Custom, Excise & Service Tax Tribunal
Sri Pran Gopal Saha vs Kolkata(Prev) on 7 March, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 76723 of 2016
(Arising out of Adjudication Order No. 13/CUS/CC(P)/WB/2016 dated 13.07.2016
passed by the Commissioner of Customs (Preventive), Custom House, 3 rd Floor, 15/1,
Strand Road, Kolkata - 700 001)
Shri Naresh Kumar Agarwalla, : Appellant
Director of M/s. Jewel Jyoti Ornaments Pvt. Ltd.,
UG-7, Sriram Plaza, Bank More,
Dhanbad, Jharkhand, PIN - 826 001
VERSUS
Commissioner of Customs (Preventive) : Respondent
Custom House, 3 Floor, 15/1, Strand Road,
rd
Kolkata - 700 001
WITH
Customs Appeal No. 76724 of 2016
(Arising out of Adjudication Order No. 13/CUS/CC(P)/WB/2016 dated 13.07.2016
passed by the Commissioner of Customs (Preventive), Custom House, 3 rd Floor, 15/1,
Strand Road, Kolkata - 700 001)
Shri Atu Dutta : Appellant
S/o. Late Chinta Haran Dutta,
Harinarayan Nagar, Barmasia, P.S.: Dhansar,
Dhanbad, Jharkhand, PIN - 826 001
[C/o. M/s. Jewel Jyoti Ornaments Pvt. Ltd., Sriram Plaza, Bank
More, Dhanbad - 826 001]
VERSUS
Commissioner of Customs (Preventive) : Respondent
Custom House, 3rd Floor, 15/1, Strand Road,
Kolkata - 700 001
AND
Customs Appeal No. 76725 of 2016
(Arising out of Adjudication Order No. 13/CUS/CC(P)/WB/2016 dated 13.07.2016
passed by the Commissioner of Customs (Preventive), Custom House, 3 rd Floor, 15/1,
Strand Road, Kolkata - 700 001)
Shri Pran Gopal Saha, : Appellant
Director of M/s. N.P. Jewellery House Pvt. Ltd.,
P-16, Kalakar Street,
Kolkata - 700 007
VERSUS
Commissioner of Customs (Preventive) : Respondent
Custom House, 3rd Floor, 15/1, Strand Road,
Kolkata - 700 001
Page 2 of 42
Appeal No(s).: C/76723-76725/2016-DB
APPEARANCE:
Shri N.K. Chowdhury, Advocate
[In respect of Customs Appeal Nos. 76723 of 2016 and 76724 of 2016]
Shri Arijit Chakraborty, Advocate
[In respect of Customs Appeal No. 76725 of 2016]
for the Appellant(s)
Shri Faiz Ahmed, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs. 75643-75645 / 2025
DATE OF HEARING: 27.01.2025
DATE OF DECISION: 07.03.2025
ORDER:[PER SHRI K. ANPAZHAKAN] The officers of Directorate of Revenue Intelligence (DRI), Kolkata Zonal Unit received an intelligence that one person by name Shri Atu Dutta, aged about 46 years, would be carrying smuggled gold of foreign origin and leaving Howrah Railway Station for Dhanbad by Shatabdi Express bound for Ranchi (Train No. 12019) on 27.12.2013 scheduled to start from Howrah at 6.05 a.m.
2. On the basis of the said intelligence, officers of DRI Kolkata Zonal Unit identified the passenger Shri. Atu Dutta sitting on seat no. 74 of Coach No. C-4. of the said train. On enquiry, the said person accepted that he is carrying substantial quantity of gold bar/biscuits of foreign origin smuggled into India and articles made out of gold biscuits of foreign origin concealed in his black coloured laptop bag and in his person.
2.1. On personal search of Shri Atu Dutta in the presence of two witnesses, the officers found 26 pieces of yellow coloured metal in small biscuits Page 3 of 42 Appeal No(s).: C/76723-76725/2016-DB concealed in his white coloured cotton waist belt was recovered. On search of the black coloured laptop bag, in the presence of the two independent witnesses, the officers found gold ornaments collectively weighing 3072 gms. and one yellow coloured metal bar believed to be Gold bar of foreign origin bearing foreign inscriptions as 'Valcambi Suisse, 1 Kg., gold 995.0' in it. As he was not having any licit document in support of legal importation/possession/transportation of such gold biscuits of foreign origin and gold ornaments made from foreign origin gold, the officers of DRI, Kolkata seized the gold biscuits and the gold articles made out of said gold biscuits of foreign origin.
2.2. In his statement recorded on 27.12.2013, Shri Atu Dutta stated that for the last three years, he was working under one Shri Naresh Agarwal, who owns a shop named Jewel Jyoti Ornaments Pvt. Ltd., UG-7 Sri Ram Plaza, Bank More, Dhanbad- 826001, Jharkhand. During last one year he was entrusted by Shri Naresh Agarwal to carry gold ornaments, made out of gold biscuits of foreign origin believed by him to have been smuggled into India from Bangladesh, received from suppliers/dealers/goldsmiths situated at Kolkata for their delivery to various places of Delhi. Under instruction of his employer Shri Naresh Agarwal, he used to travel to Kolkata to collect gold ornaments believed to be made out of gold of foreign origin, from one Shri Utpal Samanta, known to him as an artisan living at Sinthee area of Dum Dum, Kolkata, who was having his mobile no. 98741 70316. He also used to receive Gold Biscuits/ Bars of foreign origin believed to have been smuggled from Bangladesh from one person called as 'Mejda' (So far as he knows his actual name was Shri Pran Gopal Saha having Mobile No. Page 4 of 42 Appeal No(s).: C/76723-76725/2016-DB 98306 90514), believed to be the Proprietor of M/s. N.P. Jewellers, Kalakar Street, Kolkata.
