Custom, Excise & Service Tax Tribunal
Kashi Kumar Aggarwal vs Commissioner, Customs-New Delhi on 23 March, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 3
CUSTOMS APPEAL NO. 50536 OF 2022
(Arising out of Order-in-Appeal No. CCA(A) Cus/D-II/Prev./NCH/1471/2021-22
dated 10.12.2021 passed by the Commissioner of Customs (Appeals), New
Custom House, Near IGI Airport, New Delhi 110037)
Kashi Kumar Aggarwal Appellant
H.No. 91, Gali Hanuman, Pacca Danga,
Jammu 180001
VERSUS
Commissioner of Customs (Preventive) Respondent
New Custom House, Near IGI Airport New Delhi APPEARANCE:
Shri Aditya Giri, Advocate for the Appellant Ms. Jaya Kumari, Authorized Representative for the Department CORAM :
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) HON'BLE MS. BINU TAMTA, MEMBER(JUDICIAL) DATE OF HEARING: 15.02.2023 DATE OF DECISION: 23.03.2023 FINAL ORDER NO. 50387/2023 P.V. Subba Rao Shri Kashi Kumar Agarwal1 filed this appeal to assail order-in- appeal2 dated 10.12.2021 passed by the Commissioner of Customs (Appeals), New Custom House, New Delhi upholding the order-in- 1 Appellant 2 Impugned order 2 C/50536/2022 original 3 dated 20.3.2019 passed by the Additional Commissioner of Customs deciding on a Show Cause 4 Notice dated 21.2.2018 issued by the Additional Director, Directorate of Revenue Intelligence 5 , New Delhi insofar as it relates to the appellant. It needs to be pointed out that against the same order-in-original, in addition to the appellant, two other persons- Shri Deepak Handa and Shri Ravi Handa- had filed appeals before the Commissioner (Appeals) who decided the three appeals separately. Against the orders of the Commissioner (Appeals), Shri Deepak Handa filed appeal C/52922 of 2016 and Shri Ravi Handa filed C/52923 of 2016. Both these appeals have been disposed of by Final Order No. 51520-51521/2021 dated 25.5.2021. The order, in a nutshell, upheld the confiscation of the primary gold with foreign markings but set aside the confiscation of the gold ornaments and the cash. Consequently, the penalties were also reduced.
2. After the above order, the Commissioner (Appeals) passed the impugned order in respect of the appellant which also involves confiscation of the primary gold, confiscation of the jewellery, confiscation of money and imposition of penalty. In this appeal, the appellant is assailing the following:
a) Confiscation of 2776.94 grams of gold valued at Rs. 72,21,040/-
seized from the appellant by a Panchnama dated 24.8.2017. This gold includes (i) one kg gold bar of 995 purity with marking „Argos Heraeuss‟; (ii) one kg gold bar of 995 purity with marking " Rand refinery"; (iii) one cut piece of gold of 995 purity weighing 195.23 3 OIO 4 SCN 5 DRI 3 C/50536/2022 grams; (iv) a plastic box with jewellery weighing 246.37 grams; and (v) a plastic pouch with jewellery weighing 335.34 grams;
b) Confiscation of Indian currency of Rs. 8,86,500/- seized from the appellant by a Panchnama dated 24.8.2017; and
c) Penalty of Rs. 25,00,000/- imposed on the appellant under section 112(b) (i).
3. The factual matrix of the case is as follows. Acting on specific information, officers of DRI intercepted two persons sitting on seats C7 and C9 of Delhi Udhampur Express train (No. 22401) on 23.8.2017 while the train was still at Delhi Rohilla Railway Station. They identified themselves as Shri Deepak Handa 6, (the appellant in appeal No. 52922) S/o Shri Vijay Kumar and Shri Surinder Singh, S/o Shri Bansi Singh. When asked, they denied that they were carrying any gold in any form. Officers searched them and their baggage under Section 102 of the Customs Act, 1962 7 and recovered 9 gold bars of foreign origin weighing 1,000 grams each and gold jewellery weighing 5.429 kg and 120 gold coins suspected to be of foreign origin totally weighing 0.96 kg. Shri Surinder Singh, in his statement dated 24.8.2017, said that he worked as a casual labourer in the shop of Deepak on a salary of Rs. 7,500 per month and the statement of Deepak on 24.8.2017 corroborated that Shri Surinder Singh was only his employee.
