Customs, Excise and Gold Tribunal - Mumbai
Rajendra Jagannath Parekh And Ajay ... vs Commissioner Of Customs on 13 February, 2004
Equivalent citations: 2004(93)ECC597, 2004(175)ELT238(TRI-MUMBAI)
ORDER Moheb Ali M., Member (T)
1. These appeals arose out of the order of the Commissioner who confiscated the silver in question and imposed penalties under Section 111 (d) and 112 of the Customs Act respectively in the impugned order.
2. The officers of DRI of Ahmedabad collected intelligence on 25.12.1990 that M/s. Kamal Refinery received 10 to 12 bars of silver of foreign origin weighing approximately 35 kgs each, for converting them into silver chorsas. They visited the refinery on the same day. The search of the premises resulted in the finding of 704 silver chorsas weighing 357.146 kgs valued at Rs. 22,84,734/-. On 534 such chorsas the marking "Electro refined silver - 999" was noticed.
3. The search of the premises was conducted in the presence of three workers of the Refinery. Ajaybhai Shashikantbhai Parekh the nephew of the owner of the Refinery and the panch witnesses. The person in charge of the Refinery at the material time, Shri Ajay did not have any documents evidencing legal importation of the said silver. The officers seized the said silver under Section 110 of the Customs Act, on the reasonable beliefs that it was smuggled into the country.
4. It is obvious that the seized silver bars did not have any foreign markings on them. Whatever reasonable belief the officers entertained that the silver was liable to confiscation under the Customs Act was formed on the basis of the circumstances under which silver was found in the refinery, the averments made by Shri Ajay, when the officers questioned him during their visit and his subsequent statement made under Section 108 before the officers. Shri Ajay Parekh admitted that the 704 silver chorsas were made out of 10 silver bars with foreign markings.
5. The statements made by the three workers 1. Hemubhai Babubhai Thakore 2. Manubhai Dagibhai Masani and 3. Bhairambhai Jivanbhai Prajapati revealed that 10 silver bars were brought by some unknown person in an Ambassador car, whose number they did not make out as it was written in English, that they unloaded the said 10 silver bars, kept them in the refinery and that thereupon the unknown person departed in the same car.
6. The first named worker in his statement dated 25.12.1990 said that some person came to the refinery in the Ambassador car around 12 to 1 pm on 25.12.1990. He along with the other the workers unloaded the silver from the car and kept them in the refinery only on the instructions of the owner of the refinery Shri Rajubhai over phone. The owner further informed him that he was sending Ajaybhai (nephew) to the refinery. This version was further corroborated by the other two workers. All the three workers and Shri Ajay admit that the melting of the ten bars was undertaken in the presence of Shri Ajay, the nephew.
7. Shri Ajay in his statement dated 25.12.90 after giving his filial order and numerous family details, said that he received a phone call from his uncle, the owner of the refinery, on 25.12.90 directing him to go to the refinery as there was work to be done. He accordingly reached the refinery at about 1 p.m. He noticed the silver bars lying in the Refinery. He was annoyed at the sight of the 10 silver bars and asked Hermubhai as to why he did such an "illegal act" and questioned him as to who permitted him to do so. Shri Hemubhai, the worker informed him that it was the owner of the refinery who asked him to take delivery. It was obvious that the unknown person who brought the 10 silver bars left before the arrival of Ajaybhai, Shri Ajaybhai stated that the ten silver bars had same foreign markings and the workers melted the same silver bars into chorsas. The officers of DRI visited the refinery while the process of embossing the chorsas was taking place. He explained the various notings on the chits, to whom the melted silver had to be delivered, what quantity was meant for whom etc. All this was on 25.12.90. The owner of the refinery never showed up. All these statements were retracted before the CMM, Ahmedabad on 27th December 1990.
8. From the above narration it appears that the officers had reasonable belief that 704 pieces of silver found in the refinery were melted out of 10 silver bars which were smuggled into the country. At the relevant time silver was not allowed to be imported into the country except with the express permission of the RBI as per the import/export policy. It is also clear that silver is not notified under Section 123 of the Customs Act in which event, the burden to prove that it is not smuggled into the country is not on the person from which possession its is seized nor is it on the person who claims himself to be the owner.