2.3. On 24th December, 2013 he started from Dhanbad for Delhi by Rajdhani Express as instructed by his employer Shri Naresh Agarwal, with 44 pieces of Bangles / 'Bala' of approximately 4 kg. in weight valued at Rs. One Crore (approx.) handed over to him by his employer and reached Delhi on 25.12.2013. Thereafter, he reached Sardarji Jewellers at Chandni Chowk area of Delhi and handed over the said Bangles/ Bala to one person named Sardarji. In return, he did not receive any money as price. On 25th December, 2013 he started from Delhi by Rajdhani Express and reached Sealdah on 26.12.2013 at about 11 a.m. (approx.). Then he went to the said rest room at Nimbari, Banshtala, Barrabazaar to take rest. On that day total 4 (four) persons came to that room separately and individually for handing over Gold Biscuits/ Bars/ ornaments/ articles of foreign origin. On 26.12.13, he went to the office-cum-shop premises of N.P. Jewellers on Kalakar Street on the 1"
floor to see 'Mejda', Proprietor of the said N.P. Jewellers (Shri Pran Gopal Saha having Mobile No. 98306 90514). Then two other staff members of 'Mejda' (whose identities/ addresses and contact numbers were not known to him) handed over to him 26 pcs of gold biscuits of foreign origin believed to have been smuggled from Bangladesh and contained in a plastic packet. The transaction was made in the presence of said 'Mejda' (Pran Gopal Saha). Then, one Shri Agarwal (full name, address and phone number are not known to him) came and handed over to him one Pc. Gold bar weighing 1 Kg. having foreign inscription on the same.Page 5 of 42
Appeal No(s).: C/76723-76725/2016-DB 2.4. On 27thDecember, 2013, carrying all the above said gold biscuits and ornaments, he came to Howrah station at about 05.30 a.m. He was having reservation at Seat no. 74, Coach No. C-4 of Shatabdi Express (Train No. 12019 of 27.12.2013 scheduled to start at 6.05 a.m. At about 05.45 a.m, the DRI officers intercepted him and asked him to produce documents in support of his possession of gold ornaments and foreign origin gold biscuits which he was admittedly carrying. He had no such documents in support of possession of gold ornaments and foreign origin gold biscuits. Since the place was a crowded public place he requested the officers to take him to their office considering his safety and security and that of the contraband goods. On his request the officers along with the two independent witnesses brought him along with his belongings to their office. During personal search and search of his bag, the officers recovered the above mentioned gold biscuits and gold ornaments, on the reasonable belief that the gold biscuits were of smuggled in nature and the gold ornaments were made of smuggled gold .
2.5. During interrogation, the officer showed him a photograph of one person and on seeing the photograph, he identified the person as Mejda from whom he had received 26 Pcs. of gold biscuits of foreign origin on 26.12.2013.
2.6. Statement of Shri Pran Gopal Saha was recorded on 27.12.2013 wherein he inter-alia stated that he used to issue gold bars to artisans and used to receive jewellery made thereof. From the monthly summary of the cash lying in hand of his four show rooms and head office, it was found that the cash in hand was Rs. 1,11,50,551/- and also there was difference in cash in Page 6 of 42 Appeal No(s).: C/76723-76725/2016-DB hand at head office and cash in hand as per books of account. He was asked to clarify the same wherein he stated that the cash in hand was tallied with the books of his show-rooms and the same was kept for purchase of gold as well as for deposit in bank in instalments of Rs. 10 lakh. Shri Pran Gopal Saha also categorically now admitted that Shri Atu Dutta, an employee of Shri Naresh Agarwal, had received the 26 pcs of gold biscuits from one of his staff at his office in his presence and those 26 pcs of the gold biscuits belonged to Shri Naresh Agarwal of Dhanbad. Shri Pran Gopal Saha alias Mejda alias Nepal Saha was arrested on 02.01.2014.
2.7. Statement of Shri Naresh Kumar Agarwal, Director of M/s Jewel Jyoti Ornaments Pvt. Ltd, Dhanbad, was recorded on 27.12.2013 at Dhanbad by the officers of Central Excise & Service Tax Division Dhanbad, wherein, he inter-alia stated that, he used to purchase gold bars from the following firms:
(a) Megna Project Kolkata (Owner Shri Ajit Shinde)
(b) Mallick Jewellery, Bipin Bihari Ganguli Street, Kolkata (owner Shri Anu Mallick)
(c) ThikedarJewellers, New Delhi (owner Mr. Soni) He used to purchase gold ornaments from
(a) Solanki Jewellers, Mumbai,
(b) Sangvi Dhanrupji Danvi Jewellers, Mumbai,
(c) RL Ornaments, Rajkot Page 7 of 42 Appeal No(s).: C/76723-76725/2016-DB He did not purchase any gold biscuits of foreign origin.
Payments were made through RTGS from his account number 910020010008520 maintained at Axis Bank, Dhanbad. The purchased gold bars were usually collected by his staff named Atu Dutta. He further stated that Shri Atu Dutta had gone to Kolkata on 25.12.2013 and he had told him to bring manufactured ornaments from his karigars at Kolkata. Shri. Naresh Agarwal categorically stated that he has not asked Atu Dutta to collect any gold biscuits/bars from the owner of M/s N P Jewellers.
2.8. The purity of the seized gold and gold ornaments were certified by M/s G. N. Hallmarking & Refinery Pvt. Ltd., 6, Banstolla Galli, Kolkata-700007 on 27.12.2013 at DRI Kolkata Office and the purity of the gold bar was confirmed as 99.5% where as that of gold biscuits were confirmed as 99.9% and that of gold ornaments were confirmed as 91.66%.
2.9. Search was conducted on 28.12.2013 at the office premises under the control of M/s N. P. Jewellers Pvt. Ltd. at 6th Floor, Om Tower, P.16, Kalakar Street, Kolkata-07. Indian Currency worth Rs. 1,88,00,800/- was recovered and seized on the reasonable belief that the same was the sale proceeds of smuggled gold.
2.10. Shri Naresh Agarwal was summoned on 31.12.2013, 06.01.2014 and 17.01.2014, for his appearance at DRI Office but, he did not appear on all the three occasions. By letter dated 22.01.2014, Shri Naresh Kumar Agarwalla stated that, he was aware of the arrest of Shri Atu Dutta on 28.12.2013. He had produced some documents through Shri Atu Dutta before the CMM, Calcutta pertaining to 92 pcs of gold chains showing delivery of the said ornaments by M/s Page 8 of 42 Appeal No(s).: C/76723-76725/2016-DB Shree Ganesh Assaying & Hallmarking Centre, Kolkata 700007 to M/s Jewel Jyoti Ornaments (Pvt) Ltd on 26.12.2013 along with the issue and receipt vouchers of his gold ornaments/jewellery from artisans Ghosh Jewellers, Utpal Samanta, M/s Prabhakar Jewellers etc. He had further produced documentary evidence on 17.01.2014 to the CMM Court, during production of Shri Atu Dutta, regarding 995 purity locally acquired gold bar weighing 1 Kg. and having the marking Valcambi Suisse, as was purchased from M/s. Jalan Jewellers, Sonapatty, Kolkata against tax Invoice No. JJ/2056/2013-14 dated 24.12.2013, justifying the licit acquisition of the gold found from the possession of his employee after he was apprehended from the Shatabdi Express at Howrah Station on 27.12.2013. He had submitted copy of the Affidavit dated 20.01.2014 which he had affirmed before the Ld. Executive Magistrate, Dhanbad, wherein, he inter-alia stated that "the gold jewellery and the gold bar weighing 1 Kg. and having the marking Valcambi Suisse, in the possession of Shri Atu Dutta was all legally acquired and covered by documents as per the norms required in the normal course of manufacture and trading in gold jewellery / ornaments under the law."
2.11. In response to Summons dated 18.02.2014, Shri Naresh Kumar Agarwalla sent a letter dated 24.02.2014 wherein he has stated that the seized primary gold and jewellery, etc. recovered from possession of Shri Atu Dutta were all licitly acquired in the normal course of business/trade. Regarding 26 pcs of gold biscuits recovered from possession of Shri Atu Dutta on 27.12.2013, he stated that the same were handed over to Shri Atu Dutta by one Prakash Bhai of Kucha Mahajani of Delhi, which he [Atu Dutta) Page 9 of 42 Appeal No(s).: C/76723-76725/2016-DB had carried in person from Delhi. In his letter dated 21.05.2014, Shri Naresh Kumar Agarwalla intimated that due to heat stroke, he was unable to attend the summons proceedings.