4. While the jewellery was recovered from their bags, four of the foreign marked gold bars were recovered from the shoes of Deepak in which they were concealed. The remaining five gold bars and the 6 Deepak 7 Customs Act 4 C/50536/2022 gold coins were wrapped in brown colour tape and concealed in the specially designed secret pockets in the back pack.
5. The total gold weighing 15.389 kg estimated to be worth about Rs. 4.6 crores was seized under the Customs Act as Deepak did not have any bills for the gold nor any documents to show that the foreign marked gold was legally imported into India.
6. During investigation, Deepak said that the gold bars were purchased from one, Shri Kashi Kumar Aggarwal, the appellant. Investigations were conducted and the SCN was issued and adjudication order was passed which was partly set aside by Final Order dated 25.5.2021 insofar as Shri Deepak Handa and Shri Ravi Handa were concerned.
7. In the follow up operations, gold bars with foreign markings weighing 2000 grams, one cut piece of gold of 995 purity weighing 195 grams, gold ornaments weighing 246.37 grams in a plastic box and ornaments weighing 334.34 grams in a plastic pouch and cash of Rs. 8,86,500 were seized from the shop of the appellant in Delhi which are the subject matter of this appeal and the impugned order.
8. Investigations were completed and the SCN was issued and it was adjudicated by the Additional Commissioner of Customs who passed the OIO as follows:
i. I confiscate the seized gold weighing 15.3890 kg (recovered from Shri Deepak Handa) valued at Rs. 4,60,02,337, seized vide panchnama dated 23/24-8- 5 C/50536/2022 2017 under section 111(d), 111 (i) and 111(p) read with section 120 of the Customs Act, 1962.
ii. I confiscate the seized gold weighing 2776.94
grams (recovered from Shri Kashi Kumar
Aggarwal) valued at Rs. 72,21,040/- seized vide panchnama dated 24.8.2017 under section 111(d), 111(i) and 111(p) read with section 120 of the Customs Act, 1962 iii. I confiscate the seized gold weighing 1,118.24 grams (recovered from M/s. Baibhav Ornaments) valued at Rs. 46,83,820/- seized vide panchnama dated 24.8.2017 under sections 11(d), 111(i) and 111(p) read with section 120 of the Customs Act, 1962.
iv. I confiscate Indian currency amounting to Rs.
8,86,500 seized vide panchnama dated 24.8.2017 under section 121 of the Customs Act, 1962. v. I confiscate Indian currency amounting to Rs. 9,64,600 seized from the business premises of M/s. Baibhav Ornaments and I confiscate Indian currency amounting to R.s 3,64,500/- from the premises of M/s. Radhika Jewellers (Ground Floor) vide panchnama dated 24.8.2017 under section 121 of the Customs Act, 1962.
vi. I impose a penalty of Rs. 50,00,000 under section 112
(b) (i) of the Customs Act, 192 on Shri Deepak Handa for his acts of omission and commission stated above. vii. I impose a penalty of Rs. 25,00,000 under section 112 (b) (i) of the Customs Act, 192 on Shri Kashi 6 C/50536/2022 Kumar Aggarwal for his acts of omission and commission stated above.
viii. I impose a penalty of Rs. 10,00,000 under section 112
(b) (i) of the Customs Act, 1962 on Shri Ravi Handa for his acts of omission and commission stated above. ix. I do not impose any penalty under section 114AA of the Customs Act, 1962 on Shri Deepak Handa, Shri Kashi Kumar Aggarwal and Shri Ravi Handa, for the reasons mentioned above.
