Custom, Excise & Service Tax Tribunal
Jitendra Bhanuprasad Soni vs Ahmedabad on 26 August, 2021
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Customs Appeal No. 11620 of 2018-SM
(Arising out of OIO-AHM-CUSTM-000-COM-019-17-18 dated 28/03/2018 passed by Principle
Commissioner Customs, Excise and Service Tax-AHMEDABAD)
Jitendra Bhanuprasad Soni .........Appellant
21, Sudarshan Colony Near Punit Nagar Part-3 Satellite,
Ahmedabad, Gujarat
VERSUS
C.C.-Ahmedabad ......Respondent
Custom House, Near All India Radio Navrangpura, Ahmedabad, Gujarat WITH Customs Appeal No. 12079 of 2018 (Arising out of OIO-AHM-CUSTM-000-COM-019-17-18 dated 28/03/2018 passed by Principle Commissioner Customs, Excise and Service Tax-AHMEDABAD) Shri Ajesh Amrutbhai Patel ......Appellant Proprietor Of M/S. Patidar Bullion., 1199,Dedka Ni Pole, M.G. Haveli Road, Manek Chowk, AHMEDABAD, GUJARAT VERSUS C.C.-Ahmedabad ......Respondent Custom House, Near All India Radio Navrangpura, Ahmedabad, Gujarat APPEARANCE:
Shri. Chetan K Pandya, & Shri P.P. Jadeja, Advocates for the Appellant Shri. Vinod Lukose, Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR Final Order No. A/ 12321-12322 /2021 DATE OF HEARING: 17.06.2021 DATE OF DECISION: 26.08.2021 RAMESH NAIR Shri Jitendra Bhanuprasad Soni and Shri Ajesh Amrutbhai Patel (hereinafter referred to as 'the Appellants') have filed Appeals against O-I-O NO. AHM-CUSTM-000-COM-019-2017-18 dated 28-03-2018 issued by the Principal Commissioner of Customs, Ahmedabad.
2. The brief facts of case of Revenue are that the officers of DRI acting on specific information, intercepted Maruti car, Registration. No. GJ- 06 JQ-2116 in Toll Plaza at 06.00 p.m. on 07.09.2016 and searched car and persons sitting in presence of the Panchas. There were 3 persons in car viz.(i) Shri Krunal (a.k.a Kunal) Thakorbhai Soni in driver seat (ii) Smt. Bhavisha Krunal Soni ( wife of Shri. Krunal Soni) and (iii) Shri Nalin Govindbhai Soni (father-in-law of Shri. Krunal Soni & Father of Smt. Bhavisha Soni). During search, officers found 4 Gold Bars weighing 1 Kg each from the pockets of pant of Shri Krunal Soni and 4 Gold Bars weighing 1 Kg each from pockets of pant of Shri Nalin Soni, i.e. total eight Gold Bars weighing 8 Kg and on verification, their purity was found 995.0 with Market value prevailing on the date of verification was found Rs. 2,49,20,000/- (Rs. Two Crore Forty Nine Lakh Twenty Thousand only) by Government Approved Valuer. On being asked for documents showing legal import, purchase-sale of said eight Gold Bars, Shri Krunal Soni stated that he was not in possession of any such documents. Therefore, the said 8 kgs gold bars were seized under reasonable belief that the same were liable to confiscation under the Customs Act 1962.
2.1 In follow up actions, statements of various persons were recorded by DRI and investigation proceeded on the basis that carriers apprehended with 8 kgs gold gave name of one Jitendra Soni as supplier of Gold and on interrogation the said Jitendra Soni gave names of 3 persons who had delivered said seized Gold. Jitendra Soni stated to have obtained Two Gold Biscuits each of one Kg. (i.e. total 2 Kg.) from Shri Ravibhai of M/s. GopnathBullion, Marchi Pole, Ratan Pole, Ahmedabad, three Gold Biscuits each of one Kg. (i.e. total 3 Kg.) from Shri Virendra Patel of M/s. Jyoti Jewellers, Nr. Abhyuday Bank, Manek Chowk, Ahmedabad, and three Gold Biscuits each of one Kg. (i.e.total 3 Kg.) from Shri Jatinbhai Patel of M/s. Patel Bullion, Ghanchi Ni Pole, Manek Chowk, Ahmedabad.Those 3 persons who appears to have supplied seized 8 kgs gold were identified and interrogated. Their statements are on record of this case, wherein they have denied to have supplied any gold as stated by Jitendra Soni. However, neither any SCN was issued to the said 3 persons nor any action appears initiated by the DRI, Ahmedabad.