2.12. The statement of Shri Praveen Jalan of M/s Jalan Jewellers, 9, Shambhu Mullick Lane, Kolkata, was recorded on 23.01.2014, wherein he has stated that sale bill bearing no. JJ/2056/2013-14 dated 24.12.2013 was issued at the name of Jewel Jyoti Ornaments Pvt. Ltd., UG-7, Sri Ram Plaza, Bank More, Dhanabad-826001 from 72, Manohar Das Street, Kolkata by his accountant Shri Anand Sharma, whose office was at 5, Grant Lane, Lalbazar, Kolkata. The goods, as shown in the said bill was given by one of his staff named Arun Sharma under his supervision to the staff of M/s Jewel Jyoti Ornaments Pvt. Ltd. named Bikash Malakar at 43, Hariram Goyanaka Street, Burra Bazar, Kolkata (BanstalaNimbari) [on 24.12.2013]. The gold sold by him to M/s Jewel Jyoti Ornaments Pvt. Ltd. was in brick shape having weight 1 kg. The markings of company, purity and numbering were embossed on that sold gold bar. The gold bar sold on 24.12.2013 to M/s Jewel Jyoti Ornaments Pvt. Ltd. was purchased from Maa Ambe Jewellers, 47 A, Nalini Seth Road, 2nd Floor, Sonapatti, Kolkata-07 on 12.12.2013. The said gold was sold to M/s Jewel Jyoti Ornaments Pvt. Ltd on credit of 2 to 3 days. This was the first transaction. No agreement for credit sale with the said firm was made by his firm. Shri Naresh Agarwal had instructed him to hand over the said 1 kg gold bar to his person named Bikash Malakar and thus he had handed over the same to Shri Bikash Malakar, considering him a staff of M/s Jewel Jyoti Ornaments Pvt. Ltd. and took receipt on seller's copy of sale invoice no. JJ/2056/2013-14 dated 24.12.2013 from Page 10 of 42 Appeal No(s).: C/76723-76725/2016-DB him (Bikash Malakar). Payment of this sale was received on 21.01.2014 through RTGS in account no. 911020004010581 associated with Axis Bank, Burra Bazar. This payment was made against the 1 kg gold bar sold on 24.12.2013. After 24.12.2013, no sale was made to M/s Jewel Jyoti Ornaments Pvt. Ltd 2.13. On 03.01.2014 one retraction petition was filed on behalf of Shri Pran Gopal Saha before the Hon'ble court of CMM, Calcutta, denying that the alleged gold under seizure are smuggled and the alleged currency under seizure were sale proceeds from the transaction of such alleged smuggled goods which he had received from one Naresh Agarwal, employer of one Atu Dutta.
2.14. A retraction petition was filed in the court of Ld. CMM, Calcutta on 10.01.2014 on behalf of Shri Atu Dutta and along with some documents like Tax Invoice No. JJ/2056/2013-14 dated 24.12.2013 issued by M/s Jalan Jewellers, Receipt Voucher No. 990 dated 26.12.2013 and invoice cum delivery chalan both issued by Shree Ganesh Assaying & Hallmarking Centre: issue Voucher No. 12 dated 21.12.2013 and Receipt Voucher No. 08 dated 26.12.13 both addressed to Ghosh Jewellers, 26 Burtola Street, Kolkata-07; Issue Voucher No. 11 dated 19.12.2013 and Receipt Voucher No. 07 dated 25.12.13 both addressed to Shri Utpal Samanta; Issue Voucher No 14 dated 26.12.2013 and Receipt Voucher No. 09 dated 26.12.13 both addressed to M/s. Shree Ganesh Assaying & Hallmarking Centre and Issue Voucher No 13 dated 25.12.2013 and Receipt Voucher No. 10 dated 26.12.13 both addressed to P. Jewellers, Kolkata-50 were submitted.
Page 11 of 42Appeal No(s).: C/76723-76725/2016-DB
3. Upon completion of investigation a Show Cause Notice dated 25.06.2014 was issued asking all the noticees as to why the goods shouldn't be confiscated and penalty should not be imposed upon each of them for their alleged roles in smuggling of contraband goods. On adjudication, the Ld. Commissioner of Customs (Preventive), Custom House, Kolkata vide Adjudication Order No. 13/CUS/CC(P)/WB/2016 dated 13.07.2016 ordered for absolute confiscation of the seized gold and jewellery in terms of Section 111
(b), (d), (f) and (o) of the Customs Act, 1962 and also ordered for confiscation of Rs. 1,88,00,800/- in terms of Section 121 of the Act. Penalty to the tune of Rs. 50,00,000/- was imposed upon Shri Atu Dutta and Shri Pran Gopal Saha (each) under Section 112 of the Customs Act, 1962. Penalty of Rs. 1,00,00,000/- was imposed upon Shri Naresh Agrawal under Section 112 of the Act. Being aggrieved and dissatisfied with the impugned Order-in-Original dated13.07.2016, the above said appeals have been filed before this Tribunal.
4. The appellants submit that in the present case, the goods so seized have been collectively claimed by Shri Naresh Agarwal under proper documents except for the seized cash; Shri Naresh Agarwal specifically states that he has no connection with the seized cash whatsoever and the same remains unclaimed by him. The appellants further states that as far as the 'reasonable belief' of the officer is concerned, the same has not been formed while executing the seizure in terms of Section 110 of the Customs Act, 1962 and the same is evident from the Seizure List itself. It is their submission that 'Reasonable belief' is the only safeguard available against any indiscriminate seizure against any person and absence thereof makes the Page 12 of 42 Appeal No(s).: C/76723-76725/2016-DB entire seizure proceedings bad in the eyes of law. The appellants also submit that from a bare perusal of the Seizure List, it can be seen that the seizure is made without any 'reasonable belief'. It is stated that Section 110 of the Customs Act, 1962 clearly envisages that a proper officer of customs having 'reasonable belief' that any goods is liable to be confiscated, he may seize such goods; in the present case, there has been no reasonable belief on the part of the officer concerned while seizing the goods; the Board vide its Circular No. 01/2017 dated 08.02.2017 has instructed to pass a specific order depicting the reasonable belief of the officer concerned while seizing the goods. Therefore, the appellants contend that deviation thereof, clearly depicts that the seizure so made is illegal and hence, the goods are liable to be released and in corollary thereof, confiscation under Section 111 of the Customs Act, 1962 is not at all warranted. Thus, it is the case of the appellants that when preliminary seizure of goods is in dispute, the proceedings initiated by way of the impugned Show Cause Notice become vitiated thereby making the impugned order liable to be quashed.
4.1. In support of their contention, the appellants relied on the decision of the Tribunal, Kolkata in the case of Ajit Bhosle v. Commissioner of Cus. (Prev.), Kolkata reported in 2020 (374) E.L.T. 814 (Tri. Kolkata); wherein it has been held that when there is no evidence regarding illegal import of the gold, seized gold cannot be held to be smuggled in nature.