9. In the impugned order, the Commissioner (Appeals) upheld the OIO insofar as the appellant is concerned. In this appeal, the appellant is assailing the impugned order upholding the decision of the Additional Commissioner insofar as it relates to the confiscation of the gold, gold ornaments and cash from the appellant and the imposition of penalty on the appellant.
10. Learned Counsel for the appellant made the following submissions:
a) The adjudicating authority did not consider the appellant‟s request for summoning as witnesses Deepak Handa and Ravi Handa for cross examination on whose statements the whole case is based.
b) The appellant and Deeepak Handa had retracted their statements at the first available opportunity on 28.8.2017 and 24.9.2017 which was recorded by the learned Chief Metropolitan Magistrate when the appellant was produced after arrest.7
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c) The gold ornaments weighing 246.37 grams (10 necklaces and 4 sets of earrings) belong to M/s. Jeet Jewellers of Mumbai which were kept with the appellant to take care of them. They do not belong to the appellant.
d) Ornaments weighing 335.34 grams belong to M/s.
Raghav Jewellers, Saharanpur, UP which they purchased from M/s. Heera Jewellers of Chadni Chowk which was also kept with the appellant.
e) The two gold bars weighing 1000 grams each having purity of 995 and foreign markings were purchased by M/s. Easy Trading from M/s. Pinki Chains. The appellant produced invoice dated 19.8.2017 and a copy of ledger account, copy of Form DVAT-56, copy of GST R2A of M/s. Pinki Chains along with other supporting documents and evidences.
f) Revenue has not adduced any evidence to show that the seized gold was smuggled.
g) The bills produced show that the gold was legally purchased from the local market. The appellant was only a broker and was not the importer or owner of the seized gold.
h) Section 111 (d) of the Customs Act does not apply to town seizures of goods. It applies to those cases where the goods have been imported in violation of any prohibition.
i) Section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package 8 C/50536/2022 either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant.
j) Section 111(p) applies only to goods notified under Chapter IVA of the Act and gold is not notified under this section.
k) Section 120 applies to those cases where the smuggled goods have been modified in form and it does not apply to the present case.
l) Section 121 applies to sale proceeds of smuggled goods and in this case, since the goods themselves are not smuggled, section 121 does not apply.
m) Section 123 shifts the burden of proof to the person from whom the goods are seized if the goods are notified and there was reasonable belief that the goods were smuggled. In this case, there was no reasonable belief. Therefore, it is for the department to prove that they were smuggled goods and the department has not discharged this burden.
n) The gold bars were imported by an approved agency and were freely available in the open market. The appellant purchased them from the open market.
o) The gold ornaments had no foreign markings on them to show that the jewellery was smuggled. Confiscation of jewellery seized from co-accused Deepak Handa and Ravi Handa was set aside by this Tribunal.
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p) The Indian currency seized under section 121 as alleged sale proceeds of the smuggled gold is not sustainable as there was no evidence that the currency were the sale proceeds of smuggled gold.
q) The penalty imposed on the appellant under section 112 needs to be set aside.
11. Learned authorized representative for the Revenue reiterated the findings of the impugned order and asserted that the impugned order is correct and proper and calls for no interference. He made the following further submissions:
a) The appellant had, in his voluntary statement dated 25.8.2017 admitted that he sold illegally imported gold from local market to Shri Deepak Hand without invoice or receipt.
