ORDER
M.V. Ravindran, Member (J)
1. All these appeals are directed against order-in-original dated 09/03/2001 vide which the adjudicating authority absolutely confiscated the gold biscuits and also imposed penalties on all the appellants.
2. The appeals filed are as under:
i. Appeal No. C/676/01 is filed by Shri Vijay D. Patel proprietor of Paras bullions claiming ownership of 200 gold biscuits with the mark of “CREDIT SUISSE” against order of absolute confiscation and imposition of penalty under Section 112 of the Customs Act, 1962.
ii. Appeal No. C/654/01 is filed by Shri Shailesh D. Patel proprietor of S.K. Jwellers claiming ownership of 282 gold biscuits with the mark of ‘Argor Brand’, 9 gold biscuits with the mark of ‘Johnson Mathew’ and 9 gold biscuits with the mark of ‘PAMP’ (totalling 300 gold biscuits), against the order of absolute confiscation and imposition of penalty under Section 112 of the Customs Act, 1962.
iii. Appeal No. C/649/01 is filed by Shri Jaswant K. Patel against the impost of penalty as a carrier of gold biscuits with foreign marks.
iv. Appeal No. C/651/01 is filed by Shri Bhikabhai Patel against the impost of penalty as a carrier of gold biscuits with foreign marks.
v. Appeal No. C/652/01 is filed by Shri Arvind K. Patel against impost of penalty as a carrier of gold biscuits with foreign marks.
vi. Appeal No. C/648/01 is filed by Smt. Rasilben H. Rathod against impost of penalty as carrier of gold biscuits with foreign marks.
vii. Appeal No. C/653/01 is filed by Shri J.D. Patel against impost of penalty as carrier of gold biscuits with foreign marks.
viii. Appeal No. C/650/01 is filed by Shri Devang A. Patel is against the impost of penalty as an abettor in preparing documents.
ix. Appeal No. C/655/01 is filed by Shailesh A. Patel is against impost of penalty as person involved in preparing documents to give legitimacy to the whole case.
3. The relevant facts that arise for consideration are that appellants at serial Nos. (i) to (vii) above were intercepted by the police officers on the night of 23.10.1999 and taken to the office of S.K. Jwellers for safety reasons and on a search it was found that they were carrying gold biscuits with foreign marks on their possession concealed on person, shoes and in bags. On being demanded, these appellants could not produce any documents regarding the licit possession of the gold biscuits. On a reasonable belief that these gold biscuits may be smuggled, the police authorities detained these appellants and Customs authorities were informed about the recovery of the foreign marked gold biscuits. The customs authorities arrived at the scene on 23/24.10.1999 and took over the investigation. The customs officers recorded various statements of the person from whose foreign marked gold biscuits were recovered. They also recorded statements of suppliers, accountants and others during the investigations. The customs authorities seized 500 nos of foreign marked gold biscuits on a belief that they were smuggled goods. A show cause notice was issued to the appellants directing them to show cause as to why:
The aforementioned Notices 1 to 12 above were directed to show cause to the Commissioner of Customs, Gujarat, Ahmedabad as to why:
(i) 500 foreign marked gold T.T. bars totally weighing 58.320 kgs valued at Rs. 2,70,00,000/- seized under Panchnama dated 28/29.10.99 should not be confiscated under the provisions of Section 111(a), (b), (d), (o) of the Customs Act, 1962.
(ii) Duty at Tariff rate should be charged from them under Section 28 of the Customs, act, 1962.
(iii) Interest should not be charged from them under provisions of Section 28AB of the Customs Act, 1962
(iv) Penalty should not be imposed on each of them under the provisions of Section 112(a)/112(b), 114(a) of the Customs Act, 1962.
(v) The articles shown against each in Annexure D. to the SCN used for concealing the foreign marked gold T.T. bars should not be confiscated under Section 118 of the Customs Act, 1962.
3.1 The appellants who claimed the ownership of the seized gold biscuits resisted the show cause notice on the ground that they had purchased these gold biscuits from suppliers and there were bills to that effect, they also resisted the show cause notice on the ground that the seizure of gold biscuits were not effected by the customs but by the police authorities and hence the burden of proof shifted to the customs to prove that these gold biscuits were smuggled. The other appellants resisted the show cause notice for imposition of penalty on the point that they were employees/relatives and friends of the owners of the gold biscuits and were helping to safely carry the gold biscuits. The learned adjudicating authority did not accept the contentions of the appellants and vide his order-in-original absolutely confiscated the gold, imposed penalties on all the appellants on the findings that the appellants have not discharged the burden of proof as provided under Section 123 of the Customs Act, 1962 and the documents relied upon by the appellants were prepared subsequently on the direction of the appellants. In the earlier round of litigation tribunal held in favor of the appellants. The Hon’ble Supreme Court set aside that order of the Tribunal and remanded the matters to consider the issue afresh with direction to deal with the findings of the adjudicating authority as regards transportation methods, trade practices, Bills/Challan and linking etc by appreciating the same, hence these appeals are heard and disposed off.
4. When these matters were called out learned senior counsel submitted that the appellants have moved a miscellaneous application for bringing on record evidences as related to business practice of issuance of bills and carrying of gold. It is his submission that, these documents are filed in pursuance of the direction of the Hon’ble Supreme Court. Learned SDR vehemently opposes the application on the ground that these evidences were not brought before lower authority and hence should not be allowed to bring on record. After considering the arguments of both sides we are of the view that the said miscellaneous application is to be allowed and we do so.
5. The learned senior counsel appearing on behalf of all the appellants takes us through the entire records and submits that the adjudicating authority has erred in coming to the conclusion that the appellants have not proved the licit possession of the gold biscuits. He submits that all the appellants were detained and were under the direct physical control of the police authorities and the customs authorities from 23/10/1999 to 28/10/1999. It is his submission that during this period the appellants were kept in separate rooms. He takes us to the statements recorded by the customs authorities and submits that the appellants, who claimed ownership of 500 gold biscuits, had on the day of interception itself informed the authorities the purchases made by them and also gave name and addresses. It is the submission that the seller of gold biscuits had confirmed the sale of the gold biscuits to the appellants. It is the submission that the appellants had produced the bills of purchases to the authorities at the first instant when the authorities released them. It is the submission that the mode of carrying the gold in shoes is a practice in the trade for the safe carriage of gold biscuits. It was also submitted that licit possession of 200 gold biscuits by appellant in Appeal No. C/676/01 is proved by the corroborative statement and records of the supplier and the appellant also corroborated the licit possession and sale of the 300 gold biscuits. It is the submission that the purchases and sale of gold biscuits by the appellants has been recorded by them in their accounts and accepted by the authorities. He relies upon the order of the Commissioner (Appeals), Income Tax. It is the submission that the I.T. authorities sought to disallow the value of 300 gold biscuits from the purchases of the appellant in appeal No. C/654/01 on the basis of the seizure and the evidence of the Customs authorities in this case but the Commissioner (Appeals), Income Tax has come to the conclusion that appellant M/s S.K. Jwellers has licitly purchased 300 gold biscuits from M/s Para Bullions. It is the submission that, if that is so, then the one governmental authority holds that these 300 gold biscuits were legally purchased while another government authority hold it is not so. It is the submission that much relied upon evidence as regards of the preparation of the bills to S.K. Jwellers is erroneous, as the accountant of the S.K. Jwellers had confirmed that bill was received on 23/10/1999. It is the submission that the revenue has not discharged the burden that the seized and later on confiscated 500 gold biscuits were smuggled one. It was also submitted that in the gold trade the bills are raised generally after three to four days as is evidenced from the documents produced by them now. It was submitted that the passengers coming from abroad carry gold biscuits in shoes and declare the same to be in shoes. It was the submission that gold biscuits were not concealed in any cavity in the shoe but they were in the shoes only. It was further submitted that the trade practice of carrying or transporting gold in shoes is for safety purpose. It is submitted that in the current scenario transportation of small quantity of gold through professional Transportation Agency is very expensive due to which, the viability of running a bullion trading become barely profitable due to the reason that the profit margin is too meager. It is the submissions, that given the social and economic circumstances, carrying gold openly combines the risk of losing the same and will also endanger the life of the person carrying the same, hence the bullion traders adopt different methods of carrying gold in a concealed manner. The learned Senior Counsel relies upon the document i.e. Customs Baggage Receipt DDR No. 0296644 dated 1.3.2007, issued by customs authorities at Mumbai Sahar International Airport, wherein a passenger imported gold, concealing the same in his shoes for safety reason. He draws our attention to the remarks “carrying in his shoes for safety reason” on the baggage receipt. This baggage receipt, according to him was in respect of a inbound passenger who carried gold in his shoes for safety purposes. It was also submitted that even in the current case the customs authorities have accepted the mode of transporting gold in shoes, by releasing the carrier who carried gold biscuits in his shoes, when he produced bill covering the consignment. He submitted that the mode of carriage of gold in shoes is accepted by authorities and is a practice in the trade. It was also submitted that the gold biscuits were in fact seized by the police authorities first and then handed over to the customs authorities and hence the provisions Section 123 of Customs Act, 1962 does not apply to this case and it was for the revenue to produce evidence that the gold biscuits were smuggled.
