Customs, Excise and Gold Tribunal - Delhi
Shri Bharat Kumar Jain Alias Shri Bharat ... vs Cc on 25 April, 2007
Equivalent citations: 2007(120)ECC160, 2007ECR160(TRI.-DELHI), 2007(217)ELT42(TRI-DEL)
ORDER
R.K. Abichandani, J. (President)
1. The appellant challenges the order of the Commissioner of Customs made on 10.02.2005 imposing penalty of Rs. 2 lacs on him under Section 112(b) of the Customs Act, 1962.
2. According to the Revenue, acting on the information received by the Superintendent of Police, Distt. Pali, on 03.05.1991 that a consignment of smuggled silver belonging to Basant Raj Jain (since deceased) was lying in the premises of Gajraj Ginning and Oil Mills, Rani, the Police Officers raided the premises. At that time, in the presence of two independent panch witnesses, both Basant Raj and the present appellant, Bharat Kumar Jain, voluntarily disclosed that they had secreted 24 slabs of smuggled silver under the gravel (Bajri) lying in a portion of the mill. Basant Raj and Bharat Kumar Jain (the present appellant), in the presence of panch witnesses, removed the gravel from surface and took out 24 silver slabs, each wrapped in jute packing. These silver slabs were got weighed on the spot and their purity was ascertained through a goldsmith, Shri Madan Lal. Each of the slabs was found weighing around 33 to 36 kgs. The purity of silver was ascertained to be 99.9%. The total weight of the 24 silver slabs was 851.703 kgs. and it was valued at Rs. 59,57,000/-. These silver slabs were sealed and seized by the Police under a panchnama. During the course of inquiry, the Police found that Shri Basant Raj and Shri Bharat Kumar Jain (the present appellant) were involved in commission of the offences and were, therefore, arrested and remanded to judicial custody.
2.1 On 04.05.1991, on receiving of information from the Superintendent of Police, Pali, the Customs Officers examined the record on 05.05.1991 and the Police Officers were informed that the silver in question was reasonably believed to be liable to confiscation under the provisions of the Customs Act and that the inquiry made till then indicated that Shri Basant Raj was working as an agent of Dawood Ibrahim, an international smuggler based in Dubai, and that the smuggled silver was being supplied in huge quantity to various places in Rajasthan through Shri Basant Raj. On 08.05.1991, the report was submitted to the Magistrate stating that, it was a case of violation of Section 111 of the Customs Act, 1962 read with Section 3 of Import-Export (Control) Act, 1947 and Sections 13 and 67 of Foreign Exchange Regulation Act, 1973 for which power of investigation was not vested in Police, but only in the Customs Officers. A request was made to the Court that, the offence may be investigated under the Customs Act and that the seized silver and truck should be handed over to the Customs Department for further action. On 13.05.1991, the present appellant, Bharat Kumar Jain, made an application requesting the Magisterial Court not to hand over the silver under seizure to the Customs Department and to grant him one week to produce documents showing legal title of silver. Another application claiming possession of the truck was filed on the same date by the other accused, Basant Raj.
2.2 On 18.05.1991, the present appellant, Bharat Kumar Jain, made an application stating that, one Shri Sagarmal, who was a relative of the appellant, kept 24 slabs of silver in his godown on 01.04.1991 at the rent of Rs. 4,000/- per month. It was also settled that, the security of the silver slabs will be provided by the appellant, Shri Bharat Kumar Jain, and that he would be entitled to 2.5% commission on selling price of the silver, which he was authorized to sell. Shri Sagarmal had desired that the sale proceeds will be used for religious purposes through secret charity. It was stated in the application that, the appellant was the commission agent and custodian of the goods. A rent note dated 01.04.1991, allegedly signed by Shri Sagarmal, was produced along with the said application. Sagarmal was the father of the appellant's brother's father-in-law Ratan Chand.
2.3 The learned Magistrate directed that the Customs Department was free to conduct its investigation. On 19.11.1996, the Police Station Rani, informed the Customs Department about the order dated 26.08.1996 of the Judicial Magistrate (First Class), Desuri, requiring them to hand over the seized silver and relevant documents to the Customs Department. Thereafter, the Customs Officers in the presence of two independent panch witnesses and a goldsmith made weighment or 24 silver bricks on 20.11.1996, and its weight was found to be 852.300 kgs. and the value Rs. 59,66,100/-. The Customs Officers seized the said silver under Section 110 of the Customs Act on the reasonable belief that the same was liable to confiscation under Section 111 of the said Act.
2.4 In the meantime, the Customs Officers had recorded the statements of various persons including Shri Basant Raj and Shri Bharat Kumar Jain (the present appellant) under Section 108 of the Customs Act. The present appellant, in his statement dated 08.07.1992, recorded under Section 108 of the Customs Act, had admitted that he received Rs. 50,000/- for keeping the silver seized from the factory premises of Gajraj Ginning and Oil Mills, Rani. It also transpired, during the inspection by the Customs Officers that, the rent note, said to have been executed by Shri Sagarmal, was a forged one.
2.5 From the material gathered by the Customs Officers during their investigation, it appeared to the Revenue Authorities that, the consignment of 100 slabs of silver, out of which the said 24 silver slabs were initially seized by the Police on 03.05.1991 and subsequently taken over by the Customs Officers, was a part of the activities of smuggling racket, which had nexus with Dawood Ibrahim based in Dubai (UAE) and other smugglers based in Mumbai and various retailers of silver in Rajasthan, and at Palanpur, Gujarat. According to the Revenue, Basant Raj alias Vasant Rathod, appeared to have played the key role of an agent and storekeeper for Dawood Ibrahim, and his gang had actively worked to receive smuggled silver from members of the gang of Dawood Ibrahim to store/conceal it and harbour persons engaged in its transportation and distribution at Rani with the help of Bharat Kumar Jain (the present appellant). Bharat Kumar Jain was a close associate of Basant Raj and had played an active role to conceal the said 24 smuggled silver slabs in the premises of the Gajraj Ginning and Oil Mills at Rani, which, admittedly, belonged to his family. Shri Bharat Kumar Jain had concocted a false story and prepared a forged document to show that the smuggled silver was lawfully acquired from Shri Sagarmal.
3. The appellant in his reply to the show cause notice, issued under Section 124 of the Customs Act, denied the allegations and contended that, since the seizure was made by the Police on 03.05.1991, the show cause notice dated 12.05.1997 was liable to be dismissed on the ground of delay. It was contended that, the silver was seized on 03.05.1991 and, therefore, the show cause notice should have been served on or before 03.11.1991. It was also contended that, the provisions of Section 123 of the said Act were wrongly invoked and that the burden of proof was on the Department to prove that the seized silver was smuggled one as alleged in the show cause notice. It was also stated that, the appellant had never made a claim for the silver under seizure and that he was not making a claim, and further that the Department was at liberty to deal with the said silver, in accordance with law. Even before this Tribunal, the learned Counsel for the appellant clearly stated that, the appellant did not stake any claim in respect of these 24 silver slabs and that the appellant was challenging only the penalty imposed on him. It was also alleged that, the show cause notice was vague and that there was no evidence to prove that the seized silver had been unauthorizedly imported by any person. It was also contended that, the silver, being not a prohibited item, was freely available in India.
