ORDER
P.G. Chacko, Member (J)
1. These are five appeals of the department against the Order passed by the Commissioner of Customs, Jaipur in adjudication of a show-cause notice dated 15.10.97. The appellant is represented by the DR. M/s. Balaji enterprises (respondent in Appeal No. C/613/2002) and shri Umesh Chand Gupta (in Appeal No. C/616/2002) were represented by Sr. Advocate, Shri M. Chandrasekharan. None of the respondents in the remaining appeals was present, nor represented despite notice.
2. On the basis of intelligence, Customs Officers of Jodhpur raided the residential-cum-business premises of Shri D.R. Jain (respondent and two independent Panch Witnesses and recovered 21 FM (foreign marked) gold biscuits weighing 2449.944 gms., valued at Rs. 11,84,550/-, concealed under a bed-sheet along with two packets of cellophane tape and ‘Laser’ brand blades. Two other persons viz. Sh. Ashutosh Dudey (respondent in C/612/2002) and Sh. Uchab Pradhan were also present on the spot, and their personal search was also conducted, which resulted in the recovery of Delhi-to-Jodhpur railway tickets from Ashutosh Dubey and one packet of red chilli powder from Uchab pradhan and two white ‘langots’ from each of them. D.R. Jain told the officers that the gold biscuits belonged to him and had been brought from Delhi by Dubey and Pradhan corroborated this statement and told the officers that they had brought respectively 10 and 11FM gold biscuits from delhi and had used their ‘langots’ for concealing the gold. But none of them produced any evidence of legal acquisition/possession of the gold biscuits to the satisfaction of the officers. The officers of Customs believed that the gold biscuits had been brought through illegal means in contravention of Section 7 (c) and 11 of the Customs Act and were liable to confiscation under section 111 of the Act, and hence seized the goods under section 110 of the Act. Statements of D R Jain and Ashutosh Dubey were recorded under Section 108 of the Customs act on the same day (23.4.97). Their further statements were recorded on 24.4.97 also. A statement of Uchab Pradhan was also recorded on 24.4.97. Jain, Dubey and Pradhan were arrested on 24.4.97 and produced before the economic Offences Court at Jaipur on 25.4.97 where they were placed under judicial custody. In support of his Bail application before the District and Sessions Court at jaipur, D.R. Jain produced photocopies of Bill No.106 dated 10.4.97 of M/s. Ess Vee Jewellers, karol Bagh, New Delhi issued in favour of M/s. Balaji Enterprises and 3 challans bearing Nos. 14,15 and 16 all dated 22.4.97 showing purchase of the seized gold. In their letters dated 25.4.97, Dubey and Pradhan submitted that they had produced the above challans to the officers of Customs at the time of raid of the premises of D.R. Jain. D.R. Jain also submitted to the same effect in his letter dated 26.4.97. All the three, in their letters, stated that their earlier statements and signatures on Panchanama had been taken under force and duress.
Umesh Chand Gupta (U.C. Gupta) in his letter dated 26.4.97 submitted that he was the proprietor of balaji Enterprises, New Delhi and purchased 107 gold Ten Tola bars from M/s. Ess Vee Jewellers, karol Bagh, New Delhi and that out of the said 107 gold bars, 21 were sent to D.R. Jain through his employees, Ashutosh Dubey and Uchab Pradhan. On 29.4.97, the advocates of R.R. Jain, Ashutosh Dubey and Uchab Pradhan submitted copies of the following documents:-
(i) Agreement between M/s. Jain Bullion, Jodhpur and M/s. Balaji Enterprises, New Delhi dated 28.2.97 along with letter of M/s. Jain Bullion, Jodhpur dated 11.3.97.
(ii) Certificate of M/s. Ess Vee Jewellers, Karolbagh, New delhi regarding sale of 200 Ten Tola gold bars to M/s. Ess Vee Jewellers.
(iii) Bill of Entry dated 14 Feb, 1997 for import of 200 Ten Tola Gold Bars by M/s. Ess Vee Jewellers, Ram Nagar, New Delhi.
(iv) TR 6 Challan dated 17.2.97 for Rs. 5,13,216/-.
(v) Statement of account of M/s. Balaji Enterprises, Delhi From 1.4.97 to 26.4.97 with M/s. Ess Vee Jewellers, Karolbagh, New Delhi
(vi) Certificate of M/s. M/s. Ess Vee Jewellers, Karolbagh, New Delhi regarding sale of 107 Ten Tola Gold bars to M/s. Balaji Enterprises, Delhi vide Bill No. 106 dated 10.04.97.
(vii) Bill No. 106 dated 10.04.97 of M/s. Ess Vee Jewellers, Karolbagh, New Delhi.
(viii) Delivery challan No. GOL/14/97 dated 6.1.97 of MMTC, New Delhi.
(ix) Delivery Challan No. GOL/15/97 dated 10.01.97 of MMTC, New Delhi.
(x) Invoice/Cash Memo No. GOL/BE/01 dated 31.1.97 of MMTC, New Delhi.
(xi) MMTC letter dated 11.9.96 to M/s. Balaji Enterprises.
(xii) MOU between M/s. Balaji Enterprises, New Delhi and MMTC, New Delhi dated 11.9.96.
(xiii) Complaints of D.R. Jain, Ashutosh Dubey and Uchab Pradhan, dated 25.4.97.
D.R. Jain in this subsequent letter dated 5.6.97 stated that the 21 foreign marked gold biscuits had been sent to him by U.C. Gupta under challans Nos. 14, 15 and 16 dated 22.4.97 under the agreement dated 28.2.97 executed between their concerns viz. Jain Bullions and Balaji Enterprises. He also produced copies of the challans and agreement U.C. Gupta also produced, on 23.6.97, copies of all the document already procured by the advocates of Jain, Dubey and Pradhan. U.C. Gupta also stated that he used to give 1/2% commission to D.R. Jain for selling gold biscuits. He further stated that M/s. Ess Vee Jewellers, Ram Nagar, New Delhi had imported the gold biscuits and sold the same to their sister concern viz. Ess Vee Jewellers, Karol Bagh, New Delhi, from whom the goods were purchased by him. In a letter dated 26.4.97, Gupta alleged, inter alia, that the officers of Customs had snatched the challans from his employees and destroyed the same at the time of the raid of D.R. Jain’s premised. The Asstt. Commissioner of Customs (Preventive) New Delhi, through whom an enquiry was made into the role played by M/s. Balaji Enterprises, M/s. Ess Vee Jewellers, etc., communicated the enquiry results to his counterpart in Jodhpur through letter dated 8.10.97, wherein he stated that the gold biscuits sent by Balaji Enterprises under Challans Nos. 14, 15 and 16 dated 22.4.97 were out of a consignment of 207 Ten Tola bars purchased from M/s. Ess Vee Jewellers under Bill Nos. 103 dated 7.4.97, 105 dated 9.4.97 and 106 dated 10.4.97 and that M/s . Ess Vee Jewellers had purchased the consignment from their sister concern who had imported the same under Special Import Licence scheme.
3. On the basis of the results of investigations, the Commissioner of Customs issued the show-cause notice to the appellants proposing to confiscate the 21 gold biscuits and other seized goods respectively under Section 111(d) and Section 118 of the Customs Act and to impose penalties on them under Section 112 of the Act. An order dated 22.5.98 was passed by the Commissioner in adjudication of the show-cause notice, confiscating the seized goods and imposing penalties on all the notices. The appeals filed with this Tribunal against that order of the Commissioner resulted in a remand of the case to the Commissioner. The order impugned in the present appeals was passed pursuant to the remand order.
4. Heard both the sides. The DR submitted that through the Tribunal had remanded the mater to enable to the parties to cross-examine the officers of Customs, none of them pressed for cross-examination when the case was taken up by the adjudicating authority in de novo proceedings. In view of this position, it should have been held that the appellants had failed to substantiate their allegation that Challans Nos. 14, 15 and 16 dated 22.4.97 were recovered from them and destroyed by the officers. Referring to the letter dated 8.10.97 of the Asstt. Commissioner (Preventive), New Delhi, relied on by the adjudicating authority, DR submitted that the findings of the adjudicating authority based on the said letter were not sustainable. Contrary to what was found by the adjudicating authority, the Asstt. Commissioner (Preventive), New Delhi had not confirmed that the documents submitted by M/s. Balaji Enterprises were genuine or that the consignment sent by them under Challan Nos. 14, 15 and 16 dated 22.4.97 was out of the quantity of 207 Ten Tola bars purchased from Ess Vee Jewellers under Bills dated 7.4.97, 9.4.97 and 10.4.97. The DR opined that the Asstt. Commissioner’s letter probably referred to gold bars different from those involved in the instant case. It was further submitted that the Id. Commissioner’s observation that none of the statements recorded under Section 108 of the customs Act had indicated that the 21 gold biscuits were smuggled was erroneous inasmuch as, in his statement dated 24.4.97, Ashutosh Dubey had stated that the gold was of smuggled nature. The adjudicating authority failed to appreciate the department’s evidence correctly and reached erroneous conclusions on the basis of the Asstt. Commissioner’s report dated 8.10.97. It was also wrong to rely upon the agreement between Jain Bullions and Balaji Enterprises dated 28.2.97. There was also a difference in weight per biscuit between the gold biscuits seized by the officers in this case and those purchased by M/s. Balaji Enterprises under Bill No. 106 dated 10.04.97 and, therefore, the seized biscuits could not be the same as those covered by the said Bill. In the circumstances, the DR claimed, the respondents could not be held to have established legal acquisition/possession of the 21 gold biscuits.
5. The Id. Sr. Advocate brought on record English translations of the statements of the respondents recorded under Section 108 of the Customs Act, as also of the affidavit dated 25.4.97 filed by one of the Panch Witnesses before the district and Sessions Judge, Jaipur. He submitted that the facts stated by the respondents and the Panch witness constituted an unbroken chain of events, from which it was evident that the 21 gold biscuits had been lawfully acquired by M/s. Balaji Enterprises and had come to the lawful possession of M/s. Jain Buillions. The department had an initial burden to show that the gold biscuits were smuggled goods but failed to discharge it. There was not evidence whatosever to show that the 21 gold biscuits had been smuggled into India. Even at the time of raid of the premised of D.R. Jain by the officers of Customs, the original challans bearing Nos. 14, 15 and 16 dated 22.4.97 of M/s. Balaji Enterprises had been produced to the officers and Shri Jain had informed the officers that the gold biscuits had been received under an agreement between him and M/s. Balaji Enterprises and were not smuggled goods. The officers took that challans into custody but seized the gold biscuits for want of evidence of lawful import of the gold. This fact was sworn to by a Panch witness before the District and Sessions Judge in his affidavit dated 25.4.97. This evidence was not rebutted by the department. D.R. Jain was in licit possession of the gold biscuits under cover of valid documents. The goods were, therefore, not liable to consification and, consequently, none of the respondents was liable to the penalized under Section 112 of the Customs Act. Ld. Sr. Advocate relied on a decision of the Kerala High Court and submitted that, though the department was not required to prove its case with mathematical precision, they were still under an obligation to establish the guilt of the offender with such degree of probability as to prompt a prudent man to believe in the existence of facts constituting the guilt. The cited decision of the High Court in in Rajendra Prabhu Vs. Union of India (1999 107 ELT 293 KER.) In the instant case, the department proceeded merely on the basis of a suspicion and not on the basis of any direct or circumstantial evidence.
6.1 We have carefully examined the submissions.
6.2 The adjudicating authority has, in the remanded proceedings, held that the seized gold biscuits are not liable to confiscation. The authority has, accordingly,. ordered release of the goods of M/s. Balaji Enterprises and also dropped the proposal to impose penalties on the respondents. Undisputedly, the seized gold biscuits were goods notified under Section 123 (2) of the Customs Act. The person from whose possession the goods were seized as also the person who claimed ownership on the goods had the burden to prove that the goods were not smuggled goods and had been legally acquired. Obviously, this burden was on D.R. Jain and U.C. Gupta in this case. Whether they have succeeded in discharging the burden has to be examined. One of the Panch witnesses has sworn before the District and Sessions Judge, Jaipur that Shri D.R. Jain from whose possession the gold biscuits were seized by the officers of Customs had produced the original challans of M/s. Balaji Enterprises, Bearing Nos. 14, 15 and 16, to the officers and had informed them that the gold biscuits were not smuggled goods and had been received by him under an agreement. It may be contextually noted that copies of those challans were produced subsequently by D.R. Jain before the court in support of his bail application. The Panch witness further stated that the officers retained the challans with them and seized the goods on the ground of no document of lawful import of the gods having been produced. Neither this evidence of the Panch witness nor the above documentary evidence of D.R. Jain has been rebutted by the Customs. The above challans are the documents under which the gold was sent to Jain Bullions of D.R. Jain by Balaji Enterprises of U.C. Gupta. A copy of the agreement between Jain Bullions and Balaji Enterprise was produced before the Commissioner on behalf of D.R. Jain, Dubey and Pradhan. This document showed that M/s. Balaji Enterprises had agreed to supply gold biscuits to M/s. Jain Bullions for sale on commission basis. Jain, Dubey and Pradhan also produced Delivery Challans of MMTC [Metals & Minerals Trading Corporation] showing importation of gold bars on behalf of Ess Vee Jewellers. Copies of Bill of Entry dated 14.10.97 and TR-6 challan dated 17.10.97 evidencing lawful import an clearance of 200 Ten Tola gold bars by M/s. Ess Eee Jewellers, Ram Nagar, New Delhi were also produced. A certificate of M/s./s. Ess Vee Jewellers, Karol Bagh, New delhi was also produced, which showed that they had purchased the imported gold bars from their sister concern. A copy of Bill No. 106 dated 10.04.97 of M/s. Ess Vee Jewellers, Karol Bagh, New Delhi evidencing sale of 107 Ten Tola gold bars to M/s. Balaji Enterprises was also produced. We note that all these evidential materials have been considered and appreciated by the lower authority and accordingly it has been found to the effect that the 21 gold biscuits dispatched by M/s. Balaji Enterprises to Shri D.R. Jain through Dubey and Pradhan were as part of the consignment of gold bars purchased by M/s. Balaji Enterprises from M/s. Ess Vee Jewellers (at Karol Bagh) who had purchased the consignment from their sister concern (at Ram Nagar) who had imported and cleared the consignment under Bill of Entry dated 14.2.97 through MMTC. Barring some feeble notes of suspicion here and there in the memoranda of appeals as well as the show-cause notice, against the respondents, we have not come across any well-founded challenge to the case of the respondents. We find that the respondents succeeded in discharging the burden of proof under Section 123 (1) of the Customs Act by establishing an unbroken sequence of lawful transactions leading to D.R. Jain’s ultimate possession of the gold. As held by the Hon’ble High Court of Kerala in the case of Rajendra Prabhu (supra), suspicion, however string. cannot take the place of proof.
6.3 In the cited case, the court accepted a retraction dated 29.10.94 of the first petitioner, of his earlier statement dated 23.10.94 and also accepted as baggage receipt dated 19.10.94 as evidence of licit importation of the gold biscuits seized in that case. In the instant case, retraction of adverse statements allegedly recorded under coercion of adverse statements allegedly recorded under coercion was made on the very next day and a full compliment of documents indicating lawful importation of the gold biscuits and lawful transfer thereof to D.R. Jain were brought on record. The department failed to counter the evidence and show that the gold biscuits had been smuggled into India. Ashutosh Dubey did not state that the goods were of smuggled nature. He stated only what U.C. Gupta had told him. DR’s submission with reference to Dubey’s statement is factually incorrect. Much has also been said in this appeal about the Assistant Commissioner’s enquiry report dated 8.10.97. Having acknowledged the document as “enquiry report”, the appellant cannot turn round and say that what is contained in the report is not any finding of facts by the officer. We are also at a loss to understand as to how the non-cross examination of Customs officer by the respondents can be fatal to their case which is otherwise good like a well-knit fabric.
7. In view o four findings, the 21 gold biscuits were not liable to confiscation under Section 111 of the customs Act and there is no reason to interfere with the decision of the Commissioner to release the goods to M/s. Balaji Enterprises. It goes without saying that, once the goods are held to be not liable to confiscation under the Customs Act, no penalty can be imposed on any of the parties.
8. In the result, we upheld the order of the Commissioner and reject these appeals of the department.