9. To complete the narration one has to revert back to the statement of the owner of the refinery Shri Rajubhai (Rajendrabhai J. Parekh) dated 12.1.91. The seizure worth of Rs. 22 lakhs took place in his refinery on 25.12.90. He was informed about it on 26.12.90 by his wife when his house was searched. But according to him he had good and sufficient reason to make himself scarce till 12.1.1991.
10. The sequence of events according to him were that on 23.12.90 he felt an urgent need to buy silver. He set off in his ambassador car No. GBN 1585 all by himself to Delhi, reached it sometime between 8.30 to 9 A.M. on 24th, met one Shri Badrinarayan Sharma of M/s Dhancholia & Sons around 11 A.M., purchased 10 silver bars (5+5) valued at Rs. 23,20,030/- on credit, proceeded to come back to Ahmedabad on the same day in the same car, reached Ahmedabad around 11 to 11.30 A.M.; went home, handed over his car and silver to his driver Babubhai with instructions to hand over the silver to the refinery, he instructed his cousin (Nephew) Ajay to go to the refinery and get the silver melted quickly; that the workers at the refinery could not identify his driver Babubhai and therefore he had to instruct his worker Hemubhai to take the delivery of the silver and that he was also sending Ajaybhai to the refinery; that he had to deliver the chorsas to various persons; that while he was sitting in his shop at Ahmedabad he received a call that his mother was sick at Jetpur; he rushed to that place to look after her; that on 26th he was down with typhoid (the same day when his wife informed him that silver at the refinery was seized and his house at Ahmedabad was searched); that due to illness he could not attend to the summons issued by the DRI; that he made his payments to the Delhi bullion dealer by demand drafts (Rs.5 lakh + Rs. 6.63 lakhs) dated 11.1.91; that he was in possession of bills issued by the dealer for 10 silver bars and that 704 chorsas seized at his refinery were made after melting the 10 silver bars he got from Delhi. Babubhai, the driver, who did not go to Delhi with Rajubhai, in his statement dated 17.1.91 said that he came to Ahmedabad from Jetpur at 6.30 A.M. and went to Rajubhai's (the owner of the refinery) residence where Rajubhai's elder brother told him that he had to go out with car and accordingly he was told to go to Kamal refinery GIDC Odhav with white ambassador car GBN 1585 wherein 10 silver were kept and that when he want to the refinery one of the workers Hemubhai talked to Shri Rajubhai, the owner of the refinery and the car, and thereupon the said worker unloaded the silver. The car was subsequently seized by the officers as it was engaged in the transport of smuggled goods.
11. For the purpose of this appeal it is not important as to how the alleged recipients of the silver were not in Ahmedabad and how they were in some lodge at Rajkot and how they denied having to do anything with the silver found at Kamal refinery.
12. One other incident of some significance in this whole episode is the fact that all the concerned persons were acquitted by the CMM when a criminal prosecution was pursued by the department against the persons.
13. The Commissioner in the impugned order gave the following findings:-
a. The silver which was melted in the refinery on 25.12.90 and converted into chorsas was of foreign origin according to the statement made by Ajaybhai. His routine retraction before the CMM was not supported by any evidence of coercion or duress as alleged by him and the CMM did not take any cognisance of it while deciding the bail application. Nor did the Magistrate order any enquiry into the allegations made against the officers by Ajay Parekh.
b. There is no allegation in the bail application that thepanchnama was drawn anywhere other than in Kamal refinery. The contents of the panchnama were not found to be false.
c. One Ajay Parekh admitted that the silver bars (10 in all) had foreign markings there was no need for the department to enquire what sort of foreign markings were found on the bars.