4.2. In the case of Om Sai Trading Company v. Union of India reported in 2020 (372) E.L.T. 542 (Pat.), the scope and meaning of the term 'reasonable belief' has been explained, wherein it has been held that Page 13 of 42 Appeal No(s).: C/76723-76725/2016-DB "Reason to believe" is not the subjective satisfaction of the officer concerned but to be exercised in accordance with restraints imposed by law and such belief must be that of an honest and reasonable person based upon reasonable grounds; Reasons should either appear on the face of the notice or must be available on the materials which had been placed before him under Section 110 of Customs Act, 1962.
4.3. The appellants submits that though the term "reasonable belief" has been quoted in the Panchnama, the same remains absent from the Seizure List in the present case. It is submitted that the Circular No. 01/2017-Cus dated 08.02.2017 clearly states that whenever goods are being seized, in addition to Panchnama, the proper officer must also pass an appropriate order (Seizure memo)/Orders/etc. clearly mentioning the reasons to believe that the goods are liable for confiscation; However, in this particular case, no such reasonable belief has been formed while seizing the goods and as such, the said seizure becomes vitiated in nature; Moreso there is a clear violation of the Circular in the present case and that the provisions as laid down has not been adhered by the seizing officers. Accordingly, the appellants submit that the confiscation of the seized goods in this case is not sustainable as the seizure has not passed the test of 'reasonable belief'.
5. Regarding applicability of Section 123 of Customs Act, 1962, in this case, the appellants submit that the key element under section 123 of the Act is 'reasonable belief'; the seizure so made in the present case is clearly without 'reasonable belief'. When there is clear absence of reasonable belief, the appellants contend that the initial burden in terms of Section 123 Page 14 of 42 Appeal No(s).: C/76723-76725/2016-DB of the Customs Act,1962 automatically shifts upon the Department.
6. It is also their submission that no extension notice was issued to the appellant Shri Atu Dutta in terms of Section 110(2) of the Customs Act, 1962 thereby making the goods liable to be released in accordance with the provisions as laid down in the Customs Act; that Section 110 (2) of the Customs Act, 1962 provides that in the event of failure to issue a Show Cause Notice within a stipulated period of six months from the date of seizure, an extension notice is supposedly to be issued to the person from whose possession such goods have been seized intimating him with regard to the extended period for issuance of the said Notice, or else the goods shall be unconditionally released to the person. It is therefore contended that since, in this case, no extension notice in terms of Section 110 (2) of the Customs Act, 1962 has been issued to the present appellant, the goods are subject to release at once. It is further contended that though the impugned Show Cause Notice is shown to be dated as 25.06.2014, falling within the stipulated period of 6 months as estimated from the date of seizure, the fact remains undeniable that the appellant has been served with the same only after the expiry of such 6 months; In such premises the Order for confiscation of goods would be absolutely beyond the purview of law. In support of this contention, reliance is placed upon the decision in the following cases:
(a) Anil Kumar Pandey Versus Commissioner of customs, Shillong [2000 (116) E.L.T. 642 (Tribunal)] Page 15 of 42 Appeal No(s).: C/76723-76725/2016-DB
(b) Md. Gulshan Ahmed Barbhuiya v.
Commissioner, Kolkata [2019 (369) E.L.T. 1097 (Tri)]
(c) Purushottam Jajodiav. Dir. Of Revenue Intelligence, New Delhi [2014 (307) E.L.T. 837 (Del.)]
7. It is further contended by the appellants that the Department has not brought in any corroborative evidence to substantiate the allegation that the gold in guestion are smuggled in nature. It is their submission that failure to produce documents in respect of the goods carried by a person does not ipso facto prove that the goods are contraband in nature; the allegation of smuggling needs to be proved with cogent reasoning and corroborative evidence thereof. In support of this contention, the appellants relied on the decision in the case of Commissioner of Customs (Prev.), Shillong versus Sri Sangpuia, reported in 2005(189) E.L.T.321 (Tri. - Kolkata). The appellants submit that the Department, on presumption and assumption basis, absolutely confiscated the gold without any concrete evidence and held that the gold is of foreign origin and that it has been illegally imported into India as such the confiscation of seized goods is absolutely bad in the eyes of law. In support of this contention, the appellants relied on the decision in the case of Commissioner of Customs (prev.), Shillong versus Manisha Devi Jain reported in 2019(370) E.L.T.401 (Tri. - Kolkata).
8. The appellants submit that the onus of importation is no way lies upon the appellant as he is simply a purchaser who had licitly purchased the seized gold from the respective sellers and his onus has been discharged in the very moment he produced Page 16 of 42 Appeal No(s).: C/76723-76725/2016-DB documents related to the subject gold which hasn't been negated; the fact that the invoices were cross verified by the investigating authority with the respective sellers who had raised them strongly establishes the fact that the gold had been licitly and indigenously procured. It is stated that as for as the 26 pcs of gold biscuits is concerned, the appellant has already given his fair share of explanation and in the absence of reasonable belief it would totally be on the Department's liability to prove the smuggled nature of these gold biscuits which they have clearly failed to establish.
9. In view of the above submissions, the appellants have prayed for setting aside the confiscation of the gold biscuits and gold jewellery in the impugned order.
10. It is also pointed out that in the course of further search conducted on 28.12.2013 at the office premises under control of M/s N. P. Jewellers Pvt. Ltd. at 6th Floor, Om Tower, P-16, Kalakar Street, Kolkata- 07, Indian Currency worth Rs. 1,88,00,800/- was recovered and seized on reasonable belief that the same was the sale proceeds of smuggled gold; statement of Shri Pran Gopal Saha recorded on 02.01.2014 revealed that the property (Flat) at his office on 6th Floor, of P-16 Kalakar Street, Om Tower, Kol-7 was registered in his name, and being owner of the said Godrej Vault the keys also remained with him. Sri Pran Gopal Saha claimed that the recovered money/Indian Currency from the said Vault was given to him by Shri Naresh Agarwal; Shri Naresh Agarwal used to send him money in advance through his employee to his office, which he used to keep at his Vault at the 6th Floor of his office. The appellants Page 17 of 42 Appeal No(s).: C/76723-76725/2016-DB stated that an amount of Rs. 1,88,00,800/- was recovered from the possession of Shri Pran Gopal Saha, which he admitted as sale proceeds of smuggled gold received from Shri Naresh Kumar Agarwalla and that it has been alleged that Pran Gopal Saha was one of the beneficiaries of the earnings generated from the smuggling of the said gold into India; It is further alleged that Shri Pran Gopal Saha later on tried to account for the unaccounted money, which is believed to be sale proceeds of smuggled gold. In the regard, the appellant Shri Pran Gopal Saha submits that the Department has not brought in any evidence to substantiate the allegation that the seized currency was the sale proceeds of smuggled gold. Accordingly, he prayed for release of the seized currency to him.