3.1 It appears that a preliminary objection was made on behalf of the present appellant against the show cause notice dated 12.05.1997, on the ground that seizure was made by the Police Officers and not by the Customs Officers and, therefore, there was no question of any presumption regarding silver being of foreign origin. It was contended that, there was no foreign marking on the silver slabs and no evidence to show that the appellant had any knowledge that the silver was smuggled. It was also contended that, the statements recorded under Section 108 of the Customs Act contained no admission that the appellant had any knowledge of the silver being the smuggled goods. Pursuant to the direction of the Hon'ble High Court of Judicature at Jodhpur in its order dated 10.08.1998, the objections raised by the appellant were decided on 09/10.04.2003, which decision is reproduced in paragraph 49 of the impugned order. It was held that, the burden of proof was on the appellant under Section 123(2) of the Act; that the date of seizure of these silver slabs by the Customs Department was 20.11.1996 and, therefore, the show cause notice issued on 12.05.1997 was well within six months' period contemplated under Section 110(2) read with Section 124 of the Customs Act; and that the burden of proof was on the noticees to prove that the seized silver was not smuggled and was legally acquired by them.
3.2 It appears that, the appellant had again approached the Hon'ble High Court (Writ Petition No. 2836 of 2003) challenging the findings on the preliminary objections. The Hon'ble High Court, however, dismissed the petition by observing that "...it will be only appropriate if the petitioners are allowed to raise the objections in appeal, if any, that may have to be filed after adjudication of the show cause notice takes place and it is not desirable to go to the merit of the preliminary objections at this stage by this Court to protract the proceedings which are already pending long...".
3.3 On the basis of the material on record, the adjudicating authority held that, the show cause notice was duly served on the noticee within a prescribed period of six months. It was also held that, the Customs Officers had formed a reasonable belief for the seizure of the impugned silver not only on the basis of the investigation report of the Police Officer, but also on its own assessment, as narrated in paragraph 68.2 of the impugned order. It was further held that, from the perusal of panchnama and the show cause notice, it was apparent that, prima facie, the Officers had adequate reasonable belief before they affected seizure under Section 110 of the Act. Reliance was placed on the decision of the Apex Court in State of Gujarat v. Shri Mohanlal Jitamalji Porwal and Anr., reported on , in which it was held that: "If, prima facie, there are grounds to justify the belief, the Courts have to accept the Officer's belief regardless of the fact, whether the Court on its own might or might not have entertained the same belief." As regards the question, whether the said 24 silver bars were smuggled and liable to confiscation, it was observed that, the Department has proved the fact that, even if there was no direct evidence of illicit import, it could be still deducted or inferred otherwise from the credibility of the story of acquisition and the conduct of the person involved, as held by the Hon'ble Supreme Court in Issardas Daulatram v. Union of India, reported on . It was also held that, from the investigation it was abundantly established that, Basant Raj had concerned himself with acquiring, possession, transportation, disposal and otherwise dealing with the impugned silver with the help of Bharat Kumar Jain (the present appellant) and other persons. From the information furnished by him during the inquiry before the Police Officers regarding his dubious character, past history and with the Dubai based international smuggler Dawood Ibrahim and from other corroborative evidence, it stood proved that, he was engaged in the smuggling of silver in the State of Rajasthan at the behest of Dawood Ibrahim and his associates. It was further held that, Shri Kishan Lal gave a corroborative statement to the effect that Basant Raj used to visit his "Bhojanalya" with the appellant Bharat Kumar Jain and other friends and he overheard them talking about a 'Peti' of silver coming from Bombay, Gujarat and Pakistan. The Commissioner found that, silver was duly notified under Section 123 of the said Act, which casts the burden of proof on the person from whose possession the silver was seized or any other person who claimed the ownership of the seized silver under Section 110 of the Act. It was held that, Basant Raj and the appellant, Bharat Kumar Jain were the concerned persons who knew about the concealment of impugned silver in the Gajaraj Ginning Oil Mill, Rani, which was recovered at their instance from beneath gravel, under which it was secreted. Dealing with the contention that, the burden of proof was not on the appellant as the impugned silver was originally seized by the Police Officers, the Commissioner, relying upon the decision of Hon'ble the Supreme Court in State of Maharashtra v. Natwar Lal Damodar Das, reported in 1993 (13) ELT 1020 (SC), held that, even in cases where Section 123 was not attracted, the prosecution can discharge its burden by establishing circumstances from which a prudent man, acting prudently, may infer that in all probability the goods in question were smuggled goods. In paragraph 68.4 of the impugned order, the Commissioner proceeded to marshal the facts, by which the Department had discharged the burden of proof on many material particulars, falsifying the story put forth by the appellant that the impugned silver slabs belonged to Sagarmal, who kept the silver in a rented godown at the rate of Rs. 4,000/- per month in the custody of the appellant on the condition that the appellant will sell it on commission of 2.5% of the sale proceeds. It was held that, the Rent Deed produced by the appellant was proved to be forged because Shri Ratan Chand son of Late Shri Sagarmal, had stated that, the signature on the 'Kirayanama' (Rent Note) was not of his father and it was a forged one. It was also held that, Shri Sagarmal did not have means to acquire silver worth Rs. 60 lacs nor did he tell the appellant to give away the sale proceeds of 850 kgs. of silver for charitable purposes. The Commissioner noted that, after making an unsuccessful attempt to claim the ownership of the impugned silver, the appellant, Bharat Kumar Jain, gave up his claim in his reply dated 24.12.2003 stating that, he had no objection if the impugned silver slabs were confiscated, and that he did not claim ownership and possession of the same. Even Shri Basant Raj disowned the impugned silver slabs. The Commissioner held that, the ownership of the impugned silver vested in none of the noticees, but it was received by the appellant, Bharat Kumar Jain, at the behest of Dubai based international smuggler, Dawood Ibrahim and his associates for further distribution in the State of Rajasthan and at Palanpur in Gujarat. It was also held that, the appellant, Bharat Kumar Jain, assisted Basant Jain in storage, concealment and further distribution of impugned smuggled silver in consideration of monetary benefit paid to him by Basant Raj, as admitted by the appellant, Bharat Kumar Jain, in his statement under Section 108 of the Customs Act. It was, therefore, held that, there was sufficient evidence to prove that the seized 24 silver slabs were smuggled goods and liable to be confiscated under Section 111 of the said Act. It was held that, Basant Raj and the appellant, Bharat Kumar Jain, were very much concerned with the acquisition, transportation, possession, distribution and sale of the smuggled silver. As recorded in paragraph 68.9.1 of the impugned order, Basant Raj, had passed away, which fact was confirmed on 25.10.2004 by the Customs Officers and, therefore, no penalty was imposed on him. Twenty four slabs of smuggled silver valued at Rs. 59,66,100/- were confiscated under Section 111 of the Act along with the packing material which was confiscated under Sections 118 and 119 of the Act. Personal penalty of rupees two lacs was imposed on the appellant under Section 112(b) of the Act under the impugned order.