d. Shri Rajendra Parekh, the owner of the refinery, stated that he purchased 10 silver bar from Delhi reaching Delhi on 24th, brought them back to Ahmedabad and asked his driver to take them to the refinery. The whole transaction appeared to have taken place on credit basis even though Rajendrabhai was transacting with the Delhi bullion merchant for the first time. The seller at Delhi could not recognise the photograph of Rajendrabhai even though he handed over silver worth Rs. 23 lakhs. Rajendrabhai reached Ahmedabad from Delhi around 11 to 11.30 A.M. whereas Ajaybhai said that he received a call from him directing him to go to the refinery around 10 to 10.30 which shows that Rajendrabhai was at Ahmedabad much earlier them 11 A.M. on 25th. The discrepancy in the version of Rajendrabhai and Ajay clearly show that the whole story of purchase of silver at Delhi is false.
e. Even if the purchase of silver at Delhi was genuine in spite of various discrepancies, the silver so purchased was different from the one seized at the refinery. Rajendrabhai's conduct of fleeing away from Ahmedabad, his complete lack of interest in the seizure of which be came to know the very next day (26th Dec.) his reluctance to send the proof of purchase of silver even though he was in possession of purchase bills as early as 25th December go to establish that the silver alleged to have been acquired from the Delhi bullion merchant is nor the one seized at the refinery.
f. In such incidents as these it is the circumstantial evidence that is more telling then the alleged proof of local purchase to establish that the silver under seizure was illegally brought into the country. In fact that the weight of the silver purchased at Delhi was not even verified by the buyer that the registers maintained at the refinery do not show any entry about the receipt of silver into its premises and the fact that Vijay has categorically stated that the silver bars had foreign markings clearly establish that the silver in question was smuggled into the country. He therefore confiscated the seized silver under Section 111(d) read with Section 120 of the Customs Act. Imposed penalty on the owner of the refinery, Rajendrabhai and his nephew Shri Ajaybhai who actually supervised the melting of silver for converting it into chorsas.
14. Heard both sides.
15. It was argued on behalf of the appellants that the Commissioner relied upon Ajay Parekh's statement to the effect that the ten silver bars melted in the refinery had foreign marking. This statement was later retracted. The Commissioner did not give any credence to the retraction made. Ajay Parekh's statement was bare and vague about the foreign marking and should not have been relied upon.
16. The statements made by the three workers in the refinery did not disclose mat the silver was of foreign origin. Whatever they stated earlier was retracted when the bail application was moved before the Magistrate.
17. Rajendrabhai statement clearly shows that the silver was purchased at Delhi. He explained each and every circumstance that was alleged to be against him. The department has no evidence that the silver in question was smuggled for it to confiscate it under Section 111(d) read with Section 120 of the Customs Act.
18. The appellants were discharged under Section 245(1) of CRPC in the criminal protection launched against them. The department's criminal revision application against the discharge did not meet with any success. The appellants were released from detention under COFEPOSA as the Advisory Board did not fixed sufficient evidence that they were dealing in smuggled silver. The discharge of the appellants clearly shows that not even prima facie case exists against them. The Commissioner was not correct in holding that the allegation levelled against the appellants were established when on the same evidence they were acquitted by a Magistrate. In this connection he relied upon the decisions of the Tribunal in the case of Kirit Parekh v. CC&E, Hyderabad 2001 (136) ELT 955 in which the Tribunal held that it cannot ignore findings of trial court exonerating appellant substantially on evidence; Tulsidas V. Paiel v. CC, Mumbai case where the Tribunal held that finding of the Court exonerating the appellant on evidence cannot be ignored by Tribunal. He argued that the Commissioner's findings are not in conformity with the findings of the Trial Magistrate in the same given circumstances. He argued that the Commissioner ought not to have relied upon retracted statement of Shri Ajay Parekh. The department has not discharged the burden cast on it to prove that the silver in question is smuggled into the country.
19. The Ld. DR reiterated the findings of the Commissioner and filed case law in support of the decision, Narendra Kumar M. Patel v. CCE, Jaipur (1986 (26) ELT 108) wherein the Single Member Bench discussed at length as to the nature of evidence that is required to hold that goods are liable to confiscation under Section 111(d) and a person is liable to penalty under Section 112 of the Customs Act. He argued that the attending circumstances and the conduct of the person who claims himself to be the owner of the goods the clearly bring home the fact that the silver in question is not legally acquired. He argued that the silver in question is rightly confiscated and the persons concerned were rightly penalised.