2.2 The said Jitendra Soni in his statement has also given name of the appellant shri Ajesh Patel as one of the persons from whom shri Jitendra Soni had purchased gold in past without giving specific date, time and quantity of gold, but it is not the case of revenue that any piece of 8 kgs Gold was imported or supplied or given by this appellant shri Ajesh Patel, who has also denied to have given any gold to shri Jitendra Soni.
2.3 After said seizure of 8 kgs of gold and in the follow up action, Ajesh Patel's premises at M/s Patidar Bullion at 1199, Dedka Ni Pole, M.G. Haveli Road, Manek Chowk, Ahmedabad was searched on 13/14-09-2016 and 2 Gold Biscuits of 100 Gmsi.e. 200 Gms totally Valued at Rs. 5,81,224/- and two Silver Bricks totally weighing at 59.0908 Kg. valued at Rs. 24,55,515/-, having foreign markings were found.However, on clarifications given by shri Ajesh Patel and documents submitted by him the said 2 silverBricks totally weighing 59.0908 Kg. totally valued at Rs. 24,55,515/- were released by the investigating DRI officers onlyand 2 pcs of Gold Bar wt 200 gms were later on seized.
2.4 After investigation, Show Cause Notice dated 02.03.2017 was issued from File No. DRI/AZU/GI-02/Enq-41(Int-16)/2016 and addendum-cum- corrigendum dated 20.11.2017 was issued by Additional Director General, DRI, Ahmedabad Zonal Unit, Ahmedabad proposing confiscation of the seized goods in the adjudication proceedings, by common SCN was issued to following 8 persons including shri Jitendra Soni and Ajesh Patel,
(i) Shri Krunal Soni S/o Shri ThakorbhaiSoni, R/o A/8, Omkara Heritage Society, Near Siddhartha Nagar, Khodiyar Nagar Cross Road, New VIP Road, Vadodara, and;
Shri Krunal Soni S/o Shri ThakorbhaiSoni, R/o 10, Vallabh Villa Society, Opp. Khodiyar Temple, Khodiyar Cross Road (Char Rasta), New VIP Road, Vadodara - 390018.
(ii) Shri NalinbhaiSoni S/o Shri GovindbhaiSoni, R/o N-1, Savita Park, Near Govind Wadi, Isanpur, Ahmedabad.
(iii) Shri ThakorbhaiSoni S/o Shri JayantilalSoni, R/o A/8, Omkara Heritage Society, Near Siddhartha Nagar, Khodiyar Nagar Cross Road, New VIP Road, Vadodara, and;
Shri ThakorbhaiSoni S/o Shri JayantilalSoni, R/o 10, Vallabh Villa Society, Opp. Khodiyar Temple, Khodiyar Cross Road (Char Rasta), New VIP Road, Vadodara - 390018.
(iv) Shri Tushar Soni S/o Shri ThakorbhaiSoni, R/o A/8, Omkara Heritage Society, Near Siddhartha Nagar, Khodiyar Nagar Cross Road, New VIP Road, Vadodara, and;
Shri Tushar Soni S/o Shri ThakorbhaiSoni, R/o A-103, Shyam Residency, Nr. R. P. Vasani International School, Nava Naroda Road, Ahmedabad.
(v) Shri Jitendra Soni S/o Shri BhanuprasadSoni, R/o 21, Sudarshan Colony, Near Punit Nagar Part-3, Satellite, Ahmedabad, and; Shri Jitendra Soni S/o Shri BhanuprasadSoni, M/s. Jitendra Jewellers, 456, Sankdi Sheri, Nr. Jani Ni Khadki, Opp. Jalaram Farsan, Manek Chowk, Ahmedabad.