6. The learned SDR on the other hand submits that the appellants have not made out any case for them. It was submitted that the appellants do not dispute the fact that the gold biscuits were concealed in the shoes. It was submitted that the appellants did not produce any documentary evidence at the time of interception to indicate that the gold biscuits were in licit possession of the appellants. It was submitted that the in the absence of any evidence the provisions of the Section 123 had to be applied and the appellants had to discharge the burden of proof as to licit possession of gold biscuits. It was submitted that it is unacceptable that such reputed bullion traders like M/s Paras Bullions and S.K. Jwellers were traveling without any documents. It was also submitted that it is on record that all the appellants have stated that they were proceeding towards Mumbai to dispose off these gold biscuits. It was submitted that the appellants had not given any plausible reason for carrying gold biscuits in shoes if these were licitly procured gold biscuits. It was submitted that the appellants subsequently antedated the bills in order to legitimize their activities. The learned SDR took us through the statements and emphasized that at no point of time the appellants could produce any documentary evidence to discharge the burden as envisaged under Section 123 of the Customs Act, 1962. It was submitted that the person who prepared the bills had categorically confessed that the bills were prepared on 24.10.1999 and not on 23.10.1999 as is sought to be impressed. It was also his submission that the sale and purchases of the gold biscuits were not at all properly recorded, as there is commission and omission in the statements of the suppliers of gold biscuits. It was submitted that the decision of the Income Tax authorities might not be of any use to the appellants to claim the legitimacy, as the provisions are different than the provisions of Customs Act. It is also his submissions that the bills which were produced by the appellant were of different date than the date of delivery.
7. We considered the submissions made in detail by both sides and perused records. The issue involved in this case is whether the 500 nos. seized gold biscuits with foreign marks were in licit possession of the appellants are not. The adjudicating authority has held that the appellants have not been able to prove the licit possession of the gold biscuits based on the evidences collected by the investigating officers. It is also held by the adjudicating authority that the appellants have not discharged the burden cast upon them by Section 123 of the Customs Act, 1962. It would be relevant to read the said section:
Section 123: Burden of proof in certain cases: (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be:
(a) in a case where such seizure is made from the possession of any person:
(i) on the person from whose possession the goods were seized; and
(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person,
(b) in any other case, on the person, if any, who claims to be the owner of the goods seized.
(2) This section shall apply to gold, [and manufactures thereof,] watches and any other class of goods which the Central Government may by notification in the Official Gazette specify
It can be noticed from the above-reproduced section that the burden of proof that the seized goods are not smuggled, lies on the person who claims ownership of the said seized goods [Sub-section (1)(b)]. In the case before us two persons have claimed ownership of the seized 500 gold biscuits. In order to appreciate the evidence on records and to come to conclusion whether burden of proof is discharged by the appellants or not (claiming the ownership), we propose to take up the issue by splitting the appeals of the claimant’s individually.
7.1 We take up the issue of 200 gold biscuits with mark of ‘CREDIT SUISSE”. It is seen from records that Shri Vijay D. Patel proprietor of Paras Bullions (in Appeal No. C/676/01) has claimed ownership of these gold biscuits. The adjudicating authority in the impugned order has held that the appellant has not discharged the burden of proof by coming to the following findings:
It may be mentioned here that Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion has stated in his statement recorded under Section 108 of the Customs Act, 1962 on 24.10.99 that he had purchased 200 pieces of foreign marked gold bars “CREDIT SUISEE” mark from M/s. Riddisiddhi Bullion Dineshbhai, authorized person of M/s. Riddisiddhi Bullions had given him a delivery of total 200 gold biscuits of Foreign Mark at about 19.00 hrs of 23.10.99 at their premises at Manekchowk; and that Shri Dineshbhai had given him zerox copy of one delivery challan dated 23.10.99. He has also confirmed that no document other than the above said delivery challan was provided to him by M/s. Riddisiddhi Bullion Ltd. The assertion of the said Shri Vijay D. Patel in regard to the aforementioned 200 pieces of Foreign Marked gold bars of “CREDIT SUISSE” mark regarding his purchase of 200 pieces of Foreign Marked gold bars of “CREDIT SUISSE” mark from M/s. Riddisiddhi Bullions Ltd. on 23.10.99 are not true as is revealed from the following evidence:
Shri Dinesh Chagganlal Jain, authorized signatory of M/s. Riddisiddhi Bullions Ltd., Manekchowk, Ahmedabad in his statement dated 24.10.99 has stated that he had delivered 350 imported gold biscuits/foreign to the Proprietor of M/s. Paras Bullion on 23.10.99 at 16.30 hrs. from their firm. He has not mentioned whether the same were of “CREDIT SUISSE” mark as deposed by Shri Vijay D. Patel. Further, although, as categorically confirmed by Shri Vijay D. Patel in his aforesaid statement dt. 24.10.99, no document other than the above delivery challan was provided to him by M/s. Riddisiddhi Buyllion Ltd., the duplicate copy of bill No. 294/GL/99/2000 dated 23.10.99 is available on record, but there is no mention in regard to the markings of brand name of the gold biscuits covered by the aforesaid bill dated 23.10.99 issued by M/s. Riddisiddhi Bullions Ltd. in favour of M/s. Paras Bullion, Ahmedabad.
The adjudicating authority has concluded that the appellant had has not correctly explained the licit possession of the 200 nos gold biscuits. It seen from records that the authorities had recorded the statement of Shri Vijay D. Patel on 24.10.1999, when he was intercepted and taken and kept in a separate room. In his statement recorded under Section 108 of the Customs Act, 1962, Shri Vijay D. Patel had stated as under:
On being asked, I state that I had purchased two hundred bullion pieces of F.M. gold biscuits of Credit Suisse mark from M/s Riddhi Siddhi Bullion, Manekchowk, Opp Girirsh Cold drinks, Ahmedabad on 23.10.1999. Shri Dinesh Bhai, Authorised person of M/S Riddhi Siddhi Bullion had given me the delivery of total two hundred gold biscuits of foreign mark ar about 1900 hours of 23.10.1999 at their premises at Manekchowk. At the time of taking delivery shri Dineshbhai had given me Xerox copy of one delivery challan dated 23.10.1999.