He had also arranged the jewellery and coins from market as evident from his statements, corroborated by the statements of Deepak Handa and Surinder Singh.
b) The appellant could not produce any valid documents regarding the two pieces of foreign origin gold bars of one kg each seized from his shop along with the gold ornaments and cash.
c) In his statement dated 24.8.2017, the appellant confirmed that the 9 gold bars seized from Deepak with foreign markings were sold through him and further confirmed that he would sell gold bars to Deepak at least 2 to 3 times a month. In follow up investigation, he was found to have two gold bars with foreign markings and he was unable to produce any document to prove their licit possession 10 C/50536/2022 although he claimed to have purchased them from M/s. Uma Traders.
d) No prejudice is caused to the appellant from not allowing cross examination of the co-accused as they were in cahoots. The appellant also confessed to having dealt with the seized smuggled gold to Deepak. What is admitted need not be proved. Reliance is placed on Mohammed Muzzamil vs CBIC8.
e) In case of gold notified under section 123 which is seized under reasonable belief that it is smuggled, the burden of proving that it is not rests on the person from who it is seized.
12. We proceed to examine the relevant legal provisions of the Act and then examine each of the four issues viz., the confiscation of the gold bars, confiscation of the jewellery, confiscation of the seized cash and imposition of penalty upon the appellant. Legal provisions
13. The Customs Act, 1962 regulates imports and exports and provides for confiscation of certain goods, imposition of penalty on individuals and also has provisions for arrest and prosecution of the offenders. The provisions relevant to this appeal are sections 2(22), (33) and (39), 111(d), (i) and (p), 112, 120, 121 and 123. These read as follows:
Section 2: Definitions (22) "goods" includes -
(a) vessels, aircrafts and vehicles;
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2021(376) ELT 46 (Telangana) 11 C/50536/2022
(b) stores;
(c) baggage;
(d) currency and negotiable instruments; and
(e) any other kind of movable property (33) "prohibited goods" means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with;
(39) "smuggling", in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113;
SECTION 111. Confiscation of improperly imported goods, etc.
- The following goods brought from a place outside India shall be liable to confiscation: -
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof;
(p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.
SECTION 112. Penalty for improper importation of goods, etc.- Any person, -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way 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 under section 111, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;......." 12
C/50536/2022 SECTION 120. Confiscation of smuggled goods notwithstanding any change in form, etc. - (1) Smuggled goods may be confiscated notwithstanding any change in their form. (2) Where smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation:
Provided that where the owner of such goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation. SECTION 121. Confiscation of sale-proceeds of smuggled goods. - Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation. SECTION 123. Burden of proof in certain cases. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be -
(a) in a case where such seizure is made from the possession of any person,-
(i) on the person from whose possession the goods were seized; and
(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;
(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.
(2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.
14. The gold (both the gold bars and gold jewellery) were confiscated in this case under sections 111(d) (i) and (p) read with section 120. The currency was seized under section 121. Section 123 was invoked to shift the burden of proof to the appellant.
15. It is important to first examine the scope of section123 with respect to this appeal so that it is established who (Revenue or the appellant) has to prove and then further examine if the burden is discharged. This section shifts the burden of proving that the goods 13 C/50536/2022 are not smuggled to the person from whom they seized if (a) the goods are notified under this section; and further (b) the seizure was under reasonable belief that the goods were smuggled goods. This leads us to the next question as to what are „smuggled goods‟. There is no definition of „smuggled goods‟ in the Act and therefore, the natural meaning of the expression should be taken which is „goods‟ which are „smuggled‟. Both „goods‟ and „smuggling‟ are defined in the Act. Goods, as defined in section 2(22) is an inclusive definition and it includes, inter alia, vessels, currency and negotiable instruments. Therefore, there cannot be any doubt that the gold bars, gold ornaments and the cash seized in this case are clearly „goods‟. This leads to the next question as to what is smuggling. Section 2(39) defines "smuggling", in relation to any goods, as any act or omission which will render such goods liable to confiscation under section 111 or section 113. Thus, the definition of smuggling under the Customs Act is very wide and any act or omission which renders the goods liable to confiscation under section 111 or section 113 falls within its ambit. For the purpose of this case, only section 111 is relevant.