20. There is no gain saying the fact that silver at the relevant point of time was not notified under Section 123 of the Customs Act. It is equally a fact that import of silver is restricted at the relevant time.
21. The silver chorsas (704) that were found in the refinery did not have any foreign markings and none could expect them given the fact that the chorsas were the result of melting 10 silver bars each approximately weighing 35 kgs and above. On most of them the refinery workers have embossed "electro refined 999" though what took place in the refinery was only melting of bigger bars and not any refining of silver. So the 704 chorsas came out of melting .10 silver bars as admitted by all concerned. Given the fact that the officers of DRI arrived at the refinery only after the 10 bars were melted they could not have found any markings except the ones embossed by the refinery workers on the chorsas. That did not however mean that the officers could not ask the person in charge of the refinery as to where from and how the silver was acquired. Burden of proof being on the officer to prove the smuggled nature of the goods does not however take away the powers to investigate cases. It is the person who was in charge, Ajay, who informed the officers in the presence of panchas as well as in his statement dated 25.12.1990 that the silver bars (10) had foreign markings. What kind of markings they were he alone knew, but he chose to say that the silver before melting had foreign markings. Coupled with the intelligence gathered by the officers, the statement of Ajay became significant in forming a reasonable belief mat the silver in question is of foreign origin. Add to this situation that no entries in the stock register maintained in the refinery were made regarding the receipt of the silver and the person concerned was not in a position to produce any document for its legal possession except saying that some unknown person delivered the silver to the refinery workers before his arrival. The officers would have more than sufficient reason to entertain a belief that the silver has not imported into the country legally. The silver is therefore rightly seized. The presence or absence of foreign markings on goods which cannot be imported into the country without the cover of a licence, matters little to form a reasonable belief which basically depends on the mind of the officer exercising the power to seize under circumstances which are peculiar to each case, though foreign markings would certainly help in forming the reasonable belief.
22. Now, it is Ajay who admitted to the existence of foreign markings on the ten silver bars. He even said that he abused the workers for having unloaded the silver and kept in the refinery. He had full knowledge of the fact that all was not well with the silver. He permitted the melting of the silver only after he was told that the owner of the refinery gave permission to undertake the job. His statement was not vague as the learned advocate makes it out. Nothing prevented Ajay from making further disclosure regarding the nature of foreign markings.
23. The officers were accused of obtaining the statement under duress. This allegation was dealt with by the Commissioner. The Magistrate himself did not take any cognisance when the accusation is made against the officers. It is noticed that only Ajay but the three refinery workers also retracted the statements made by them. All the bail applications have similar phraseology, similar allegations as if they were dictated by someone. Such retractions, as they, were rightly rejected by the Commissioner. Further the workers who said that they were not aware whether the silver had foreign markings or not had nothing to retract. Their further statement that the person who delivered the silver was not known to them except that he came in a white Ambassador car, was further corroborated by the owner of the refinery himself when he stated that Babubhai who was the driver was not known to the workers.
24. What is admitted need not be proved by the officers. This is a legal maxim. In this case Ajay admitted to the foreign markings on the silver and that is what is inferred by the officers from circumstantial evidence. After this the onus of proof to establish that the foreign marked silver was obtained through legal channels is on the person who had peculiar knowledge of the fact. Ajay failed to do so.