11. Since the confiscation of gold biscuits, gold jewellery and Indian Currency are not sustainable in the eyes of law, the appellants prayed that penalties imposed on them are legally not tenable and prayed for setting aside the same.
12. On the other hand, The Ld. Authorized Representative of the Revenue submits that the appellant, namely, Shri Atu Dutta was not having any document for the licit purchase of the gold biscuits and gold ornaments found in his possession on 27.12.2013 when he was intercepted at Shatabdhi Express at Howrah station; Later, during the course of investigation also, the appellants have failed to produce any documentary evidence for the licit purchase of the gold biscuits and gold jewellery. He stated that under Section 123 of the Customs Act, 1962, it is the responsibility of the person who claims ownership of the gold to prove that the same were not Page 18 of 42 Appeal No(s).: C/76723-76725/2016-DB smuggled; In this case neither Shri Atu Dutta who was in possession of the gold nor Shri Naresh Agarwalla who later claimed the ownership of the 26 pieces of gold, could produce any evidence for the licit procurement of the gold in question. Accordingly, he submits that the ld. adjudicating authority has rightly confiscated the gold biscuits and gold ornaments in question.
12.1. Regarding the Indian Currency seized, he submits that Shri Pran Gopal Saha has claimed that the currency belonged to Shri Naresh Agarwalla; In his statements Shri Pran Gopal Saha admitted that the currency was the sale proceeds of smuggled gold. Accordingly, the ld. Authorized Representative of the Revenue justified the confiscation of Indian currency.
12.2. He further contends that as the appellants dealt with the smuggled gold knowing that they are liable for confiscation, penalties have been rightly imposed on them. Accordingly, he supported the impugned order.
13. Heard both sides and perused the appeal records.
14. We observe that on 27.12.2013, Officers of DRI, Kolkata intercepted the passenger Shri. Atu Dutta sitting on seat no. 74 of Coach No. C-4 of Shatabdi Express, in Howrah Railway Station. On personal search, 26 pieces of gold in small biscuits found concealed in his white coloured cotton waist belt was recovered. On search of the black coloured laptop bag, the officers found gold ornaments collectively weighing 3072 gms. and one yellow coloured metal bar believed to be Gold bar of foreign origin bearing foreign inscriptions as 'Valcambi Suisse, 1 Kg., gold Page 19 of 42 Appeal No(s).: C/76723-76725/2016-DB 995.0' in it. As he was not having any licit document in support of legal importation/possession/transportation of such gold biscuits/bars with foreign markings and gold ornaments believed to have been made from smuggled gold, the officers of DRI, Kolkata seized the gold biscuits and the gold articles.
14.1. Thus, the questions to be answered in this case are: -
(1) Whether the officers of DRI had 'reason to believe' that the gold biscuits/ bars were smuggled in nature and the gold ornaments were made from smuggled gold?
(2) Whether the burden of proving that the gold in question are not smuggled in nature is on the appellant under Section 123 of the Customs Act, 1962?
(3) Whether the evidences submitted by the appellants establish that the 26 pieces of gold biscuits, 1 kg.gold bar and 3072 gms. of gold ornaments were purchased from domestic sources and hence not liable for confiscation?
(4) Whether the Indian Currency seized in this case are liable for confiscation?
(5) Whether penalties imposed on the appellants under Section 112 of the Customs Act, 1962 and Section 135 of the Customs Act, 1962 are sustainable in this case?Page 20 of 42
Appeal No(s).: C/76723-76725/2016-DB Question No. (1): "Whether the officers of DRI had 'reason to believe' that the gold biscuits/ bars were smuggled in nature and the gold ornaments were made from smuggled gold?"
15. The appellants submitted that the Department has not brought in any evidence to prove that the gold in question were smuggled into India. They have drawn our attention to Section 110 of the Customs Act, 1962, wherein in has been stated that the Officers can seize the gold only on the "reasonable belief" that the gold is smuggled in nature. It has also been contended that in the present case, there was no reasonable belief on the part of the Officers concerned while seizing the goods. The appellants have also cited the Board Circular No. 01/2007 dated 08.02.2007 wherein it has been instructed that a specific order regarding reasonable belief is to be passed by the Officers while seizing the goods; there is no such exercise undertaken by the Officers, as is evidenced from the Seizure Memo; therefore, it is contended that the seizure in question itself is illegal.
15.1. We have perused the Panchnama and the Seizure Memo available on record. On perusal of the Pachnama, we find that the Officers have initiated action on the basis of a specific intelligence that the gold were smuggled into India through unauthorized routes and accordingly, the seizure was effected on the 'reasonable belief' that the gold in question were on smuggled in nature. For ready reference, the relevant portion of the said Panchnama is reproduced below: -
Page 21 of 42Appeal No(s).: C/76723-76725/2016-DB Page 22 of 42 Appeal No(s).: C/76723-76725/2016-DB Page 23 of 42 Appeal No(s).: C/76723-76725/2016-DB Page 24 of 42 Appeal No(s).: C/76723-76725/2016-DB 15.2. From the above, it is seen that the Panchnama drawn by the Officers on 27.12.2013 clearly establishes that there was a reasonable belief formed that the goods were liable for confiscation and accordingly, the same have been seized in terms of Section 110 of the Customs Act, 1962. We also observe that the Officers had received a specific intelligence that Shri Atu Dutta (one of the appellants herein) would be carrying gold of foreign origin without having any valid/licit documents in his person and accordingly, he was intercepted on 27.12.2013 at Howrah Railway Station. Thus, we find that the interception of Shri Atu Dutta was on the basis of a specific intelligence which indicated that the said person was carrying gold of smuggled nature. We are of the view that this intelligence developed by the Officers is sufficient enough to have the reasons to believe that the gold in possession of Shri Atu Dutta was smuggled into India and hence liable for confiscation under the provisions of the Customs Act, 1962.
15.3. We observe that this view has been taken by the Hon'ble Calcutta High Court in the case of Commissioner of Customs (Preventive) v. Rajendra Kumar Damani @Raju Damani [2024 (5) TMI 730 -
Calcutta High Court] (CUSTA No. 16 of 2023 (I.A.G.A. No. 01 of 2024 dated 15.05.2024). The relevant paragraph of the said decision is reproduced below: -
"10. The first aspect to be considered in the case on hand is with regard to on whom the burden of proof lies. Section 123 of the Customs Act deals with the burden of proof in certain cases. Sub Section (1) states that where any goods to which the said section applies are seized under the Act in the reasonable believe that they are smuggled goods, Page 25 of 42 Appeal No(s).: C/76723-76725/2016-DB the burden of proving that they are not smuggled goods shall be
(a) in a case where such seizure is made from the possession of any person-
(i) on the person from whose possession the goods were seized; and
(ii) if any person other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other persons;
(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. Sub Section (2) states that Section 123 shall apply to gold and manufacturers thereof, watches and any other class of goods which the Central Government may by notification in the official Gazette specifies.