4. The learned Counsel appearing for the appellant in his very elaborate and lengthy arguments submitted that, the Commissioner has no jurisdiction to hear the matter because no valid seizure was made by the Customs Authorities nor was any search made. It was submitted that, in the absence of any search under Section 105 of the Act, there could not have been any seizure of the 24 silver slabs by the Customs Authorities. Moreover, since the silver slabs were already seized on 03.05.1991 by the Police, there could not have been any subsequent seizure of the same goods by the Customs Authorities under Section 110 of the said Act. Therefore, when there was no valid seizure by the Customs Authorities, there could not have been any confiscation, and when there could not have been any confiscation, no penalty could have been imposed on the appellant on the ground that the appellant had dealt with the goods, which were liable to be confiscated. It was submitted that, the appellant, Bharat Kumar Jain, was, in fact, only an informer at whose instance the Police could seize the silver, which was allegedly stolen and hidden in the premises of Gajraj Ginning and Oil Mills, Rani, owned by the appellant's father and managed by his brother. It was submitted that, the appellant had informed the Police about the illegal action and storage of silver bars by Basant Raj, who brought the same to the said premises, and was subsequently arrested on the seizure of silver being made. It is submitted that, instead of rewarding the appellant, he was being victimized, which can be seen from the fact that, no penalty was imposed on any of the other noticees. It was further submitted that, the appellant had been subjected to arrest and detention under COFEPOSA, but was ultimately released after a proper inquiry, as per the orders of the competent Court. It is submitted that, the appellant could not be treated as an accomplice or a conspirator merely because he had been shown as a co-accused/co-noticee in the proceedings under COFEPOSA or in the Customs case. It is further submitted that, the appellant was only 18 years of age at the relevant time and could not have acted with any ulterior design and that he was a victim of illegal action of Shri Basant Raj, who was found guilty for violation of Customs Law and his detention under the COFEPOSA was upheld. It was further contended that, the silver slabs, which were initially alleged to be stolen property, did not have any foreign markings and none of the witnesses had testified that the seized silver was imported smuggled silver. It is argued that the Customs Authorities had no jurisdiction over the silver which was in their possession and that it should be returned to the Police authorities for being dealt with by them in terms of the orders of the Magistrate that may be passed. It is submitted that, in the absence of the said seized silver, being proved to be smuggled, the Customs Act was inapplicable. It was also submitted that, no notice could have been issued after more than five years of the initial seizure by the police and, therefore, no penalty was imposable on the appellant. It was further argued that, there being no duty demand raised or permissible under the Customs Act, there can be no question of penalty nor of confiscation of these seized silver slabs. It was submitted that, the Customs Authorities were already aware of the fact that the silver in question was seized by the Police on 03.05.1991 and the show cause notice issued on 12.05.1997 was, therefore, clearly beyond five years and totally invalid and unauthorized. Since the notice was barred by limitation, there could be neither confiscation of the silver nor any duty demand or penalty in the absence of duty liability. It was also submitted that, the onus of proof was on the Revenue to show that the goods were smuggled. He contended that, the levy of penalty on the appellant was not justified because the Revenue had not established mens rea on the part of the appellant as it was not proved that he had acted wilfully and that his conduct was contumacious or dishonest, so as to warrant levy of penalty. It was also submitted, relying upon the decision of the Hon'ble Supreme Court in Amrit Foods v. CCE, reported in 2005 (190) ELT 433 (SC), that the imposition of penalty could not be sustained when the show cause notice does not indicate specific clause or sub-rule under which the liability of penalty is attracted.
4.1 The learned Counsel in support of his submission that, seizure by Police cannot be treated as seizure by the Customs and that presumption under Section 123 of the said Act was not applicable and, therefore, the onus was on the Revenue to prove that the goods were smuggled, relied upon the following decisions:
(i) Gyan Chand v. State of Punjab ;
(ii) Jitender Pawar v. CC ;
(iii) Raj Kamal Departmental Store v. CC 2002 (51) RLT 756;
(iv) State of Maharashtra v. P.P. Jain 2000 (126) ELT 180 (Bom);
(v) Naveed Ahmed Khan v. CC ;
(vi) Rajesh Kumar v. CC ;
(vii) E. Easware Reddy v. CC 2006 (196) ELT 410 (T);
(viii) Duli Chand v. CC, New Delhi 2001 (137) ELT 465;
(ix) Mapsa Tapes Pvt. Ltd. v. Union of India ; and
(x) Virtual Soft Systems Ltd. v. C.I.T 289 ITR 83 (SC) 4.2 In support of his submission that, the wrong application of burden of proof on the accused would vitiate the entire action and proceedings and that the reasonable belief of smuggled nature of goods cannot be based on presumption nor merely on suspicion or speculation, relied upon on the following decisions:
(i) Shanti Lal Mehta v. Union of India 1983 (14) ELT 1715 (Del);
(ii) Gyan Chand v. State of Punjab ;
(iii) CCE v. D.K. Singh 2006 (199) ELT 202 (MP);
(iv) Asstt. Collector of Customs v. Mukhujusein Ibrahim Pirjada 1970 Cri. LJ 1305 (Guj.); and
(v) Asstt. Collector v. Daljit Singh and Ors. .
4.3 In support of his submission that, no search or seizure, when the assets and the place of storage are already known to the Revenue, can be made, relied upon the following decisions:
(I) CIT v. Tarsem Kumar and Ors. (From Customs);
(ii) Bafna Textiles v. ITO (From Excise);
(iii) Motilal v. Preventive Intelligence Officer (From Customs);
(iv) CIT v. Ramesh Chander (From Police);
(v) Union of India v. Hadi Bandhu Dass (From Police);
(vi) Tej Pal Oswal v. ITO (From Police);
(vii) Bassel Tool Co. v. K.L. Gugulani (From Police);
(viii) K. Choyi v. Syed Abdulla Bafakky Thangal (SC) (No seizure when taken from Magistrate);
(ix) Vinod Bhai Jayanti Lal Jhaveri v. Director of Inspections (ITO took from Excise Authorities); and
(x) P.R. Metrani v. C.I.T. 287 ITR 209 (SC) 4.4 In support of his submission that, where the goods were wrongly taken into possession by the Revenue Authorities in the absence of any tax liability being held to be payable, they must be returned and should not be retained by the Revenue, relied upon the decision of the Hon'ble Apex Court in J.R. Malhotra v. Addl. Sessions Judge .
