Calcutta High Court
Commissioner Of Customs (Preventive) vs Shri Rajendra Kumar Damani @ Raju Damani on 15 May, 2024
Author: T.S. Sivagnanam
Bench: T.S. Sivagnanam, Hiranmay Bhattacharyya
CUSTA NO. 16 OF 2023
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SPECIAL JURISDICTION (CUSTOMS)
ORIGINAL SIDE
RESERVED ON: 10.05.2024
DELIVERED ON:15.05.2024
CORAM:
THE HON'BLE MR. CHIEF JUSTICE T.S. SIVAGNANAM
AND
THE HON'BLE MR. JUSTICE HIRANMAY BHATTACHARYYA
CUSTA NO. 16 OF 2023
(I.A G.A NO. 01 OF 2024)
COMMISSIONER OF CUSTOMS (PREVENTIVE)
VERSUS
SHRI RAJENDRA KUMAR DAMANI @ RAJU DAMANI
Appearance:-
Mr. Kaushik Dey, Learned Senior Standing Counsel.
Mrs. Aishwarya Rajashree, Adv.
.....For the Appellant.
Mr. Joydip Kar, Sr. Adv.
Mr. Shovendu Banerjee, Adv.
Mr. Soumyajit Mishra, Adv.
.....For the Respondent.
Page 1 of 23
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REPORTABLE
JUDGMENT
(Judgment of the Court was delivered by T.S. Sivagnanam, CJ.)
1. The revenue is on an appeal questioning the correctness of the order
passed by the Customs Excise and Service Tax Appellate Tribunal, Kolkata
(Tribunal) in Customs Appeals dated 13.03.2023 by which the appeal filed
by the respondent along with other connected appeals were allowed holding
that the stand taken by the respondent and others that the gold in question
was made out of an old jewellery purchased in cash which fact has not been
denied by the revenue by cogent reasons and therefore the gold is not liable
for confiscation. Further the learned tribunal held that the revenue has
failed to establish the fact that the cash recovered from the respondent and
others are sale proceeds of the smuggled gold and therefore the cash seized
cannot be confiscated and no penalties are imposable.
2. The revenue has raised the following substantial questions of law for
consideration:-
(a) Whether the Learned Tribunal erred in law
in not holding that the statements of the
Respondent/Noticee No.1 i.e. Rajendra
Kumar Damani was voluntary, while giving
credence to the Noticee's submission that
they were retracted. The statements made
by Respondent/Noticee No. 1 on
07.08.2018, 08.08.2018, and 25.07.2019
were all in his own handwriting and in his
vernacular, which indicates that the
statements were all voluntary ?
(b) Whether the Learned Tribunal erred in law
in not holding that the that the third
statement, which is also in his own
handwriting and in his vernacular, is after
the gap of almost a year, in which he has
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reiterated his original statements. The
attempted retraction was almost a year
after the initial statement and the noticee
had made no mention of any threat or
coercion in the initial bail hearing, and
hence has to be construed as an after
thought?
(c) Whether the Learned Tribunal was correct
in holding Noticees claim that the gold was
melted from old jewellery, since this claim
was never made at any stage of the
investigation, nor any shred of documentary
evidence was produced ?
(d) Whether the Learned Tribunal erred in law
in the holding the claim of the Noticee at
face value in the face of overwhelming
evidence against the same and not
considering Section 123 of the Customs Act,
1956 which places the burden of proof on
the Noticees?
(e) Whether the Learned Tribunal erred in law
in not holding that mere melting of old
jewellery will yield gold of purity of only 91-
92% and melting of old jewellery into pure
gold is a precise chemical process which
requires strong chemicals and skilled
professionals and cannot, in the normal
course, be done at home Noticee No. 1 has
produced no evidence or documentary proof
of any kind to substantiate engaging any
professional to carry out this refining
process ?
(f) Whether the Learned Tribunal failed to
appreciate that Hon'ble Supreme Court in
Judgement dated 03.04.1974 passed in
Collector of Customs, Madras and Ors. Vs.