16. Thus, to sum up, if any goods including cash, are liable to confiscation under section 111, they constitute smuggled goods and if they are seized under the reasonable belief that they are smuggled goods and if such goods are also notified under section 123, the burden of proving that they are not smuggled rests on the person from who the goods are seized. Otherwise it rests on the Revenue. It is undisputed that gold is covered under section 123 and cash is not. Therefore, the burden of proof insofar as the cash 14 C/50536/2022 is concerned, rests on the Revenue. The burden of proof shifts to the appellant with respect to gold depending on whether it was seized under the reasonable belief that it was „smuggled goods‟. If so, the burden shifts to the appellant and not otherwise.
17. The next important section is 121 which provides for confiscation of the sale proceeds of the smuggled goods. This is the section under which the cash has been confiscated. What is different between sections 111 and 121 is that the former provides for confiscation of smuggled goods whereas the latter provides for confiscation of the sale proceeds of smuggled goods. Naturally, such sale would take place after smuggling and such proceeds will be of Indian origin. On the other hand, if anyone smuggles currency (Indian or foreign) into India, such currency will be „smuggled goods‟ themselves.
18. The third important section is 120 which states that the smuggled goods will be liable for confiscation not withstanding any change in the form. For instance, if one smuggles silver bars and then melts them and converts them into some other form, the mere fact that they were converted makes no difference and they will still be liable to be confiscated. The gold jewellery was confiscated under section 111 read with this section.
19. The next section to be examined is 2(33) which defines "prohibited goods" as any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are 15 C/50536/2022 permitted to be imported or exported have been complied with. Thus, the definition of „prohibited goods‟ is wide and includes goods whose import is prohibited fully either under this Act or under any law and further includes goods whose import is permitted only subject to some conditions and such conditions have not been fulfilled. This definition becomes significant when examining the confiscability under section 111.
20. The last section to be examined is section 111, specifically, clauses (d), (p) and (i) under which the gold was confiscated. Under section 111 (d) "any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force"
can be confiscated. Gold is a prohibited good inasmuch as its import was permitted during the relevant period only by the designated agencies under the Foreign Trade (Development & Regulation) Act, 1992.
21. As far as section 111(i) is concerned, it provides for confiscation of "any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof".
22. As far as section 111(p) is concerned, it provides for confiscation of "any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened". Issues in this case 16 C/50536/2022
23. We proceed to examine the submissions by both sides with respect to each of the issues in this case and decide. A. Foreign marked gold bars, two, weighing 2 kg in total and having a purity of 99.5%, one cut piece of yellow metal of the same purity weighing 195.23 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in Original)
24. These two gold bars and the cut gold piece had extremely high levels of purity and were in primary form and the gold bars had foreign markings. They were seized from the appellant in a follow up operation to the seizure of foreign marked gold bars from Deepak and Surinder. They were found in the premises of the appellant. When the officers questioned the appellant on 25.8.2017, the appellant admitted that he had sold foreign marked gold to Deepak without invoice or receipt and further that he would sell so to Deepak 2 or 3 times a month. The appellant had no receipts or documents to show that the gold was not of foreign origin. In fact, even in the appeal before us, the appellant does not dispute that the gold was of foreign origin. The officers, therefore, had a reasonable belief that they were smuggled goods and accordingly, seized them. The burden of proof is on the person from who they are seized, viz., the appellant to prove that they were not smuggled as per section 123.