25. It is only much later the owner of the refinery and in this case the owner of the silver itself who has attempted to prove that the said silver was purchased legally from a Delhi bullion dealer. The show cause notice clearly brings out how this theory of purchase has several short-comings. The Commissioner in his order deals with the aspect in a detailed fashion. In his statement dated 12.1.1991, (seizure of the silver was on 25.12.1990) says that he rushed in his car to Delhi to purchase the silver on 23rd December 1990, purchased it on 24th, returned to Ahmedabad in his car and reached there on 25.12.1990. If that were to be so, he had in his possession proof of legal acquisition on 25.12.1990 itself. He came to know of the seizure on 26th when he was at Jetpur but chose not to clarify the matter till 12.1.1991. The reason stated was mat he fell sick (typhoid) on 26th December and had no occasion to send the proof or answer the summons. This version has its own drawback. Property worth Rs. 23 lakhs legally belonging to him was seized and he does not bat an eyelid to prove that something close to terrible miscarriage of justice had taken place. The Tribunal has observed that belated production of purchase bills much after the seizure can be negeleted; Kailash Chand Jain v. CEE Kanpur (2002 (143) ELT 195). The conclusion that one can reasonably draw from such belated versions is that the bills were not in his possession on the day when the seizure took place. Indeed the belated bills may not refer to the silver in question as is often noticed and that is what the Commissioner concluded. It is not an unreasonable conclusion as is attempted to be made out by the learned advocate. Once the explanation given by Rajendrabhai is rejected for valid reasons, the onus shifts to him to come out as to how he acquired the goods in question. The department clearly indicated in the show cause notice as to how the explanation was not acceptable and for what reasons. While replying to the show cause notice and indeed during the proceedings before the Commissioner, the onus has not been discharged except reiterating what has been stated in Rajendrabhai's statement dated 12.1.1991.
26. There is an essential difference between "burden of proof as a matter of law and pleading and as a matter of adducing evidence. The burden in the former sense is upon the party who invites a decision in the existence of certain facts which he asserts. This burden is constant and never shifts. But the burden to prove in the sense of adducing evidence, i.e. onus of proof shifts from time to time having regard to the evidence adduced by one party or the other, or the presumption of fact or law raised in favour of the one or the other. Such shifting of onus is a continuous process in the evaluation of evidence. When sufficient evidence either direct or circumstantial in respect of its contention is disclosed by the revenue adverse inference could be drawn against the assessee if he fails to rebut it by materials in his exclusive possession. It is only on the application of the principles of shifting onus, the rule relating to burden of proof in Section 106 and the presumption that may be drawn under Section 104 of the Evidence Act can sustain (AIR 1961 SC 1474; AIR 1964 SC 136; AIR 1966 1867 SC; AIR 1972 SC 2136; AIR 1974 SC 859; AIR 1975 SC 182; AIR 1975 SC 2083 and 1983 (13) ELT 1620 referred to).
27. Applying the above maxim as laid down by the Apex Court to the present case, it is observed that the department by adducing circumstantial evidence has brought out that restricted/prohibited goods were brought into the country without a valid licence. Rajendrabhai's attempt to prove the licit origin of the silver as discussed above has several loopholes. Just to mention a few one may revert back to his statement read with Hemubhai's (the worker of the refinery) statement dated 25.12.1990. Hemubhai says that Rajendrabhai has asked him to unload the silver and attend to its melting. This was on 25th itself. Rajendrabhai says that he was in possession of bills for the purchase of the silver on 25th. If that were to be so, there is no reason why he has not disclosed this fact to his worker or for that matter to his nephew whom he has asked to go and attend the work in the refinery on 25th. If he has disclosed the fact of purchase of silver to these persons, their statements would have been to the effect that the silver in question was sent by the owner of the refinery through his driver. Hemubhai would not have stated that an unknown person has delivered the silver. He would have said the unknown person was none other than the driver of Rajendrabhai himself. There are other inconsistencies as well. The driver says that on 24th itself he was told that he had to go to the refinery with silver by the brother of Rajendrabhai whereas as Rajendrabhai says that he brought the silver to Ahmedabad on 25th and he himself directed the driver not his brother. There are other inconsistencies as well All these inconsistencies throw serious doubts on the version of Rajendrabhai. The Commissioner rightly therefore, rejected his version. Basing on the circumstantial evidence, he concluded that the onus to prove the fact of licit origin of the silver has not been discharged by Rajendrabhai who claimed the ownership.