(vi) Shri Ajesh Patel S/o Shri Amrutbhai Patel, Proprietor of M/s. Patidar Bullion, 1199, Dedka Ni Pole, M.G. Haveli Road, Manek Chowk, Ahmedabad-380001, and;
Shri Ajesh Patel S/o Shri Amrutbhai Patel, R/o 21, VrundavanBunglow, Behind JBR Arcade, Science City, Ahmedabad.
(vii) Shri Umeshbhai Solanki S/o Shri Kishorbhai Solanki, R/o 7/626, Rambaug Mohalla, Rampura, Lal Darwaja Road, Surat-395003.
(viii) Shri Narendrakumar Makwana @ Lalabhai S/o Shri Dahyabhai Makwana, Proprietor of M/s. Bike Point, 7-8-9-10, Krishna Complex, Pandol, Ved Road, Surat-395004, and;
Shri Narendrakumar Makwana @ Lalabhai S/o Shri Dahyabhai Makwana, R/o 190/191, Sant Jalaram Society, Gate No. 1, Opp. Pandor Industries, Ved Road, Surat-395004 and;
Shri Narendrakumar Makwana @ Lalabhai S/o Shri Dahyabhai Makwana, R/o 7/1022-24, Adam Ni Wadi, Nr. Garden Mill, Rampura, Surat-395003.
2.5 The above mentioned SCN dated 02.03.2017 has been adjudicated vide common Order-In-Original No. AHM-CUSTM-000-COM-019-2017-18 dated 28-03-2018, wherein seized total 8 kgs of gold bars, not claimed by anyone, have been "confiscated absolutely" and penalty was imposed u/s 112(b) of the Customs Act 1962 on all the noticees as shown in the impugned Order-In-Original. These persons included Appellant shri Jitendra BhanuprashadSoni and shri Ajesh Patel, on whom Penalty imposed is Rs. 25,00,000/- & Rs. 25,000/- respectively. Hence, Appeal No. C/11620/2018- SM has been filed by shri Jitendra BhanuprashadSoni.
2.6 In case against shri Ajesh Amrutbhai Patel, out of 2 pcs of Gold bar 200 gms, one pc of 100 gms Gold bar was released by O-I-O No. AHM- CUSTM-000-COM-019-2017-18 dated 28-03-2018 and the other Gold bar wt 100 gms valued at Rs. 2,99,000/-recovered from business premises of Shri AjeshAmrutbhai Patel was confiscated absolutely, u/s 111 (d) of Customs Act, 1962 which is subject in Appeal No. C/12079/2018-SM filed by shri Ajesh Patel. Except shri Jitendra Soni and shri Ajesh Patel, no other person has filed any Appeal in this Tribunal against either confiscation of Gold or against the penalty imposed on them by the said Order-in-Original.
3. Shri. Chetan Pandya, Advocate represented the Appeal filed by Appellant Shri Jitendra Bhanuprasad Soni. He argued that such heavy penalty of Rs. 25,00,000/- imposed on this individual Appellants is not fair, justified and deserves to be set aside in this case. He submitted that penalty is imposed on Appellant without hearing him and there is no case for imposing penalty on this Appellant, who has co-operated in investigation and disclosed all particulars correctly whatever he knew. Appellant has no criminal background and have never been involved in any criminal activity including any cases under Customs Act 1962, except the present case. Appellant have neither smuggled 8 Kgs Gold in India nor he has any objection with the confiscation of 8 kgs Gold. The penalty imposed upon Appellant is very harsh and deserves to be set aside. Appellant has not claimed ownership or possession of seized & confiscated 8 kgs Gold. He argued that Penalty u/s 112(b) of Customs Act 1962 requires Mens rea on record, which is not existing in the present case. Hence, the entire penalty deserves to be set aside, in the interest of justice.
