii) Shri Kiran Viswanath Patil did not mention about this said Transfer Voucher when he was produced before the Judicial Magistrate on 23.10.2018
iv) Shri Kiran Vishwanath Patil did not mention about this said Transfer Voucher when he filed his bail application No. 2575/2018 before the Hon'ble Gauhati High Court on 10.12.2018.
v) In his Affidavit cum Declaration dated 26.06.2019, wherein he retracted his statement, Shri Kiran Vishwanath Patil stated that he had brought the five gold bars under proper documents from Admednagar, Maharashtra to Guwahati for making ornaments. But he did not mention what those purported documents were. If the said Transfer Voucher dated 20.10.2018 in support of the five gold bars was available and he was carrying the same, why did he not produce before the Custorns officer when his statements were taken on the day of detection on 22.10.2018, why did he not tell the Judicial Magistrate about this document when he was produced on 23.10.2018, why did he not tell the Gauhati High Court about this document when he filed his ball application No. 2876/2018, why did he not mention the details of the said Transfer Voucher in his Affidavit cum Declaration dated 26.06.2019?
(vi) It is also seen that Shri Kiran Vishwanath Patil's earlier ball application dated 2575/2018 was rejected by the Gauhati High Court vide order dated 28.11.2018. Here also, there is nothing regarding the said Transfer Voucher dated 20.10.2018.
(vii) In the Affidavit cum Declaration dated 26.06.2019, it is also stated that "That the factual position in relation to the said gold bars was that I Page 8 of 13 Appeal No.: C/75684/2020-DB brought the said gold bars under proper documents from Admednagar (Maharashtra) to Guwahati for making ornaments hence I was taking the said gold bars under proper documents to Kolkata to make an effort to make omaments. Now the pertinent question is, if the gold bars were brought from Ahmednagar, Maharashtra to Guwahati for making ornaments, why did he make a detour to Kolkata on his way to Guwahati? He reached Guwahati on 20.10.2018 in the evening and he was proceeding to Kolkata on 22.10.2018 when he was caught with the gold bars. If the gold bars were brought to Guwahati to make ornaments, why was he leaving Guwahati only after one day? If the gold bars were brought to Guwahati to make ornaments, why this was not stated when he subscribed his statements before the Customs officer on the day of detection on 22.10.2018, when he was produced before the Judicial Magistrate on 23.10.2018 and in his bail applications?
(viii) Now, the most damning evidence of afterthought manipulation and fabrication of documents by Shri Kiran Vishwanath Patil is as under:
As stated by him, Shri Kiran Vishwanath Patil started from his village (in Maharashtra) on 12.10.2018, he visited his uncle's house in Kolkata on 14.10.2018, on 20.10.2018 at about 4.00 pm he reached Guwahati by flight and in Guwahati he stayed in Room No. 107 of Hotel Amber, Fancy Bazar, Guwahati. If, as claimed by him, he brought the gold bars from Ahmednagar, Maharashtra with the Transfer Voucher dated 20.10.2018, how was this possible because he had already left Ahmednagar on 12.10.2018 and he was already in Guwahati on 20.10.2018? The fact was that, the said Transfer Voucher was not Page 9 of 13 Appeal No.: C/75684/2020-DB with Shri Kiran Vishwanath when he left Ahmednagar, Maharashtra for Guwahati, the said Transfer Voucher was not with him when he was intercepted with the gold bars.
The said Transfer Voucher was only an afterthought with connivance with the said M/s Kalpadruma Gems & Jewels India Ltd., Ahmednagar, Maharashtra.
(ix) As brought out above, the only conclusion that can be drawn regarding the said Transfer Voucher dated 20.10.2018 was an afterthought by Shri Kiran Vishwanath Patil. This is nothing but a manipulation and fabrication of documents by Shri Kiran Vishwanath Patil.
29. M/s Kalpadruma Gems & Jewels India Ltd., Ahmednagar, Maharashtravide their letter dated 22.06.2019 had claimed ownership of the gold bars under seizure. Vide further letter dated 15.07.2019, it was requested that they be issued notice under Section 124 of the Customs Act. They stated that they had handed over five gold bars weighing 7998.650 gms of pure gold (which were melted) on 18.10.2018 to Shri Kiran Vishwanath Patil for making 22 ct gold ornaments, Transfer Voucher No. 0-201 dated 20.10.2018 issued in the name of Mr. Kiran Patil, Guwahati was enclosed. Therefore, if the gold bars were handed over to Shri Kiran Vishwanath Patil on 18.10.2018 by M/s Kalpadruma Gems &Jewels India Ltd., how the said Transfer Voucher was dated 20.10.2018? Moreover, Shri Kiran Vishwanath Patil had already left Ahmednagar, Maharasthra on 12.10.2018. Therefore, the said Transfer Voucher could not have been with Shri Kiran Vishwanath Page 10 of 13 Appeal No.: C/75684/2020-DB Patil when he was apprehended with the gold bars on 22.10.2018 at the Guwahati Railway Station. Moreover, in the said Transfer Voucher, the address of Shri Kiran Vishwanath Patil is given as Guwahati, whereas, he is from Tavadarwardi Village, Sangli District, PS. Bhilawadi, Maharashtra- 416303.