25. The submission of the learned counsel for the appellant is that gold can be imported by authorized agencies (such as banks) who can further sell them to others in India. Therefore, it is his submission that the gold was legally imported into India and therefore is not smuggled. There is an ambiguity in the submissions before us inasmuch as at one point in the synopsis it is submitted that the appellant purchased it from the agency and at another he 17 C/50536/2022 states that the gold belonged to Easy Trading. The question is not just who purchased from whom but whether the gold is smuggled or not and the burden of proof is on the appellant. The mere fact that gold is imported by various agencies like banks also makes no difference to the case and neither does the fact that smugglers smuggle gold into India on a regular basis. What is important is to see from the evidence available on records if the seized gold was legally imported. It needs to be pointed out that gold bars manufactured by refineries is in bars of specific weights, purity and are embossed with the name of the firm, the purity, weight and even a serial number. Thus, when an agency imports gold, the details of the bars which are imported will be mentioned in the invoices and in the import documents. The designated agencies are banks and other well reputed firms and when they sell the bars further, such sales are well documented. The least one would expect to have is a copy of the Bill of Entry or document under which the gold was imported. No duty paid document or Bill of Entry is produced before us or before the lower authorities to establish that the seized gold was legally imported. If any duty paid document was produced, it could have been verified with the import documents. Therefore, it has not been established that the seized gold was not smuggled.
26. Learned counsel submitted that the adjudicating authority did not consider the appellant‟s request for summoning as witnesses Deepak Handa and Ravi Handa for cross examination on whose statements the whole case is based. He further submitted that the appellant had retracted their statements at the first available 18 C/50536/2022 opportunity which was recorded by the learned Chief Metropolitan Magistrate when the appellant was produced after arrest. We find while the case emanated from the seizure of gold bars from Shri Deepak Handa and follow up investigation was conducted based on the statements of Deepak and Ravi, insofar as this gold is concerned, it stands on its own footing. Even if the statements of Deepak and Ravi are ignored, the fact that the gold bars were seized from the appellant is not in dispute. It is also not in dispute that they are of foreign origin and had foreign markings and were of very high purity is not in dispute. It is also not in dispute that no duty paid documents in the form of Bill of Entry (whether the duty is paid by the appellant or the importer from whom the appellant claims to have purchased) is available. No such document is produced till date even before us. Therefore, the case against the appellant does not in any way get diluted. The fact that the appellant had given his statements on 24.8.2017 and 25.8.2017 but subsequently retracted them when produced before the Ld. CMM was also examined. The statements give out several personal details which are likely to be in the exclusive knowledge of the appellant. It is inconceivable that the officer recording the statement had these details. It suggests that the statements were voluntary. These statements also indicate the appellant‟s relationship with Deepak Handa and that the appellant would sell gold to Deepak. The retraction does not indicate what part of the statement recorded by the officers was incorrect and what the truth is- his personal details, the fact that he would sell gold to Deepak or the nature of the seized gold. If officers had compelled him to 19 C/50536/2022 write incorrect facts, the retraction should have brought out the correct facts. We find nothing to this effect. If one has legitimately bought foreign marked gold and is accused by DRI officers of possessing smuggled gold, it is inconceivable that when one is produced before the learned CMM that one would NOT say that he had actually bought duty paid gold and produce the documents. It needs to be reiterated that no duty paid documents have been produced till date even before us. Therefore, these submissions of the learned counsel will not carry the case of the appellant any further.
27. Learned counsel submits that the two gold bars weighing 1000 grams each having purity of 995 and foreign markings were purchased by M/s. Easy Trading from M/s. Pinki Chains and produced invoice dated 19.8.2017 and a copy of ledger account, copy of Form DVAT-56, copy of GST R2A of M/s. Pinki Chains along with other supporting documents and evidences. The gold bars were imported by an approved agency and were freely available in the open market. The appellant purchased them from the open market. He further submits that Revenue has not adduced any evidence to show that the seized gold was smuggled. We find that none of the documents establish that the gold was duty paid. While it is true that gold imported by an approved agency can be and is sold in the market, it is the responsibility of the person who is in possession of the gold to establish that it is not smuggled. All that one needs to get a copy of the duty paid document such as Bill of Entry and the relevant documents to show that the gold bar which one is in possession of was duty paid. It is as simple as that. 20
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28. Learned counsel for the appellant further submitted that in this case, there was no reasonable belief for seizing the gold. Therefore, it is for the department to prove that they were smuggled goods and the department has not discharged this burden. We disagree. The appellant was in possession of foreign marked gold and had no documents to show that duty was paid on it. This gave the department reasonable belief to seize. The burden of proof is on the appellant. If one has duty paid gold bars which are seized and confiscated, it will not be unreasonable to expect that one would obtain the duty paid documents and produce instead of letting the gold be confiscated and getting oneself arrested. If the gold which the appellant was in possession was, indeed, duty paid, the documents to show that must be with the appellant and in his exclusive knowledge which he must produce, however no such documents have been produced not only before the investigating officers or the adjudicating authority but even before us. We are therefore, satisfied that the appellant has not discharged his burden of proving that the gold bars and the cut piece were not smuggled.