4. Shri P.P. Jadeja, Counsel appearing on behalf of Appellant shri Ajesh Patel, while reiterating grounds of Appeal and submissions in synopsis and made during hearing has stated that seized 100 gms Gold from his business premises on 14-09-2016 is out of his legally procured trading stock on that day which is not liable to confiscation; that when said gold came to them, they have recorded its purchase into Books of Account with documents under valid Invoices; that the confiscation of Gold wt. 100 gms is not supported by evidence or reasonable belief that Gold wt. 100 gms is smuggled into India and it is liable to confiscation under of Section 111(d) of the Customs Act 1962. The said 100 gm Gold confiscated was a part of their normal trading stock and it was recorded stock also on date of seizure. This is proved from the stock inventory for the month of September 2016 placed at page No. 213/214 in Appeal wherein it is reflected as stock on 13-06- 2016. The gold in question has been seized in town after it has been entered into India, it may have changed many hands after its import into India. When gold has come at their end in normal course of business of sale/purchase, they have received it with Bills without having any serial number; that as per prevailing Trade practice in market, Gold bars of 100 gms were received without any mark/serial number in purchase Invoices and accordingly Appellant has taken entry of stock in their Books of Account for their trading purpose only. The law does not require performance of any impossible to be complied. Thus, when smuggling of seized gold is not established by DRI, confiscation of seized Gold is not justified. Appellant has discharged burden of proof under Section 123 of Customs Act 1962. Thus, confiscation of 100 gms Gold is not sustainable in facts of this case and confiscation deserves to be set aside. When seized gold is not liable to confiscation, consequent penalty of Rs. 25,000/- does not survive. Appellant submit that after repeal of Gold (Control) Act and its Rules, no such elaborate records are required to be maintained, except the normal records to show the sale and purchase of the gold. There are no Rules or Regulations which mandates strict requirement of maintaining any records for purchases of gold, as was required in case of Notified Goods (Prevention of Illegal Import) Rules, 1969 read with Sections 11C, 11D, 11E, 11F and 11G of Customs Act, 1962 or Rules which mandates requirement of maintenance of records in a specific manner. These views are in judgment of the Hon'ble Division Bench of Tribunal in mainly the decisions referred in Appeal and in the following case:
• 2001 (127) E.L.T. 415 (Tri.-Mum.) - S.K. Chains v. CC(Preventive), Mumbai.
• 2002 (149) E.L.T. 427 (Tri.-Kolkata) - Girdhari Dubey v. Commissioner of Customs (Prev.)Kolkata
5. Shri Vinod Lukose, Learned Superintendent (Authorised Representative), appearing on behalf of the Revenue reiterates the findings of the adjudicating authority and has submitted that arguments by both the Appellants are untenable and accordingly he argued that their Appeals may be rejected. He has also filed written submission in order to object the arguments made on behalf of the Appellants and has contended that since gold is covered under section 123 of the Customs Act 1962 the burden of proving that seized Gold bars are not smuggled goods is on Appellants, which Appellants shri Jitendra B. Soni have not discharged for seized 8 kgs Gold bars and Shri Ajesh Patel for 100 gms Gold bar and hence, confiscation of 8 kgs Gold, 100 gms Gold and also penalty on the Appellants may be upheld.
6. Heard both the sides and perused records. I find that Penalty on both the Appellants was imposed under Section112(b) of Customs Act, 1962 which provides for imposition of penalty on any person who acquires possession or is concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation u/s 111 of the Customs Act 1962. In the present case, I find that investigating DRI officers have booked two different type of cases investigated and covered in a Show Cause Notice and it being a common SCN, adjudicating authority has passed single Order-In-Original covering these two cases.
