Custom, Excise & Service Tax Tribunal
Subhash Bhanwarlal Verma Lt ... vs The Pr. Commissioner-Hyderabad - ... on 10 October, 2025
1 Appeal No. C/30015/2022
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. - I
Customs Appeal No. 30015 of 2022
(Arising out of Order-in-Appeal No. HYD-CUS-000-APP-052-21-22 (APP-I) dated
12.01.2022 passed by Commissioner of Customs & Central Tax, Hyderabad)
Shri Subhash Bhanwarlal Verma .. APPELLANT
Lt Bhavarlalji
H No. 491-1-A, Sutmil Mill Road,
Latur, Maharashtra - 413 512.
VERSUS
Commissioner Of Customs .. RESPONDENT
Hyderabad - Customs Kendriya Shulk Bhavan, L B Stadium Road, Basheerbag, Hyderabad, Telangana - 500 004.
APPEARANCE:
Shri P. Rama Krishna, Advocate for the Appellant.
Shri A. Rangadham, Authorised Representative for the Respondent.
CORAM: HON'BLE Mr. A.K. JYOTISHI, MEMBER (TECHNICAL) HON'BLE Mr. ANGAD PRASAD, MEMBER (JUDICIAL) FINAL ORDER No. A/30396/2025 Date of Hearing: 20.08.2025 Date of Decision: 10.10.2025 [ORDER PER: ANGAD PRASAD] This appeal has been filed by the Appellant against the Order-In-
Appeal No. HYD-CUS-000-APP-052-21-22(APP-I) dated 12.01.2022 (i.o),.
Learned Commissioner upheld the order passed by Adjudicating Authority vide Order-In-Original No. 57/2019-Adjn.Cus (ADC) dated 08.08.2019.
2. Brief fact of the case as per Appellant is, the Appellant is engaged in a business of dealing in gold and silver ornaments since last ten years as a proprietary concern and started trading in gold bullion since 2015 under the name and style of M/s. Ramdev Bullion, he is having a PAN No. and also enrolled under Goods and Service Tax law, Appellant has regularly purchased the gold at Mumbai and Hyderabad and sold the same at his native place i.e. Latur, Maharasthara mostly.
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3. The Appellant is the real and true owner of the Gold Bars which were in the Custody of DRI (28 gold bars of 100grams each of 'Valcambi' mark, totally weighing 2800 grams), the said Gold Bars-999 having with a Valcambi marks on his Gold Bars, as a matter of fact the Appellant has purchased a Thirty Three (33) Gold Bars of Valcambi-999 made total weight of 3300 grams from his vendor M/s Ambica Bullion situated at 10/B, Glitz Mall, 99, Vithalwadi, Kalbadevi, Mumbai on 12.09.2017 vide invoice No. 502 for Rs. 99,33,000/- and also paid SGST of the Rs. 1,48,995/- CGST of Rs. 1,48,995/- the totalling the value of Rs. 1,02,30,990/-) in support of his claim. The statement of Shri. Kailash Bhai of M/s Ambica Bullion, Mumbai is valid sufficient proof of gold.