4.5 On the issue of bar of limitation in issuing the show cause notice, the learned Counsel relied upon the following decisions:
(i) Gammon India Ltd. v. CCE ;
(ii) CCE v. Gammon India Ltd. 2002 (146) ELT A313 (SC); and
(iii) ISL Industries Ltd. v. CCE 1999 (109) ELT 316 (T).
4.6 The learned Counsel also relied upon the decision of the Hon'ble Supreme Court in Virtual Soft Systems Ltd. v. C.I.T (supra), for the proposition that if there was no tax, no penalty can be levied.
5. The learned Authorised Representative for the Department while supporting the reasoning and findings of the Commissioner submitted that, this was not a case of mere handover of the seized silver slabs by the Police, but it was a case where an independent seizure was affected by the Customs on 20.11.1996 under a panchnama after forming a reasonable belief which is recorded in that panchnama. He submitted that, there was no time limit prescribed for issuance of a show cause notice under Section 124 of the said Act unlike for the notices under Section 28. He submitted that, the only consequence of delay in issuing notice under Section 124 beyond six months' of seizure was that, the seized goods were required to be returned, as contemplated by Section 110(2) of the Act. He submitted that, the show cause notice under Section 124 would not become invalid when the only consequence contemplated in respect of delay beyond six months, was return of the seized goods. The learned Authorised Representative for the Revenue placed reliance on the decision of the Hon'ble Supreme Court in Harbans Lal v. Collector of Central Excise & Customs , in which it was laid down, in paragraph 8 of the judgment, that the period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice issued under Section 124 of the Act. He also placed reliance on the decision of this Tribunal in D.S. Srinivas v. Commissioner of Customs, Bangalore reported in 2002 (148) ELT 946 (T), pointing out from paragraph 3(a) of the judgment that, where the Customs Authorities seized the gold biscuits, which were to be handed over by the Police to the Customs Department, it was held that, since fresh seizure by the Customs Authorities was done after entertaining a belief to seize the gold, the ratio of the decision in Gian Chand v. State of Punjab (supra), could not assist the appellant. He further submitted that, the burden of proof was on the appellant because the goods i.e. Silver was notified under Section 123 of the said Act. He pointed out that 'Silver Bullion' appeared at Item No. 13 of the said Notification issued under Section 123(2) of the Act. He submitted that, in any event, the Commissioner had come to a finding, on appreciation of the material on record, that the Department had discharged the burden of proof that the goods were of foreign origin. He pointed out that, the extent of purity of 99.9% and the near uniform weight of slabs, which was around 32-33 kgs. each and their being in bullion form coupled with the evidence on the record of the case, in respect of the manner in which they were secreted and found out, the only inference that could be drawn was that, these were goods of foreign origin. He relied upon the decision of the Tribunal in Shambhu Nath v. Commissioner of Customs, Lucknow , for the proposition that, 'silver bullion' being, at the material time, an item notified under Section 123(2), the provisions of Section 123(1) were applicable to the silver slabs in question. In response to the contention raised on behalf of the appellant that, when there is no duty demand, no penalty could be imposed, it was submitted that, in Section 112 of the Customs Act, the liability extended to a penalty not exceeding the duty sought to be evaded on such goods or one thousand rupees, whichever is greater. He submitted that, there could be no question of assessment and payment of duty in cases where the goods are smuggled and it is the duty sought to be evaded by such smuggling activity, which was the measure of imposing penalty.
5.1. On the contention raised on behalf of the appellant that, unless there was search, there could not have been any seizure, which was based on the provisions of Section 132 of the Income Tax Act, it was submitted that, the scheme of the provisions of Sections 105 and 110 of the Customs Act was different; and the scheme of Section 132 of the Income Tax Act, 1961 cannot be invoked for interpreting the provisions of Section 110, which could stand independently of Section 105 of the Customs Act. He submitted that, there was no pre-condition prescribed that a seizure was a pre-requisite for confiscation under Section 111 of the Act. He argued that, for seizure the only condition under Section 110(1) was that, the goods were liable to be confiscated. He submitted that, the appellant had no locus standi to challenge the confiscation because he did not claim any ownership over the goods after his initial attempt to do so in the magisterial court. Going through the relevant material on record, he submitted that, the evidence disclosed that the appellant had actively participated in concealing the silver slabs in the factory premises of Gajraj Ginning and Oil Mills, Rani, which belonged to his family, and that even the rent was fixed for the purpose @ Rs. 4,000/- per month and further that the appellant had, admittedly, received Rs. 50,000/- for keeping the silver safe in his custody.
6. In reply, the learned Counsel for the appellant submitted that, the statements recorded before the Police could not be relied upon and that the allegation that rent of Rs. 4,000/- per month was fixed for keeping of the silver by the appellant, was an unsubstantiated allegation. He submitted that, there was no foreign marking on the silver slabs and no circumstantial evidence could be relied upon for holding that the silver was smuggled. In respect of the decision of the Hon'ble Supreme Court in Harbans Lal v. Collector of Central Excise & Customs, (supra), he submitted that, the time limit was not the subject matter of that case and, therefore, the ratio was not helpful to the Revenue. He further submitted that, the presumption under Section 123(1) can apply for only initial seizure and was not applicable for final adjudication. Moreover, it was rebuttable presumption and that no opportunity of rebuttal was provided. He submitted that, seizure and confiscation were integral part of one another. He relied upon the decision of the Hon'ble High Court of Andhra Pradesh in Appellate Collector of Customs & C.E. v. T.N. Khmbati , in which the Hon'ble High Court in para 8 of the judgment held that, it was difficult, nay, impossible, to postulate confiscation without seizing any goods. Seizure necessarily formed part of confiscation. This is why the Act had always connected the idea of confiscation with search and seizure. It was observed that, Section 100 enabled the officer to search any person only if he had reason to believe that person had secreted on in his person any goods liable to confiscation or any documents relating thereto. It was argued that, this conclusion was reinforced by Sub-section (1) of Section 110, under which if no notice in respect thereof under Section 124(a) was given within six months of the seizure, the goods were to be returned to the person from whose possession they were seized. He further submitted that, reason to believe was required to be recorded before effecting seizure, and for this purpose he relied upon the Hon'ble High Court of Punjab & Haryana in Mapsa tapes Pvt. Ltd. v. Union of India , in which it was held in paragraph 25 that, while existence of power of seizure may be justified, its exercise will be liable to be struck down unless 'reasons to believe' were duly recorded before action of search and seizure was taken. It was submitted that, there was no positive evidence adduced by the Revenue to prove that the goods were smuggled silver or that the appellant was, in any way, involved, so as to attract penalty.
