Custom, Excise & Service Tax Tribunal
Sri Prafful Kumar Jain vs Hyderabad-I- Appeal on 27 March, 2024
(1) Appeal No. C/30269/2023
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. - I
Single Member Bench
Customs Appeal No. 30269 of 2023
(Arising out of Order-in-Appeal No.HYD-CUS-000-APP-01-23-24 (APP-I), dated
24.04.2023 passed by Commissioner of Customs & Central Tax (Appeals), Hyderabad)
Sri Praful Kumar Jain .. APPELLANT
(Authorised Signatory of
M/s Padmavati Jewellers)
D.No.11-36/3-16,
Palli Vari Street,
One Town Police Station,
Patha Basti,
Vijayawada Urban, NTR,
Andhra Pradesh - 520 001.
VERSUS
Commissioner of Customs .. RESPONDENT
Hyderabad - II Kendriya Shulk Bhavan, L.B. Stadium Road, Basheerbagh, Hyderabad, Telangana - 500 004.
APPEARANCE:
Shri B Seetha ramaiah, Consultant for the Appellant. Shri Pradeep Saxena & Shri A Rangadham, Authorised Representatives for the Respondent.
CORAM: HON'BLE Mr. ANIL CHOUDHARY, MEMBER (JUDICIAL) FINAL ORDER No. A/30221/2024 Date of Hearing:12.01.2024 Date of Decision:27.03.2024 [ORDER PER: ANIL CHOUDHARY] This appeal is filed against impugned Order-in-Appeal against absolute confiscation of 211.07 gms of gold valued at Rs. 10,70,547/- under Section 111 (d), (i) and (j) of the Customs Act and also against imposition of penalty of Rs. 2,14,000/- under Section 112 (a) and (b) on the appellant proprietor of M/s Padmavati Jewellers.
2. The appellant is a jeweller by profession and Proprietor of M/s Padmavati Jewellers at Vijayawada. Briefly stated, the facts are that the Officers of the Air Intelligence Unit (AIU), RGIA Airport, Hyderabad, received (2) Appeal No. C/30269/2023 specific intelligence that there is domestic transportation of foreign marked Gold Bars without proper documents through Indigo flight from Hyderabad to Jaipur through Flight No. 6E467 vide Airway Bill No. 312/HYD/46653714 dated 02.10.2020 and No. 312/HYD/46653725 dated 02.10.2020. Acting on the same, the Officers of the Air Intelligence Unit (AIU) intercepted the consignment.
3. The officers on verification of the above referred Airways Bills, found that M/s VBS Parcel, Hyderabad was sending 18 Kilograms (approx) gold bars/gold jewellery packed in six tin boxes covered with cloth packing to Shri Bhagathlal Gurjar & Surgyna Saini, Mumbai through Pawan Cargo Forwarders Pvt Lt., Hyderabad and three Kilograms of gold jewellery packed in one Tin Boxes covered with cloth packing to Shri Kamal Kishore Teterwal/Sunil Kumar, Jaipur. In the presence of representatives of courier agencies, GMR Cargo executives, on request from the officers, scanned certain number of the said packages, which indicated the presence of some yellow metal. Subsequently, the packages No. 4 and 6 were opened, wherein 17 sub-packets were found in package no. 4 and 15 sub-packets were found in package no. 6. On further opening of the sub-packets, the officers found foreign marked yellow metal biscuits, yellow metal pieces, yellow metal jewellery items and loose crystal etc. No supporting documents/bills were found accompanying the said packages.