4. The appellant submitted that, after purchase of said Gold Bars on 13.09.2017 he was travelling from CST Mumbai to Hyderabad by Rail i.e. LTT Visakhapatnam Express in general compartment to visit his co-brother's house at Hyderabad who was suffering with ill-health, he carried the said quantity of the Gold along with the valid and legal purchased documents and said Gold was duly wrapped tightly in Gujarati news paper and parcel with brown colour tape adhesive and put in stitched fold of the white colour nadapatti underwear are the safety of the gold while travelling and wore the same for safety of his gold, thereafter, due to digestive disorder, couple of time, the Appellant had to go to the toilet, on that reason, he had removed said underwear, wherein the wrapped gold was kept and put the same in his luggage bag and same was kept on the upper seat-berth as the train, after sometime two persons were boarded from Lonavala station and sat on the same berth where the bag was kept by him, thereafter, he found that the persons sitting on the upper berth had already got down from the train. On the same day i.e. 13.09.2017, the train had reached to Begumpet Railway 3 Appeal No. C/30015/2022 Station and it was stopped just one minute (the Appellant had not know about the train stopped at Begumpet Railway Station or not as per train schedule) on that reason, the Appellant had get down at Begumpet Railway Station nearly 9.30 P.M. for further journey to Nampally, Hyderabad station from Begumpet Railway Station, Appellant went on MMTS after reaching the Nampally Railway Station, he dragged his trolley bag and took an Auto for went to his Co-brother's house, after reaching his brother's house, he has opened his trolley bag, then he has found that his white colour underwear with Gold Bars and original bill are missing in his luggage bag, on that reason he went to unconscious, after on regaining consciousness, he thought about the Co-passengers in the train sitting at the upper berth who had adjusted his luggage bag, has suspected and assumed that, his Gold Bars were stolen by them who were travelled along with his compartment and got down in Pune, on that reason, he has approached the Pune Railway Police Station, after reaching on 15.09.2017 at about 8.00 P.M and lodged a complaint on 16.09.2017 and same was registered as Crime No. 504/17 under Section 379 of IPC on theft of his gold and recorded the detailed statement of Appellant regarding his Gold Bars and nature of package and also recorded the other relevant witnesses relating to the nature of purchase for investigation purpose, but the investigation officer has mechanically conducted a vague and table investigation on that reason he has omitted the real facts and even though he did not considered the evidence submitted by the Appellant, on that result, the investigation officer rejected to return his Gold Bars.
5. The Appellant submitted that, thereafter, the Pune Railway Police got the information from Hyderabad Railway Police about the recovery of 28 Gold Bars, the Pune Railway Police had send the details of the Appellant case 4 Appeal No. C/30015/2022 to the Hyderabad Railway Police (the description about the Gold Bars packing material are exactly matched as per report made by the Appellant at Pune Railway Police) Where upon Hyderabad Railway Police called the Appellant and recorded his statement, thereafter, they informed to the Appellant they handed over to the possession of the recovered 28 Gold Bars to the officers of the Department of Revenue intelligence, Regional Unit, at Hyderabad (the DRI) and advised him to collect back them by showing proper documents to them.
6. The Appellant submitted that, he along with the officers of the Pune Railway Police has approached the Respondent Authority i.e. DRI, Hyderabad and submitted the all relevant documents pertaining to his Gold Bars as proof of legal purchase along with GST & CGST payment and which statement also recorded by the Respondent Authorities under Section 108 of the Customs Act 1962, then the Appellant had requested them to release his Gold Bars, but the Respondent Authorities did not released his Gold Bars.
7. The Appellant submitted the Respondent Authorities (DRI) wrongly investigated the Appellant case on assumed the facts and insisted the Appellant to show the "end to link with the purchases and sale of Gold Bars of his supplier" as per common business practice in market it is not possible to co-relate that from which stock of gold bars laying at the end of the supplier of him, but the Authorities never consider his statement, his vendor statement as well submission of all legal and valid proof of documents.
8. The Appellant submitted that he had purchased the 33 Gold Bars i.e. 28 Valcambi mark Gold Bars and 5 Gold Bars of MMTC Pamp said fact also corroborated by his vendor statement was recorded by the DRI officials regarding the Appellant's Gold Bars and moreover not consider the all bills, it 5 Appeal No. C/30015/2022 has receipts and documents were proved by the Appellant clearly shows that the Appellant is a real, absolute and genuine owner of his Gold Bars. Which were received by the Railway Police, Nampally, Hyderabad.
9. The Appellant submitted that, the DRI Authority has issued a Show Cause Notice to unknown person, as per the paragraph 13 of the Show Cause Notice the Person(s) concerned/unknown are required to produce all evidence on which they propose to rely in support of their defence along with written reply. As per Show Cause Notice, the Appellant had claimed the ownership of his Gold Bars, which was subject of the Show Cause Notice.