D. Bhoormul has held that with regard to
these specified goods if seized under this
Act in the reasonable belief that they are
smuggled goods, the burden of proof that
they are not such goods shall be on the
person from whose possession, they are
seized. The prosecution or the Department
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is not required to prove its case with
mathematical precision to a demonstrable
degree ?
3. We have heard Mr. Kaushik Dey, learned Senior Standing Counsel for
the appellant assisted by Mr. Aishwarya Rajashree, learned Standing
Counsel and Mr. Joydip Kar, learned Senior Advocate assisted by Mr.
Shovendu Banerjee and Mr. Soumyajit Mishra, learned advocates for the
respondents.
4. The DRI, Kolkata conducted search at two premises in Kolkata and
during the search operation huge amount of cash of Indian currency of 50 to
2000, nine pieces of yellow metallic coins believed to be gold of foreign origin
and a pouch of white colour metallic granules believed to be silver of foreign
origin were found. A search list cum inventory was prepared by the DRI of
the recovered Indian currency as well as the yellow metallic coins believed to
be gold of foreign origin and white metallic granules believed to be silver of
foreign origin and the search list was signed by the respondent herein.
When the respondent was questioned, he stated to have admitted that the
entire cash is the sale proceeds of smuggled gold and silver. The DRI officers
called upon the respondent to produce documents but they could not
produce any document to show that the ceased articles were not of foreign
origin.
5. In the simultaneous search conducted in the second premises, eleven
number of yellow colour metallic bars believed to be gold of foreign origin
concealed inside old and used newspapers and several bundles of huge
amount of cash of Indian currency secreted in metallic vault fitted on the
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wall was found. The respondent is stated to have admitted that he is the
owner of the shop and the other two persons were his employees and that
the eleven yellow colour metallic bars believed to be gold of foreign origin
were smuggled in nature and that he used to store those smuggled goods in
the said metallic vaults at his shop for selling those to others and the
recovered amount of Indian currency are the sale proceeds of such smuggled
gold sworn by him on earlier occasions. Statement of the respondent was
recorded under Section 108 of the Customs Act, 1962 (the Act) on
06.08.2018 wherein it appears that he has admitted that he has been
dealing with smuggled gold and the Indian currency recovered is out of the
smuggled gold which was sold earlier.
6. Further he added that there is no document in support of his
procurement of the gold bars. Statements of the others were also recorded,
test report was obtained from the, Chemical Laboratory, Customs House,
Kolkata which certified that the seized items are gold and the percentage of
gold by weight was 99.5%. The call detail records of the mobile phones used
by the respondent were ascertained from which it was seen that the
respondent was in regular contact with two other persons and the other two
persons were also dealing in smuggled gold.
7. Based on the above facts and other details, show cause notice dated
28.07.2019 was issued under Section 124 of the Act to six noticees of which
the respondent is the first notice. Calling upon them to explain as to why
the seized eleven pieces of gold of foreign origin having total weight
10500.80 grams valued at Rs. 3,15,02,400/-, nine pieces of gold coins
valued at Rs. 2,07,000/- and 509.100 grams of silver granules valued at Rs.
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19,448/- should not be confiscated under Section 111(b) and 111(d) of the
Act; why Indian currency notes amounting to Rs. 1,74,76,500/- seized
during the investigation, should not be confiscated under Section 121 of the
Act and among others things why penalty should not be imposed under
Section 112(a) and/or 112(b) and 117 of the Act.
8. In the show cause notice, it had been stated that import of gold in the
India is regulated under various provisions and subject to strict conditions.
In accordance to Notification No. 50/2017- as amended, gold, with
description as mentioned in the notification, is allowed to be imported by the
importers and/or eligible passengers upon payment of applicable rate of
duty subject to specific conditions being fulfilled. It was stated that as per
notification and circulars/instructions/rules, it can be seen that well
defined and exhaustive conditions and restrictions are imposed on the
import of various forms of gold by eligible passengers/nominated banks etc.