28. In Issardas Daulatram v. UOI AIR 1966 SC 1867, the SupremeCourt held that even though there as no direct Evidence of illicit import, it could be still deducted or inferred otherwise from the credibility of the story of acquisition and the conduct of the person from whom the gold is seized. These were relevant pieces of evidence which bore on the question regarding the character of the gold - whether it was licit or illicit. This decision of the Court was at a time when Section 178A was not in the statute book (Burden of Proof).
29. In Kanungo and Co. v. CC, Calcutta 1983 AIR 1972 SC 2136, the apex court held that even though the burden of proof is on the department they discharged that burden by falsifying in many material particulars the story performed by the appellant. Equally a false denial could be relied upon by the Customs authorities for the purpose of coming to the conclusion that the goods are illegally imported.
30. In CC v. D. Bhoormull AIR 1974 SC 859, the Supreme Court held that an adverse inference of facts may arise against him which coupled with the presumptive evidence adduced by the prosecution would rebut the initial presumption of innocence and in the result prove him guilty. In this case, the Apex Court was dealing with notified and non-notified goods. The Apex Court held that the dubious conduct of a person may reasonably lead to the conclusion that the goods are smuggled. In the present case, the disappearance of Rajendrabhai for one reason or the other and his refusal to show up in spite of summons only establish his dubious conduct. It appeared that he showed up only after fabricating evidence. He may or may not have purchased the silver at Delhi, prima facie it appears doubtful mat he did but that state does not establish the nexus between what is seized by the department and the one alleged to have been acquired at Delhi. The Apex Court also observed that for weighing evidence and drawing inference from it there can be no canon. Each case presents its own particulars and in real common sense and shrewdness must be brought into play.
31. In Labhchand Dhanpat Singh Jain v. State of Maharashtra AIR 1975 SC 182, the Apex Court observed that even in the absence of direct evidence, the character of goods recovered as well as the guilty knowledge of the accused could be inferred from circumstantial evidence.
32. The ratio laid down by the Supreme Court on various occasions seemed to have not been appreciated by the lower courts. The present case is not such that no circumstantial evidence exists to establish the illicit origin. Once Ajay Parekh stated that the silver he dealt with had foreign markings, he has to also tell the department how he has acquired it legally. Rajendrabhai's explanation being what it is, the department rightly discarded his theory.
33. The learned advocate stressed on the contention that both Rajendrabhai and Ajay Parekh were discharged by the court and that fact would have a bearing on the departmental proceedings. The case law cited by him is perused. However, while in criminal proceedings, the persuasion of the guilt must amount to such a moral certainty as convinces a tribunal beyond all reasonable doubt, in civil matters a mere preponderance of probability is sufficient, and the benefit of every reasonable doubt need not necessarily go to the department. In quasi criminal cases such as under the Customs Act prima facie doubt is sufficient to shift the onus to the accused (AIR 1966 SC 1667, AIR 1972 SC 2136 and AIR 1974 SC 859). The advocate relied upon the Tribunal's decision in Tulsidas V. Patel v. CC, Mumbai 2000 (119) ELT 616 to argue that acquittal in prosecution is bound to be taken into consideration while adjudicating the case. In the case cited, the Tribunal observed that identical allegations are made in the show cause notice and the complaint before the Magistrate (they are identical, any way, in all cases). The Tribunal observed that if the trial court acquits the accused, the Tribunal is bound to take that fact into consideration. Unfortunately, this decision does not refer to the various Supreme Court decisions and the decision of the Madras High Court mentioned above. Relying on these pronouncements on the nature of evidence required to establish a fact in the proceedings before a trial court and a quasi judicial authority, the argument of the appellant is rejected. The law laid down by the Supreme Court in D. Bhoormull's case has to be followed and not the one pronounced by a subordinate judicial forum.
34. Having regard to what has been discussed above, the following order is passed: While passing the order, it is observed that the appellants got a waiver of pre-deposit of penalty all these years. The confiscation of silver valued at Rs. 2,285,784/- is upheld. Penalty on Rajendra Jagannath Parekh is reduced to Rs. 5 lakhs. Penalty on Ajay Shashikant Parekh is retained.
35. The appeal of Rajendra Jagannath Parekh is partly allowed. The appeal of Ajay Shashikant Parekh is rejected.