It can be noticed that the appellant Shri Vijay D. Patel on the date of interception had categorically stated that he had purchased these foreign marked gold biscuits from M/s Riddhi Siddhi Bullion Ltd on 23.10.1999 and had taken the delivery on that date itself. The authorities on recording the statement of Shri Vijay D. Patel confronted Shri Dinesh Chaganlal Jain authorized person of Riddhi Siddhi Bullion. The officers summoned Shri Dinesh Chaganlal Jain to the office of the Superintendent, Customs (Preventive), H.Q. Ahmedabad on 24.10.1999 itself and recorded his statement independently under Section 108 of the Customs Act, 1962. The relevant portion of the statement of Dinesh Chganlal Jain as regards the sale of 200 biscuits of foreign mark gold biscuits is read:
On being asked in respect of one document from the seized file mentioned at Annexure A at serial No. 5, page No. 591, bill No. 294/G.L./9/2000 dated 23.10.1999 being bill in duplicate in the name of M/S Paras Bullion, I state that the 350 nos of imported gold biscuits mentioned in the said bill weighing 40824.00grams and valued at Rs. 1,91,80,000/-, I state that the said 350 nos of imported gold biscuits, have been delivered to Shri Vijay Bhai, owner of M/s Paras Bullion on 23.10.1999 at 16.30 hrs
It is seen from the records and the statement that Shri Dinesh Chaganlal Jain of M/s Riddhi Siddhi Bullion Ltd., when recorded independently, at the office of the Superintendent of the Customs in his statement under Section 108 of the Customs Act, 1962, stated categorically that their company had sold 350 nos of gold biscuits of foreign mark under bill No. 294/G.L./9/200 dated 23.10.1999 to the current appellant i.e. Vijay D. Patel. The said statement of Shri Dinesh Chaganlal Jain also further gives detailed account how they had procured these 350 imported gold biscuits from ABM Amro Bank and another seller M/s Anjali Exim Pvt. Ltd. It is to be noted here that the version of appellant Shri Vijay D. Patel that he has licit possession of the said 200 imported gold biscuits by purchase from Riddhi Siddhi bullion Ltd has been corroborated by the authorized person of Riddhi Siddhi Bullion Ltd. It is also to be noted that Shri Dinesh Chaganlal Jain had confirmed the sale 350 nos imported gold biscuits and the duplicate copy of said challan No. 294/G.L./9/2000 dated 23.10.1999 was found in the records seized at the end of M/s Riddhi Siddhi Bullion Ltd. The explanation of the licit possession of the gold biscuits with foreign marking in the hands of M/s Riddhi Siddhi Bullion Ltd., is accepted by the revenue authorities from the fact that the investigating authorities did not deem it necessary to record statements of the sellers of foreign marked gold biscuits to M/s Riddhi Siddhi Bullion Ltd., despite being informed about the source of purchase by the authorized person of M/s Riddhi Siddhi Bullion Ltd. If the foreign marked gold biscuits at the hands of Riddhi Siddhi Bullion Ltd., are not smuggled goods, now it cannot be said that the same are smuggled goods at the hands of the current appellant, on the face of the corroborated evidence that appellant had licitly purchased the same from M/s Riddhi Siddhi Bullion Ltd. Appellants claim of licit possession has been held as not proved by the adjudicating authority on one another finding i.e. that there were no mention as regards the marks of gold biscuits on bill No. 294/G.L./9/2000 dated 23.10.1999. On a specific query from the bench, as to whether officers confronted the appellant and seller about the absence of marks on the bill No. 294/G.L./9/2000 dated 23.10.1999 and there being no co-relation, learned SDR submitted that the statements of the appellant and authorized person of the seller do not contain any question or clarification being sought on this point. The revenue has not brought on record during the course of recording the statements and investigation that there was a trade practice to mention the marks of gold biscuits on the documents, in the absence of any evidence to that effect, revenue cannot now turn around and say that there is no co-relation between the seized gold biscuits and the purchase bill due to absence of mention of marks on the purchase bill. The emphasis of the adjudicating authority that the challan of Riddhi siddhi Bullions Ltd did not contain brand name or marks to co-relate the sale of the seized gold biscuits is without any legal backing. It requires to be mentioned here that after repeal of Gold Control Act no elaborate records are required to be maintained, except the normal records to show the sale and purchase of the goods. There seems to be no Rule or Regulation which mandates the requirement of maintaining records in respect of purchases of gold, as is required in the case of Notified Goods (Prevention of Illegal Import) Rules, 1969 read with Section 11C, 11D, 11E, 11F and 11G of the Customs Act, 1962 or such rules as is in Central Excise Act, 1944, which mandates the requirement of maintenance of records in a specific manner. These views are fortified by the judgment and order of the Division Bench of this Tribunal in the case of S.K. Chains v. CC (Preventive), Mumbai as reported at wherein the tribunal held:
Admission of purchase of foreign marked gold biscuits from open market without receipt not indicates that gold under seizure is illegally imported, there being no Central Act in existence requiring maintenance of any documents indicating such receipts.
It is seen that in an identical case division bench of this tribunal in the case of Girdhari Dubey v. Commissioner of Customs (Prev.) Kolkata as reported at held that “If revenue wants that gold dealers of foreign marked gold in India should indicate the brand names with respect to each brand then foreign marked gold should have been declared as one of items under Chapter IVA of Customs Act, 1962. We find that no such notification for placing foreign marked gold exists.
This issue has been settled (as the revenue has not filed any appeal against this judgment) and there is no requirement under the law to mention the brand or marks of the foreign marked gold on the sale documents.
7.2 It is seen from records that Shri Chaganlal Jain while deposing before the authorities under Section 108 of the Customs Act, 1962, clearly indicated that the gold biscuits with CREDIT SUISSE marks and with other marks were purchased by Riddhi Siddhi Bullion Ltd. from ABM-Amro bank and Anjali Exim Pvt. Ltd., giving the detailed account as maintained by Riddhi Siddhi Bullion Pvt. Ltd. It transpires from the records that ABM-Amro bank had imported 1000 gold biscuits with CREDIT SUISSE marks vide Air way bill No. 085-1490-2573 dated 20th September 1999 and out this imports sold 250 biscuits to M/s Riddhi Siddhi Bullion Ltd. and this was informed by the bank to the Assistant commissioner of Customs, Ahmedabad, vide their letter dated 12th November 1999 and it was also informed by the bank to customs authorities that there 250 nos. gold biscuits were sold vide bill dated 25th October 1999. Even at this stage also the investigating officers did not consider it fit to call the concerned bank officials and confront them nor any statement was recorded. It is seen from the records that Shri Dinesh Chaganlal Jain, authorized signatory of Riddhi Siddhi Bullion Ltd., in his statement before authorities on 24.10.1999 gave the time, date place and quantity of the gold biscuits purchased from ABM-Amro bank, which is not questioned by the revenue till date. It is further seen from the statement that the authorized signatory had deposed that the 250 gold biscuits of foreign marks were delivered to M/s Riddhi Siddhi Bullion Ltd by delivery order dated 23.10.1999 and M/s ABM-Amro has issued a regular Invoice/Bill to M/s Riddhi Siddhi Bullion Ltd, on 25.10.1999, a fact, which is not disputed by the revenue by adducing contrary evidence. This evidence in form of statement of the seller of the gold biscuits to current appellant is a primary evidence which indicates that the 200 nos seized gold biscuits with foreign marks were not of smuggled nature.
7.3 The evidences produced in the nature of primary corroboration as to the non-smuggled nature of the 200 nos seized gold biscuits with foreign mark of CREDIT SUISSE and inability of revenue to show from records, the smuggled nature of the these seized gold biscuits, to our mind, appellant Shri Vijay D. Patel who is claiming the ownership of these gold biscuits with foreign marks has discharged the burden cast on him under Section 123 of the Customs Act, 1962 to the effect that the 200 nos seized gold biscuits with CREDIT SUISSE mark were not smuggled and were procured by and were in his licit possession by a legitimate transaction of sale and purchase.
8. Next we take up the issue of 300 nos of seized Gold Biscuits with foreign marks (282 nos of Argor Brand, 9 nos of Johson Mathew brand, 9 nos of PAMP brand) the ownership of which is claimed by Shri Shailesh R. Patel of S.K. Jwellers (in Appeal No. C/654/01).