4. On suspicion that the yellow metal bars found in package Nos. 4 and 6 to be made of gold, the officers approached Shri V. Vijay Kumar, a Government approved assayer (assayer in short) to assay the contents of the packages. Upon analysis by way of conducting specific tests such as "kasouti test" and "acid test", Shri V. Vijay Kuamr ascertained that the said yellow metal biscuits are of foreign marked 24 Carat Gold biscuits. Subsequently, a comprehensive report dated 03.10.2020 was also given by the assayer certifying that the said yellow metal bars are that of 24 carat foreign origin gold bars and that the other items are gold jewellery, Diamond studded jewellery, loose diamonds and uncut diamonds etc. As per the valuation report dated 03.10.2020, the items inventories was valued at Rs. 6,62,46,387/-. Also, the seven gold packages marked as M-1 to M-7 were seized vide Panchnama dated 03.10.2020 and sealed with customs seal in the presence of witnesses and the representatives of the courier agencies, on reasonable belief that the appellant smuggled the goods by not declaring (3) Appeal No. C/30269/2023 the same to the Customs with intent to evade payment of Customs duty and the same are liable to confiscation under the provisions of the Customs Act, 1962.
5. While the investigation in respect of items other than gold bars were handed over to the jurisdictional CGST Rangareddy Commissionerate, the investigation in respect of the foreign marked gold bars was further taken up by Hyderabad Customs, during the course of which, owners of such foreign marked gold bars were ascertained. In the table of details prepared by the Department, the name of the appellant appears at serial no. 7 of the table and the details are as follows:
Sl.No. Jewellar's Courrier Quantity of Package Value as per name/Owner's Boy/Agency 24 Carat Number Inventory (in name Name Gold Bars Rs.) Seized 7 M/s Padmavati Mr. Harachand 211.07 6.8 10,70,547 Jewellers, Ram, Marudhar Grams Sivalayam Street, Express Service Cut piece bar Vijayawada
6. During the course of investigation proceedings, statements of representatives of respective courier agencies and the respective jewellers/owners of the above tabulated packages were recorded under Section 108 of the Customs Act, 1962.
7. In the same manner, voluntary statement was also recorded from the subject appellant Shri Prafful Kumar Jain of M/s Padmavati Jewellers (Sl No. 7 above of table IV in SCN), wherein he deposed that he is running a proprietorship concern and purchasing jewellery from different shops and sold the same to jewellery shops nearby. He is purchasing pure gold also for selling the same to different jewellers and for sending it for job work also. In case of the impugned consignment, they were sending gold for job work to M/s Kanak Jewellers, Mumbai first time. In his deposition he also mentioned that they procure the gold of 99% purity from M/s DP Gold and SVBC Gold, Vijayawada and produced the copy of the invoices of the procurement as well as invoices/challan addressed to the job worker to show that gold quantity of 211.07 grams were being sent to M/s Kanak Jewellers.
8. However, upon finding their explanation not satisfactory, the appellant were issued a show cause notice alleging that they have failed to produce any document regarding procurement of 24 Carat foreign marked gold, as (4) Appeal No. C/30269/2023 the document does not indicate purchase of foreign marked gold. In absence of any proper documentary proof and sending the same to Mumbai without any accompanying documents to show the source of the procurement, made himself allegedly liable to be confiscation as involved in the conspiracy of smuggling of gold bars and allegedly trying to dispose/sell in the local market without any invoices or document, rendering the impugned cut pieces of gold bars weighing 211.07 grams and valued at Rs. 10,71.547/- liable for confiscation under the provisions of Section 111(d), 111(i) and 111(j) of the Customs Act, 1962 and also liable for imposition of penalty under Section 112 (a) & (b) of the Customs Act, 1962.
9. In response to the above show cause notice, Shri Prafful Kumar Jain, representative of M/s Padmavati Jewellers appeared for personal hearing on 10.11.2021 and submitted before the original Adjudicating Authority, that the seized gold is not of foreign origin and/or improperly or illicitly imported by them and that the seized gold was purchased goods under proper invoices, therefore Section 111(d) and 111(i) do not apply. Similarly, they also submitted that the seized gold is not notified by the Government, under any notification and as such all the three Sub-Sections of 111 under which confiscation is proposed in the show cause notice do not apply and further requested that proceedings may be dropped.