7. First, I will examine the Appeal No. C/11620/2018-SM filed by the Appellant shri Jitendra Bhanuprasad Soni, who has filed Appeal against penalty of Rs. 25,00,000/- without claiming any ownership or possession of seized & confiscated 8 kgs Gold, which was seized on 07.09.2016. The O-I-O has given findings that Shri Jitendra Soni is the person who gave or delivered contraband gold to all three persons who had come to take delivery of seized gold. His role is that he dealt with smuggled prohibited goods and therefore liable for penalty under Section 112 (b)(i) of Customs Act,1962. I find that DRI investigation is on the basis that persons apprehended with seized 8 kgs gold gave name of shri Jitendra Soni as supplier of Gold and shri Jitendra Soni gave names of 3 other persons who had delivered seized Gold. Shri Jitendra Soni stated having obtained 2 Gold Biscuits each of one Kgs (i.e. total 2 Kgs) from Shri Ravibhai of M/s Gopnath Bullion, Ahmedabad, 3 Gold Biscuits each of one Kgs (i.e. total 3 Kgs) from Shri Virendra Patel of M/s Jyoti Jewellers, Ahmedabad, and 3 Gold Biscuits each of one Kgs (i.e. total 3 Kgs) from Shri Jatinbhai Patel of M/s Patel Bullion, Ahmedabad. I find that DRI investigation has not adduced anything more except seizure of 8 kgs gold and the statements of Appellant shri Jitendra Soni to come to any definite conclusion that seized 8 kgs Gold was smuggled or otherwise. Penalty under section 112(b) of Customs Act 1962 requires mens rea to be established on record. Perusal of the said provisions reveals that penalty under that provision can be imposed wherever there is an element of mensrea or conscious knowledge, which is an essential condition for imposition of the penalty. Thus, it was required to establish that Shri Jitendra B. Soni definitely knew that the said 8 kgs Gold was smuggled into India. However, from records, it is not coming out that Appellant shri Jitendra B. Soni knew that said 8 kgs Gold was smuggled into India or that the 8 kgs Gold was liable to confiscation under section 111 of Customs Act 1962. It is settled law that penalty being quasi criminal in nature cannot be imposed on assumptions and presumptions. Facts of the case in hand do not reveal any such element of mensrea or conscious knowledge qua the Appellant Jitendra B. Soni. His Statement is that doing such purchase-sale in cash may "create doubt" and as Gold was without having supportive bill or lawful document for their import, he had "suspicion" that they might have been smuggled. Thus, statement "he had suspicion that Gold might have been smuggled", but he was not aware that it was smuggled only. Further, purchase of such quantity in cash may be for any reason may "create doubt" and may be objectionable under provisions of Income Tax, but such cash transaction of Gold in India will not make such Gold liable to confiscation under Customs Act 1962. Shri Jitendra Soni acted on commission and delivered seized 8 kgs Gold by taking from traders who were not made noticee in this case and delivered to the persons who had come to take its delivery. However, this statement does not prove that transaction was for smuggled gold which is liable to confiscation. While taking delivery from suppliers to purchasers of 8 kgs Gold it was neither coming out from records that smuggled 8 kgs Gold was delivered to Appellant shri Jitendra B. Soni and he had entered into transaction of 8 Kgs smuggled gold delivered to Shri Nalinbhai and Shri Krunal at his shop as per instruction of Shri ThakorbhaiSoni. The role of shri Jitendra Soni, does not justify such penalty under Section 112(b) of Customs Act 1962. DRI investigation has not brought any evidence except statements to show that Appellant shri Jitendra B Soni dealt with smuggled Gold knowingly which was liable to confiscation. Accordingly, in peculiar facts and circumstances of this case, imposition of penalty on Appellant shri Jitendra B. Soni u/s 112(b) of Customs Act 1962 is not justified, warranted and it deserves to be set aside. Appellant pleaded to drop penalty, without challenging confiscation of seized 8 kgs Gold. Penalty under Section112(b) of CustomsAct, 1962 is not attracted against shri Jitendra B. Soni in the facts of this case. I also find force in arguments of Appellants that this is a town seizure case and 8 kgs Gold in question were not seized at the point of Entry in India. Hence, it is obligatory for Revenue to prove that Gold seized & confiscated are smuggled into India, whether claimed or not by Appellant or other persons. The burden is on the revenue to prove that the seized Gold was smuggled gold into India. Thus, Revenue has not proved smuggling of Gold into India. Hence, for imposing penalty u/s 112(b) ibid mens rea is necessary which is not coming out from records against the Appellant shri Jitendra Soni. Settled principle of law "Suspicion, however strong it may be, it can not replace the facts" needs to be applied in this case. Evidences on record are not sufficient to impose penalty on him. Suspicion in this case by Revenue has tried to replace the proof and this has resulted in an erroneous order passed by Adjudicating Authority against Appellant. Circumstantial evidence only is relied upon, unless it is conclusive on the fact of smuggling and Appellant dealt with smuggled goods knowingly, such circumstantial evidences cannot be taken to be the proof of the fact of smuggling for imposing penalty. Penalty u/s 112(a) under Customs Act 1962 is for any "act, omission or abetment" in improper import of goods and does not require mensrea, whereas penalty u/s 112(b) ibid operates for smuggled goods after its improper import and requires mensrea. Ingredients required for imposing penalty are not existing to impose penalty under Section112(b) of Customs Act, 1962. Penalty imposed against Shri Jitendra B. Soni deserves to be set aside.