10. The Joint Director, Directorate of Revenue Intelligence, Hyderabad had issued a Show Cause Notice so Appellant has approached the Joint Director and claimed ownership of his Gold Bars. However, the Respondent Authorities by order dated 10.05.2018 inform that, said Show Cause Notice which has relied upon the documents cannot be provided to as he is not the party on Show Cause Notice however, the opportunity has granted to him to put forth his claim, at the time of personal hearing as when fixed, he has appeared before them and submitted the all relevant documents regarding his claim.
11. The Appellant submitted that again and again requested the Authority and stated that his only one true and real owner and had legally purchased the Gold Bars. The same facts establishes from the statement of Shri Ishant Kailash Jain who admitted the same. The Gold Bars having Valcambi marking were recovered by the Hyderabad Police were absolutely matched along with description of package, but the remaining 5 Gold Bars are not yet recovered by the Authority. The Investigation officer did not consider the statements of his guarantor and mediator (i.e. Shri Dhanabai Modi) (who is 6 Appeal No. C/30015/2022 main witness to reveal the truth to purchase of Gold Bar from the vendor) which was recovered by Railway Police Station officers at Pune, but the Respondent Authorities intentionally was not taken any statement from them nor considering their statement and received the affidavit and Co-brother, but never considered their affidavits.
12. The Appellant submitted that the Appellant was get down the train at Begumpet Railway Station on when said train was stopped on 13.09.2017, said fact was not considered by the Respondent. Authorities have failed to produce any piece of evidence of proof regarding to Gold Bars are not belongs to Appellant. The Respondent never considered the appellant phone calls records and phone calls history i.e. CDR, said CDR history should shows that the location and travelling history of the Appellant and he also requested to the investigation officer and Authorities to bring the CDR history regarding his Phone Number, but they never took any steps.
13. Thereafter Appellant has approached the Hon'ble High Court. Hon'ble High Court decided Appellant W.P. No. 901 of 2021 and granted a liberty to file a Appeal before Bench under Section 128 of the Customs Act, Therefore Appellant has filed this Appeal.
14. Whereas Learned AR, submitted that the Railway Police on 19.09.2017 informed the officers of DRI, Hyderabad that they have seized 28 Gold Bars with 'Valacambi' mark which appeared to be it foreign marking. The Gold Bars of yours to be recovered from Enakapally Ramakrishna and Gaddam Naresh, both Railway porters and Syed Iqbal an auto driver who dishonestly took the said 28 Gold Bars from Hyderbad Railway Station premises, where these were found abandoned. They did not recover any documents relating to the said Gold Bars and no person approached them claiming the 7 Appeal No. C/30015/2022 ownership of the Gold Bars. On receipt of the 20 Gold Bars, they were subjected to examination by the approved valuer and they were found to be of foreign origin by the approved valuer. Accordingly, under reasonable belief that they are smuggled and are liable for confiscation as per the Customs Act, 1962 the same were seized under panchanama dated 19.09.2017 and seizure memo dated 19.09.2017. The foreign marked Gold Bars are valued at Rs. 85,96,000/-. The assistant inspector of Police, Railway Station Police Pune vide letter dated 21.09.2017 informed that an offence was registered by them on the basis of complaint by one subhash Bhanwarlal Verma has purchased 33 Gold Bars which marking 'Valcambi' from Ambica Bullion, Mumbai vide Invoice No. 502/2017 dated 12.09.2017 and were stolen by two