7. The foremost contention raised on behalf of the appellant was that, the seizure by the Police made on 03.05.1991, could not be treated as seizure by Customs, and that once there was a seizure by Police, there could not be a second seizure by Customs, of the same goods. In support of this submission, heavy reliance was placed on the decision of the Hon'ble Supreme Court in Gian Chand and Ors. v. State of Punjab, (supra), and other cases, which have been noted hereinabove. In Gian Chand and Ors., (supra), the Hon'ble Supreme Court was concerned with the provisions of Sections 178A, 178 and 180 of the Sea Customs Act. Under Section 178 of the Sea Customs Act (which was repealed by the Customs Act, 1962), anything liable to confiscation under that Act could be seized in any place in India by any officer of Customs or other person duly employed, for the prevention of smuggling. Section 178A of the Sea Customs Act, which was similar to the provisions of Section 123 of the Customs Act, 1962, provided that, where any goods to which the said provision applied were seized under the Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession, the goods were seized. Sub-section (2) of Section 178-A set out the commodities to which the said Section applied. This was similar to the provisions of Sub-section (2) of Section 123. There was a specific provision under Section 180 of the Sea Customs Act dealing with the goods seized by the Police as a result of their search and gold coming into the possession of the Customs Authorities. Section 180 of the Sea Customs Act does not have its corresponding provision under the Customs Act, 1962. The said Section 180 was as under:
180. When any things liable to confiscation under this Act are seized by any Police Officer on suspicion that they have been stolen, he may carry them to any police station or Court at which a complaint connected with the stealing or receiving of such things has been made or an enquiry connected with such stealing or receiving is in progress, and there detain such things until the dismissal of such complaint or the conclusion of such enquiry or of any trial thence resulting.
In every such case the Police Officer seizing the things shall send written notice of their seizure and detention to the nearest custom-house; and immediately after the dismissal of the complaint or the conclusion of the enquiry or trial, he shall cause such things to be conveyed to, and deposited at, the nearest custom-house, to be there proceeded against according to law.
It is abundantly clear from the decision in Gian Chand and Ors. v. State of Punjab, (supra), that it was because of this provision of Section 180 of the Sea Customs Act, that it was held that, there was no fresh seizure under the Customs Act. This is evident from the following findings in paragraph 8 and 9 of the judgment:
8. ...A seizure under the Act if one for which the authority to seize is conferred by the Act and in the context it could be referred to as a seizure under Section 178. The seizure from the owner of the property under Section 180 is not a seizure under the Act but by a police officer effecting the seizure under other provisions of the law, for instance the Criminal Procedure Code. And that is made clear by appropriate language in the first paragraph of Section 180....
9...A seizure under the authority of law does involve a deprivation of possession and not merely of custody and so when the police officer seized the goods, the accused lost possession which vested in the police. When that possession is transferred, by virtue of the provisions contained in Section 180 to the Customs authorities, there is no fresh seizure under the Customs Act. It would, therefore, follow that, having regard to the circumstances in which the gold came into the possession of the Customs authorities, the terms of Section 178A which requires a seizure under the Act were not satisfied and consequently that provision cannot be availed of to throw the burden of proving that the gold was not smuggled, on the accused.
[Emphasis Added] Thus, in the context of the provisions of Section 180, it was held in paragraph 11 of the judgment in Gian Chand (supra), that the delivery to the Customs Authorities under Section 180 was not a seizure under the Act within Section 178A under the Sea Customs Act. There was thus a special provision by which the Police Officer seizing the goods on a suspicion that they were stolen, was required to inform the nearest Customs House and cause the things to be conveyed to and deposited at the nearest Customs House for being proceeded against in accordance with law. Such delivery of goods to the Customs Authorities under the latter part of Section 180, was held by the Hon'ble Supreme Court to be not a seizure under the Sea Customs Act within the meaning of Section 178A thereof. In the absence of any provision corresponding to Section 180 in the Customs Act, 1962, the ratio of Gian Chand and Ors. v. State of Punjab, (supra), and all other cases following the said case, can, therefore, have no application to the seizures which are affected under Section 110(1) of the Customs Act, 1962, which reads as under:
110(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods:
PROVIDED that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part-with, or otherwise deal with the goods except with the previous permission of such officer.
8. The seizure of goods can be affected under Section 110(1) if the proper officer has reason to believe that they are liable to confiscation. The word 'smuggling', as defined in Section 2(39) of the said Act in relation to any goods, means - any act or omission which will render such goods liable to confiscation under Section 111 or 113 of the said Act. The goods imported from a place outside India, that are liable to confiscation, are enumerated in Section 111 of the said Act. Under Clause (p) of Section 111, which was inserted w.e.f. 03.01.1969, it is provided that, 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, shall be liable to confiscation. Chapter IVA of the said Act deals with, "Detection of illegally imported goods and prevention of the disposal thereof. Section 11B empowers the Government to specify the goods when it is satisfied that it is expedient in the public interest to take special measures for the purpose of checking the illegal import etc. Persons possessing the notified goods are required to abide by the provisions of Section 11C and take precautions, as indicated in Section 11D and also maintain account and enter the said transactions, as regulated by the provisions of Section 11-E and 11-F of the said Act. In the present case, admittedly, silver was specified by a Notification of the Central Government and all these provisions were, therefore, applicable in respect of the said commodity.
9. It appears from the material on record that, though the silver came to be seized on 03.05.1991 by the Police, soon thereafter, even the Customs Department started their investigation and tried to get the silver. However, ultimately, by magisterial orders, the matter was required to be dealt with by the Customs Department. On intimation, the Customs Officers seized the said 24 silver bars under a panchnama. In the panchnama, which was elaborately drawn in the presence of two independent panch witnesses on 20.11.1996, it was recorded that, the officials of the Customs had informed the panch witnesses that the silver was procured by violating the provisions of Customs Act, 1962 and that on the basis of recovered silver, weight of each silver slabs, the purity of silver, and on the facts discovered during the police investigation, it could be confirmed that the silver was smuggled and brought in through illegal route to India and that, therefore, the Officers of Customs, on the basis of this reasonable belief that the said 24 slabs of silver weighing 852.300 kgs. were liable to be confiscation under Section 111 of the Act and the packing material including gunny bags were also liable to be confiscated under Section 118, seized the goods under Section 110(1) of the said Act. It is thus clear that the reasonable belief of the proper officer was recorded even in the panchnama pursuant to which the seizure was affected. It is not as if mere custody of silver was handed over by the Police to the Customs Department. The Customs Department effected the seizure of the goods on a reasonable belief that they were liable to confiscation, which was altogether a different matter from merely acquiring possession, and carried with it all the consequences of such seizure, contemplated by the said Act.
10. It is propounded on behalf of the appellant by the learned Counsel that unless there is search, there cannot be seizure; and unless there is seizure, there cannot be confiscation, which contention was based on the analogy of the provisions of Section 132 of the Income Tax Act, 1961, which is wholly inapposite in the context of the provisions of Sections 105 and 110(1) of the Customs Act.
10.1 Section 132 of the Income Tax Act, 1961 deals with 'search and seizure' and provides that, where the concerned authorities have reason to believe that any person summoned to produce or cause to be produced any books of account or other documents has omitted to do so or if any person to whom summon is issued or might be issued would not produce the books of accounts or other documents which will be useful in the proceedings or if any person is in possession of the money, bullion, jewellery etc. which has not been or would not have been disclosed for the purpose of the Income Tax Act, then the authorised officer can enter and search the place or premises that would indicate where he has reason to suspect that such books of account, documents, money, bullion, jewellery etc. are kept, and seize them when found as a result of such search. It will thus be seen from the provisions of Section 132 of the Income Tax Act, 1961 that, search and seizure are integrally connected, and are to be resorted to when the person does not produce these articles despite summons or is not likely to produce them. The scheme of Section 132 of the Income Tax Act is, therefore, entirely different from the provisions of Sections 105 and 110(1) of the Customs Act, 1962. It is evident from the provisions of Section 110(1) that, seizure of goods liable to confiscation need not necessarily be the outcome of any search as is the case in the provisions of search and seizure under Section 132 of the Income Tax Act, which is evident from the expression, "seize any such books of account...or thing found as a result of such search" occurring in Clause (iii) of Section 132(1)(B)of that Act. The power of seizure under Section 110(1) is not necessarily confined to the premises in respect of which the power of search may be exercised under Section 105 of the Customs Act. While authorization is required for search under Section 105(1), on the basis of which any officer of Customs may search for goods, documents or things, a proper officer can effect seizure on the reasonable belief that goods are liable to confiscation under Section 110(1) without any pre-requisite of authorization, which is not required in view of the statutory authorization contained in Section 110(1) of the Act. It will also be seen from the provisions of Section 106 that a proper Officer, when he has reason to believe that any aircraft, vehicle etc. is being or about to be used in the smuggling, he may stop it and rummage, examine and search or even break open the lock etc., as provided therein, and also use necessary force as contemplated. Thus, under the scheme of Customs Act, 1962, searches have been separately dealt with from the power of seizure, and the power of seizure is not dependent upon any pre-requisite of search. There is, therefore, no substance in the contention that no valid seizure could have been affected under Section 110(1) in the absence of any search having been done as authorized by Section 105.
11. It has been contended on behalf of the appellant that the show cause notice, which was issued on the appellant on 12.05.1997, was beyond the statutory period of six months, and counting it from 03.05.1991 when the Police had seized the 24 sliver slabs, it was even beyond the extended period of five years. The Commissioner has come to a finding that, from the date of seizure by the Customs i.e. 20.11.1996, the show cause notice, issued on 12.05.1997, was well within six months and, therefore, within the statutory period of limitation laid down under Section 110(2) read with Section 124 of the Customs Act, 1962. As noted above, the findings on preliminary objections were against the appellant and a Writ Petition was filed challenging the same before the Rajasthan High Court, wherein the Hon'ble High Court has directed that the issue can be raised before this Tribunal; and that is why the appellant has been heard through his counsel also on the questions which were decided on the preliminary objections earlier by the Commissioner before making the impugned order.
11.1 Section 124 of the Customs Act, 1962, unlike Section 28, does not prescribe any time limit for a show cause notice to be issued. The scheme of the provisions of Sections 28 and 124 is different. Section 28 can be invoked when any duty has not been levied or has been short-levied etc. Such notice is required to be served within six months, in cases other than those falling under Clause (a) of Sub-section (1), to be computed from the "relevant date", which is defined under Sub-section (3). Customs duty is levied under Section 12 of the said Act on the goods imported into or exported from India. "Imported goods" means, any goods brought into India from a place outside India, except those which have been cleared for home consumption; and "import" means, bringing into India from a place outside India. Assessment of duty is to be done under Section 17 after an importer has entered any imported goods under Section 46, and after examination and testing them for the purpose of assessing duty under Sub-section (2) of Section 17, the proper officer may inquire, as contemplated therein. Under Section 46(1), the importer of any goods other than those intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form. It is on such entry of goods, on importation being made under Section 46, that the assessment of duty proceedings contemplated by Section 17 has to be undertaken by the proper officer, when the duty is not levied or is short levied or is erroneously refunded, the provisions of Section 28 are attracted.
12. The provisions regarding confiscation of goods and conveyances and imposition of penalties are contained in Chapter XIV of the said Act. Section 111 enumerates the goods that shall be liable to confiscation, while Section 112 enumerates penalty for improper importation of goods which are liable to confiscation. Under Section 112(b) any person, 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, in the case of dutiable goods other than prohibited goods, to a penalty not exceeding the duty sought to be evaded on such goods or Rs. 1,000/- (thereafter raised to Rs. 5,000/-) whichever is greater. Section 112(b) is wide enough to penalise even a person acquiring possession or in any way dealing with the goods, which he knows or has reason to believe are liable to confiscation under Section 111. There are also provisions for confiscation of packages and their contents, and confiscation of goods used for concealing smuggled goods, in Sections 118 and 119 of the Act. Adjudication of confiscations and imposition of penalties may be done by the authorities indicated in Section 122 and the adjudication procedure is laid down in Section 122A. Section 123 deals with burden of proof in certain cases, while Section 124 provides for issuance of show cause notice before confiscation of goods. As per Section 124, no order confiscating any goods or imposing any penalty on any person shall be made under Chapter XIV of the Act, unless the owner of the goods or such person on whom penalty is proposed is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty and unless such owner or person is given an opportunity of making a representation in writing as contemplated thereunder and is given a reasonable opportunity of being heard in the matter. Section 124 does not prescribe any time limit for issuing show cause notice before confiscation of goods or imposing any penalty under Chapter XIV. This Section does not laid down any period within which the notice required by it has to be given. The period laid down in Section 110(2) affects only the seizure of the goods and not the validity of the notice, as held by the Hon'ble Supreme Court in Harbans Lal v. Collector of Central Excise & Customs, (supra). Failure to issue a show cause notice under Clause (a) of Section 124, within the prescribed time, will only result in an obligation on the part of the customs authorities to return the goods to the person from whose possession they were seized. There is nothing in the language of Section 110(2) which may restrict the power of the competent authority to initiate proceedings under Section 124 upto a certain time limit. In the present case, the show cause notice was issued under Section 124. The High Court of Bombay in Mohan Lal Devden Dhai Choksey v. M.P. Mandkar, , held in para 13, while referring to the decision of J.K. Bardolia Mills v. M.L. Khunoer, Deputy Collector of Central Excise and Customs, reported in 1975 (16) Gujarat Law Reporter 119, in the context of the provisions of Section 124 of the Act, that there is nothing in the provisions of Section 111, 112 and 124 of the Act to indicate that the goods, in respect of which an order of confiscation or penalty can be passed under Section 111 and 112 of the Act, must be goods seized under the provisions of Section 110. The period of six months mentioned in Section 110 relates only to the seizure of the goods and not to validity of the notice under Section 124 of the Act. Section 124 does not lay down any period within which the notice required by it has to be given. There is, therefore, no substance in the contention raised on behalf of the appellant that the show cause notice issued under Section 124 was invalid on the ground that it was issued beyond five years from the date of the initial seizure by Police on 03.05.1991. Seizure by the Police under the Code of Criminal Procedure and seizure by the Customs under the Act of 1962, are altogether different seizures and in the context of Section 124, no question of computing any limitation from the date of any such seizure can ever arise, because Section 124 does not prescribe any period for such a notice. The rationale behind not prescribing the period of limitation for a notice under Section 124 appears to be that, on confiscation the goods would vest in the Central Government by becoming property of the Central Government as contemplated by Section 126 of the Act.
13. It appears from the record that, the issue of burden of proof was decided against the appellant earlier by giving finding on the preliminary objection. It was held, as recorded in para 67 of the impugned order, that the silver bullion, being a notified item under Section 123(2) of the Customs Act, 1962, the burden was on the noticees to prove "non-smuggled" nature of the seized silver bullion under Section 123. It was contended on behalf of the appellant that this finding was erroneous because the goods were seized by the Customs from the Police Authorities and not from the noticee - appellant.
13.1 There is no dispute over the fact that silver was notified under Sub-section (2) of Section 123 of the Act. The burden of proof that the goods seized under Section 110(1) of the Act are not smuggled goods, where they were seized under a reasonable belief that they are smuggled goods, is on the person from whose possession the goods were seized, and if any other person claims to be the owner, also on such other person. In any other case i.e. where the seizure is not made from the premises of any person, the burden will be on whoever claims to be the owner of the goods, so seized. As noted above, reliance was placed on the ratio of the decision in Gian Chand and Ors. v. State of Punjab, (supra), in which it was held that, the delivery to the Customs Authority under Section 180 of the Sea Customs Act was not a seizure under Section 178A of the Sea Customs Act. The decision of the Hon'ble Supreme Court was rendered in the context of the specific provision of Section 180 which provided for the Police Officer seizing the things to convey to and deposit such things at the nearest Customs House. It was held that, the seizure from the owner of the property under Section 180 by the Police was not a seizure under the Act, as contemplated by Section 178-A. As discussed above, there is no provision corresponding to Section 180 of the Sea Customs Act in the Customs Act of 1962 and, therefore, the seizure made by the Customs Authorities under Section 110(1), after having reason to believe that the goods were liable to confiscation, occurred for the first time, when the seizure panchnama was drawn by the Customs Officers on 20.11.1996, which also records their "reason to believe" as contemplated by Section 110(1) when the goods were seized before independent panch witnesses under the said detailed panchnama, which is on record. Since the goods were seized under Section 110(1) by the Customs Officers, which power they could have exercised for seizing the goods from anywhere, the burden of proof that they are not smuggled goods would ordinarily be on the noticee under Section 123 of the said Act. When the goods were seized by the Police from the possession of the appellant, who had received Rs. 50,000/- for keeping them in his safe custody concealed in the premises of Gajraj Ginning and Oil Mills, Rani, in which, as per the material on record, he was assisting his elder brother. Since initially seizure was made by the Police, it is possible for the appellant to contend that the seizure by the Police was not a seizure under the Customs Act as contemplated by Section 123(1). The appellant, however, clearly attempted to get the goods released by claiming that they were taken from his possession by the Police and he would prove title, but later he abandoned that course before the Customs Authorities. It will be seen from the impugned order that, the Commissioner has not rested his decision merely on the burden of proof theory incorporated in Section 123, but has, by appreciating the relevant material on record, categorically found that the Department has, even apart from Section 123 of the Customs Act, discharged the burden of proof in many material particulars falsifying the story put-forth by the appellant towards his claim that the impugned silver slabs belonged to one Shri Sagarmal (his brother's father-in-law), who kept the silver in a godown rented for Rs. 4,000/- per month, in the appellant's custody on the terms and conditions that he will sell them and charge commission at the rate of 2.5% of the sale proceeds.
13.2 The contention that the appellant was an informer, is wholly baseless because, it has come on record that on the night intervening 1st and 2nd May of 1991, Basant Raj and the appellant, Bharat Kumar Jain and others were caught by the Police at Kenpura crossing under the provisions of Rajasthan Excise Act and the Arms Act for consuming liquor in a public place and keeping a revolver. On 3rd May, 1991, bail was granted by the Court under the Arms Act and Basant Raj returned to his house at Rani in the afternoon. It appears that the information about these persons being brought to the Police Station, Sanderao, on 02.05.1991 reached S.P., Pali, pursuant to which the premises of Gajraj Ginning and Oil Mills, Rani, were raided, after which the FIR was lodged on 03.05.1991 at 5.00 PM by the SHO, Shri Veera Ram. In that FIR, a copy of which is on record, it was stated that, information from S.P., Pali, was received by Shri Veera Ram, pursuant to which the Police party had gone to search the factory premises of Gajraj Ginning and Oil Mills, Rani, and they found that Basant Raj and the appellant, Bharat Kumar Jain, were present in the factory. When the Police party asked for searching the premises, Basant Raj and the appellant, Bharat Kumar Jain, took them to the spot where 24 slabs of smuggled silver were burried under the gravel in the factory premises and after removing the gravel/sand, they produced the 24 slabs of silver. On being asked to submit the bill or any document in their possession, they could not produce the same. As per the FIR, Basant Raj and the present appellant were arrested in the factory premises on 03.05.1991. The fact that these 24 sliver slabs were recovered from the premises belonging to the family of the appellant, Bharat Kumar Jain, is clearly established and is not disputed. These silver slabs were concealed beneath the gravel in the premises of the appellant's family. The appellant had made an application before the Magistrate requesting not to handover the said silver slabs to the Customs Department and applied for time to prove ownership. A copy of this application is on record. The appellant had charged rent of Rs. 4,000/- per month for keeping the said silver slabs and the appellant admitted having received Rs. 50,000/- from Basant Raj for keeping these silver slabs. In his application dated 18th May, 1991 made in the Court of Judicial Magistrate, Desuri, it was stated that, 24 boxes of silver which were lying in the appellant's factory, namely, M/s Gajraj Ginning and Oil Mills, Rani, were seized in possession by the Police and that on 03.05.1991, the Police arrested the present appellant and Basant Raj. In paragraph 4 of this application, the appellant had submitted that the silver slabs were put in the premises of the appellant's close relative on rent of Rs. 4,000/- per month and that the appellant was given the silver slabs by Shri Sagarmal of Bijova. The appellant was to get the commission of 2.25% of the sale proceeds. Shri Sagarmal had given these silver slabs to him for selling them on commission basis. It was then stated that, "...At present the applicant is entitled to get it from the Court because the goods were taken from his possession by the Police." He prayed that the goods be handed over to him under a "Superdinama". Along with this application, the appellant had produced a copy of the rent note in which it was stated that, godown was given on rent by his close relative of the appellant to Shri Sagarmal. The name of the premises was Gajraj Ginning and Oil Mills. It was given on a rent of Rs. 4,000/- per month. It was stipulated that the security guard will be provided by the appellant. It was recorded that, receipt of 24 boxes of silver, handed over to the appellant, was duly given and the appellant was to sell the goods directly for which he was to get commission of 2.25%. It was stated that, since Shri Sagarmal (the executant of the rent note) was an aged person, he wanted to sell the silver to spend the sale proceeds for religious purposes. It was also stated that the said silver was not stolen goods. It was then stated that, if there be any trouble, then that will be the responsibility of the executant. This rent note is said to have been executed on 01.04.1991 and a copy thereof was admittedly produced along with the application dated 18.05.1991 by which the appellant claimed before the Judicial Magistrate, that the silver should be handed over to him as it was taken from his possession. Shri Ratan Chand son of Shri Sagarmal, whose daughter was married to the appellant's brother, has in his statement categorically denied that, his father, Shri Sagarmal, had executed such a note. He stated that, the father of the appellant, Shri Bakhatawar, had offered him gratification to wrongly confirm the existence of such document. He stated that the said document, if presented by Bharat Kumar Jain, was a concocted and forged document, because his father did not give any such document. His father did not have the means to purchase 24 slabs of silver, worth approximately Rs. 60 lacs. Realizing that his brother's father-in-law, Shri Ratan Chand, was not supporting his design, the appellant, for obvious reasons, disowned silver slabs; and even before this Tribunal, the learned Counsel, on being asked, made it clear that the appellant was not claiming to be the owner of the silver slabs. The appellant in his statement recorded on 08.07.1992 had in terms admitted that, for the work of keeping the silver, he had received a sum of Rs. 50,000/-. The appellant took up a false plea that silver slabs were given by Shri Sagarmal to him. Shri Sagarmal passed away on 17.04.1991. He created a forged rent note in the name of Shri Sagarmal. Such a false defence was itself an important circumstance which showed the guilt and involvement of the appellant and also the fact that the silver slabs were in his possession and he had secreted the same for a sum of Rs. 50,000/-. It is significant to note that the lawyer of the appellant was present when his statement was recorded on 08.09.1992 under Section 108 of the Customs Act in which he admitted having received Rs. 50,000/- for keeping the silver. It is obvious that, if the silver was not smuggled silver, there would not be any reason to secret it. The fact that the silver slabs, each weighing more than 30 kg and of uniform purity of 99.9% were secreted in the premises of the appellant and his family in which he assisted his elder brother for which secretive custody he admittedly received Rs. 50,000/- are strong circumstances to indicate that the silver was smuggled. No documents were produced to show the ownership of silver. Such large quantity of silver slabs, if not of foreign origin and smuggled, would have been covered under valid documents showing their origin and ownership and the nature of the transaction. These circumstances, coupled with the statement of witness, Shri Kishan s/o Shri Roopa Ram, stating before the Customs Officers under Section 108 of the Act on 18.05.1991 that, Basant Raj, the appellant, Bharat Kumar Jain and others used to come and sit in his lodge at late night and that they used to talk about the business of silver; that they used to mention about the box of silver; that they used to talk in respect of receiving the silver from Pakistan, Bombay and Gujarat; that he had seen them moving towards Rani village and had also seen a truck, like Matador, going behind them; that two persons used to come and go back to Sanderao in white Maruti Car after talking with Basant Raj and the appellant, Bharat Kumar Jain, and that they used to return back after an hour and at all the occasions, a Matador or truck like DCM Toyato used to follow them; that they used to go towards Rani village and the appellant also used to go with them; that Basant Raj and the appellant, Bharat Kumar Jain also used to talk with those persons in respect of these boxes; that Basant Raj and the appellant, Bharat Kumar Jain used to talk in a low voice in respect of silver and they used to talk about receiving the silver from Pakistan, Bombay and Gujarat through sea; that he thought that they were talking about smuggled silver boxes, clearly show the involvement of the present appellant. On the cross-examination, this witness, Shri Kishan, was asked, whether Bharat used to come alone and sometimes Bharat used to come along with other friends, to which he answered in the affirmative. Immediately thereafter he was asked, "when Bharat Jain used to come to your hotel, did you hear anything about the discussions he had with his companions". To that he answered, he did not hear anything as they used to sit at a distance. He was asked the question in the sequence of the earlier question, where he was asked, whether it was a fact that some time, Bharat used to come alone and some times Bharat used to come along with other friends. Obviously, therefore, the witness gave an answer that he did not hear anything when Bharat Jain came with his other friends and had discussions with those companions. This crude attempt on the part of the cross-examiner does not at all affect the veracity of the statement recorded under Section 108 in the year 1991 in which he had stated that Basant Raj, the appellant, Bharat Kumar Jain, and others used to talk about silver coming from Pakistan and the boxes of silver. There is no cross-examination over the material facts disclosed by Shri Kishan.
14. For the foregoing reasoning, it is abundantly clear that the appellant was involved in acquiring, possessing, concealing etc. of 24 silver slabs, which were liable to be confiscated, being smuggled goods. The totality of the facts and circumstances of the case, establishes, on preponderance of probabilities, that the appellant had dealt with the silver slabs in the manner contemplated by Section 112(b) of the Act having the knowledge or at least the reason to believe that the silver slabs were liable to be confiscated. As noted above, the learned Counsel for the appellant has made it abundantly clear throughout the proceedings that the appellant was not challenging the confiscation, which obviously he could not have, since he subsequently disowned the goods. The imposition of penalty under Section 112(b) of the said Act was, therefore, fully justified. The learned Commissioner has, for cogent reasons given in paragraph 68.1 to 68.9.2 of the impugned order, rightly held that the appellant had reason to believe that smuggled silver, in which he was dealing, was liable to confiscation and has correctly imposed the penalty of Rs. 2 lakhs on the appellant, which is rather on a lenient side. There is absolutely no warrant for interference with the impugned order on any of the grounds urged on behalf of the appellant. The appeal is, therefore, dismissed.
(Dictated & pronounced in the open court)