8. Now, I take up case in Appeal No. C/12079/2018-SM filed by shri Ajesh Patel, Proprietor of M/s Patidar Bullion, Ahmedabad who has claimed that seized 100 gms Gold from his business premises on 13/14-09-2016 is out of his legally procured trading stock on that day which is not liable to confiscation and hence he prays to set aside confiscation of the seized 100 gms Gold bar and penalty of Rs. 25,000/- imposed on him.
9. I find that Shri Ajesh Patel is the proprietor of M/s Patidar Bullion, Ahmedabad and has been engaged in purchase & sale of Gold, Silver Bullions. Seized 2 pcs of Gold bar 200 gms are claimed to be out of their stock of inventory of that day i.eon 13/14-09-2016. Appellant Shri Ajesh Patel submitted that they used to purchase gold bars from open market against Invoices and sell such gold pcs under their Invoices. Appellant has produced Stock Register summary from 01-09-2016 to 30-09-2016 and month-wise summary of purchase & sales from 01-04-2016 to 31-03-2017 for Gold and showing turnover of gold for September 2016 are available in his Appeal records with copies of Invoices of sale of Gold during month of September 2016, copes of Invoices of purchase of gold during month of September 2016 are also placed in this appeal papers. Thus, Appellant Ajesh Patel has stated that seized 100 gms Gold is from his business premises on 14-09- 2016 is out of his legally procured trading stock on that day which is not liable to confiscation. I find that it is not the case of DRI that any piece of 8 kgs Gold was imported or supplied or given by Ajesh Patel. Appellant neither has any nexus nor claimed any of 8 kgs seized gold. Shri Ajesh Patel has claimed his seized 100 gms Gold, which according to him is not liable to confiscation. It is a fact that out of seizure of 200 gms Gold from Appellant shri Ajesh Patel, O-I-O has ordered to release 100 gram gold valued at Rs. 2,99,000/- unconditionally. However, O-I-O has ordered absolute confiscation of the other 100 gram of Gold valued at Rs. 2,99,000/- u/s 111(d) of Customs Act, 1962 which Appellant claims to be unjustified. When said gold came to them, they have recorded its purchase into Books of Account with documents under valid Invoices. However, Revenue expected Appellant to produce only Bill of Entry containing the details of payment of duty thereon only as an acceptable proof that the seized Gold was licitly imported into India. I find that this being a town seizure, confiscation of Gold wt. 100 gms is not supported by any evidence that the said seized Gold wt. 100 gms is smuggled into India and it is liable to confiscation under of Section 111(d) of Customs Act 1962. The said seized 100 gm Gold confiscated was a part of normal trading stock and it was recorded stock on date of seizure. This is proved from the stock inventory for September 2016 placed in Appeal wherein it is reflected as in the stock on 13-06-2016. Closing stock of 12-09-2016 for Gold was 2842.627 gms including 200 gms and with seizure of 200 gms on 13-09-2016, closing stock of Gold remained 2642.627 gms. The investigation has not adduced evidence to show that seized 200 gm gold was smuggled into India. The gold in question was seized in town after it has been entered into India and it may have changed many hands after its import into India. When gold has come in hands of shri Ajesh Patel in the normal course of business of sale/purchase, they have received it with Bills without having any serial number. When O-I-O has released 100 gms Gold it was shown to have been imported by Kotak Mahindra Bank in 2010, but it had come in hands of Appellant Ajesh Patel much later before seizure in year 2016. I find force in Appellant's argument that as per prevailing Trade practice in market, Gold of 100 gms were received without any mark/serial number in purchase Invoices and accordingly Appellant has taken entry of stock in Books of Account for their trading purpose. Thus, it is impossible in normal market practice followed all over India, to know that gold purchased by him from Indian market for sale is gold imported from customs ports or not. I find that O-I-O has confiscated 100 gms Gold which is not liable to confiscation, as impugned O-I-O has not considered stock on date of seizure and not ascertained that the same has been legally received or purchased by shri Ajesh Patel. This is case of town seizure and DRI officers have seized Gold on suspicion of its being smuggled, without adducing evidence of its smuggling. As per section 123 of Customs Act 1962, it provides that when any goods to which section 123 applies are seized on the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods is on person from whom the goods were seized. Foreign marks on Gold may be sufficient for the purpose of seizure, but not for confiscation in adjudication proceedings of such town seizure. When smuggling of seized 100 gms Gold is not proved, in town seizure, confiscation of Gold is not justified. Gold is not a totally prohibited item and Gold can be imported upon payment of duty on certain conditions to be followed by concerned importers. For town seizure cases, Appellant has submitted that after repeal of Gold (Control) Act and its Rules, no such elaborate records are required to be maintained, except the normal records to show sale and purchase of the gold. Investigating DRI officers or appearing authorized representative in this Appeal has not been able to produce any such Rules or Regulations etc which mandates strict requirement of maintaining any records for purchases of gold, as was required in case of Notified Goods (Prevention of Illegal Import) Rules, 1969 read with Sections 11C, 11D, 11E, 11F and 11G of the Customs Act, 1962 or such Rules as is in Central Excise Act 1944, which mandates requirement of maintenance of records in a specific manner. The above views are supported by the following judgments:-
• In case of Dhanistha Gold v/s C.C., Ahmedabad 2019 (369) E.L.T. 688 (Tri. - Ahmd), confiscation of gold was set aside holding that no statement of any person that gold was of smuggled nature and hence no reason to confiscate same and ultimately confiscation of seized gold was set aside in terms of Section 111 of Customs Act, 1962.
• In case of C(P), Kolkatta v/s Ashok Kumar Agarwal - 2017 (348) E.L.T. 555 (Tri. - Kolkata), Confiscation of foreign marked gold bars was set aside holding that Respondent having produced purchase bill and seller confirmed sale of such gold to him, burden of proof under Section 123 of Customs Act, 1962 stands discharged and also holding that there is no legal requirement of mentioning markings of gold bars in sales bill and original importers themselves not showing such markings in delivery/sales documents issued by them and Revenue having failed to prove that gold bars not purchased by respondent and same procured from any other sources, confiscation not sustainable and further holding that Onus shifted to Department when assessee discharged his burden by producing bills showing purchase of gold in terms of Section 123 of Customs Act, 1962. [para 4] • In the case of Nitya Gopal Biswas v/s CC(P) - 2016 (344) E.L.T.-209 (Tri - Kolkata), it has been held that reasonable doubt of smuggled nature of foreign marked gold may be sufficient for the purpose of seizure of gold, by virtue of Section 123 of Customs Act, 1962, but the same is not sufficient for confiscation when appellant has produced legal document of their licit acquisition and that Department not able to establish the smuggled nature of seized foreign marked gold, whereas claimant appellant has been able to discharge his burden by providing licit document of purchase of 60 foreign marked gold biscuits, further holding that in the light of liberalized policy of Central Government it cannot be held that all the foreign marked gold being bought and sold in India is of smuggled nature and confiscation and penalties imposed were set aside.
• The Division Bench of Tribunal in the case of 2001 (127) E.L.T. 415 (Tri.-Mum.) - S.K. Chains v. CC(Preventive), Mumbai wherein seizure of foreign marked gold viz. 33 gold pieces seized from appellant duly recorded in firm's stock register and Gold claimed to have been acquired from a gold dealer firm is not approved holding that burden of proof on appellant discharged in terms of Sections 123 of Customs Act, 1962. [para 9]. Further, it has also been held in that case that admission of purchase of foreign marked gold biscuits from open market without receipt not indicates that gold under seizure is illegally imported, there being no Central Act in existence requiring maintenance of any documents indicating such receipts in terms of Section 110 and 123 of Customs Act, 1962.
• In 2002 (149) E.L.T. 427 (Tri.-Kolkata) - Girdhari Dubey v. C. C. (Prev.) Kolkata similar view is taken in Para 3(c) and (d), which is reproduced for ready reference :-
3(c) In view of our findings we would set aside the order of confiscation of 32 pcs. of gold also relying at the findings of this Tribunal in the case of S.K. Chains reported in 2001 (127) E.L.T. 415 wherein in Para 10 of the reported decision the Tribunal has considered the effects of the liberalized policy as regards import and dealing in gold and thereafter concluded that that onus as placed under Section 123 was discharged in the facts of that case.