11. What is important to note is that Section 123 enacts that where any goods to which the Section applies, are seized under the Act in the reasonable believe 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, the burden thus shifts under the conditions specified in the Section and the conditions being the seizure of goods to which the section applies, seizure under the Act (Customs Act) and seizure in the reasonable believe that they are smuggled goods. When these three elements are proved, the burden would shift to the accused to show that they are not smuggled goods.
12. It has been held that the section does not compel the officers to give reasons and the non-mention of reasons does not vitiate the authorization, even though it was always proper for the officers to give reasons (Assistant Collector of Customs Versus Page 26 of 42 Appeal No(s).: C/76723-76725/2016-DB Pratap Rao Sait and Others 1972 CrLJ 1135). Thus when Section 123(1) of the Act casts on the person concerned, the burden of proving that the goods are not smuggled goods, it is up to him to show whether that goods are not of foreign origin and hence not smuggled or that the goods are of foreign origin, but not smuggled goods, having been lawfully acquired.
13. Reasonable belief that goods are smuggled goods is to be judged from the Customs Officers experience and that sufficiency of material leading to formation of belief is not generally open to judicial review. However, the opinion of the customs officers cannot be wholly objective and the courts can examine the correctness and the circumstances leading to such belief. Therefore, it would be sufficient if the circumstances on the material before the officer, prima facie gives sufficient grounds to entertain the belief, one such factor being prior information."
15.4. From the above, we find that the specific information about the smuggled gold is sufficient enough to form the reasonable belief that the goods in question are smuggled in nature and liable for confiscation. Accordingly, we do not find any infirmity in the seizure of the gold by the Officers. Accordingly, Question No. 1 at paragraph 14.1 of this Order is answered in the affirmative.
Page 27 of 42Appeal No(s).: C/76723-76725/2016-DB Question No. (2): "Whether the burden of proving that the gold in question are not smuggled in nature is on the appellant under Section 123 of the Customs Act, 1962?"
AND Question No. (3): "Whether the evidences submitted by the appellants establish that the 26 pieces of gold biscuits, 1 kg. gold bar and the gold ornaments were purchased from domestic sources and hence not liable for confiscation?"
16. Regarding the reasonable belief to be exercised under Section 123 of the Customs Act, 1962, we find that three different types of gold were found to be in the possession of Shri Atu Dutta during his interception by the Officers. The evidences available in respect of each category of gold is, therefore, to be dealt with separately: -
(i) Seizure of gold ornaments:
16.1. We find that the gold ornaments, having a total weight of 3072 grams, were seized from the black coloured laptop bag carried by Shri Atu Dutta. In his statement, Shri Atu Dutta has stated that on 27.12.2013, he came from Delhi via Rajdhani Express and came to the restroom situated at Nimbari, Banshtala, Barrabazaar, Kolkata and during that period, four persons came to his room separately and individually for handing over gold biscuits / bars / ornaments.
16.1.1. Shri Sunil Dinda (address/phone number not known to him) came to that room first at round 3:00 p.m. and handed over to him Long Chains (33 pieces) weighing 610 gms.Page 28 of 42
Appeal No(s).: C/76723-76725/2016-DB 16.1.2. Lalmohon (full name/address/phone number not known to him) came to that room and handed over to him 3 pieces of Ball chain (motor mala) weighing 60 gms.
16.1.3. Shailen (full name/address/phone number not known to him) and handed over to him 89 gold chains weighing 848 gms.
16.1.4. Shri Utpal Samanta (full address not known to him) came to that room to see him and handed over to him 36 pieces gold chains and 93 pieces Ear-rings (Bali) made of gold weighing 754 gms.
16.2. Thus, we observe that the said gold ornaments have been handed over to the appellant viz. Shri Atu Dutta by four different persons.
16.2.1. In his statement dated 27.12.2013 recorded at Dhanbad, Shri Naresh Agarwalla, Director of M/s. Jewel Jyoti Ornaments Pvt. Ltd, Dhanbad, inter alia stated that, he used to purchase gold bars from the following firms:
(a) Megna Project Kolkata (Owner Shri Ajit Shinde)
(b) Mallick Jewellery, Bipin Bihari Ganguli Street, Kolkata (owner Shri Anu Mallick)
(c) Thikedar Jewellers, New Delhi (owner Mr. Soni) He used to purchase gold ornaments from
(a) Solanki Jewellers, Mumbai,
(b) Sangvi Dhanrupji Danvi Jewellers, Mumbai,
(c) RL Ornaments, Rajkot Page 29 of 42 Appeal No(s).: C/76723-76725/2016-DB 16.2.2. Shri. Naresh Agarwalla submitted that he had produced some documents through Shri Atu Dutta before the CMM, Calcutta pertaining to 92 pcs of gold chains showing delivery of the said ornaments by M/s Shree Ganesh Assaying & Hallmarking Centre, Kolkata 700007 to M/s Jewel Jyoti Ornaments (Pvt) Ltd on 26.12.2013 along with the issue and receipt vouchers of his gold ornaments/jewellery from artisans Ghosh Jewellers, Utpal Samanta, M/s Prabhakar Jewellers etc. He had further produced documentary evidence on 17.01.2014 to the CMM Court, during production of Shri Atu Dutta, regarding 995 purity locally acquired gold bar weighing 1 Kg. and having the marking Valcambi Suisse, as was purchased from M/s.
Jalan Jewellers, Sonapatty, Kolkata against tax Invoice No. JJ/2056/2013-14 dated 24.12.2013, justifying the licit acquisition of the gold found from the possession of his employee after he was apprehended from the Shatabdi Express at Howrah Station on 27.12.2013. He had submitted copy of the Affidavit dated 20.01.2014 which he had affirmed before the Ld. Executive Magistrate, Dhanbad, wherein, he inter-alia stated that "the gold jewellery and the gold bar weighing 1 Kg. and having the marking Valcambi Suisse, in the possession of Shri Atu Dutta was all legally acquired and covered by documents as per the norms required in the normal course of manufacture and trading in gold jewellery / ornaments under the law."
16.2.3. It has also been stated by Shri Naresh Agarwalla that he did not purchase any gold biscuits of foreign origin; payments were made through RTGS from his account number 910020010008520 maintained at Axis Bank, Dhanbad. The purchased gold bars were usually collected by his staff named Page 30 of 42 Appeal No(s).: C/76723-76725/2016-DB Atu Dutta. He further stated that Shri Atu Dutta had gone to Kolkata on 25.12.2013 and he had told him to bring manufactured ornaments from his karigars at Kolkata. Shri. Naresh Agarwal categorically stated that he has not asked Atu Dutta to collect any gold biscuits/bars from the owner of M/s N P Jewellers. It was also stated that the purity of the seized gold and gold ornaments were certified by M/s G. N. Hallmarking & Refinery Pvt. Ltd., 6, Banstolla Galli, Kolkata-700007 on 27.12.2013 at DRI Kolkata Office and the purity of the gold bar was confirmed as 99.5% where as that of gold biscuits were confirmed as 99.9% and that of gold ornaments were confirmed as 91.66%.. He inter alia stated that he has asked Shri Atu Dutta to collect the gold ornaments from one of the karigars by name Shri Utpal Samanta who was living at Sinthee Area of Dum Dum, Kolkata. In view of the above, the appellant, Shri Naresh Agarwalla stated that the said gold ornaments were purchased domestically. It is observed that he has produced evidence in the form of invoices and purchase bills evidencing the legal purchase of these gold ornaments. Accordingly, it has been contended that they have discharged their burden under Section 123 of the Customs Act and the confiscation of the gold ornaments is bad in law.