unknown persons during his journey on 13.09.2017 by LTT Visakhapatnam Express. Subhash Bhanwarlal Verma in his statement dated 09.10.2017 stated that he had purchased 33 Gold Bars from Ambica Bullion vide Invoice 502/2017 dated 12.09.2017, out of which 28 Gold Bars were of Valcambi marking and five Gold Bars were of MMTC Pamp marking, all having weight of 100 grams each, that the invoice has not mentioned markings or numbers. He travelled by LTT Visakhapatnam Express on 13.09.2017 from Karjat to Begumpet and alighted at Begumpet. He further travelled by local train from Begumpet to Hyderabad on reaching his Co- brother's home he observed that the Gold Bars kept in an underwear in his trolley bag were missing, he suspected theft by some persons who travelled in the same bogey and got down at Pune and he lodged a complaint at Pune on 16.09.2017. The invoices produced by the Appellant could not connect it to the gold seized. Appellant does not produce any evidence supporting his journey as claimed by him. The Railway Authority vide Letter dated 16.10.2017 informed that LTT Visakhapatnam Express does not have a scheduled halt at Begumpet Station and the train on 13.09.2017 had not 8 Appeal No. C/30015/2022 stopped at Begumpet station as per guard's report. Thus, the claim of the Appellant having travelled by LTT Vishakhapatnam Express on 13.09.2017 was not supported by any evidence and Railway Police, Hyderabad have also not recovered any document relating to his travel or purchase documents of the said gold during their seizure. The Invoice No. 502 dated 12.09.2017 of Ambica Bullion was issued to Ramdev Bullion for 3300 grams of Gold Bars. Learned AR, stated that Ishant Kailash Jain of Ambica Bullion stated that they have supplied 33 Gold Bars of 100 grams each of Valcambi Suisse procured from (1) M/s Raj Gold and Diamonds, Mumbai of Shri Dinesh Jain vide Invoice Nos. 217/17-18 dated 12.09.2017 and (2) M/s Chintamani Gold of Shri Vikram Kumar Seth vide Invoice No. 47 dated 12.09.2017. He also stated that he was unable to provide the details of specific identity of bars supplied.
15. Shri Vikram Kumar Seth of M/s Chintamini Gold stated that they have supplied 1100 grams of 999 purity to M/s. Ambica Bullion vide Invoice No. 47 dated 12.09.2017; that out of said 1100 grams were supplied out of their purchase from M/s Mandev Bullion vide Invoice No. G-4032 dated 10.08.2017 and 100grams from the old stock. He further submitted that M/s Mandev Bullion has supplied the bars fromthe consignment procured from M/s A. Kumar & Company vide Invoice No. 392 dated 10.08.2017. However, he was unable to provide the details of specific identity of the bars.
16. Shri Bharat Pratapraj Mehta of M/s A. Kumar & Company in his statement that they have supplied 100 bars (999 Gold Bars) tp M/s Mandev Bullion vide Invoice No. 392 dated 10.08.2017 out of the consignment of 150 kgs supplied by M/s Rajesh Exports Ltd., Bengaluru on 10.08.2017. He further vide letter dated 17.09.2018 submitted a copy of Invoice No. 10055504BKB031 dated 07.08.2017 (along with packing list having serial 9 Appeal No. C/30015/2022 numbers of Gold Bars of Valcambi) vide which M/s Rajesh Exports Ltd., has produced 500 kgs of Gold Bars from M/s Valcambi and out of which 150 kgs of Gold Bars were supplied to them on 10.08.2017. All Gold Bars supplied by M/s Rajesh exports were of Valcambi marking and has specific serial number.
17. Learned Authorised Representative, Shri Dinesh Mangilal Jain of M/s Raj Gold & Diamond stated that they have supplied 2200 grams of 999 purity Gold Bars vide Invoice No. 217/17-18 dated 12.09.2017 to M/s Ambica Bullion out of the consignment procured from M/s Nakoda Bullion. He further stated that Shri Minkush Jain of Nakoda Bullion purchased the said bars from M/s Mundra Finvest (Guj) Ltd., with marking MMTC Pamp.