8.1 The adjudicating authority has come to the conclusion that the appellant has not proved the licit possession of these seized gold biscuits by following findings:
I also find that during the course of investigation, the residential premises of Shri Satishbhai Patel, Accountant of M/s. S.K. Jewellers, Ahmedabad, situated at Patel Vas, At & Post Mahijada, Taluka Daskroi, Dist. Ahmedabad, were searched and a file containing pages 1 to 115 together with 3 sales invoices books of M/s. S.K. Jewellers, were recovered and seized therefrom. A bill No. 11931 dated 23.10.99 shown to have been issued to M/s. S.K. Jewellers, A-4, Jaldarshan, Ashram Road, Ahmedabad, by M/s. Paras Bullion, Ahmedabad, is at page No. 89 of the said file at Sr. No. 2 of the Annexure A to the panchnama dated 25.10.99 drawn at the residence of the said Shri Satishbhai Patel. It would be worth mentioning here that Shri Devang A. Patel has in his statement dated 6.11.99 stated that on 23.10.99 he had handed over a bill in favcou of M/s. S.K. Jewellers by Paras Bullion to Shri Satishbhai, Accountant of M/s. S.K. Jewellers and the same was handed over to him by Shri Ashwinbhai Patel. It is seen that the serial number of the aforesaid bill is not printed or pre-printed. It is interesting to note here that the writer of the said bill No. 11931 dated 23.10.99, i.e. Shri Ashwinbhai Ishwarlal Patel, residing at 14, Shubhan Sukan Apptt., Vithalbhai Patel Colony, Naranpura, “Ahmedabad, shown to have been issued by M/s. Paras Bullion to M/s. Patel Bullion has categorically stated in his statement recorded under Section 108 of Customs Act, 1962 on 6.12.99 that his maternal nephew Shri Devang A. Patel who is a friend of Shri Vijaybhai D. Patel had phoned him on 24.10.99 and informed him about the recovery or gold biscuits by Police and on being called by him he had gone to the residence of Shri Vijay D. Patel on 24.10.99 and as directed by him i.e. Shri Devang A. Patel, he had prepared the bill No. 11931 dated 23.10.99 on 24.10.99. The above facts have been corroborated by Shri Devang A. Patel himself in his statement dt. 7.12.99.
Both S/Shri Vijay D. Patel, Proprietor of M/s. Paras Bullion and Shailesh R. Patel have admitted to have not issued/received any bill, voucher or delivery challan in regard to the aforementioned 300 pieces of foreign marked gold bars covered by the said bill No. 11931 dated 23.10.99. Shri Shailesh R. Patel has not made payment either in cash or cheque for the said 300 pieces of foreign marked gold bars. The above facts are admitted by both S/Shri Vijay D. patel and Shailesh R. Patel in their statements dated 24.10.99.
Further, no details regarding identity/brand of the said 300 gold bars are given in the said bill.
In the circumstances narrated hereinabove, there is no credibility of the bill No. 11931 dated 23.10.99. Also in absence of any mention of Brand or identification mark of the gold bars in the said bill, the seized foreign marked gold cannot be correlated with the same and hence the Bill No. 11931 dated 23.10.99 has no credibility at all and has to be rejected as an irrelevant and concocted document, having no evidentiary value in the Eyes of law
It can be seen from the above reproduced findings of the adjudicating authority, that he has held that the appellant has not given the proof of licit possession of the gold biscuits on two grounds, one that the document No. 11931 dated 23.10.1999 is not authentic and there were no marks of gold biscuits on the documents and hence the sale cannot be co-related and absolutely confiscated the said 300 gold biscuits.
In order to appreciate the legality of the absolute confiscation it is necessary to consider the evidence, which is as under.
Shri Shailesh R. Patel on 23/24.10.199 when intercepted by police officers deposed that he purchased these 300 nos of foreign marked gold biscuits from Shri Vijay D. Patel of Paras Bullions. The relevant portion of the statement reads as under:
On being further asked by you, I state that on 22/23.10.1999, I have purchased 300 FM TT bars of assorted marking from M/s Para Bullion for which he has not issued any bill nor I have made any payment towards purchase of 300 FM TT Bars.
It can be seen that, on the day of interception, appellant before the police and the Customs officers had categorically deposed that he had purchased these seized 300 nos gold biscuits from Paras Bullions though he could not produce any documents. It can be seen that the appellant at the first instance had clearly indicated that the purchases were legitimate and from a source whose name and address were given to the authorities. Shri Vijay D. Patel of Paras Bullions in his statement recorded on 24.10.1999 had clearly stated that he has sold 300 nos of gold biscuits with foreign marks to Shailesh R. Patel. In the very same statement Shri Vijay D. Patel had told the officers that he had purchased 454 nos of gold biscuits from K.L. Choksi and 570 nos of gold biscuits from other bullion dealers. It is seen from records that Shri Vijay D. Patel produced documents to show that M/s Paras Bullion had purchased these said gold biscuits with foreign marks for which bills were available. It is seen that M/s Paras bullions had purchased 454 nos of gold bars with foreign marks from M/s K.L. Choksi vide Bill No. 5936 dated 21.10.1999, 5981 dated 23.10.1999 (at page No. 11 of main paper book) and Bill No. 5960 dated 22.10.1999 (at page No. 13 of main paper book), and also different bills and purchased 570 nos. of gold biscuits with foreign marks from M/s Amrapali industries Ltd., (Bullion Division) vide bill No. 3983/99 dated 9.9.1999(at page No. 12 of the main paper book) and bill No. G/3135/99 dated 16.9.1999 (at page No. 14 of the main paper book). The investigating officers summoned Shri Nareshbhai Keshavlal Choksi the proprietor of M/s K.L. Choksi, on 24.10.1999 to verify the authenticity of deposition of Shri Vijay D. Patel and recorded his statement in their office under Section 108 of the Customs Act, 1962. Shri Nareshbahai K. Choksi had categorically stated that his firm M/s K.L. Choksi had sold 454 nos of gold biscuits with foreign marks to M/s Paras Bullions and also gave the bill nos under which these gold biscuits were sold. It is seen that the quantity of 454 nos of gold biscuits matches with the statement of the purchaser and sellers with the records as produced by the purchaser. It is also to be noticed that statement of Shri Nareshbhai K. Choksi was recorded independently on 24.10.1999 itself and adds to the authenticity of the claim of Shri Vijay D. Patel that he had licit possession of gold biscuits with foreign marks and sold the same to Shri Shailesh R. Patel. It is surprising to note that the investigating officers did not deem it appropriate to summon any person from Amrapali Industries Ltd., (Bullion Division) to check authenticity of the claim of Shri Vijay D. Patel that he had procured 570 gold bars from the said Amrapali Industries Ltd. This would indicate that revenue authorities have accepted that M/s Paras bullion had licit possession of the gold biscuits with foreign marks from Amrapali Industries Ltd., and also from M/s K.L. Choksi. If the 300 nos seized gold biscuits with foreign marks were not smuggled goods in the hands of M/s Paras Bullions, it would be incorrect to come to a conclusion that the same gold biscuits in the hands of appellant are smuggled.
8.2 The adjudicating authority has absolutely confiscated 300 nos gold biscuits on the ground that the documentary evidence in form of bill 11931 dated 23.10.1999 was not authentic on the ground that the said bill was prepared on 24.10.1999. To come to this conclusion the adjudicating authority has relied upon the statement dated 6.12.1999 of Ashwinbhai I. Patel who deposed that he had prepared the said bill No. 11931 dated 23.11.1999 on 24.10.1999 on direction of Shri Dewang Patel. It seen from records that the investigating officers conducted a search on 25.10.1999 at the residence of Shri Satish Amrutlal Patel, part time accountant of S.K. Jwellers and recovered a bill book and a file containing bills of purchases. The said Shri Satish A. Patel was summoned on 26.10.1999 to their office by the Customs Officers to record statement under Section 108 of the Customs Act, 1962. Shri Satish A. patel in his statement dated 26.10.1999, on being shown bill No. 11931 dated 23.10.1999 recovered from his residence issued in favour of S.K. Jwellers by Paras bullions stated that the said bill was given by Shri Dewang Patel at about 1930 hrs on 23.10.1999 near Shailesh Bhais’ residence and also stated that he does no know whether Shri Shailesh R. Patel was aware of the bill or not. The investigating authorities recorded statement of Shri Dewang Patel on 6.11.1999, who stated that he had himself handed over the bill No. 11931 dated 23.10.1999 to Shri Satish A. Patel, the part-time accountant of M/s S.K. Jwellers on 23.10.1999 itself. It is seen from records that investigating authorities after recording statement of Shri Ashwin I. Patel on 6.12.1999, recorded a further statement of Shri Dewang Patel on 7.12.1999 Shri Dewang Patel stated that Shri Ashwin I. Patel had prepared the bill No. 11931 dated 23.10.1999 for 300 gold biscuits and was delivered by him to part-time accountant on 23.10.1999 at 1930 hrs. It can be seen from the records that the part-time accountant in his statement recorded under Section 108 of the Customs Act, 1962 stated the said bill No. 11931 dated 23.10.1999 was received by him on 23.10.1999 at 1930 hrs itself, a fact which has been corroborated by Shri Dewang Patel in his statements dated 6.11.1999 and 7.12.1999 i.e. before and after the statement of Shri Ashwin I. Patel. It has to be seen whether the seized gold biscuits were imported in violation of the Customs Act, 1962 so as to make them liable for absolute confiscation. The adjudicating authority has failed to consider the fact that the seized gold biscuits were licitly imported in to India as has been proved from the chain of purchases and sale (already enumerated in this paragraph) and has relied only upon the statement of Ashwin I. Patel to come to conclusion that bill No. 11931 dated 23.10.1999 is not authentic while discarding the statements of two other persons who stated that the said bill No. 11931 was handed over and received on 23.10.1999 itself. We have already given elaborate reasons for not accepting the arguments of the SDR on the point that there was no mention of the brand/mark on the documents in paragraph No. 6.1 and the same reasoning will hold good in this issue also. The records of case indicate that there exists a overwhelming documentary evidence and statements recorded under Section 108 of the Customs Act, 1962, to indicate that the 300 nos gold biscuits with foreign marks are not smuggled goods and appellant has discharged the burden of proof cast upon him under Section 123 of the Customs Act, 1962 as to these gold biscuits were not of smuggled nature.