These conditions are restrictions imposed on the import of gold. It was
stated that in the case on hand that none of the condition was satisfied
rendering it a clear case of smuggling. Section 123 of the Act was referred to
and it was stated that the burden of proving that the gold is not smuggled
gold shall be on the person, who claims to be the owner of the goods so
seized or from whom whose possession the goods are seized. In paragraph
27.1 of the show cause notice the role of the respondent has been set out.
9. The adjudicating authority namely The Additional Commissioner of
Customs (Preventive) afforded an opportunity of personal hearing to all the
noticees on 11.11.2019 including the respondent who has represented by
the learned advocate in the hearing fixed on 24.01.2020. The reply given by
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the respondent was considered and by order dated 16.09.2020, the gold and
silver were ordered to be absolutely confiscated as well as the order for
absolute confiscation of the Indian currency which was seized, a sum of Rs.
70,00,000/- was imposed as penalty on the respondent. Aggrieved by such
order, the respondent and the other noticees filed appeal before the
Commissioner of Customs (Appeals) and by order dated 31.12.2021, the
appeal filed by the respondent was dismissed. Challenging the said order,
the respondent and others preferred appeal before the tribunal which was
allowed and challenging the correctness of the same, the revenue has
preferred this appeal.
10. The first aspect to be considered in the case on hand is with regard
to on whom the burden of proof lies. Section 123 of the Customs Act deals
with the burden of proof in certain cases. Sub Section (1) states that where
any goods to which the said section applies are seized under the Act in the
reasonable believe that they are smuggled goods, the burden of proving that
they are not smuggled goods shall be (a) in a case where such seizure is
made from the possession of any person- (i) on the person from whose
possession the goods were seized; and (ii) if any person other than the
person from whose possession the goods were seized, claims to be the
owner thereof, also on such other persons; (b) in any other case, on the
person, if any, who claims to be the owner of the goods so seized. Sub
Section (2) states that Section 123 shall apply to gold and manufacturers
thereof, watches and any other class of goods which the Central
Government may by notification in the official Gazette specifies.
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11. What is important to note is that Section 123 enacts that where any
goods to which the Section applies, are seized under the Act in the
reasonable believe that they are smuggled goods, the burden of proving that
they are not smuggled goods shall be on the person from whose possession
the goods were seized, the burden thus shifts under the conditions specified
in the Section and the conditions being the seizure of goods to which the
section applies, seizure under the Act (Customs Act) and seizure in the
reasonable believe that they are smuggled goods. When these three elements
are proved, the burden would shift to the accused to show that they are not
smuggled goods.
12. It has been held that the section does not compel the officers to give
reasons and the non-mention of reasons does not vitiate the authorization,
even though it was always proper for the officers to give reasons (Assistant
Collector of Customs Versus Pratap Rao Sait and Others 1). Thus when
Section 123(1) of the Act casts on the person concerned, the burden of
proving that the goods are not smuggled goods, it is up to him to show
whether that goods are not of foreign origin and hence not smuggled or that
the goods are of foreign origin, but not smuggled goods, having been lawfully
acquired.
13. Reasonable belief that goods are smuggled goods is to be judged from
the Customs Officers experience and that sufficiency of material leading to
formation of belief is not generally open to judicial review. However, the
opinion of the customs officers cannot be wholly objective and the courts
can examine the correctness and the circumstances leading to such belief.
1972 CrLJ 1135
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Therefore, it would be sufficient if the circumstances on the material before
the officer, prima facie gives sufficient grounds to entertain the belief, one
such factor being prior information.
14. Having noted the above legal position, we are required to examine as
to what was the stand taken by the respondent and the two others co
noticees. As could be seen from the averments set out in the show cause
notice, and the adjudication order, a slight inconsistency is noticed in what
the respondent and other noticees have stated. In the statement recorded
under Section 108 of the Act on 06.08.2018, from the respondent herein
who was the first notice, he had stated as herein:-
9. Statement of Shri Rajendra Kumar Damani alias
Raju Damani was recorded under Section 108 of
the Customs Act, 1962 on 06.08.2018, wherein, he
inter-alia stated that;
I. He has a jewelry trading Co. at 72
Monohar Das Street Ground floor in his
name (Rajendra Kumar Maheshwari)
whose license was acquired by him 5-6
years back.