29. Learned counsel further submitted that Section 111 (d) of the Customs Act does not apply to town seizures of goods. It applies to those cases where the goods have been imported in violation of any prohibition. He submits that Section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the 21 C/50536/2022 appellant. Section 111(p) applies only to goods notified under Chapter IVA of the Act and gold is not notified under this section.
30. We find that section 111(d) nowhere indicates whether it applies to town seizures or seizures at the ports and airports. All that it states is that „any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force‟ are liable for confiscation. Gold is not freely importable. Import of gold in any form, is prohibited except by nominated agencies as per the Foreign Trade Policy notification above issued under the Foreign Trade (Development and Regulation) Act, 1992. Unless this condition of the import (only by a notified agency) is fulfilled, gold is a prohibited good. The appellant also does not dispute that the gold can be imported only by the nominated agencies. If gold is imported by anyone else, it will be prohibited goods. Hon‟ble High Court of Delhi in Commissioner of Customs & Central Excise Delhi IV vs Achiever International9 held that the prohibition under Section 11 of the Customs Act is different from confiscation under section 111(d) of the Customs Act. While section 11 deals with prohibitions under the Customs Act only, confiscation under Section 111(d) can be done even if the import violated any other law for the time being force. In the case before the Hon‟ble High Court, section 3 of the Imports and Exports (Control) Act, 1947 was violated which is the predecessor law of Foreign Trade (Development and Regulation) 9 2012 (286) ELT 180 (Del) 22 C/50536/2022 Act, 1992 which has been violated in this case. Hon‟ble Apex Court has in Om Prakash Bhatiya10 and Sheikh Mohd. Omer11 has held that Sec 2(33) of the Customs Act has wider connotations than Sec 11 of the Act. Even if gold is not notified separately under Sec 11 of the Act, the prohibition flows from the statue i.e., Sec 123 of the Act. Further, in Sheikh Mohd Omer it is held that any prohibition referred in Sec 111 applies to every type of prohibition and that may be partial or complete. Any restriction to import or Export is to an extent a prohibition. We, therefore, find section 111(d) applies to this case.
31. We, however, agree with the submission of the appellant that section 111(i) applies only when any dutiable or prohibited goods are found concealed in any package either before or after unloading thereof. It should not apply to any goods which were seized from the shop of the appellant. Section 111(p) applies only to goods notified under Chapter IVA of the Act and that gold is not notified under this Chapter is not in dispute. Therefore, confiscation under sections 111(i) and (p) are not sustainable.