9. Learned SDR emphatically argued and stressed on behalf of the Revenue, that onus of goods being not of smuggled nature is on the appellant, in this case on plain reading of Section 123 of the Customs Act, 1962. On the question of onus, we find that the Constitution Bench of the Hon’ble Supreme Court of India in the case of Ambalal v. Union of India and Ors. as reported at 1983 E.L.T. 1321 (S.C.) have settled the law. Their Lordships held as under:
The decision in regard of items 1 to 5 turns purely on the question of onus. The Collector of Central Excise as well as the central Board of revenue held that the onus of proving the import of the goods lay on the appellant. There is no evidence adduced by the customs authorities to establish the offence of the appellant, namely, that the goods were smuggled into India after the raising of the customs barrier against Pakistan in March 1948. So too, on the part of the appellant, except his statement made at the time of seizure of the goods and also at the time of the inquiry that he brought them with him into India in 1947, no other acceptable evidence has been adduced. In the circumstances, the question of onus of proof becomes very important and the decision turns upon the question on whom the burden of proof lies.
This Court has held that a customs officer is not a judicial tribunal and that a proceeding before him is not a prosecution. But it cannot be denied that the relevant provisions of the Sea Customs Act and the land Customs Act are penal in character. The appropriate customs authority is empowered to make an inquiry in respect of an offence alleged to have been committed by a person under the said Acts, summon and examine witnesses, decide whether an offence is committed, make an order of confiscation of the goods in respect of which the offence is committed, make an order of confiscation of the goods in respect of which the offence is committed and imose penalty on the person concerned, see Sections 168 and 171A of the Sea Customs Act and Sections 5 and 7 of the Land Customs Act. To such a situation, though the provisions of the Code of Criminal Procedure or the Evidence Act may not apply except in so far as they are statutorily made applicable, the fundamental principles of criminal jurisprudence and of natural justice must necessarily apply. If so, the burden of proof is on the customs authorities and they have to bring home the guilt to the person alleged to have committed a particular offence under the said Acts by adducing satisfactory evidence. In the present case no such evidence is forthcoming; indeed there is no title of evidence to prove the case of the customs authorities.
(Emphasis Supplied)
The above said observation of their Lordships squarely covers the issue before us, in as much, that the appellants have clearly brought on record that they were in licit possession of the seized gold biscuits and said gold biscuits were not of smuggled nature by documentary evidences corroborated by statements of suppliers, independently, that also, when the appellants were in detention with authorities. It is seen from records and is undisputed that Revenue has not adduced any evidence, in any form that the seized gold biscuits were of smuggled nature.
9.1 Further it transpires from records that the appellant M/s. Paras Bullion is not one of those fly by night operator. It is seen from records that the bullion trading by the firm during the said year is approximately to the tune of Rs. 972.47 Crores. The stock registers produced indicate that they were regularly trading in large number of gold biscuits, and there is no rebuttal of these stock register by the adjudicating authority. This would indicate that M/s. Paras Bullion is a regular dealer in gold bullion and is maintaining records. It is also to be noted here that Income Tax authorities on the same set of evidence (based upon the information shared by customs with Income Tax Department) concluded that the transactions of purchases and sales were genuine, on the basis of documentary evidences. If that be so, then the transactions which are genuine and legal to one revenue department cannot be said being illegal for another revenue department, both working under the same Ministry.
9.2 It was argued extensively on behalf of the Revenue that appellants had not produced any evidence to the effect that the seized gold biscuits were in their licit possession when intercepted and subsequent production of document will be of no consequence. This proposition and argument is not well founded nor does have any legal backing due to two reasons. Firstly, a plain reading of Section 123 of the Customs Act, 1962 does not indicate that, it has to be proved by the person on the spot, that the goods are not of smuggled nature. Secondly, it is now settled law, that provisions of Section 123 of the Customs Act, 1962 are of procedural nature. If the provisions of Section 123 are of procedural nature, then it is for the person who claims ownership of the goods, to produce evidence at any given stage of the proceedings. Three Judges Bench of the Hon’ble Supreme Court of India in the Balumal Jamnadas Batra v. State of Maharashtra as reported at 1983 E.L.T. 1558 (S.C.) has held as under:
It is true that lighters and flints were notified as provided in Section 123(2) in the Official Gazette of 26.8.1967. Nevertheless, as the provisions of Section 123(1) of the Act only lay down a procedural rule, they could be applied when the case came up for trial before the Presidency Magistrate who actually decided it on 15.7.1969. Indeed, the complaint itself was filed on 30.10.1968. It is immaterial that the appellant was found in possession of the goods on 21.4.1967.
(Emphasis Supplied)
In the case before us we find that the appellants when intercepted with seized gold biscuits had categorically stated the source of supply/purchase and followed it up with documentary evidence at the time of adjudication. We observe that investigating officer summoned and recorded the statement of suppliers and accepted their version that seized gold biscuits were imported into India legally. If that be so, then the production of documentary evidence by the appellants at the time of adjudication, more so, when the suppliers have corroborated the sale, will support their case. Hence respectfully following the ratio of judgment of Hon’ble Supreme Court in the case of Balumal Jamnadas Batra (Supra) we hold that the documentary evidence of licit possession produced subsequently are to be considered as evidence in support of appellant’s claim. In the case before us, the documents were produced and corroborated, hence it has to be held that seized gold biscuits were not of smuggled nature.
10. We would like further record that a lot was argued by SDR that the Bills produced by the appellants were of not the same date. The trade practices in the bullion market seem to indicate otherwise. The documents in the miscellaneous application allowed by us, show that even today the nationalized banks, for the sale of foreign marked gold biscuits, issue the bills for the sales affected, after two to three days. If the nationalized banks are following the said procedure, than it has to be held that just because the invoices are of subsequent date it would not matter, as long as the burden of proof, that the goods are not smuggled, is discharged. As regards the mode of transportation of the gold biscuits in shoes, we notice that it may look odd, and it may raise a suspicion and nothing more. We find that the mode of transportation of valuables in a covert manner has been accepted as a general practice. We may refer to the decision Hon’ble High Court of Bombay in the case of R.R. Kabra v. State are reported at 2000 (126) E.L.T. 415 (Bom.) in that case a person was intercepted while carrying gold biscuits concealed in underwear. Their Lordships observed as under:
Mr. Bhonsale, however, relied upon the circumstances that these slabs were concealed in three different packets that were kept in the inside pocket of the under-wear of the accused and that, as stated by constable Yeshwant Maroti, the accused appeared to be frightened when he was accosted by them. But in my opinion, these circumstances taken either singly or cumulatively are insufficient to raise any such presumption in favour of the prosecution. The fact that the accused carried these slabs in three different packets by keeping them in the inside pocket of the underwear can hardly be said to be in any way unusual. Even an innocent person would carry valuable things in this manner or take care to keep them as secure as possible, especially in Bombay where pickpockets are known for their dexterity.