II. After working at the said shop for
some days he indulged himself into
illegal business of gold bullion and he
was in that illegal business of gold
bullion for the last 2 years and earned
at about Rs. 50,000/- to 60,000/- per
month.
III. He makes profit of about Rs. 2000/-
to Rs. 3000/- on trading, per kg of the
gold. He operates from his office at 72
Monohor Das Street and 2nd floor of 17,
Paggaypatty office, Kolkata
IV. Whatever gold he sold and
purchased had illegally been smuggled
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into India. He did not keep any
documents, neither had he bought gold
on documents nor did he sell the gold on
documents. He also stated that he
carried out the whole business illegally.
V. He used to buy illegally smuggled
gold of foreign origin from 1). Pradip
Gupta (mobile number 9830023195) at
47B, Nalini Seth Road Maa Ambay
Jelwers, Kolkata 7, 2nd floor. 2). Sanker
(mobile number 8910380072) at Sona
Patti, Kolkata 7, 3). Aloke (mobile
number 9903193619) at Sona Patti,
Kolkata 7. Apart from them, there are
some other people namely Gopal, Manoj
and Nandu who used to sell him
smuggled gold of foreign origin. Phone
number of Gopal is 9831426223 and
Nandu is 9874618102. But he doesn't
know phone number of Manoj and his
shops name and address. Sanakar and
Aloke delivers the gold by themselves
and Pradip Gupta of Maa Ambay
Jelwers sends his staff Rajesh to deliver
the smuggled gold. He takes delivery of
20/25/30 kg of smuggled gold of
foreign origin per month from them. As
per his knowledge, the smuggled gold of
foreign origin are brought into India in
Biscuits form, which are then melted to
transform into 1 kg Bar by the people of
Sonapatti. He had/has given
instructions to them to deliver only such
1kg gold bars without any marking on
them. On receiving the same, he used to
sell those gold bars to different parities,
among which, Mr. Anil Agarwal of
Banda, M.P, Mr. Abishek Agarwal @
Pawan (mobile number of 7080367020)
and Gurudas Babu (Land
phone0332258-1730) of Sonapatti were
his primary customers. Sometime, one
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Deepak of Mirzapur (mobile number
9044381101) used to come to take
delivery of the gold. He also stated that
he used to make all the transaction in
cash and all those transaction did not
have any legal documents.
VI. He has an account in H.D.F.C Bank
and Axis Bank of Bourbourn Road
Branch. The total balance, at that time,
in both the accounts, amounts to Rs. 6
lac approximately. He also stated that
he did not have any other bank account
either in his name or in the name of his
company i.e. Rajendra Kumar
Mahaswari.
VII. On 06/08/2018, he reached his
Office at 72 Manohar Das Street,
Kolkata 700007, at around 11 AM in the
morning. As usual, his three Parties
namely, Maa Ambay Jewlers, Sankar
and Aloke came and gave delivery of
4kgs, 2 kgs and 2 kgs of gold bars of 1
kgs, of foreign origin without any
markings to him. With that he reached
his shop/godown at 17 Pageyapatty,
Kolkata - 700007. He already had 2.50
Kgs Gold in the Office. In the morning
only Shri. Anil Agarwal of Banda had
told him that to buy 4 kg gold for which
Shri. Anil Agarwal of Banda had sent
Rs. 1 Crore 8 lakh through his staff to
shop/godown at 17 Pageyapatty,
Kolkata - 700007 at around 12 noon. He
had kept 8 kgs gold in his shop/godown
at 17 Pageyapatty, Kolkata, took Rs. 35
Lakh with him and came back to his
Office at 72 Manohar Das Street,
Kolkata. Thereafter, Officers of DRI led
by Deputy Director along with 2
panchas came to his Office at 72
Manohar Das Street, Kolkata at around
1.30 PM. Then he narrated the whole
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incidence of interception, search,
recovery, preliminary assaying and
seizure.
VII. On being asked, he stated that, Shri
Sanatan Behra @ Hari do the work of
cleaning the office at 72 Monohar Das
Street besides receiving illegal gold bar
and cash rupees from different parties.
He further stated that Bhola Rai do the
work of cleaning the office at 17 Paggay
Patty besides receiving illegal gold bar
and cash rupees from different parties.
He added that both of them are well
aware of his illegal business and he
used to pay Rs. 10,000 per month to
Sanatan Behra @ Hari and Rs. 9,000
per month to Bhola Rai.
IX. On being asked about Shri Abhishek
Kumar Agrawal he stated that at the
time of search at his 17 Paggay Patty
office, Shri Abhishek Kumar Agrawal @
Pawan came to buy gold bar from him in
illegal manner. He also stated that
previously, i.e. more or less 10 days ago
from that day Shri Abhishek Kumar
Agrawal @ Pawan bought about 500 gm
of gold bar from him. Also Shri Abhishek
Kumar Agrawal stated that he
possessed Rs. 15 lakh (which was
recovered from Abhishek Kumar
Agarwal) and he came to take delivery
of 500 gram gold.
X. Earlier only once he delivered gold to
Shri Abhishek Kumar Agrawal @
Pawan.
XI. For the last two years, he was in
that business of buying and selling gold
bar in an illegal manner due to which
his business accelerated and those
recovered and seized cash amount were
results of that illegal business. He also
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stated that he received those cash
amount on selling gold bar in an illegal
way.
XII. His prime source of income is
buying and selling the gold in an illegal
way. He further stated that the cash
amount recovered from his
residence was the sale proceeds of
the gold.
XIII. He used to keep contact with
Sankar and Aloke through his mobile
no. 9831111575 and 8334042852. He
mentioned that Aloke roam around to do
this work and Sankar has one Jewelry
shop which is situated near Dhramkata
at Sonapatti. He visited twice or thrice to
his shop, but he did not have the exact
details of his shop. He did not know
anything about their residential
address.
15. The authority while issuing the show cause notice dated
28.07.2019 after considering the statement given by the respondent herein
and other matters connected therewith, explained the role of the respondent
in paragraphs 27.1 of the show cause notice which is as follows:-
27.1 Shri Rajendra Kumar Damani alias
Raju Damani: From the statement dated
06.08.2018 and 07.08.2018 of Shri Rajendra
Kumar Damani alias Raju Damani, recorded
under Section 108 of the Customs Act, 1962,
it could be seen that Shri Rajendra Kumar
Damani used to do trading of the smuggled
gold and silver of foreign origin by way of
procuring them from different person at Sona
patti, Kolkata. The very fact that he never did
the trading of Gold and silver under cover of
legal documents establishes that the Gold
and silver which he used to trade are
procured illegally. Shri Rajendra Kumar
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Damani, in his Statements, given under Sec.
108 of Customs Act, 1962, has categorically
admitted that the 11 pieces of gold bars
seized from his possession are smuggled
gold of foreign origin which had been melted
and were delivered to him without markings,
as per his instructions. It is ostensible that
the huge cash in India currency, recovered
from the office and residential premises of
Shri Rajendra Kumar Damani were the sale
proceeds of the illegal gold. Shri Rajendra
Kumar Damani alias Raju Damani, has
failed to produce documents evidencing their
licit source. Moreover, Shri Rajendra Kumar
Damani alias Raju Damani, in his statements
recorded under Sec. 108 of Customs Act
1962, has admitted that these are the sale
proceeds of the smuggled gold and also that
he had been involved in the said illicit
trading of smuggled gold in the past also.
Most importantly, in the said seized Indian
Currency Notes, one Indian Currency of
denomination of Rs. 2000/- has been found
to be Fake Currency (FICN), which also
clearly indicates that the entire amount was
sale proceed of the smuggled gold which
came into his possession, by way of Hawala
transactions. He personally controlled and
headed this illegal business of smuggled
gold, in lure of money. The magnitude of
smuggling in which he engaged himself is
shocking. The unexplainable Indian Currency
recovered from the Office and residential
premises of Shri Damani established the fact
of his involvement in the business of
smuggling gold for long time causing havoc
on the economy of the Country. In the
statement of Shri Rajendra Kumar Damani
alias Raju Damani, recorded under Section
108 of the Customs Act, 1962, on 06.08.2018
and 07.08.2018 he stated that he took
delivery of 4 kg, 2 kg and 2 kg of gold of
foreign origin from his three parties namely
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Maa Ambay Jelwers (Prop. Pradip Gupta),
Sanker and Aloke respectively. However,
from the Call Detail Report (CDR) of the
mobile number 9831111575, stated to be
used by Shri Rajendra Kumar Damani alias
Raju Damani, it could be seen that no call
was made from Rajendra Kumar Damani to
his said three parties or vice-versa and also
that in the statement of the said three
persons they have denied of supplying the
said gold to Shri Rajendra Kumar Damani
alias Raju Damani. Further, it could be seen
from the statements of Shri Ashok Kumar
Jalan @ Pappu Jalan and Shri Amit Jalan
and the CDR of the mobile number
9831111575, that the actual supplier of the
10.5 Kg gold seized from the shop of
Rajendra Damani was Shri Ashok Kumar
Jalan and Amit Jalan. However, Shri Raju
Damani knowingly suppressed the true fact
with an intention to shield his principal
supplier and tried to jeopardize the
investigation. On the other hand he tried to
rope in some small traders which proves his
criminal intention.
From the foregoing, it appears that Shri
Rajendra Kumar Damani, knowingly
indulged himself in smuggling of gold for
monetary benefit. Further, Shri Damani
appears to have suppressed the name of
actual supplier of the smuggled gold by
naming some of the name of small
businessman of Sonapatti, Kolkata with a
mala-fide intention to hide the actual supplier
of the smuggled gold from the clutch of law of
the land.
Thus it appears that Shri Rajendra Kumar
Damani had been knowingly involved in the
Illegal activity of smuggling gold and he in
connivance with Shri Bhola Ray @ Bholi Ray
and Shri Sanatan Behera alias Hari
smuggled 11 pcs of gold weighing 10500.800
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gms valued at Rs.3,15,02,400/-, 9 pcs of
gold coin, valued at Rs. 2,07,000/- and
509.100 grams of silver granules, valued at
Rs. 19,448/-, in the instant case of seizure,
along with seized Indian Currency Note of
Rs. 1,74,76,500/-. It therefore appears that
he is involved in carrying, removing, keeping
and dealing with the said goods in any other
manner which he knew were liable for
confiscation under Section 111(b),111 (d) &
121 of the Customs Act, 1962, and thus
appears to be liable for penalty under Section
112(a) and/or 112(b) & 117 of the Customs
Act, 1962.
16. In the reply to the show cause notice which has been noted by the
adjudicating authority in paragraph 30.1, it was contended that the gold did
not have any foreign markings or any foreign inscription to establish that
the seized gold was of foreign origin and in spite of the same these officers
formed the reasons to believe that the seized gold bars were of foreign origin.
Reiterating the submissions made in the reply dated 26.11.2019, it was
stated that the seized gold bars and coins were obtained after importing of
old and used gold jewellery which were by no means smuggled. Further it
was contended that the chemical tests report also does not proof that the
gold to be of foreign origin and smuggled as eleven pieces of seized gold bars
the purity has been found to be 99.5% and the purity of nine gold coins
have been found to be about 91% and therefore there are no grounds to
presume that the gold under seizure was of foreign origin and smuggled into
India. With regard to the seized Indian currency, it was submitted that no
incriminating records or gold or goods were found along with the Indian
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currency, therefore it cannot be considered as sale proceeds of the smuggled
goods.
17. As could be seen from the statement recorded under Section 108
of the Act on 06.08.2018, the respondent has admitted that he indulged
himself into illegal business of gold bullion and he was in that illegal
business for the last two years and whatever gold he sold and purchased
had illegally been smuggled into India and he did not keep any documents
neither had he brought gold with documents nor did he sell the gold on
documents. He had also stated that he carried out the whole business
illegally and he used to buy the illegally smuggled gold of foreign origin from
six persons and that for the last two years, he was in the business of buying
and selling gold bars and that the recovered and seized cash amount were
result of selling of the smuggled gold bars.
18. The adjudicating authority on facts found that the respondent
and the other two noticees who were also the appellants before the tribunal
could not produce any document in support of importing/ possessing/
carrying/ otherwise dealing with gold so recovered and seized from them
and therefore held that they failed to discharge the burden of proof as
required under Section 123 of the Act. Further the adjudicating authority
held that no documents could be produced by the respondent and the two
other co-noticees in support of legally possessing the silver granules. With
regard to the Indian currency notes which was seized the adjudicating
authority holds that the respondent failed to produce any documents
evidencing the source of the said cash and has referred to the admission in
the statement recorded under Section 108 of the Act that they are the sale
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proceeds of the smuggled goods. In the background of these facts, the order
of absolute confiscation and imposition of penalty was passed.
19. Before the appellate authority, the grounds raised by the
respondent and other co noticees before the adjudicating authority were
reiterated in a more elaborate fashion and the decisions of the courts were
referred to. The appellate authority considered the stand taken by the
respondent and the other two co noticees and found that the respondent
and other co noticees could not produce any document in support of
importing/ possessing/ carrying/ otherwise dealing with the gold so
recovered and seized from them and they had failed to discharge the burden
of proof as required under Section 123 of the Act and accordingly affirmed
the view taken by the adjudicating authority. Reliance was placed on the
decision of the Hon'ble Supreme Court in Om Prakash Katari Versus
Commissioner 2 which upheld the decision of the High Court of Kerala
wherein it was held that the appellant therein having been unable to explain
the source of the gold which was confiscated, the order passed by the High
Court cannot be interfered and the appeal was dismissed.
20. Thus, it is seen that though a faint plea was taken before the
appellate authority as well as before the adjudicating authority that the gold
came into possession through purchase of old gold jewellery was never
established by the respondent and other co noticees at any point of time
that apart that no documents were produced with regard to the source of
the money which was seized which was the Indian currency. In the light of
2019 (368) ELT (A) 155 SC
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the above factual conclusion, the appellate authority affirmed the order
passed by the adjudicating authority.
21. When the matter travelled on appeal to the learned tribunal
what was required to be seen is whether the respondent and other co
noticees were able to establish the stand taken by them that the gold was
obtained by them by purchasing old gold jewellery. Before the tribunal,
apart from reiterating the stand taken before the appellate authority, it was
contended that the respondent and the other noticees have retracted their
statements on the ground that they were not voluntary and therefore the
statement recorded under Section 108 cannot be relied on. The department
contended that in terms of Section 123 of the Act, the burden is on the
respondent and having failed to discharge the burden, the adjudicating
authority rightly ordered for absolute confiscation and imposed penalty.
22. With regard to the effect of an alleged retractive statement and
its evidential value, the department referred to several decisions which
include the decision of the Hon'ble Supreme Court in Percy Rustomji Basta
Versus State of Maharashtra 3 and Surjeet Singh Chhabra Versus
Union of India and Others 4. The learned tribunal in paragraphs 17
records that during the course of investigation, it was found that there was
no mark on the gold seized and the purity of the gold was found to be 99.5%
and not 99.9% and during the course of investigation, the respondent has
made a statement stating that the source of procurement of the said gold is
made from old jewellery purchased in exchange of cash during the long
1983 ELT 1443 (SC)
1997 89 ELT 646 (SC)
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period of time and due to the stock of gold was melted through the said old
jewellery and converted into gold bars. The tribunal holds that this fact has
not been verified by the revenue. After recording such a finding, the tribunal
has referred to certain decisions and holds that he noticees have explained
the source of procurement of gold which is not denied by the revenue and
further having no mark on the gold and purity of the gold is not in
conformity of the foreign gold, the benefit of doubt goes in favour of the
noticees.
23. Further the tribunal holds that the statements recorded during
the investigation was retracted by the respondent and other two co noticees
and they are not admissible in absence of corroborative evidence. After
referring to certain decisions, the tribunal hold that the currency seized
from the respondent and the other two co noticees were not established by
the revenue with corroborative evidence to show that the same are the sale
proceeds of smuggled gold and then proceeds to refer to a certain decision
and has recorded its conclusion in paragraph 26 holding that the
respondent and the two co noticees have submitted that the
smuggled/procured gold in question is made out of old gold jewellery
purchased in cash and the said fact has not been denied by the revenue by
any cogent evidence, therefore the gold in question is not liable for
confiscation and the same is required to be released. Further the tribunal
holds that the revenue has failed to establish the fact that the cash
recovered from the respondent and the two co noticees are the sale proceeds
of the smuggled gold and therefore the cash seized cannot be confiscated
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and the same is required to be released. Further the tribunal holds that no
penalties are imposable on the respondent and the two co noticees.
24. What is important to note is that though the respondent took a
plea that the gold bars was made out of old gold jewellery purchased in cash
it was a very faint plea which was raised by the respondent and the co
noticees. Assuming such a plea was required to be considered, the onus is
on the respondent and the co noticees to establish with documents that the
gold which was seized was from and out of the old gold jewellery purchased
by cash. This aspect of the matter was never established by the respondent
and the co notices. Therefore, the learned tribunal erroneously shifted the
burden on the department stating that the same has not been denied. The
question of denial will come only if the onus is discharged by the respondent
and the co noticees as required under Section 123 of the Act. Thus, without
any document placed by the respondent and the co noticees, the tribunal
could not have come to the conclusion that the department did not establish
the same by cogent evidence. This finding is absolutely perverse and
contrary to the scheme of Section 123 of the Act.
25. The respondent and the other co noticees would contend that
the purity of the gold not been 99.9%, it is established that it is not
smuggled gold. Such conclusion cannot be arrived at in the absence of any
proof to show that the gold was from and out of the gold jewellery which was
purchased for cash. That apart, merely because the statement is said to
have been retracted, it cannot be regarded as involuntary or unlawfully
obtained. In this regard, the revenue has rightly placed reliance on the
decision of the Hon'ble Supreme Court in Vinod Solanki Versus Union of
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India and Others 5. If the learned tribunal was of the view that the
statement recorded under Section 108 of the Act was not admissible on
account of the retraction, that by itself cannot render the statement as
involuntary. It is the duty casts upon the court to examine the correctness
of the validity of the retraction, the point of time at which the retraction was
made whether the retraction was consistent and whether it was merely a
ruse. These aspects have not been examined by the learned tribunal
resulting in perversity. The mobile phones which were recovered and the call
details record which were obtained have all been elaborately discussed by
the adjudicating authority. This aspect has not been dealt with by the
learned tribunal. The seizure cannot be denied by the respondent since the
seizure list was drawn in the presence of two independent witnesses and the
DRI officers and copy of which was handed over to the respondent and the
other two co noticees. Further we find there was nothing on record before
the learned tribunal to hold that mere melting of old gold jewellery will yield
gold of less purity and considering the quantity which has been seized, it
can never be the case of the respondent or the other two co noticees that
they have done the melting process at their residence as such melting
requires expertise and also use of several chemicals. Thus, the observations
of the tribunal have to be held to be without any basis or foundational facts
or documents.
26. Thus, for all the above reasons, we find that the order passed by
the tribunal suffers from perversity and calls for interference.
(2009) 233 ELT 157 (SC)
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27. In the result, the appeal is allowed and the order passed by the
learned tribunal is set aside and the order passed by the adjudicating
authority as affirmed by the appellate authority is restored. The substantial
questions of law are answered in favour of the revenue.
(T.S. SIVAGNANAM, CJ.)
I Agree
(HIRANMAY BHATTACHARYYA, J.)
(P.A - SACHIN)