18. Learned AR, summarise the documentary evidence as thus the Gold Bar seized have specific serial numbers. Invoice 502 dated 12.09.2017 does not contain any marks and numbers to connect it to the seized goods. From the investigation made, out of the 33 bars covered in the invoice only 10 bars were of Valcambi make and 22 bars of MMTC Pamp make. The Appellant claims that there were 5 Gold Bars of '999-Pamp' out of the 33 bars purchased from Ambica Bullion. Investigation revealed that Raj Gold and Diamond had admittedly supplied 22 Gold Bars with MMTC-Pamp marking. The 28 Gold Bars seized had Valcambi Suisse marking and no Gold Bars with MMTC-Pamp marking. Thus, the claim of the appellant bars to be false. Further, the Appellant has not produced any travel ticket to justify his travel claim and also the train had no scheduled stop at Begumpet on the said date. The marking on the gold indicate it is of foreign origin. No documents are found showing payment of duty. Therefore Section 123 of the Customs Act, will be apply The Appellant has failed to prove that he is the owner of the seized gold.
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19. Heard both the sides and perused the records.
20. The appellant has stated that he carries on the business of gold and silver under name M/s Ramdev Bullion, Latur. On 12.09.2017, he purchased 3,300 grms of Gold Bar from M/s Ambica Bullion, Mumbai for a total value of Rs. 1,02,30,990/- including CGST and SGST. The invoice issued by Ambica Bullion, Mumbai in this regard substantiates this fact. The appellant has also submitted complete details of his bank account related to Central Bank of India that is showing payment made to the said Ambica Bullion through the Central Bank, which further conforms the appellant's statement. It is therefore evident that the appellant purchased 3,300 grms of Gold Bar on 12.09.2017.
21. The appellant has stated that on 12.09.2017, he travelled from Mumbai to Hyderabad by the LTT Visakhapatnam train and got down at Begumpet Railway Station in the evening of 13.09.2017. The appellant has explained that his co-brother was not-well and he had to visit him, as his brothers house was located nearby.
22. The Department, however, contents that the said train does not halt at Begumpet Railway Station and has produce a certificate in this regard. Yet, it cannot be conclusively said, merely on the basis of the department certificate, that the train did not halt at Begumpet Railway Station on that particular day. It is generally within every one's experience that trains remain halted for considerable periods before reaching the main station if the platform ahead is not clear, even though such halts are not officially recorded. This fact cannot be ignored. Since the appellant's brother was ill, and the appellant had to visit him, and his brother's house was close to Begumpet Railway Station, the appellant's claim to alighting at Begumpet 11 Appeal No. C/30015/2022 Railway Station appears naturally plausible. The department has also stated that the appellant did not produce any travel ticket to prove that he had travelled on that day and by that particular train. It is true that no travel ticket has been submitted. The appellant came to know about the loss of the Gold Bars only after reaching his brother's house and opening his bag. The appellant has stated that the ticket was misplaced. It is possible that the ticket was either misplace or destroyed after the completion of the journey. However, merely on the ground of non-availability of the ticket, it cannot be concluded that the appellant did not travel by the said train at the stated time. Despite repeated request from the appellant, it is not clear why the department did not conform this fact from the Railway CCTV. Hence, the department contention that the appellant failed to prove that he travelled on that day cannot be considered correct.