16.2.4. We find that on the day of interception, Shri Atu Dutta had categorically stated in his statement that four persons came to his room in Barabazaar and handed over to him the gold ornaments in question. Shri Naresh Agarwalla also categorically stated that he had asked Shri Atu Dutta of collect the gold ornaments from Shri Utpal Samanta, one of the karigars of the said gold. We also find that the appellants have produced evidence such Page 31 of 42 Appeal No(s).: C/76723-76725/2016-DB as invoices and hallmarking of the said gold jewellery. The appellants have also submitted that and the payments have been made through RTGS and banking sources. In this regard, it is also observed that the gold jewellery is not of 99.9% purity. Thus, we find that there is no evidence available on the record to substantiate the allegation that the gold ornaments were made of smuggled gold. On the other hand, we find that the Department has not brought in any evidence to support their claim that the ornaments in question were smuggled in nature. It is the settled position of law that allegation of smuggling cannot be made only on the basis of assumptions and presumptions; there must be cogent and corroborative evidence on record to substantiate the allegation that the ornaments were smuggled in nature. In the absence of the same, we hold that the appellants have discharged their liability cast under Section 123 of the Act to the effect that the gold ornaments were procured legally with documents. Consequently, we hold that the gold ornaments totally weighing 3072 grams are not liable for confiscation.
(ii) Seizure of gold bar weighing 1 kg.:
16.3. In this regard, we find that the said gold bar handed over to Shri Atu Dutta on 26.02.2013, weighing 1 kg., was found to be having a foreign inscription "Valcambi Suisse" and of 99.5% purity.
Thus, we observe that in these circumstances, the Officers exercised a prima facie doubt that the gold was of foreign origin as it was bearing the foreign inscription as aforesaid. However, we find that the appellants have produced the documents for licit purchase of the same. We observe that Shri Naresh Agarwalla has given evidence regarding the legal Page 32 of 42 Appeal No(s).: C/76723-76725/2016-DB procurement of the said gold vide invoice dated gold bar weighing 1 Kg. and having the marking Valcambi Suisse, as was purchased from M/s. Jalan Jewellers, Sonapatty, Kolkata against tax Invoice No. JJ/2056/2013-14 dated 24.12.2013, justifying the licit acquisition of the gold.
16.3.1. Thus, we find that the appellants have submitted evidence regarding the legal procurement of the 1 kg. gold bar while there is no evidence brought on record by the Department to substantiate their allegation that the said gold bar had been smuggled into India. It is also seen that they have produced documentary evidence on 17.01.2014 before the court of the Ld. CMM, during production of Shri Atu Dutta, regarding 995 purity locally acquired gold bar weighing 1 Kg. and having the marking Valcambi Suisse, as having been purchased from M/s. Jalan Jewellers, Sonapatty, Kolkata against tax Invoice No. JJ/2056/2013-14 dated 24.12.2013.
16.3.2. Thus, as the appellants have discharged their burden of proof cast upon them regarding licit purchase of the gold as required under Section 123 of the Customs Act, we hold that the 1 kg. gold bar is not liable for confiscation.
(iii) Seizure of 26 pieces of gold biscuits:
16.4. In respect of the 26 pieces of gold biscuits seized, we observe that as per the statement of Shri Atu Dutta recorded on 26.12.2013, 'Mejda' (Shri Pran Gopal Saha) hadhanded over the said gold to Shri Atu Dutta on 26.12.2013. He has stated that this gold belonged to Shri Naresh Agarwalla of Dhanbad and Shri Naresh Agarwalla also in his statement dated 27.12.2013 has admitted that these gold bars Page 33 of 42 Appeal No(s).: C/76723-76725/2016-DB belonged to him. We observe that these 26 pieces of gold biscuit are bearing a foreign marking and hence, as per Section 123 of the Customs Act, the onus is on the person who claims ownership of the said gold. Shri Atu Dutta was not having any documents regarding legal procurement of the gold and he has not claimed ownership of the gold. Shri Naresh Agarwalla has claimed ownership of the gold vide his letter dated 21.02.2014.
16.4.1. In this regard, we observe that Shri Naresh Agarwalla was summoned seven times to appear before the DRI authorities, but he has not responded to such summons and not appeared.
However, vide his letter dated 21.02.2014, Shri Naresh Agarwalla claims ownership of the 26 pieces of gold biscuits seized from Shri Atu Dutta. It is seen that he (Shri Naresh Agarwalla) has not produced any document in this regard evidencing the legal procurement of the gold in question. As gold is a notified item under Section 123 of the Customs Act, the onus to prove that the gold is not of smuggled in nature is on the person who claims the ownership of the gold (i.e. Shri Naresh Agarwalla in this case). However, we find that he could not produce any valid documents for the legal purchase of the said gold. Therefore, we hold that Shri Naresh Agarwalla has not discharged his legal obligation cast upon him for claiming ownership of the gold in question. Consequently, we hold that the 26 pieces of gold bars/biscuits with foreign marking cannot be released to Shri Naresh Agarwalla in the absence of any documents evidencing licit purchase of the same.
Page 34 of 42Appeal No(s).: C/76723-76725/2016-DB 16.4.2. It is also observed that even Shri Atu Dutta, from whose possession the said gold was seized, was not having any valid documents.
16.4.3. In such circumstances, we hold that the 26 pieces of gold have been rightly confiscated by the ld. Adjudicating authority in the impugned order. Accordingly, confiscation of the 26 pieces of gold biscuits is upheld.
16.5. Question Nos. (2) and (3) framed at paragraph of this Order (supra) stands answered accordingly.
Question No. (4): "Whether the Indian Currency seized in this case are liable for confiscation?"
17. Regarding Seizure of Indian Currency to the tune of Rs.1,88,00,800/- [Rupees One Crore Eighty Eight Lakh Eight Hundred Only], we find that the said currency was seized from the Office of Shri Pran Gopal Saha on 28.12.2013. Shri Pran Gopal Saha has been alleged to be one of the beneficiaries of the earnings accumulated from the smuggling of gold into India by the appellants and thus, the Department alleges that the Indian Currency in question are the sale proceeds of the said smuggled gold.
17.1. We find that with regard to the Indian Currency seized from Shri Pran Gopal Saha (one of the appellants herein), it has been submitted by the appellant that the money, which was recovered from his vault, was given to him by Shri Naresh Agarwalla and the money recovered from the vault of "Godrej" make installed in his office cum store room on the 6th Floor of his shop at P-16, Kalakar Street, Om Towers, Kolkata-07 (Shri Pran Gopal Saha's premises) is actually belonging to Shri Naresh Agarwalla. He has stated that Shri Naresh Agarwal used to send him Page 35 of 42 Appeal No(s).: C/76723-76725/2016-DB money in advance through his employee to his office, which he used to keep at his Vault at the 6th Floor of his office.We also find that Shri Naresh Agarwalla has submitted evidence to claim the ownership of the currency in question. We find that there is no evidence available on record that the currency has been generated on account of sale proceedings of the smuggled gold.