32. To sum up, we find that the gold bars and piece of gold were correctly held liable for confiscation under section 111(d) by the adjudicating authority and such confiscation was correctly upheld in the impugned order. Confiscation under sections 111(i) and (p) need to be set aside. B. Gold jewellery weighing 581.71 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in original) 10 2003 (155) ELT 423 (SC) 11 1983(13)ELT 1439 (SC) 23 C/50536/2022
33. These gold ornaments were confiscated in the order in original and the confiscation was upheld in the impugned order under sections 111(d), 111(i) and 111(p) read with section 120 of the Customs Act. Section 120 provides that Smuggled goods may be confiscated notwithstanding any change in their form. Further, it also provides that where smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable to confiscation. It is the case of the department that the seized jewellery was made out of smuggled gold and NOT that it itself was smuggled. There were also no foreign markings on them to show that the jewellery is smuggled. Thus, it is not in dispute that the gold jewellery was not smuggled but is made in India. If it was established with some evidence that the jewellery was manufactured out of smuggled gold, then such smuggled gold would have been covered under Section 123 and by virtue of section 120, would have been liable for confiscation notwithstanding the change in its form into jewellery. However, there is no such evidence on record. In our considered view, therefore, the jewellery is not liable to confiscation in the absence of any evidence that it is smuggled or it has been made by converting smuggled gold. The mere fact that the jewellery was found along with the smuggled gold bars makes no difference. Confiscation of the gold jewellery cannot be sustained and needs to be set aside and we do so. In Final Order dated 25.5.2021, this tribunal had taken a similar view with respect to the jewellery seized from others in this case.
24
C/50536/2022 C. Indian currency amounting to Rs. 8,86,500 seized from the appellant (S.no. (iv) of the operative part of the order in original)
34. While section 123 shifts the burden of proof to the person from whom the goods were seized in case of gold, it does not do so, in respect of cash. The currency was seized under section 121 as „sale proceeds of smuggled goods‟. This section states that „Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale- proceeds thereof shall be liable to confiscation'. This section does not shift the burden of proof to the person(s) from whom the cash is seized. It is for the Revenue to establish that the cash which has been seized are (a) the sale proceeds; (b) the goods that were sold were smuggled goods; and (c) the person who has so sold the goods had either the knowledge or had reason to believe that the goods were smuggled. Merely because some unaccounted cash is lying, it cannot be confiscated unless the three conditions in Section 121 are fulfilled. From the records of this case, we do not find that the Revenue has established any of these factors or even identified which were the smuggled goods which were sold by the person from whom the cash is seized. Confiscation of this cash is therefore, liable to be set aside and we do so. It also needs to be noted that an identical view was taken with respect to the cash seized from Baibhav Ornaments and Radhika Jewellers in this Tribunal‟s Final Order dated 25.5.2021.
D. Penalty of Rs. 25,00,000 imposed on the appellant under Section 112 (S.No. (vii) of the operative part of the Order in Original) 25 C/50536/2022
35. Penalty under section 112 is imposable for any acts or omissions which render the goods liable to confiscation under section 111 of the Act. This section reads as follows:
SECTION 112. Penalty for improper importation of goods, etc.- Any person, -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way 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 under section 111, shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;
36. We note that we had, by final order dated 25.5.2021, reduced the penalties imposed on Shri Deepak Handa and Shri Ravi Handa. We also set aside the confiscation of the cash and jewellery seized from the appellant. We, therefore find it fit to reduce the penalty imposed on the appellant also to Rs. 5,00,000/- (Rupees five lakhs only).
37. The appeal is partly allowed and the impugned order is partly modified as follows:
a) Confiscation of foreign marked gold bars, two, weighing 2 kg in total and having a purity of 99.5%, one cut piece of yellow metal of the same purity weighing 195.23 grams seized from the appellant (part of S.No.(ii) of the operative part of the 26 C/50536/2022 Order in Original) under section 111(d) is upheld and confiscation under sections 111(p) and 111(i) are set aside.
b) Confiscation of Gold jewellery weighing 581.71 grams seized from the appellant (part of S.No.(ii) of the operative part of the Order in original) under section 111 read with section 120 is set aside.
c) Confiscation of the seized Indian currency (cash) under section 121 is set aside.
d) The penalty imposed on the appellant under section 112 is reduced to Rs. 5,00,000/-
38. The appeal is disposed of as above with consequential relief.
(Order Pronounced on 23.03.2023) (P.V. SUBBA RAO) MEMBER (TECHNICAL) (BINU TAMTA) MEMBER (JUDICIAL) RM