23. The appellant stated that upon discovering that his Gold Bars were missing, he was initially stunned and loss consciousness for a while. After regaining composure, he lodged First Information Report (FIR) at Pune Railway Station. The FIR registered as No. 504/17 under Section 379 of Indian Penal Code on 13.09.2017 at 9.30 A.M. The Department has argued that the FIR was registered at Pune Railway Station, whereas, the theft was discovered in Hyderabad. The appellant has explained that during the journey, he developed an upset stomach and went to the toilet, leaving the concealed gold in his bag. At Lonavala Station, two passengers boarded and sat on the upper berth where his bag was kept. They later got off, which made the appellant suspicious of them. Therefore, he might have lodged the FIR at Pune Railway Station. Furthermore, this was a continuing offence and appellant was entitled to lodged the FIR at any place during the journey. Hence, the department is argument that the FIR should have been lodged at 12 Appeal No. C/30015/2022 Hyderabad or any other station has no significance. The FIR was lodged as soon as reasonably possible after the occurrence. It is also important to note that the Hyderabad Railway police Station registered a other FIR regarding the recovery of the gold bars on 14.09.2017 at 14.30 hours, being FIR No. 217/17 under Section 41(2) and 102 of the Criminal Procedure Court. The details of the FIR are as follows:
"Facts of the case are that on 14.09.2017 at 14.30 hours received a complaint from Sabhavath Ram S/o Manya, Age. 52 yrs, Occ. Chief Ticket Inspector Hyderabad R/o Rly Qtr.No. 562/5, Bhoiguda, Secunderabad would like to inform you that on 14.09.2017 when I was on duty at Hyderabad Railway Station at about 09.25 Hrs. I received credible information that some Gold biscuits were taken by some licenced porters and auto drivers which was found at the portico (under the premises of Hyderabad Railway Station). Prior to this, the GRP and RPF have conduced Frisking & checking in Hyderabad Railway Station. Upon which I called to licenced porters of Hyderabad Railway Station and enquired with them. During enquiry it is learnt that some gold biscuits were taken by (1) E. Ramakrishna, 2) G. Naresh and 3) Syed Iqbal (Auto Driver) and also revealed that they have taken such gold biscuits which were wrapped in a news paper and covered with plaster, kept it in the folding of a white color short and there after they have taken away. On opening the same, there were (22) gold biscuits as such the same have been handed over to me for taking further action. Thus, I took the porters and auto driver together with gold biscuits and reported to the inspector RPF Hyderabad. He in-turn informed the same to GRP/Hyderabad. Soon after receipt of the said liable information the GRP inspector rushed to RPF office, the SS/Hyderabad was also called RPF officer and informed the same, wherein the said 22 gold biscuits and the above persons were present and they were enquired thoroughly. During the enquiry they revealed the same as mentioned supra, but on further enquiry of the GRP, they revealed that actually the gold biscuits were more than 22. On the suspicion the above persons and 22 gold biscuits were handed over to GRP Hyderabad and requested for taking necessary legal action against the above persons".
24. Railway Police Station Hyderabad after recovery of Gold Bars prepared a Panchanama with statement of concern person, which is very relevant for disposal of this appeal, which is as thus.
"My name is Paskapalli Ramakrishna s/o Chandraiah, aged 32 years.
Caste Kurma, Occ. Linesman, Badge No.24, Rly. Coollie, Hyderabad Rly.
Station, r/o H.No. 3-4-937/30, Ratna Nagar, Barkathpura, Hyderabad, my duty was at Hyderabad Rly. Station on 13.09.2017 between 11.00 hrs to 14.09.2017 11.00 hrs. During my duty time i.e. on 13.09.2017 night at 23.00 hrs myself and other rly. Coolies were with me, Gaddam Naresh and Auto Driver, Syed Iqbal by patrolling coming to portico side, Gaddan Naresh leg some item touched him as he felt, immediately it was taken and seen, it is of one white necker nada patti rolled in one news paper, and over it 13 Appeal No. C/30015/2022 packing plaster brown colour pasted. It is opened and seen, in it gold biscuits were there."
25. Similar statement were given by Syed Iqbal (Auto Driver) and Gaddam Naresh (Railway Coolie). Therefore, the said Gold Bar were recovered just after completion of appellant journey. It is also important to mention that the statement given by these persons that it is one Necker nada patti rolled in one newspaper, and over it packing plaster brown colour pasted. This facts also corroborate statement given by appellant, in which method appellant was kept the purchased Gold Bars.
26. Railway Police Station Hyderabad by letter dated 19.09.2017 with seized gold sent it to the additional director, directorate of revenue intelligence Hyderabad with mentioning this fact that.
"With reference to the above cited subject it is to submit that, on 1309.2017 at about 23.00 hrs Railway porters namely Enakapally Ramakrishna, Gaddam Naresh and one Auto driver namely Syed Iqbal have dishonestly taken away of (28) gold biscuits each weighing 100 grms from the Hyderabad Railway Station premises which were found abandoned. Later on 14.09.2017 only (22) gold biscuits handed over to chief ticket inspector of Hyderabad Railway Station by concealing remaining (6) Gold biscuits with them.
In this regard on 14.09.2017 at 14.00 hrs the CTI of Hyderabad brought such 22 gold biscuits along with above accused persons to RPS Hyderabad and lodged a complaint for taking necessary legal action.
On receipt of the compliant, a case was registered vide in Crime No. 217/2017 U/Sec 41(1)(b)/102 CRPC and took up the investigation. During the interrogation the above accused persons confessed that they concealed the remaining (6) of gold biscuits at their houses, hence recovered such 6 gold biscuits from their houses respectively. The total (28) gold biscuits weighing kgs 02.800 grams were seized under cover of Panchanamas which are appears to be imported from Valcambi Minus, Switzerland. On each gold biscuits there are Hallmark numbers as below.
Gold biscuits. (Valcambi Suissee - 999.0) each gold biscuits weighing 100 grm
1) AHO 13076, 2) AHO 13077, 3) AHO 13078, 4) AHO 13079,
5) AHO 13080, 6) AHO 11951, 7) AHO 11952, 8) AHO 11953,
9) AHO 11954, 10) AHO 11955, 11) AHO 11956, 12) AHO 11957,
13) AHO 11958, 14) AHO 11959, 15) AHO 11960, 16) AHO 11761,
17) AHO 11762, 18) AHO 11763, 19) AHO 11764, 20) AHO 11765,
21) AHO 11766, 22) AHO 11767, 23) AHO 11768, 24) AHO 11769,
25) AHO 11770, 26) AHO 11331, 27) AHO 11332, 28) AHO 11334.
So far the owner of above Gold has not approached to police station and did not find till the date. Hence sending the above total (28) gold biscuits for further necessary action." 14 Appeal No. C/30015/2022
27. Railway Police Station Pune on 22.09.2017 sent a letter to intelligence officer directorate of revenue intelligence Hyderabad with request that:-
"An offence has been registered with Pune Railway Police Station vide CR. No. 504/2017, as 379 on complaint of Subhash Bhanvarlal Verma, Age. 57, r/o 491/1 A, sutmil road, Latur about theft of 33 gold biscuits of price 1,02,30,990/-, approx and other documents.
While investigating the matter we came to know the Hyderabad Railway Police have seized gold biscuits and have registered offence vide CR.No. 217/2017 u/s 41(1) (b), 102 crpc, 403, 201 r/w 34 IPC. They have handed over custody of gold biscuits to your department for further enquiry.
Complainant in our case has claimed these gold biscuits and he is to approach your office.
So, we request you to furnish the information above whether the enquiry is completed. If enquiry is completed, inform us our pune Railway Police Station e.mail id - ps. Pune. prly mahapolice.gov.in, before handing over custody of gold biscuits to complainant."
28. The above facts corroborates the appellant statement and enhance the credibility of his version. The department has argued that the appellant claimed to have purchased 33 Gold Bars, whereas only 33 Gold Bars were recovered. However, in the FIR lodged by the appellant, the number of the Gold Bars reported stolen was also 33 in number. Moreover, in the representation which was submitted by him, he had requested to make efforts to recover the remaining Gold Bars. Therefore, if some of the Gold Bars could not be recovered / traced for any reason, the appellant claim regarding the recovered Gold Bars cannot be denied merely on that ground. The appellant has stated that he had purchased 28 Gold Bars of "999 Valcambi Suisse" marks and 5 Gold Bars of "999 Pimpi" marks the statement given by appellant is similar with report of valuation of Jewellary. This fact further, corroborates the appellant is claim.
29. Inspite of information/letter of Pune Railway Police Station, department has not issued show cause notice to appellant as per legal requirement under Section 124 of Customs Act. Section124 of the Customs Act provides that:-
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Issue of show cause notice before confiscation of goods, etc No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person--
(a) is given a notice in writing with the prior approval of the officer of Customs not below the rank of an Assistant Commissioner of Customs, informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty;
(b) is given an opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the grounds of confiscation or imposition of penalty mentioned therein;
and
(c) is given a reasonable opportunity of being heard in the matter:
Provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person concerned be oral.
Provided further that notwithstanding issue of notice under this section, the proper officer may issue a supplementary notice under such circumstances and in such manner as may be prescribed.
30. The Department issued the show cause notice dated 16.03.2018 to the person(s) concern/unknown to produce of evidence on which they propose to relay in support of their defence along with the return reply. Appellant had already informed them about the relevant fact including ownership, but department did not issue show cause notice to appellant even though after general notice, appellant submitted reply with documentary evidence. But department failed to examine appellant's claim of ownership properly. Even at the time of Adjudication as well as appellant stage, they failed to consider appellant's claim, which was based on credible trust worthy evidence. It is also important to mention that in the show cause notice, it is admitted fact that no other person has approached either Hyderabad Railway Police or the DRI office for claiming the ownership of the said seized Gold Bars. Thereby, no other claimant except appellant has claimed of the recovered Gold Bars.
31. Learned Counsel for the appellant relied on principle bench of CESTAT Delhi decision Ram Lubhaya V/s Commissioner of Customs, New Delhi [2002 (147) E.L.T. 807 (Tri-Del)] in which held that gold seized by Railway police and transferred to Customs authorities subsequently - No presumption as to 16 Appeal No. C/30015/2022 smuggled nature of gold biscuits capable of being drawn under Section 123 of Customs Act, 1962 - Burden lies on Customs authorities to prove by positive evidence that biscuits smuggled into India illegally without payment of duty.
32. Learned Counsel also relied on Kolkata CESTAT decision Subham Verma V/s Commissioner of Customs [(2024) 16 Centax (Tri-Cal)] in which it was held that where at time of seizure of foreign marked gold bars, accused stated to have purchased such gold bars against cash from a shop but later on stated that such gold bars were received from another person and said person had admitted to have purchased same from a jewel company, in view of fact that both said person and Director of jewel company had joined investigation and produced invoices, payment details and copy of ledger account/stock register, which were not discarded either by investigating authorities or by adjudicating authority as fabricated, gold bars could not be confiscated. This order supports the contention of the appellant.
33. The Department relied on Hon'ble Supreme Court decision Kuldeep Singh and collaborates V/s state of Rajasthan (2000) 5 CC 7 in which Hon'ble Supreme Court held that it is well settled principle that in case of circumstantial evidence, when the accused offers an explanation and that explanation is found to be untrue, then the same offers an additional link in the chain of circumstances to complete the chain. Since there is no untrue statement offered in this case, therefore, this case law is distinguished. It is also important to mention that it is not a case which is based on circumstantial evidence.
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34. Learned representative of Department also relied on Supreme Court decision Om Prakash Khatri V/s Commissioner [2019 (11) TMI 796] in which Hon'ble Supreme Court upheld Kerala High Court judgement, Commissioner of Customs Kerala V/s Om Prakash Khatri [2019 (3) TMI 457] wherein Hon'ble Kerala High Court held that a reading of Section 123 also require only a reasonable belief as far as gold is concern that it was smuggled. If for the sake of argument, persumed that the proper officer has reasonable belief that the seized gold was smuggled, then appellant has given sufficient explanation with ample evidence that the goods was purchased in a bonafide manner by the appellant and therefore it can not be said to be smuggled.
35. Therefore, appellant has successfully proved that the recovered gold is owned by him and same was purchased in a bonafide manner. Therefore, confiscation of gold is not tenable and impugned order also not sustainable.
36. Therefore, appeal is allowed with consequential relief.
(Pronounced in open court on 10.10.2025) (A.K. JYOTISHI) MEMBER (TECHNICAL) (ANGAD PRASAD) MEMBER (JUDICIAL) shirisha