10. Not agreeing to any of the submissions made by the appellant, the respondent observed that there is no ambiguity that the seized yellow metal bars are that of 24 carat foreign origin gold bars as the same is certified by the government approved assayer, vide his Comprehensive report dated 03.10.2020 and that the appellant failed to establish that the invoices submitted by him pertains to the same gold that was seized by the officers. Thereafter, the respondent passed the impugned order whereby he ordered absolute confiscation of gold bars (cut pieces) weighing 211.07 grams and valued at Rs. 10,70,547/-, seized under seizure memo dated 03.10.2020. Further, he imposed a penalty of Rs. 2,14,000/- on the appellant under the provisions of the Customs Act, 1962.
11. Being aggrieved with the Adjudicating Order, the appellant filed an appeal before the Commissioner (Appeals).
12. The Commissioner (Appeals) was pleased to dismiss the appeal confirming the Order-in-Original.
(5) Appeal No. C/30269/2023
13. Being aggrieved, the appellant is before this Tribunal.
14. Assailing the impugned order, the Learned Counsel for the appellant interalia urges that the appellant is a jeweller by profession dealing in gold and gold jewellery among others. The appellant is Authorised Signatory of M/s Padmavati Jewellers at Vijayawada. Shri Praful Kumar Jain, at the initial stage of enquiry had stated that they purchase gold jewellery for trading and also purchase pure gold from authorised dealers/re-sellers against proper invoice. Such gold purchased by them is sent to jewellers for sale or to gold artisans for job work. The appellant had evidence that they have been purchasing pure gold from different reputed agencies such as M/s DP Gold and SVBC Gold, Vijayawada and others. The appellant has produced the copy of invoices for procurement of the gold as well as the job work challanto the job worker M/s Kanak Jewellers, Mumbai. The Court below have erred in observing that the appellant failed to produce any document regarding procurement of 24 Carat foreign marked gold and thus arbitrarily rejected the evidence produced. Evidently, the gold pieces sent by the appellant were not of standard weight and size and the same were of uneven/irregular shape totally weighing 211.07 gms. Thus evidently, the gold sent by the appellant for job work was not of foreign origin as all foreign origin gold is of standard weight and size with mark of the refinery with unique serial number.
15. Learned Counsel further points out from the inventory prepared by the Officers reproduced in the Show Cause Notice, were in para 1.8 Table 4, the details of this appellant appearing at Serial No. 7 wherein the weight of gold is shown as 211.07 gms valued at Rs. 10,70,547/-. No details like number of pieces etc., is mentioned. Thus, evidently, the gold seized from this appellant being of uneven shape, size and weight is not the gold bar of foreign origin. Thus, evidently, the gold bar seized is out of the business stock in trade of the appellant. Thus, the whole case of Revenue is based on assumptions and presumption having no legs to stand. The appellant is registered with GST Department and regularly filed their GST returns wherein their purchases and sale invoices are available on the GSTN portal. Thus, no case of smuggling is made out against this appellant. Admittedly, it is a case of town seizure and not a seizure at any International Port or any Customs Station.
(6) Appeal No. C/30269/2023
16. Learned Counsel also points out from the valuation report dated 03.10.2020 prepared by the Authorised assayer Shri V. Vijay Kumar at the time of inspection of the consignment, wherein he has categorically mentioned that the gold was tested by touch stone method and also taken acid test. Further, it is categorically mentioned by valuer that it cannot be determined whether the gold is of foreign or Indian origin. Thus, the allegation that gold in question to be of foreign origin is only by way of bald allegation by Revenue. The appellant have also led evidence by filing tax invoice no. CHN0418/2020-21 dated 03.08.2020 issued by M/s DP Gold Pvt Ltd., for sale of 200 gms of 24 Carat gold for Rs. 11,12,200/- including IGST. Appellant have also filed copy of two more invoices dated 06.08.2020 issued by DPG for 300 gms of pure gold and also invoice dated 07.08.2020 for sale of 300 gms of pure gold to the appellant. Appellant have also produced copy of tax invoice No. Vja000044/20-21 dated 08.06.2020 for purchase of 200 gms gold bars of 999 purity for Rs. 9,56,710/- including GST. Appellant have also produced job work voucher being challan no. dated 01.10.2020 for sending 211.070 gms of gold to M/s Kanak Jewels, Dharavi, Mumbai for manufacture of jewellery on job work basis. It is further urged that a copy of the job work voucher was also kept in the box containing gold when the same was dispatched through courier. The appellant have also filed the screen shots of invoice summary from GSTN portal, reflecting the purchase invoices from M/s SVBC gold being invoice dated 21.6.2021 and 25.06.2021 and similarly screen shots for purchases during June 2021, August 2021 etc.
17. Accordingly, Learned Counsel urges that the appellant have led sufficient evidence as regards the source of gold being from the stock in trade, sent for job work which were seized by the Revenue on 03.10.2020 and subsequently confiscated vide impugned orders. Accordingly, Learned Counsel prays for allowing the appeal with consequential benefits.
18. Learned Counsel has also led evidence being extract of monthly summary of purchase of gold and sale, and sending the same for job work for the financial year 2020-21 and also have filed the extract of stock register for the months of August, September and October in support of their contention. The appellant have also filed the copy of ledger account of their transactions with M/s DP Gold Pvt Ltd., and M/s SVBC gold for the financial year 2020-21 wherein the aforementioned transactions are reflected. It is (7) Appeal No. C/30269/2023 also evident that the payments have been through from banking channel for the purchase of gold.
19. Learned AR for Revenue opposing the appeal relies on the findings in the impugned order. They further rely on the following rulings:
i) Om Prakash Khatri Vs Commissioner [2019 (11) TMI 796 - SC Order]
ii) Balram Kumawat Vs UOI & Others [2003 (8) TMI 221-SC]
iii) Commissioner of Customs (AIR) Vs P. Sinnasamy [2016 (9) TMI 879 - Madras High Court]
20. Having considered the rival contentions, I find that the appellant have led cogent evidence that they are jewellers dealing in gold and gold jewellery having their shop under the name of M/s Padmavati Jewellers at Vijayawada. Appellant have also led evidence that in the ordinary use of business they regularly purchase gold from the reputed sellers like M/s DP Gold Pvt Ltd., and M/s SVBC Gold etc. In support of their contentions, the appellant have led evidence being extract of their stock register, summary of gold dealings showing quantum and value for the financial year 2020-21 and also a copy of ledger account of M/s DP Gold and M/s SVBC Gold for the financial year 2020-21 wherein appellant have got regular purchases from these concerns and they have been making payments through the banking channel. Appellant have also led evidences being copy of purchase invoices for gold from aforementioned 2 concerns and have also produced copy of job work challan issued for sending the goods for job work being 211.07 gms to M/s Kanak Jewellers, Mumbai. Appellant have also led evidences being screen shots of summary of the invoice of the purchase by them which are reflected on GSTN portal for few months in support of their regular business transactions wherein they purchase gold upon proper GST invoices.
21. I find that the aforementioned cogent evidences led by the appellant have not been found untrue. Thus the appellant have discharged the onus under Section 123 of the Customs Act. I further find that the Court below have rejected the cogent explanation given, arbitrarily based on assumptions and presumptions, having no legs to stand.
22. In view of my aforementioned findings, I allow the appeal and set aside the impugned order. The appellant shall be entitled to return of the (8) Appeal No. C/30269/2023 seized gold and if the same have been disposed of, shall be entitled for refund of the auction proceeds along with interest as per rules.
23. Appeal allowed.
(Order pronounced in the open court on 27.03.2024) (ANIL CHOUDHARY) MEMBER (JUDICIAL) jaya