29.1 In the above said letter dated 22.06.2019, M/s Kalpadruma Gems & Jewels India Ltd. also mentioned that Kiran Vishwanath Patil's uncle Mr. Sanjay Kadam in Kolkata deals in wholesale selling of gold ornaments and the pure gold was given to Mr. Kiran. The role of the said uncle Snajay Kadam as mentioned by M/s Kalpadruma Gems & Jewels India Ltd. in their letter was never mentioned by Shri Kiran Vishwanath Patil while subscribing his statements before the Customs officer on 22.10.2018, while he was produced before the Judicial magistrate on 23.10.2018, in his bail application dated 23.10.2018 before the Chief Judicial Magistrate, Kamrup (M), Guwahati. 29.2 Therefore, the claim of the said M/s Kalpadruma Gems & Jewels India Ltd. is also without any merit. This was nothing but manipulation and connivance with Shri Kiran Vishwanath Patil. Accordingly, the request of the said M/s Kalpadruma Gems & Jewels India Ltd. was rightly rejected by the competent authority and they were informed vide letter dated 31.07.2019 (Refer to para 23 supra).
30. Considering the facts and circumstances of the case and the afterthought manipulations and fabrication of documents by Shri Kiran Vishwanath Patil, I Page 11 of 13 Appeal No.: C/75684/2020-DB give credence to the statements recorded by him on the day of seizure under Section 108 of the Customs Act before the Customs officers. It is undisputed that Shri Kiran Vishwanath Patil was carrying the five gold bars under seizure without any licit document. It is a fact that Guwahati is the gateway to North East and well connected to the rest of India through rail, air and road. Every item importedthrough the North East international borders, whether legally imported or smuggled, has to pass through Guwahati if it is transported/movedby rail or road. Hence, the contention of Shri Kiran Vishwanath Patil that seizure was effected on the mainland and not near the international border is not tenable. Shri Kiran Vishwanath Patil also contended that there is no foreign marking on the gold bars and therefore it cannot be said the gold bars under seizures were smuggled into India from foreign country. This is an absurd argument. Does he mean that goods without foreign marking are not smuggled. Shri Kiran Vishwanath Patil also contended that no evidence has been brought out in the SCN as to from which country the gold bars had been brought into India. In the present case even though there is no foreign marking on the gold bars, however, from the nature of interception of Shri Kiran Vishwanath Patil, his initial inability to explain his carrying the gold bars, absence of any licit document in support of the gold bars and the details disclosed in his statements, the Customs officers had reasonable belief that the gold bars are of smuggled nature. Since gold is a notified item under Section 123 of the Page 12 of 13 Appeal No.: C/75684/2020-DB Customs Act, 1962, as explained and brought out in the preceding paragraphs, the Customs officer had the reasonable belief that the gold bars are smuggled in nature and therefore the same were seized under Section 110 of the Customs Act. Thereafter, the onus was on Shri Kiran Vishwanath Patil to prove that the gold bars are legal in nature. He had failed to do so. He had tried to mislead and hoodwink the quasi-judicial authority with his belated and unmerited retraction, weaving unbelievable story and manipulating and fabricating documents in connivance with some other party.
6.1. The appellant submitted that he has been penalised on the basis of his own statement. He has retracted his statement vide his Affidavit cum Declaration dated 26.06.2019. However, we find that he has retracted his statement recorded on 22.10.2018, only on 26.06.2019. We observe that the appellant has not mentioned anything about the recording of the statement under duress before the Magistrate or in the bail applications filed by him. He was released on bail w.e.f 12.12.2018, however, he has not retracted his statement till 26.06.2019.Thus, we observe that the retraction was only an afterthought, which need not be taken cognizance. Accordingly, we hold that the statements given by the appellant can be relied upon against him to establish his role in the offence.
6.2. Section 112(b)(i) of the Customs Act of 1962 states that someone who acquires possession of goods that they know or believe are liable to confiscation is liable to a penalty. In view of the above findings, we hold that the Appellant had knowingly or consciously involved himself in the Page 13 of 13 Appeal No.: C/75684/2020-DB alleged act of carrying gold without any valid documents. As the role of the appellant in the offence committed has been established based on his own admission, we hold that the appellant is liable for penalty as per section 112 (b)(i) of the Customs Act, 1962. Accordingly, we hold that the ld. adjudicating authority has rightly imposed penalty on the Appellant under Section 112(b)(i) of the Customs Act, 1962.
6.3. However, regarding the quantum of penalty imposed, we observe that the appellant is an intermediary and he was not the ultimate beneficiary of the smuggled gold. Thus, we observe that the penalty imposed on him is very high and it can be reduced to commensurate with the role played by him in the offence. Accordingly, we reduce the penalty imposed on the appellant in the impugned order from Rs.52,55,000/- to Rs.10,00,000/-
7. In view of the above, we hold that the appellant is liable for penalty under Section 112(b)(i) of the Customs Act, 1962. However, we reduce the penalty imposed on the appellant from Rs.52,55,000/- to Rs.10,00,000/-. The appeal filed by the appellant is disposed of on the above terms.
(Order Pronounced in Open court on 07.05.2025) (R. MURALIDHAR) MEMBER (JUDICIAL) (K. ANPAZHAKAN) MEMBER (TECHNICAL) RKP