(Emphasis Supplied)
It seems that the Customs department itself accepts the mode of transportation of gold biscuits in shoes, which is evident from the remarks on the Baggage receipt No. 0296644 dated 1.3.2007, which is endorsed by the Customs officials as produced along with the miscellaneous application.
11. We had asked the learned DR, whether the investigating officers had shown the seized gold biscuits to the seller to verify, that, the very same were sold, the answer was in negative. It is seen from records that revenue has not adduced any evidence, even remotely, to indicate that the seized gold biscuits were of smuggled nature, while appellants have clearly demonstrated that they had licitly purchased the gold biscuits in a normal sale and purchase transactions. It is also seen from records and evidence that the seized gold biscuits at the hands of sellers were not smuggled is accepted by the revenue, by not conducting any further investigation or summoning the persons who had supplied seized gold biscuits to appellants and also by not issuing any show cause notices to the suppliers hence the seized gold biscuits cannot be branded as smuggled goods in the hands of appellants. Hon’ble Supreme Court in the case of Commissioner of Customs, Madras v. D. Bhoormal as reported at has held as under:
However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the department altogether burden of producing some evidence in respect of the fact in issue.
(Emphasis Supplied)
It is seen from the records of the case before us, the revenue has not produced any evidence in support of their case (as discussed in earlier paras) and hence the ratio of judgment of the Hon’ble Supreme Court in the case of D. Bhoormal (Supra) squarely covers the issue in favour of the appellants. Since we have decided the issue based on factual matrix, we are not dwelling into the propositions of case laws cited by the Counsel of appellants.
12. The net result of the reasoning and findings, clearly brings out, that the appellants have discharged the burden cast upon them under Section 123(1)(b) of the Customs Act, 1962, that the 500 nos of seized gold biscuits with foreign marks are not smuggled. In view of these findings the impugned order absolutely confiscating the seized gold biscuits is liable to be set aside and we do so. Since the confiscation of the goods is set aside, consequent penalties imposed on the appellants are also liable to be set aside and we do so. All the appeals are allowed with consequential relief, if any.
(Pronounced in court on….)
M. Veeraiyan, Member (T)
13. I have gone through the order proposed by my ld. Brother Shri M.V. Ravindran, Member (Judicial) and since I am not able to persuade myself to accept the same, I proceed to record my separate order.
14. This appeal is being heard in remand in pursuance of the order dated 8-3-2007 of the Hon’ble Supreme Court. The relevant portion of the important directions/observations of the Hon’ble Supreme Court is reproduced.
The commissioner of customs, inter alia, has gone into the entire materials brought on records by the parties. It has taken into consideration a number of circumstances in arriving at the findings. The Tribunal, however, as noticed herein before, inter alia, not only proceeded on the basis that one of the carriers had been let off but also purported normal fashion of transport of gold bars for which no evidence was brought on record.
Tribunal should have dealt with the findings that there existed serious discrepancies in the bills or vouchers.
15.1. Certain relevant facts require to be highlighted.
15.2. Two bullion dealers along with six other persons were intercepted by the police with 551 gold bars with foreign marks when they were proceeding to Mumbai. The bullion dealer Sh. Vijay D. Patel, Proprietor of M/s. Paras bullion along with his two assistants Sh. Bikabhai D. Patel and Sh. Nathubhai D. Patel were found carrying 90, 55, and 55 gold bars respectively. Another bullion dealer Sh. Sailesh R. Patel, Proprietor of M/s. S.K. Jewellers along with four of his assistants namely Sh Nattubhai Brijlal Soni, Sh. Arvind K. Patel, Sh. Jaswanth K. Patel and Smt. Rasilaben Rathore were carrying 100, 51, 55, 50 and 95 gold bars respectively.
15.3.1. On the basis of intimation received from the police, customs authorities commenced investigations and seized 200 gold biscuits from the first group and Sh. Vijay D. Patel claimed ownership of the said 200 gold bars.
15.3.2. As regards the 51 bars found in the possession of one of the employees Sailesh R. Patel namely Sh Nattubhai Brijlal Soni the same was claimed to have been purchased by M/s S.K.Jewellers from M/s Amarpali Industries under invoice No. G 4277/99 dt 23-10-99 and accordingly the same was released to Sh. Nattubhai B. Soni.
15.3.3. The customs authorities seized 300 gold bars which were in the possession of other persons in the group and the ownership of the same was claimed by Sh. Sailesh R. Patel, Proprietor of M/s. S.K. Jewellers.
15.4. It was claimed that the entire quantity of 500 gold bars which were seized from both the groups were procured by Sh. Vijay D. Patel from different sources and out of which 300 gold bars were sold to Sh. Sailesh R. Patel of M/s. S.K. Jewellers and Sh. Sailesh R. Patel, was yet to make payments and no bills were raised by Sh. Vijay D. Patel.
15.5. Sh. Vijay D. Patel and Sh. Salesh R. Patel who claimed to have purchased the 300 gold bars from Sh. Vijay D. Patel were proceeding together to Mumbai with their respective group of carriers to find prospective buyers for the gold bars.
16. The main issues to be considered are as follows. As the gold is notified under Section 123 of the Customs Act, 1962, what is the nature and extent of responsibility or burden on the persons from whose custody/possession the gold has been seized and on the person who claims ownership of the gold bars? In the light of findings on the above, whether, in the present case, burden of proof has been discharged by the appellants making the possession of gold bars as licit?
17.1. The rationale of enacting the Section 123 is worth recollecting. Normally the burden to prove the allegations is on the prosecution. To meet certain extreme difficult situations, the law has specifically provided for shifting the burden on others. Gold, diamond are items of small volume but of high value and hence highly prone to smuggling. If gold or diamond are brought from a foreign country whether by legal import or by smuggling, price for the same in foreign exchange has to go out of the country, legally or through other means. If the gold or diamonds are smuggled, the money has to go mostly illegally. While the nation may require the foreign exchange for purposes like import of fuel, purchase of defence equipments etc., the needs of individual could be different. Some people might be interested in investing in idle assets like gold. Therefore in respect of items which are prone to smuggling, the unusual step of shifting the burden of proving that the gold or diamonds seized from the custody of persons is provided for.
17.2. Our Nation faced acute shortage of foreign exchange in 1991 and was about to default in payment of foreign debts and narrowly escaped humiliation by making the payment by pledging gold which was in the possession the Government.
17.3. If the Section 123 notified item is seized abandoned then naturally the question of burden of proof does not arise except when somebody claims ownership. When the goods are seized from the possession of a person, the burden to prove that the gold has been imported legally and it has been acquired legally is on the person from whose possession the gold has been seized. If the person from whose possession the gold has been seized is not the owner and somebody else claims the ownership the burden is cast collectively on both the persons i.e. the person from whose possession the gold is seized and the person who claims the ownership of the gold.
17.4. The provisions of Section 123 are attracted not only in respect of goods seized in the border area but also in the inland area. A person may be dealing only in smuggled goods. He may also import or other wise acquire legally some quantity and deal with such goods. He can not be allowed to use his legitimate business as a cover to do illegal transactions. For example an excise assessee may indulge in clearing part of his production on payment of duty and part of the may not be accounted and same may be cleared clandestinely. A gold dealer can also, similarly indulge in dealing in smuggled gold along with his genuine sale.
17.5. The Section 123 has been enacted not only to curb smuggling at the border but also to enable mixing up of smuggled goods with other genuine goods. The purchase bill for 1000 gold bars cannot be allowed to give perpetual right for storing 1000 bars in the shop and the owner and employee of the owner to roam around without bills any quantities say of 200 bars, 300 bars every time taking the cover that he has already procured 1000 gold bars.
17.6. The decision of the Hon’ble Supreme Court in the case Ambalal v. Union of India and Ors. as reported at 1983 E.L.T.1321 (S.C) was rendered in the context of Sea Customs Act in a case of smuggling which happened in the year 1947 when provisions similar to Section 123 of the present Customs Act was not available in the Sea Customs Act and hence cannot be applied to the present case.
