Customs, Excise and Gold Tribunal - Tamil Nadu
A.S.A. Kabir vs Commissioner Of Customs on 22 April, 1996
Equivalent citations: 1997(89)ELT595(TRI-CHENNAI)
ORDER T.P. Nambiar, Member (J)
1. This is an appeal filed by the appellant against the orders passed by the Collector of Customs, Madras in Order No. 70/93-RD, dated 17-2-1994. In terms of that order he confiscated 42 gold bars weighing 4.893 kgs. and 6 Nos. of silver ingots weighing 234.904 kg. under Section 111(d) of the Customs Act, 1962 read with Section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992. He dropped the proceedings with respect to the Indian currency. He imposed a penalty of Rs. 1,00,000/- on the appellant.
2. The brief facts of the case are that on 19-3-1993, acting on an information, the officers of the Customs House, Madras searched the residential premises of the appellant, No. 22, Vengupillai Street and recovered 42 gold bars weighing 10 tolas each with foreign markings in a bundle. The appellant was not in possession of any valid documents to prove the licit origin. Therefore the officers seized the same on a reasonable belief that the same are smuggled into India.
3. The officers also recovered 6 Nos. of silver ingots with markings 38.425, 39.939, 39.258, 40.421, 38.586 and 38.275. It is the case of the Department that the above silver ingots were found to be tempered with on top and fresh filling marks were found on them. The appellant produced 3 baggage receipts issued by the Madras Airport with respect to the silver bars. The Customs Officers seized the same on a reasonable belief that they are smuggled into the country. They also recovered some money from the appellant amounting to Rs. 1,75,000/-. They were also seized on a reasonable belief that they are the sale proceeds of smuggled gold.
4. On 20-3-1993, the appellant gave a statement to the effect that he was doing business as unlicenced Travel Agent and used to buy foreign goods like silver and gold for the customers of the hotel and sell them on profit. He also stated that the 42 gold bars belonged to Shri Shamsuddin and the silver ingots belonged to Shri K. Mohan. He also stated that at the time of seizure he was not in possession of baggage receipt for the gold bars and these gold bars were imported by Shamsuddin on 6-2-1993 and he has misplaced the baggage receipt and he would produce the same later. He also accounted for the currency notes. Statements of Shri Abubacker, brother of the appellant was also taken so also the statements of Hyder Ali, Rahamathullah, Zahir Jussain and others were taken.
5. On 22-3-1993 some information was received that the silver contain gold and therefore the same was passed through the Chemical Examiner who opined it does not contain gold. On 6-4-1993, Shri Shamsuddin was examined and he stated that he was a Singapore citizen of Indian origin and he had brought gold into India on 6-2-1993 and cleared through the Customs on payment of duty and he had handed over the gold and the baggage receipt to the appellant to dispose of the same when the price was high and the gold was legally imported and requested for release of the same.
6. On 7-5-1993, Shri K. Mohan holder of Indian Passport stated that he brought 78 kgs. of 2 silver bars and 20 kgs. silver granules from Singapore on 5-3-1993 and paid Customs duty vide BR15436, dated 5-3-1993 and he handed over the 2 silver bars totally weighing 78 kgs. to Shri Kabir for sale.
7. Shri G. Kumaraswamy in his statement dated 7-5-1993 inter alia stated that he brought 2 silver ingots totally weighing 76 kgs and 20 kgs. Of silver granules to India and paid Customs duty and he had left 2 silver bars totally weighing 76 kgs. in the custody of the appellant for sale and requested the Department to release the same. After investigations, show cause notice was issued to the appellant to show cause as to why the gold and silver could not be confiscated under Section 111(d) of the Customs Act.
8. It was the case of the Department that under Clause 3 of the Imports (Control) Order, 1955 issued in pursuance of Section 3(1) of the Imports and Exports (Control) Act, 1947 read with Section ll(2)of the Customs Act, 1962 read with Section 13(1)-of Foreign Exchange Regulation Act, 1973, import of gold and silver without valid permit is prohibited. Therefore, in the absence of valid documents or bill or indicate the licit origin and legal acquisition of the goods, they are liable to be confiscated under Section 111(d) of the Customs Act. Thereafter the appellants filed their reply and the adjudication order was passed.