We would also considering the onus under Section 123 has been discharged in the facts of this case by the appellants. If the Revenue wants that the gold dealers indulging in sale and purchase of foreign marked gold in India, should indicate the brand names and that discharge under Section 123 shall be only with respect to each brand then foreign marked gold should have been declared as one of the items under Chapter IVA of the Customs Act. We find that no such notification of placing foreign marked gold exists. Therefore the confiscation of the foreign marked gold for non satisfactory brand wise accounting as arrived at in the facts of this case was not called for.
3(d) Since we find no reason for sustaining the confiscation of 32 pcs. of foreign marked gold which has been claimed by Shri Giridhari Dubey we find no reason for imposition of any penalty on Shri Giridhari Dubey.
10. I find that the above view is in compliance to prevailing Rules in India. If revenue wants that gold dealers of foreign marked gold in India should indicate the brand names with respect to each brand then foreign marked gold should have been declared as one of items under Chapter IVA of Customs Act, 1962.
11. This issue is settled (as revenue has not filed any appeal against above judgments). Thus, there is no requirement under prevailing law to mention brand or marks or numbers of foreign marked gold on sale/purchase documents. Hence, confiscation ordered deserves to be set aside in this case. Appellant Shri Ajesh Patel has submitted to follow decisions relied upon as above which are applicable in facts of this case. Shri Ajesh Patel also submits that by impugned O-I-O one 100 gms gold pc was released unconditionally, but while release the said 100 gm gold bar, customs authorities have unreasonably recovered penalty of Rs. 25,000/- for release of 100 gm Gold, which may be allowed as consequential relief. Shri Ajesh Patel has submitted that Appeal No. C/12079/2018-SMC is against confiscation of 100 gms gold and on mandatory pre-deposit, order is deemed to be stayed. Accordingly, Appellant Shri Ajesh Patel pray to release 100 gms Gold to him and in case, confiscated Gold is disposed off, he may be given proceed equal to market value as on date of release.
12. Ajesh Patel also pray to allow appeal by setting aside order of confiscation of 100 gms Gold and penalty imposed on him, as it is bad in law and deserves to be set aside. Appellant has substantiated that the seized 100 gms gold was out of his stock inventory of legally purchased Gold. Appellant discharged burden of proof u/s 123 of Customs Act 1962 by maintaining normal business daily account with relevant documents of purchase/sale showing Opening Balance + Receipt - issue = closing stock, while dealing in Gold/silver purchased and sold in open market on large scale in market. Thus, confiscation of 100 gms Gold is not sustainable in facts of this case and deserves to be set aside and I do so.
13. Accordingly, impugned O-I-O No. AHM-CUSTM-000-COM-019-2017-18 dated 28-03-2018 is modified to the following extent only:-
• Order of absolute confiscation of 8 kgs Gold not claimed by anyone is sustained;
• Order of absolute confiscation of 100 gms Gold recovered from Shri Ajesh A. Patel, Proprietor of M/s Patidar Bullion is set aside and it is ordered to return him the same.
• Penalties imposed on the Appellants shri Jitendra B. Soni and shri Ajesh Patel u/s 112(b) of the Customs Act 1962 are set aside.
• Remaining part of the impugned O-I-O No. AHM-CUSTM-000-COM-
019-2017-18 dated 28-03-2018 issued by Principal Commissioner of Customs, Ahmedabad not objected in Appeal in this Tribunal by any other aggrieved person is not interfered.
14. In view of the above, Appeal No C/11620/2018-SM filed by the Appellant Shri Jitendra Bhanuprasad Soni and Appeal No. C/12079/2018-SM filed by the Appellant Shri Ajesh Amrutbhai Patel, Proprietor of M/s Patidar Bullion are allowed in the above terms with consequential reliefs, if any available, in accordance with law.
(Pronounced in the open court on.26.08.2021) (RAMESH NAIR) MEMBER (JUDICIAL) Prachi