18.1. In the present case, there are many things which are unusual.
18.2. Shri Vijay D. Patel and Shri S.R. Patel are not persons of ordinary means. They are highly placed people in the gold trade. They are owners of bullion shops and have shown substantial transactions. The turn over of M/s Paras Bullions is more than Rs. 900 crores during the relevant period. It is therefore unusual that such highly placed people carry personally and also with the help of the carriers huge quantity of gold without bills and travel to a place looking for the perspective buyers. 16.2. Shri Sailesh R. Patel claimed to have purchased 300 gold bars from Sh Vijay D. Patel on 23-10-99. Sh Sailesh R. Patel in his statement dated 24-10-99 has clearly stated that no bill was issued and no payment was made. Sh Vijay D. Patel has in his statement dated 24-10-99 also claimed only about oral agreement for sale. There is a dispute as to whether the bill was issued on 23-10-99 and delivered to the part time accountant on the very same day but was prepared on 24-10-99 as a cover up operation by antedating it to 23-10-99. In the over all circumstances, it appears that the claim that the bill was prepared on 23-10-99 is an after thought. If it was prepared on 23-10-99 no valid reason has been given as to why a bill said to have issued by Paras Bullion was not carried along with the consignment. It would not have been burdensome to carry such a piece of paper and they would not be exposed any risk. Was it out of ignorance or out of deliberate design? In respect of 51 gold bars which was in possession of Sh Nattubhai Brijlal Soni the bill was carried with them and hence the same was released. Apparently they were aware of the importance of such bill to show the legality of acquisition and possession. It can not therefore be out of ignorance.
18.3. Sh Vijay D. Patel carries a Xerox copy of delivery challan issued by ABM Amro Bank in favour of Ms Riddhi Siddhi Bullion. This document in original can be an evidence for valid possession by Ms Riddhhi Siddhi Bullion and not a reliable evidence to show legal possession by Paras Bullion. If such evidence can be accepted to hold that the possession is legal the provisions of Section 123 will have no life at all.
19.1. These two big dealers in gold are claiming that the gold bars were being concealed in shoes by their carriers for safety purposes. They also claim that it is a trade practice. It is true that nobody can be expected to carry precious items like gold openly thus attracting the attention of undesirable people. But whether their claim that the transportation of gold by concealment in shoes is a trade practice to ensure safety is acceptable?
19.2. It is to be noted that out of the 500 bars seized, Sh Vijay D. Patel was found carrying 90 bars in his bag and Sh S.R. Patel was carrying 100 gold bars in plastic packets kept in his bag. One of the carriers of S.R. Patel namely Ms Rasillben Rathod was carrying 95 bars tied in her waist belt. The balance of 215 bars was found concealed in the shoes worn by the four carriers. In addition, 51 bars were found from the shoes of Sh Nattubhai Brijlal Soni which was released as the same were covered by documents. The very fact that substantial quantity of seized gold was found transported not by concealment in shoes by the other members of the two groups knocks the foundation of their theory and story that such transportation is a trade practice. To carry about 25 nos of gold bars weighing close to 3 kg kept in each of the shoes and to travel is an expert and painful job and cannot be undertaken by ordinary persons but only by members of seasoned criminal gangs.
19.3. To consider the concealment in shoes as a practice is inconceivable in the Indian context. High respect bordering sanctity is attached to items like gold, and gold ornaments. It is common knowledge that gold ornaments are not normally worn in the legs. It may be mentioned that in some business premises even the proprietors / partners do not enter the premises with their shoes on. The gold and shoes are not appropriate companions. In view of this also, the claim that gold is being concealed in shoe for the sake of safety as a practice is not acceptable.
19.4. There have been many cases of smugglers using shoes for concealment of gold and other precious articles and have been nabbed by customs authorities in the air ports. Concealment in shoes was not found to be a practice but only as part of malpractice.
19.5. A passenger claims to have come through the airport concealing his gold in the shoes and declaring to the customs Mumbai Sahar airport and then getting a certificate in the baggage receipt dated 1-3-07 issued for payment of duty that the gold was concealed for safety purposes in the shoes. The passenger, perhaps, feared that some robbers may rob him while he was traveling in the aircraft!
Some customs officer has also willingly or unknowingly obliged the said passenger and given such a certificate. In my opinion, the customs officer has gone beyond his normal call of duty / role in certifying that the gold was transported for safety purposes. It can be only a case where a certificate has been issued as solicited by the passenger. The officer was not required to acknowledge the mode of transport, packing etc. of the goods imported by various passengers. Even if this particular passenger who has brought by concealing in his shoes, fearing theft/robbery of gold this cannot lead to conclusion that there is a practice to transport gold by concealing in shoes. In spite of the odd method followed, the passenger has been law abiding and the gold brought by him was not offending in nature as the same was admittedly declared and applicable duty stood paid. The stray and strange case of concealing by a passenger does not justify any inference of a practice and definitely not a general trade practice. Just as a few trees cannot be mistaken for a forest, stray cases of carrying in shoes can not be considered as evidence of a trade practice.
19.6. The release by customs of 51 gold bars carried in shoes by Sh Nattubhai B. Soni does not mean acceptance of any trade practice by the customs authorities. The decision to release was based on the documents in the possession of the said carrier.
20. The transactions of ABN Amro bank importing gold and selling them to M/s Riddhi Siddhi Bullion Ltd who in turn selling them to M/s. Paras Bullions are different as the movements arising out of these transactions are covered either by the invoice or the challan. It does not really matter whether payment is made in advance or at the time of delivery or after some time. What is relevant is that the sold quantity gets properly and promptly accounted in the books of accounts. Therefore the submission that preparation of invoice after the lapse of a few days is a trade practice can not be accepted with out the attendant circumstances. In the cases cited by the ld Advocate, the supplies were with delivery challans followed by invoices after delay of a few days. This can not be compared with the conduct of the appellants who have neither issued the invoices nor the delivery challans.
21. The reliance placed on the order of the income tax authorities in their own case is misplaced. The income tax authorities were concerned not about the legality of transactions under other law. They are concerned about the purchases made, the sales effected, the expenditure incurred all to arrive at the income generated by the assesse and the decision taken by them will have no bearing as to whether the gold bars have been acquired in conformity or in contravention of the provisions of the Customs Act. If a person indulged in bootlegging, gambling etc and earned money the income tax will collect tax due and it is for the concerned department to take appropriate action for violations of other laws. It is a different matter that income tax department might alert the other concerned agency.
22.1. It is not the case of each of the carrier, in addition to having the gold concealed in the peculiar manner, has chosen to carry the relevant papers, showing legal possession of the gold. Their masters who accompanied also did not carry the relevant papers evidencing legal possession.
22.2. If the police have not intercepted, and the customs have not come into the picture can it be reasonably presumed that after disposal of the gold in Mumbai market, Shri S.R. Patel, Sh. Vijay D. Patel that we expect them to prepare bills and regularize the transaction or not to account them at all?
23. The following emerges:
a. The concealment of gold bars in shoes cannot be considered as a trade practice but only as a practice followed by members of seasoned criminal gangs.
b. The submission that preparation of invoice after the lapse of a few days is a trade practice can not be accepted with out the attendant circumstances. In the cases cited by the ld Advocate, the supplies were with delivery challans followed by invoices after delay of a few days. This can not be compared with the conduct of the appellants who have neither issued the invoices nor the delivery challans.
c. The brand names and marks are being mentioned in the sale documents by the banks but are not generally being mentioned by players down the line.
d. In the present case, at the time of seizure there were no reliable documents with the carriers as well as with the persons who claimed ownership evidencing legal possession of the foreign marked gold bars.
e. The initial statements by Sh Vijay D. Patel and Sh S.R. Patel only refer to sale of 300 bars on the basis of oral agreement and on loan basis and does refer to any invoice or challan prepared by Ms Paras Bullions. The possession of gold by Vijay D. Patel was sought to be regularized by preparing anti dated documents on 24-10-99 by Sh. Ashwinbhai I. Patel by visiting the residence of Sh. V.D. Patel on Sunday but dating the document as if prepared on 23-10-99.
f. Sh Vijay D. Patel did not carry any purchase document or transport document showing the purchase from his immediate suppliers nor did he give such documents to Sh. S.R. Patel. The two bullion traders who are in bullion trade for many years and who are in the know of the nature of law governing the sales have not taken the supporting documents and trying their best to explain their acquisition in a rather indirect way.
24.1. In any adjudication proceedings, the level of evidence required is preponderance of probability. Further, when the goods involved in the case are notified under Section 123, naturally the burden of proof shifts to the person who claims ownership or from the person from whose possession the goods were seized. Burden of proof in this case is on Sh. Vijay D. patel and Shri S.R. Patel as claimants to prove that they have legally acquired the gold and they were legally in possession of the gold seized.
24.2. If Sh Vijay D. Patel had brought the invoices under which he claimed to have purchased the gold or the delivery challans under which he claimed to have received the 500 gold bars and if he has raised the invoice on Sh. S.R. Patel for the 300 gold bars claimed to have been sold to him and if Sh. S.R. Patel carried such invoice then the situation would have been totally different. In such a situation the questions like whether sale was on credit basis or whether the gold bars are carried in suit cases or bags or concealed in shoes or whether they maintained the accounts in a particular form and for whom these consignments were meant in Mumbai etc become irrelevant. In such a situation these persons also would have been allowed to go with the gold bars as was done in the case of Sh Nattubhai Brijlal Soni. The gold bars have been seized under the reasonable belief that they are smuggled goods. Their story is unbelievable. Each omission and conduct appears condonable but cumulatively, their conduct and the entire circumstances taken together shows that they were not on any genuine business mission but on certain clandestine activities.
24.3. In the light of the above, in my considered opinion, the claimant-owners have not discharged their burden of proof in terms of Section 123 of the Customs Act. Therefore, confiscation of the 500 gold bars deserves to be upheld. Penalties are also warranted.
25. The order of confiscation of 500 gold bars is upheld. However taking the entire facts and circumstances of the case, the penalty imposed on Sh Vijay D. Patel is reduced from Rs. 50 lakhs to Rs. 10 lakhs and the penalty imposed on Sh Sailesh R. Patel is reduced from Rs. 50 lakhs to Rs. 10 lakhs. The penalties imposed on others are not excessive and hence not interfered with.
Difference of opinion.
Whether the order proposed by learned Member (Judicial) allowing all the appeals should be approved or the order proposed by the learned Member (Technical) should be approved?
The following difference of opinion is referred to the 3rd Member.
2. The order passed by the learned Member allowing all the appeals should be approved or the order passed by the learned Member should be approved.
3. Heard both sides. The detailed facts are already mentioned in para 1, 2 and 3 of the Misc. order.
4. The main contention of the appellant is that the 51 gold biscuits recovered from the shoes of Shri Nandubhai Vrajlal Soni were returned to Mr. Soni on production of necessary invoice of M/s Amrapali Industries dated 23.10.99 issued in the name of M/s S.K. Jewellers. In respect of remaining quantity of gold biscuits, the contention of the appellant is that nowhere in their statement the person whose possession are gold biscuits were recovered admitted the same are smuggled in nature. On the other hand, Shri Vijay Dasrathbhai Patel proprietor of M/s Paras Bullion has claimed the ownership of 200 gold biscuits with the mark of credit Suisse. Shri Vijay Dasrathbhai Patel in his statement submitted that the gold biscuits were purchased from M/s Riddhi Siddhi Bullion Ltd. on 23.10.99. The investigation was conducted from M/s Riddhi Siddhi Bullion Ltd. and Shri Dinesh Chhaganlal Jain on M/s Riddhi Siddhi Bullion Ltd. in his statement stated that 350 nos. of gold biscuits of foreign marked were sold vide bill dated 23.10.99 to Vijay Dasrathbhai Patel. During the search of the premises a duplicate copy of Challan dated 23.10.99 was found in the records of M/s Riddhi Siddhi Bullion Ltd. In respect of sale of 350 gold biscuits, the contention is that Shri Dinesh Chhaganlal Jain of M/s Riddhi Siddhi Bullion Ltd. also disclosed the source of 350 gold biscuits. During the investigation he disclosed that the biscuits were procured from ABN AMRO bank and from M/s Anjali Exim Pvt. Ltd. In view of this statement of Shri Dinesh Chhaganlal Jain, it is stated that gold biscuit was procured legally and the same were sold to Shri Vijay Dasrathbhai Patel, therefore, it cannot be said that gold biscuits in question are smuggled in nature. In respect of remaining gold biscuits, the contention is that at the time of recovery Shri Shailesh R. Patel claimed the ownership of these gold biscuits on the ground that the same has been purchased from M/s Paras Bullion. Shri Vijay Dasrathbhai Patel of M/s Paras Bullion in his statement dated 24.10.99 clearly disclosed that he has sold 300 number of gold biscuits to Shri Shailesh R. Patel and also disclosed the source of the gold biscuits as he purchased 454 of gold biscuits from M/s K.L. Choksi and 750 no. of gold biscuits from other bullion dealers. Shri Vijay D. Patel also produced documents regarding purchase of the gold biscuits. Investigation was also conducted from Shri Keshavlal Choksi proprietor of M/s K.L. Choksi, in the statement admitted that the sale of 454 no. of gold biscuits with foreign marks to M/s Paras Bullion and also gave the bill numbers under which the same are sold. No investigation was conducted in respect of the other source disclosed by Shri Vijay D. Patel in this statement. The contention of the appellant is that the Revenue is alleging that the gold in question is smuggled in nature but there is no evidence on record nor there any admission by the persons from whose possession the same was recovered. The contention is that in view of this the gold biscuits in question cannot be confiscated on the ground that the same are smuggled into India. The appellant also relied upon the findings and investigation conducted by Income Tax department regarding transaction of sale and purchase of goods in question.
5. The contention of the Revenue is that at the time of recovery of the gold biscuits, the appellants were not having in possession any document under which the same were received by them. The Revenue is also argued that record has been manipulated to show the legal sale and purchase of gold. The gold in question is smuggled one.
6. I find that, in this case, at the time of recovery of the gold biscuits recovered from Shri Nandubhai Soni which was concealed in his shoe were returned back on production of necessary invoice under which the same were purchased. In respect of other gold biscuits, the case of the Revenue is that the same were smuggled in nature whereas the appellant produced evidence regarding legal purchase of the gold biscuits from various sources. During investigation, it was found that the source which was duly corroborated by the statement of supplier of the gold biscuits to the appellant. The appellant Shri Vijay D. Patel, proprietor of M/s Paras Bullion claimed the ownership of 200 gold biscuits on the ground that the same were purchased from M/s Riddhi Siddhi Bullion Ltd. on 23.10.99 and M/s Riddhi Siddhi Bullion Ltd. corroborated this fact that they had sold 350 no. of gold biscuits under bill dated 23.10.99 to Shri Vijay D. Patel. M/s Riddhi Siddhi Bullion Ltd. also disclosed the source of procurement of 350 gold biscuits as the same were purchased from ABN AMRO Bank and M/s Anjali Exim Pvt. Ltd. The enquiries conducted from ANB AMRO Bank also disclosed that the 250 no. of gold biscuits were sold on 20.10.99 to M/s Riddhi Siddhi Bullion Ltd. In respect of 300 gold biscuits, Shri Shailesh Kumar Ratilal Patel of S.K. Jewellers claimed the ownership, the same were purchased from M/s Paras Bullion. Shri Vijay D. Patel of M/s Paras Bullion admitted that the gold biscuits in question were sold to S.K. Jewellers. M/s Paras Bullion was disclosed the source of procurement of biscuits in question the 450 of gold biscuits from M/s K.L. Choksi and 570 number of gold biscuits were procured from other bullion dealer which was duly reflected in the books of account. During investigation Choksi admitted they had sold the gold biscuits to M/s Paras Bullion under various bills. Further, I find that the Income Tax authorities were also initiated proceeding in respect of sale and purchase of the gold in question and the same were subsequently dropped on the ground that entire transaction in respect of gold bars were legally accounted for and there is no doubt about the said transactions. In view of the evidence produced by the appellant to show the legal procurement of the purchase of the gold in question and in absence of other evidence to show that gold in question is smuggled in nature. I agree with the view of Hon’ble Member (J) allowing the appeals. The matter placed before regular bench for further necessary action.
MAJORITY ORDER
In view of the majority decision, the appeals are allowed, confiscation set aside, penalties also set aside, with consequential relief, if any.
Pronounced in Court on….