9. The learned Sr. Advocate Shri Kareem appearing for the appellant contended before us that there was no reasonable belief to seize the gold in question. He also stated that when the documents were produced with respect to the silver, there could not have been any reasonable belief. He contended that as far as the gold is concerned, the same was seized and the receipts were in the house of the appellant and he was not allowed to produce the same. It was therefore stated that when the appellant was examined on 20-3-1993 he has clearly stated that he will produce the documents and they are in his house. The learned Advocate further pointed out that the appellant on 20-3-1993 itself had given the statement to the effect that the gold under seizure were brought by Shri Shamsuddin. He has also pointed out that the appellant has stated that the silver was brought by Shri K. Mohan and Shri G. Kumaraswamy. Therefore he stated that there was no reasonable belief in this regard and therefore the burden is not shifted to the appellant to prove that these are not smuggled gold and silver. In this connection strong reliance was placed on the decision of the Hon'ble Supreme Court in the case of Collector of Customs v. Nathella Sampathu Chetty and Anr. reported in AIR 1962 S.C. 316. Other decisions were also brought to our notice.
10. The learned SDR stated that there are circumstances in this case to show that the officers had reasonable belief in seizing the same. He also stated that once when the officers have prima facie materials for seizing the same, the same is not subjected to judicial review.
11. In the light of these arguments the question to be decided first by us is as to whether the gold and silver were seized on a reasonable belief that they were smuggled into the country and whether the burden is shifted on to the appellant to prove that they are not smuggled. After answering this point we will take up the other issues in this case in the light of the arguments addressed by the learned Advocate which we will refer at a later point.
12. As far as the gold is concerned, it is seen that the 42 Nos. of gold bars with foreign markings were found in the possession of the appellant. At that point of time the appellant could not produce any documents to show the licit origin. Gold is a notified item under Section 123 of the Customs Act. But the argument of the learned Advocate that the appellant was not allowed to produce the documents and he was taken into custody cannot be accepted by us. If that were to be so, in his statement dated 20-3-1993, he would definitely have mentioned that the documents were in his house and he was not allowed to produce the same. But such a statement was not furnished by him. On the contrary, in his statement he has stated that he was not in possession of baggage receipt for the 42 gold bars and that he has misplaced the baggage receipt and he will produce the same later. Therefore when these baggage receipts were not found in respect of the gold bars, the officers had prima facie materials before them to seize the same on a reasonable belief that they are smuggled into the country. Even in the decision relied upon by the learned Advocate, reported in AIR 1962 Supreme Court 316, at Para 45 their Lordships of the Supreme Court, held as follows :
"Even taking the record of the detention in the mahazar prepared at the Central station as "the seizure" we do not agree with the learned Judges of the High Court that the seizing officer could not entertain a reasonable belief that the gold seized was smuggled. The reasonableness of the belief has to be judged by all the circumstances appearing at that moment. In the present case, the quantity of gold in the possession of Nandgopal of the value of over one lakh of rupees was certainly a very relevant factor to be taken into account and which could be considered in judging the matter. No doubt, such a quantity could be the subject of bona fide purchase in the course of normal trade, particularly when the person in possession was the representative of a well known firm of bullion dealers. But one would also normally expect that the representative would have secured a bill or voucher to evidence the purchase. In other words; (1) it was not a case of a few triplets of gold to small quantity purchased for domestic or personal use but a considerable amount for purposes of business, (2) the undelivered letter addressed to M/s. Mathuradas Gopalkrishnayya & Co. which admittedly had a bearing upon the purchase of gold in the possession of Nandgopal necessarily drew an amount of suspicion on the theory of a bona fide purchase. These circumstances, in our opinion, which were admittedly present at the moment when the gold was taken by the Customs Officer at the Central station did tend to raise a reasonable suspicion that the gold seized had been obtained illicitly and this was sufficient to constitute in the words of the statute "a reasonable belief that the goods (gold) were smuggled.".
13. It is now seen that in all such cases when the officers have entertained a reasonable belief, the Court should not interfere with the reasonable belief entertained by the officers. In the decision reported in 1987 (29) E.L.T. 483 (SC) dated 26th March, 1987, the Hon'ble Supreme Court at Para 4 held as follows :
4. P.W. 1, Superintendent of Customs Shri Mahida testified that he had seized the article in question in the reasonable belief that the same was an article made of smuggled gold. The acceptance of this evidence would result in the burden of proof being shifted on the person from whom the article was seized to establish that it was not smuggled gold in view of the statutory provision (Section 123 of Customs Act) relating to burden of proof which would justify raising the presumption that the article in question was made of smuggled gold. Whether or not the official concerned had seized the article in the "reasonable belief" that the goods were smuggled goods is not a question on which the Court can sit in appeal. The law to this effect has been declared in no ambiguous terms in Pukhraj v. D.R. Kohli - AIR 1962 S.C. 1559 : 1962 (3) Supp. S.C.R. 866. This Court has administered caution to the Courts not to sit in appeal in regard to this question and has observed 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 of its own might or might not have entertained the same belief. The law declared by this Court is binding to the High Court and it was not open to the High Court to do exactly what it was cautioned against by this Court. Section 123 of the Act does not admit of any other construction. Whether or not the officer concerned had entertained reasonable belief under the circumstances is not a matter which can be placed under legal microscope, with an over-indulgent eye which sees no evil any where within the range of its eyesight. The circumstances have to be viewed from the experienced eye of the officer who is well equipped to interpret the suspicious circumstances and to form a reasonable belief in the light of the said circumstances. In the present case the concerned official had mentioned three circumstances which made him entertain the reasonable belief that the article was a smuggled one viz :
(1) On the basis of the prior information he was alert and was on the look out, watching the movements of Respondent No. 1. (2) The chain which had adorned the waistline of Respondent No. 1 was coated with mercury so as to give an appearance of being made of silver. (3) As per the opinion of the goldsmith it was made of pure gold.
If these circumstances did not make the Superintendent of Customs entertain a reasonable belief that it was a smuggled article, he was not fit to be an Officer of the Customs Department. The circumstance that the chain was coated with mercury and given an appearance of having been made of silver though it was made of pure gold of 99.60 purity or 24 carat, was sufficient even for a layman, not to speak of a Customs official, to entertain the belief that it was smuggled gold. Would any one who was wearing an article as an ornament, evidently for ostentatious purposes, give the article of pure gold the appearance of being made of silver? To repeat the observation made earlier one might coat an article of silver to give an appearance of having been made of gold but no one would ordinarily take the trouble and incur the expenditure to coat an article of gold in order to give it an appearance of having been made of silver. This was an extremely unusual circumstance which would have aroused the suspicion of anyone. When the goldsmith was summoned at the Railway Station to test the article on the spot, and he expressed the opinion that it was made of pure gold, there was no scope for taking any other view. Even if a layman, let alone a judge, were to ask himself the question as to whether in these circumstances he would have entertained a reasonable belief that the article was a smuggled article inasmuch as gold of this purity is manufactured only in foreign countries which have sophisticated equipment and the further fact that an attempt to camouflage the article was made by the person concerned his common sense would, not have given himself any other answer. The conduct of Respondent No. 1 in coating the article of pure gold to make it appear as if it was of silver was itself a conduct which could have provided the basis for entertaining a reasonable belief it being a relevant piece of evidence as per the law declared by this Court in Issardas Daulat Ram and Ors. v. The Union of India and Ors. - 1962 Suppl. (1) S.C.R. 358 : A.I.R. 1966 S.C. 1867. The view taken by the High Court is altogether unreasonable and accordingly it cannot be sustained.
So also in the decision reported in 1992 (59) E.L.T. 201 (SC), the Hon'ble Supreme Court at Para 16 held as follows :
16. The reasonable belief as to smuggled goods, as enjoined in the Act, had been explained by this Court in State of Gujarat v. Mohanlal Jitamalji Porwal and Anr. (1987 2 SCC 364). There this Court observed whether or not the officer concerned had seized the article under the "reasonable belief" that the goods were smuggled goods, is not a question on which the Court can sit on appeal. The circumstances under which the officer concerned entertains reasonable belief, have to be judged from his experienced eye who is well equipped to interpret the suspicious circumstances and to form a reasonable belief. See also M.A. Rasheed and Ors. v. State of Kerala (AIR 1974 SC 2249) and The Barium Chemicals Ltd. and Anr. v. Tlie Company Law Board and Ors. (1966 Suppl. SCR 311). It must be reiterated that the conclusions arrived at by the fact finding bodies, the Tribunal or the statutory authorities, on the facts, found that cumulative effect or preponderance of evidence cannot be interfered with where the fact finding body or authority has acted reasonably upon the view which can be taken by any reasonable man, Courts will be reluctant to interfere in such a situation. Where, however, the conclusions of the fact finding authority are based on no evidence then the question of law arises and that may be looked into by the Courts but in the instant case the facts are entirely different. See the principles enunciated by this Court in M/s. Mehta Parikh & Co. v. C.7.T., Bombay (1956 SCR 626). The same view was expressed by this Court in Pukhraj v. D.R. Kohli (1962 Suppl. 3 SCR 866) where while dealing with the provisions of the Customs Act, 1878, this Court held that Section 178 of the said Act imposed the onus of proof that the gold was not smuggled, on the party if it was seized under the Act. The question whether it was under the reasonable belief or not, was a justiciable one. The facts of this case certainly warrant the formation of belief. In any case, once it is held that there was material relevant and germane, the sufficiency of the material is not open to judicial review.
Applying the above principles to the facts of this case it is clear that the 42 numbers of gold bars were found in the possession of the appellant and he could not produce any receipts evidencing the licit import. The above said facts certainly warranted the formation of a belief. It is therefore established that there are prima facie materials to the officers to come to the conclusion that these are smuggled goods and the sufficiency of these materials present at that time is not open to the judicial review as held by their Lordships of the Supreme Court. In the light of the above principles laid down it is clear that the gold bars having been seized on a reasonable belief that they are smuggled into the country, the burden is shifted to the appellant to prove that these are not smuggled gold.
14. With respect to the silver seized in this case it is to be found out whether the burden has passed on to the appellant to prove that these are not smuggled goods. In this connection it is pertinent to note that silver also is an item which is notified under Section 123 of the Customs Act. When the officers visited the premises, they recovered 6 Nos. of silver ingots and there were markings in ink on those 6 silver ingots. These markings respectively are, 38.425,39.939,39.258,40.421,38.586 and 38.275. With respect to all these 6 silver bars the appellant had produced 3 baggage receipts. These baggage receipts contained 3 silver bars as having been imported into country. But on the spot there was no co-relation between the baggage receipts and the 6 pieces of silver bars. The reasonable belief of the officers has to be adjudged at the time of seizure. It was also found by officers that there were many other baggage receipts found in the possession of the appellant and in such circumstances when corresponding goods were not found therein and when the silver in question cannot be corelated to these baggage receipts, certainly there were prima facie materials available for the officers to form a reasonable belief. As held by the Hon'ble Supreme Court that when materials were there for the officers to form a reasonable belief then in such circumstances, the Tribunal cannot waive the circumstances in order to find out whether the officers could have entertained such reasonable belief. The reasonable belief is that of the officer and when prima facie materials are there, for a reasonable amount to entertain such belief, then the Tribunal cannot waive the circumstances as held by the Hon'ble Supreme Court.
15. In the above said case, the learned Advocate has further contended that in the Mahazar nothing is mentioned about the information and about the reasonable belief. But a Mahazar is a document which is prepared at the spot showing the seizure of these silver ingots as well as gold bars. There is no provision of law which requires that the Mahazar contain about the reasonable belief entertained by the officers. Mahazar is only the narration of actual seizure proceedings which have taken place in the house of the appellant. Even otherwise in the Mahazar it has been clearly stated that the documents as well as the gold and silver were seized on a reasonable belief. There is no requirements of law let the officers should mention in the Mahazar that they searched the premises on an information received by them. In fact the show cause notice has mentioned this aspect and the mere fact that such a recital is not found in the Mahazar is not sufficient to hold that there was no information to the officers. The very fact that they searched the premises of the appellant itself indicates that they had information in this regard. In such circumstances the burden of proof has shifted on to the appellant to prove that the gold as well as the silver seized in this case are not smuggled goods.
16. The next aspect of the question is whether the appellant has proved that these gold as well as silver are not smuggled goods. In this connection the learned Advocate Shri Kareem contended before us that the burden cast on the appellant is so very heavy and it was not necessary for the appellant to prove his case beyond reasonable doubt. It was pointed out by the learned Advocate that as per the Mahazar, the gold ,seized, which are 44 gold bars, were having the markings "CREDIT SUISSE". In this connection the learned Advocate pointed out that the baggage receipt produced by the appellant also reveals that the gold bars imported under these baggage receipts bear the markings "SUISSE". It was the contention of the learned Advocate that the Customs Officers not having indicated the full description of the gold, is not sufficient to hold that these baggage receipts cannot be corelated with the gold seized in this case.
17. We have examined this aspect of this question as argued by the learned Advocate. It is now seen that in the Mahazar it is clearly written that the gold seized in this case were having the markings as "CREDIT SUISSE" but the baggage receipt produced by the appellant covers the gold bars with markings "SUISSE". Therefore these 3 baggage receipts cannot be corelated with the goods seized. The word "CREDIT" is not mentioned in these baggage receipts. The learned Advocate in this connection contended before us that there is no particular forum in which the officers have to allow the clearances of imported gold and at the relevant time when the gold was permissible to be imported on payment of duty, such omissions on the part of the officers will not restrict the truthfulness of the appellant's case. But even in the baggage receipt it is clearly mentioned in the column of 'description ' as "SUISSE". It is for the appellant to prove that the gold is not smuggled. In order to prove the same, the identity of the gold seized with that of the gold imported under the 3 baggage receipts have to be established by the appellant. There cannot be any presumption that the officers have failed to mention the actual description of the gold imported. On the contrary, under Section 114 of the Indian Evidence Act there is a presumption that they have done their duty correctly unless it is established otherwise. The very fact that the officers have described the gold in the baggage receipts as "SUISSE" goes to show that these were the only markings on those gold bars which were imported under those baggage receipts. But the gold seized in this case contain markings "CREDIT SUISSE". Therefore, it is absolutely clear that the baggage receipts cannot be corelated with that of the gold seized in this case. It is also seen that one Shamsuddin has stated that he has imported the gold under these baggage receipts and he handed over the baggage receipts and the gold to the appellant. There is no statement from Shamsuddin to the effect that he had imported gold containing the markings "CREDIT SUISSE" and that the officers only described it as "SUISSE". Shamsuddin only gave a statement that the gold belongs to him and it may be released to him. It is pertinent to note that thereafter he did not take part in the adjudication proceedings. This argument that the gold seized as well as the baggage receipts were corelatable was taken before the adjudicating authority and the adjudicating authority has also dealt with this point. The observations of the adjudicating authority is as follows :
"As per the requirements of Section 123 of the Customs Act, 1962, there is no option but to verify the exact coverage by the duty payment documents filed, whether it be in the form of baggage receipt or otherwise, particularly when the goods under seizure are in the form of gold bars (and silver ingots) and have not been shown to be cut and sold piece meal in the hypothetical fashion suggested by the Counsel. Any plea based on hypothetical grounds such as whether a person should suffer for mistake, if any, committed by Customs Officers in failing to enter the full description of the goods on the baggage receipts, cannot also come to the rescue of the notices, unless otherwise they are in a position to establish that such a mistake had, in the first place, occurred in the instant case.
It is thus seen that merely because the appellant had stated in his statement dated 20-3-1993 that one Shamsuddin had imported the same, the burden is not discharged in view of the fact ,that the baggage receipts produced by the appellant do not cover the gold seized from his possession. That being the case, the appellant has not discharged his burden that these gold are not smuggled gold.
18. As far as the confiscation of the silver is concerned, it was contended before us by the learned Sr. Advocate that Section 123 is not attracted to the facts and circumstances of the case and the burden is not shifted to the appellant. We have already held in the discussions made in Para 14 of the above order that there was a reasonable belief for the officers to seize the same and that the burden is shifted to the appellant to prove that the gold as well as the silver are not smuggled.
19. Therefore the question to be decided is whether the appellant has discharged his burden. It was contended before us that the principles of natural justice requires when the goods should be confiscated only on the basis of allegations of the show cause notice. The allegation in the show cause notice is that these silver are smuggled goods and they are seized on a reasonable belief that they are smuggled goods. Therefore it cannot be said that the adjudicating officer has gone outside the purview of the allegations in the show cause notice. Since the appellant has to prove that these are not smuggled goods, he has produced baggage receipt to show that they are licitly imported into the country. The baggage receipts recovered from the appellant were only photocopies of the baggage receipts relating to the silver already sold. If the baggage receipts show that the seized silver is covered under the same, then the appellant has discharged the burden. A careful scrutiny of the baggage receipts show that they cover 231.250 kg. of silver described as 6 bars. The baggage Receipt No. 15438, dated 5-3-1993 covers 2 silver ingots weighing 78 kgs., baggage Receipt No. 15436, dated 5-3-1993 covers 2 silver bars weighing 76 kgs and baggage Receipt No. 16015, dated 5-3-1996 covers two silver bars weighing 77.250 kgs. The total weight therefore is 231.250 kgs.
20. But as far as these silver bars under seizure weighing 38.425 kg., 39.939 kg., 39.258 kgs., 40.421 kg., 38.586 kg. and 38.275 kg. respectively their total weight is 234.904 kg. It is thus seen that the weight of the silver in total is more than what is covered by the three baggage receipts. The total weight of no (sic) the two silver bars under seizure tallies with the weight of the two silver bars mentioned in any of the baggage receipts. Therefore the baggage receipts which are also Zerox copies, do not tally with the seized silver. Therefore the only conclusion is that these seized silver are not covered under the baggage receipt and the appellant has not proved that these seized silver are licitly imported into the country. Further these baggage receipts also show certain amount of silver granules and no explanation is given as to what happened to those silver granules. Hence in view of the circumstances as mentioned above, the appellant has failed to discharge the burden upholding the licit origin of these silver bars under seizure. Therefore they are correctly confiscated under Section 111(d) of the Customs Act. Accordingly we confirm the confiscation of the gold as well as silver in this case. In this view of the matter the penalty of Rs. 1,00,000/- imposed on the appellant also cannot be said to be excessive. The appeal is therefore dismissed.