17.2. On the other hand, Shri Naresh Agarwal has produced documentary evidence to the effect that the currency in possession of Shri Pran Gopal Saha belonged to him and he had only given it for keeping it in the said vault of Shri Pran Gopal Saha. Thus, we hold that the confiscation of the Indian Currency of Rs.1,88,00,800/- on the belief that they are sale proceedings of smuggled gold, is not sustainable. Accordingly, we hold that the said currency cannot be confiscated and accordingly, we set aside the confiscation of the Indian Currency of Rs.1,88,00,800/-. Question No. (4) at paragraph 14.1 (supra) stands answered accordingly.
Question No. (5): "Whether penalties imposed on the appellants under Section 112 of the Customs Act, 1962 and Section 135 of the Customs Act, 1962 are sustainable in this case?"
18. We observe that penalties have been imposed on the appellants under sections 112 of the Customs Act, 1962. For the sake of ready reference, the provisions of the said section are reproduced below:
Page 36 of 42Appeal No(s).: C/76723-76725/2016-DB Section 112 Penalty for improper importation of goods, etc. Any person, -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, -
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding the value of the goods or five thousand rupees, whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions Page 37 of 42 Appeal No(s).: C/76723-76725/2016-DB of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher :
Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater;
(iv) in the case of goods falling both under clauses (i) and (iii), Page 38 of 42 Appeal No(s).: C/76723-76725/2016-DB to a penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest;
(v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest.
18.1. The essential ingredients for invoking the provisions of Section 112 are as under:
a) act or omission on part of person which rendered the goods liable to confiscation under section 111 ibid.
b) knowledge or
c) reason to belief on the part of the person
who is in any way concerned in any goods which he knows or has reason to believe are liable to confiscation under section 111 ibid.
18.2. Regarding the penalty imposed on the appellants, we observe that the charges levelled against the appellants in respect of smuggling of gold jewellery and gold bar weighing 1 kg. have not been sustained and hence, no penalty is imposable on account of the alleged attempt to smuggled the gold Page 39 of 42 Appeal No(s).: C/76723-76725/2016-DB ornaments and gold bar weighing 1 kg. Similar, the seizure of Indian currency amounting to Rs.1,88,00,800/- has also been found to be not liable for confiscation and thus, no penalty is imposable on the appellants on account of seizure of the said Indian currency also.
18.2.1. We also find that penalty has also been imposed on the appellants on the basis of the alleged offences committed by them in the past. However, we find that there is no evidence brought on record to indicate that they were involved in offences in the past. Accordingly, no penalty is imposable on the appellant for the past offences.
18.3. With regard to the confiscation of the 26 pieces of gold biscuits seized from the possession of Shri Atu Dutta, it has been established that Shri Atu Dutta did not have any valid document(s) for legal procurement of the 26 pieces of gold biscuits. Therefore, as he was found to be in possession of the said gold of foreign origin without any valid documents, we hold that he is liable for penalty under Section 112 of the Customs Act. However, it is observed that Shri Atu Dutta is only a carrier of the said gold and not the ultimate beneficiary. Therefore, we are of the view that the penalty imposed on him must commensurate with the offence committed by him. Accordingly, considering the role played by him, the penalty imposed on Shri Atu Dutta is reduced from Rs.50,00,000/- (Rupees Fifty Lakhs only) to Rs.2,00,000/- (Rupees Two Lakhs only), under Section 112 of the Customs Act, 1962.
18.4. We find that in the impugned order, Shri Pran Gopal Saha, Proprietor of M/s. N.P. Jewellery House Pvt. Ltd., has been penalized on account of seizure of the Indian currency of Rs.1,88,00,800/- from his Page 40 of 42 Appeal No(s).: C/76723-76725/2016-DB possession. The said currency was considered as sale proceeds of the smuggled gold. However, it has been proved that there is no evidence available to establish that the Indian currency in question was the sale proceeds of the seized gold and hence, it has been held that the said Indian currency is not liable for confiscation. In these circumstances, we hold that no penalty is imposable on Shri Pran Gopal Saha and accordingly, the penalty imposed on him is set aside.
18.5. Coming to the penalty imposed on Shri Naresh Kumar Agarwalla, we observe that he had claimed ownership of the 26 pieces of gold biscuits. However, he could not produce any documents evidencing ownership of the same and therefore, his claim of ownership of the said gold was not considered. Further, admittedly, Shri Atu Dutta, the person from whose possession the said gold had been seized, stated Shri Naresh Kumar Agarwalla to be the owner of the said 26 pieces of gold biscuits. It is also observed by us that the 26 pieces of gold biscuits are bearing a foreign marking and hence, as per Section 123 of the Customs Act, the onus is on the person who claims ownership of the said gold. Therefore, considering the facts and circumstances of the case, we are of the considered opinion that Shri Naresh Kumar Agarwalla is liable to be penalized under Section 112 of the Customs Act, 1962. However, the penalty imposed on Shri Naresh Kumar Agarwalla of Rs.1,00,00,000/- (Rupees One Crore only) is found to be on the higher side and therefore, we reduce the penalty imposed on him to Rs.5,00,000/- (Rupees Five Lakhs only) under Section 112 of the Act.
Page 41 of 42Appeal No(s).: C/76723-76725/2016-DB
19. In view of the above discussions, we pass the following order: -
(i) We hold that the officers of DRI had 'reason to believe' that the gold biscuits/bars were smuggled in nature and the gold ornaments were made from smuggled gold. However, the appellants have discharged their liability cast under Section 123 of the Act in respect of the gold ornaments. Accordingly, we hold that the gold ornaments seized are not liable for confiscation.
(ii) The appellants have discharged their burden of proof cast upon them regarding licit purchase of the gold as required under Section 123 of the Customs Act in respect of the 1 kg.
gold bar and hence we hold that the same is not liable for confiscation.
(iii) We hold that the 26 pieces of gold have been rightly confiscated by the ld. adjudicating authority in the impugned order as no documents were produced for its licit purchase. Accordingly, confiscation of the 26 pieces of gold biscuits is upheld.
(iv) The Indian Currency of Rs.1,88,00,800/-
seized in this case are not liable for confiscation. Accordingly, we order for the release of the same.
(v)The penalties imposed on Shri Naresh Kumar Agarwalla and Shri Atu Dutta, under Section 112 of the Customs Act, 1962, stand reduced to Rs.5,00,000/- and Rs.2,00,000/-
respectively. The penalty imposed on Shri Pran Gopal Saha under Section 112 of the Act is set aside.
Page 42 of 42Appeal No(s).: C/76723-76725/2016-DB
20. In these terms, the appeals are disposed of.
(Order pronounced in the open court on 07.03.2025) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd