Madras High Court
Commissioner Of Customs vs Mohammed Ali Jinnah on 9 May, 2025
Author: C.Saravanan
Bench: R.Suresh Kumar, C.Saravanan
2025:MHC:1211
C.M.A.No.2685 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 03.10.2024
Pronounced on 09.05.2025
CORAM :
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
and
THE HONOURABLE MR.JUSTICE C.SARAVANAN
C.M.A.No.2685 of 2023
and
C.M.P.No.24899 of 2023
Commissioner of Customs,
Chennai II Commissionerate,
Custom House,
60, Rajaji Salai,
Chennai – 600 001. ... Appellant
Vs.
Mohammed Ali Jinnah ... Respondent
Prayer: Appeal under Section 130 of the Customs Act, 1962, to set aside
the order passed by the CESTAT, Chennai in Customs Appeal
No.40099/2020 dated 20.04.2023 and allow the said Customs Appeal.
For Appellant : Mr.Sai Srujan Tayi
Senior Standing Counsel
For Respondent : Mr.B.Kumar
Senior Counsel
for Mr.T.Sudhanraj
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C.M.A.No.2685 of 2023
JUDGMENT
(Judgment of the Court was delivered by C.SARAVANAN, J.)
This Civil Miscellaneous Appeal has been filed by the Appellant,
the Commissioner of Customs, Chennai II Commissionerate, Chennai
against the Final Order No.40289 of 2023 dated 20.04.2023 passed by
the Customs, Excise and Service Tax Appellate Tribunal (CESTAT),
Chennai in Customs Appeal No.40099 of 2020 under Section 130 of the
Customs Act, 1962 (hereinafter referred to as the 'Impugned Order').
2. By the Impugned Order, the aforesaid appeal filed by the
Appellant/Customs Department before CESTAT, Chennai against the
Order-in-Appeal bearing reference Seaport C.Cus.II No.550 of 2019 dated
14.11.2019 has been dismissed. By the Order-in-Appeal Seaport C.Cus.II
No.550 of 2019 dated 14.11.2019, the Appellate Commissioner allowed
the appeal filed by the Respondent against Order-in-Original No.65168 of
2018 dated 10.09.2018 passed by the Additional Commissioner of
Customs, (Chennai-III) Commissionerate, Chennai.
3. The Respondent had earlier suffered an adverse order in Order-
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in-Original No.65168 of 2018 dated 10.09.2018 from the File
No.OS.No.08/2017-PAU/DRI/CZU/VIII/48/ENQ-1/INT-01/2017 in the
hands of the Additional Commissioner of Customs, (Chennai-III)
Commissionerate, Chennai.
4. By the aforesaid Order-in-Original No.65168 of 2018 dated
10.09.2018, the Additional Commissioner of Customs, (Chennai-III)
Commissionerate, had passed the following Order:-
i. I confiscate the seized 3.097 kg of foreign origin gold
bars, totally valued at Rs.91,98,090/- under Section
111(a), 111(d) and 111(i) of the Customs Act, 1962.
ii. I confiscate the packing materials with no commercial
value used for concealing the smuggled gold bars
under Section 119 of the Customs Act, 1962.
iii. I impose penalty of Rs.5,00,000/- (Rupees Five Lakhs
Only) on Shri Mohammed Ali Jinnah under Section
112 of the Customs Act, 1962.
iv. I impose a penalty of Rs.10,00,000/- (Rupees Ten
Lakhs Only) on Shri Murugan under Section 112 of
the Customs Act, 1962.
v. I impose a penalty of Rs.10,00,000/- (Rupees Ten
Lakhs Only) on Shri Batcha @ Pitchai under Section
112 of the Customs Act, 1962.
5. The Additional Commissioner of Customs, Chennai-III
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Commissionerate has also imposed a personal penalty on the Respondent
for sum of Rs.5,00,000/- and Rs.10,00,000/- each on the said Murugan
and Batcha alias Pitchai under Section 112 of the Customs Act, 1962.
6. The above decision was reversed by the Appellate Commissioner
vide Order-in-Appeal Seaport C.Cus.II No.550 of 2019 dated 14.11.2019
after framing the following issues:-
(a) Whether the Gold bars are of foreign origin?
(b) Whether they are of standard size?
(c) Whether the case was proved by DRI with
cogent evidences?
(d) Whether the smuggling was corroborated with
evidences?
(e) Whether the confiscation was legal?
(f) Whether penalty is liable to be imposed?
7. The Appellate Commissioner concluded that the investigation
was incomplete so as to conclude that the seized crude gold bars were
smuggled or whether the crude gold bars are of standard size of foreign
origin with foreign marking and therefore no penalty can be imposed.
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8. On a specific intelligence that a person, who was said to be
travelling from Devakottai and was carrying 2 smuggled crude gold bars
of foreign origin/foreign marked weighing 1720 grams and 1377 grams in
a black colour backpack, the Directorate of Revenue Intelligence (DRI)
intercepted the Respondent when the Respondent reached the Pallavaram
Bus Stand. The Respondent was arrested on 23.01.2017 and was later
released on a personal bond.
9. On the date of arrest of the Respondent i.e., on 23.01.2017, a
mahazar was drawn and the two crude gold bars were seized from the
Respondent. At the time of arrest and during the interrogation, the
Respondent had initially denied possessing the smuggled gold bars of
foreign origin with foreign mark in person or in his luggage.
10. However, on a persistent enquiry by the officers of the
Directorate of Revenue Intelligence (DRI), the Respondent admitted that
he was indeed carrying gold bars which were concealed and kept in his
bag. The Respondent thus handed over the bag to the Officers of the
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Directorate of Revenue Intelligence (DRI).
11. During the personal search, the Officers recovered a copy of the
Aadhaar Card bearing No.6674 6560 5340, 4 Bus Tickets viz., Ticket
No.047841, Ticket No.29737, Ticket No.85449 and Ticket No.084311
and Ticket No.80372 for Trichy to Chennai.
12. The Officers found two packets of gold bars wrapped with blue
adhesive tape which were kept in green and blue polythene bags and on
cutting the two packets after removal of the blue adhesive tapes from the
two packets, it was found wrapped in black tape, brown adhesive tape and
thin white paper. The packet contained 2 crude gold bars weighing about
3097 grams (1720 grams + 1377 grams) and was valued a total sum of
Rs.91,98,090/- at Rs.2,970/- per gram.
13. The seized gold bars appeared to have been concealed and
smuggled into India from Srilanka without declaring with the Customs
Department with an intention to avoid payment of appropriate customs
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duties and therefore were liable for confiscation under the provisions of
the Customs Act, 1962 and therefore, a mahazar was drawn on
23.01.2017.
14. In a voluntary statement dated 23.01.2017, the Respondent also
stated that one person named Murugan aged about 55 years from
Pudhupattinam in Ramanathapuram District had approached him on
22.01.2017 for carrying the smuggled gold from Srilanka for being handed
over and delivered to one Batcha alias Pitchai at Chennai for a monetary
consideration of Rs.5,000/- and that the Respondent agreed to carry the
aforesaid gold and thus carried the gold packed in a plastic cover and got
into the bus that would go to Aranthangi and further proceed to Chennai
via., Trichy.
15. The Respondent in his voluntary statement further stated that he
reached Perungalathur (outskirts of Chennai) on 23.01.2017 and the said
called Batcha alias Pitchai to come to Pallavaram Bus Stand and that
while waiting at Pallavaram, he was intercepted by the Officers of the
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Directorate of Revenue Intelligence (DRI), when he admitted to the
concealment of smuggled gold in his bag and that he was present during
the Mahazar Proceedings on 23.01.2017.
16. In the Mahazar Statement, the Respondent appears to have also
stated that on 4 to 5 earlier occasions also, the Respondent had travelled in
bus to hand over smuggled gold bar which the Respondent used to collect
from the said Murugan for being handed over to Batcha alias Pitchai for
a monetary consideration of Rs.5,000/- and admitted that he was not the
owner of the gold and that he was aware that the gold bars were smuggled
from Srilanka and were without payments of customs duty and without
any bill/receipt or any other document for the legal possession.
17. However, on 20.02.2017, the Respondent retracted his
statements dated 23.01.2017 and 24.01.2017 and stated that gold was
acquired by the Respondent from his earnings when he was abroad and
that the Respondent had made the crude gold bars through a goldsmith in
Nambuthalai.
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18. In Letter dated 05.04.2017, the Respondent further stated that
the seized gold bars were not smuggled and that the same were his
earnings and that the seized gold was purchased in India only and he had
saved it for his daughter's marriage and that he converted the gold biscuits
into crude gold bars and was supposed to sell the same in Chennai to buy
jewellery for his daughter's marriage.
19. The Respondent in his voluntary statement on 07.06.2017 under
Section 108 of the Customs Act, 1962, admitted that he was present during
the mahazar proceedings on 23.01.2017 and further agreed with his
voluntary statement on 23.01.2017 and 24.01.2017 that he travelled from
Devekottai and reached Chennai and that he maintained a Bank Account
in Indian Overseas Bank (IOB), Devakottai and that had earlier worked
in Malaysia and Saudi Arabia and submitted a copy of the passport.
However, the Respondent admitted that he neither had a PAN Card nor
was an Income Tax Assessee.
20. The Respondent was thus summoned on 10.04.2017 for personal
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appearance on 17.04.2017 to which the Respondent replied that he was not
well and would later appear. Letters were also received from Shahul
Hameed, Ayesha Beevi and Nashrina Begum, the father, the mother and
the wife of the Respondent, who claimed that the seized gold bars were
not smuggled gold bars but were purchased in India only from the
Respondent earnings.
21. However, on verification from the Bank Statement of the
Respondent, it was noticed that the Respondent only had a meagre bank
balance of Rs.415/- and mostly cash deposits and withdrawals were made
only during the period before the seizure of the gold.
22. The Additional Chief Metropolitan Magistrate (E.O.I),
Egmore, Chennai vide Order dated 31.08.2017 in Crl.M.P.No.1818 of
2017 confirmed that the seized crude gold bars did not have any foreign
markings. Necessary certificate was issued by the Magistrate to that effect
under Section 110 (1B) and Section 110 (1C) of the Customs Act, 1962.
Although gold bar is not a perishable item, the Government in the exercise
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of its power under the Customs Act, 1962 has issued Notification bearing
M.F.(D.R.) Notification No.72/97-Cus (N.T.) dated 22.12.1997 and
amended Notification bearing M.F.(D.R.) Notification No. 31/80-Cus,
dated 05.02.1986 as already amended by Notification No.42/89 (N.T.)-
Cus., dated 30.06.1989; No. 7/93-Cus. (N.T.), dated 25.01.1993; No.
10/95-Cus, (N.T.), dated 01.03.1995.
23. In this background, the Respondent was issued with
SCN.F.No.DRI/CZU/VIII/48/ENQ-1/INT-01/2017 dated 21.07.2017
along with two named persons Murugan and Batcha alias Pitchai under
Section 124 of the Customs Act, 1962.
24. Arguing the case on behalf of the Department, the learned
Senior Standing Counsel for the Appellant Department relied on the
following Judgments rendered by the Hon'ble Supreme Court, Bombay
High Court, Kerala High Court and that of this Court both in the context
of the Customs Act, 1962 and the Sea Customs Act (India Act VIII, 1878):
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i. Pukhraj Vs. D.R.Kohli, Collector of Central Excise,
Madhya Pradesh and Vidarbha and another, AIR 1962
SC 1559 / 1962 SCC OnLine SC 154.
ii. Kewal Krishan Vs. State of Punjab, AIR 1967 SC 737 /
1962 Supp (3) SCR 613.
iii. M/s.Kanungo & Company Vs. Collector of Customs
and others, (1973) 2 SCC 438.
iv. Collector of Customs, Madras and others Vs.
D.Bhoormall, (1974) 2 SCC 544.
v. Om Prakash Khatri Vs. Commissioner of Customs,
Cochin in Civil Appeal No.5069 of 2019 dated
04.07.2019.
vi. Patel Engineering Limited Vs. Union of India and
another, 2014 SCC OnLine Bom 791 / (2014) 307 ELT
vii. Commissioner of Customs Vs. Om Prakash Khatri,
2019 SCC OnLine Ker 836 / (2019) 2 KLT 246.
viii. Shri A.L.Jalaludeen @ Chellavappa Vs. The Deputy
Director, Enforcement Directorate Shastri Bhavan,
Chennai – 600 006, 2009 SCC OnLine Mad 720 / (2009)
5 Mad LJ 1303.
25. Assailing the Impugned Order, the learned Senior Counsel for
the Respondent submitted that the present Civil Miscellaneous Appeal was
without any merits and is liable to be dismissed.
26. It is submitted that even though the burden of proof is on the
person from whose possession, the goods were seized under Section 123
of the Customs Act, 1962, the initial burden of proof has been discharged
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by the Department. It is therefore submitted that Order-in-Original
No.65168 of 2018 dated 10.09.2018 that was passed by the Additional
Commissioner of Customs, Chennai-III Commissionerate was rightly
interfered and set aside by the Appellate Commissioner vide Order-in-
Appeal Seaport C.Cus.II No.550 of 2019 dated 14.11.2019 which
decision was affirmed by the Customs, Excise and Service Tax Appellate
Tribunal (CESTAT) vide Impugned Order.
27. Learned Senior Counsel for the Respondent further submits that
at the time when the mahazar statement was recorded, telephone numbers
of the said Murugan and Batcha alias Pitchai were recorded. However,
no statements were obtained from the said Murugan and Batcha alias
Pitchai.
28. It is submitted by Learned Senior Counsel for the Respondent
that the seized gold bars were assayed i.e., valued by appropriate gold
assayer on 24.01.2017 who certified that the 2 gold bars were of 24 Carat
of the purity (99.9%) of 999.9 fineness and that the value of the crude gold
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bar weighing about 3097 grams worked out to Rs.91,98,090/-. It is
however submitted that the Certificate of assayer was not furnished to the
Respondent at the time of mahazar proceedings on 23.01.2017 or
thereafter.
29. That apart, it is submitted on behalf of the Respondent that the
Certificate of assayer is dated 24.01.2017 and was produced for the first
time before Customs, Excise and Service Tax Appellate Tribunal
(CESTAT), whereas the mahazar was drawn on 23.01.2017. There is large
scale irregularity in the investigation.
30. Arguing the case on behalf of the Respondent, the learned
Senior Counsel for the Respondent relied on the following cases rendered
by the Hon'ble Supreme Court, Allahabad High Court, Karnataka High
Court, Delhi High Court and that of this Court and the Order of Customs,
Excise and Service Tax Appellate Tribunal (CESTAT):
i. Radha Kishan bhatia Vs. Union of India and others,
AIR 1965 SC 1072.
ii. Amba Lal Vs. Union of India, AIR 1961 SC 264 /
1960 SCC OnLine SC 67.
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iii. Gian Chand and others Vs. State of Punjab, AIR
1962 SC 496.
iv. Vinod Solanki Vs. Union of India and another,
(2008) 16 SCC 537 / 2008 SCC OnLine SC 1917.
v. A.Tajudeen Vs. Union of India, (2015) 4 SCC 435 /
2014 SCC OnLine SC 807.
vi. Mohtesham Mohd. Ismail Vs. Spl. Director,
Enforcement Directorate and another, (2007) 8 SCC
vii. Commissioner, Customs (Preventive) Sector H
Aliganj Lucknow Vs. Shakil Ahmad Khan and
others, 2019 (2) TMI 465.
viii. Central Excise Department, Bangalore Vs.
P.Somasundaram, 1979 SCC OnLine Kar 187.
ix. Customs Vs. Dina Aruna Gupta, 2011 (7) TMI 383.
x. Shanti Lal Mehta Vs. Union of India and others,
1982 SCC OnLine Del 303 / 1983 ELT 1715.
xi. D.V.Kishore Vs. The Commissioner of Customs
(Seaports – Imports), Customs House, Chennai and
another, 2017 SCC OnLine Mad 17861 / (2017) 350
ELT 527.
xii. Shri Sarvendra Kumar Mishra and another Vs.
Commissioner of Customs, Lucknow, 2021 (9) TMI
405 (Customs Appeal Nos.70437 and 70438 of 2020,
Final Order Nos.70198 and 70199 of 2021 dated
06.09.2021)
xiii. M/s.Ankit Agarwal Vs. Commissioner of Customs
(Preventive), Kolkata, 2020 (10) TMI 783 (Customs
Appeal No.76862 of 2018, Final Order No.75504 of
2020 dated 16.10.2020)
31. Learned Senior Counsel for the Respondent would further
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contend that the Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) has appreciated both the oral and documentary evidence placed
on record in proper perspective and has rightly dismissed the appeal
preferred by the Appellant as against the Order passed by the
Commissioner of Customs (Appeals-II), Chennai, who also on going
through the entire materials placed before him, has set aside the
confiscation of goods (gold) and also penalties imposed by the
adjudicating authority. Therefore, it is contended that both the authorities
below have rightly adjudicated the matter and passed well-considered
orders which require no interference.
32. It is submitted by the learned Senior Counsel for the Respondent
that the observation of the Additional Chief Metropolitan Magistrate
(E.O.I), Egmore, Chennai vide Order dated 31.08.2017 in
Crl.M.P.No.1818 of 2017 that the seized crude gold bars did not have any
foreign markings which ought to have been considered by the Additional
Commissioner of Customs, Chennai-III Commissionerate while ordering
absolute confiscation of the gold bars seized from the respondent
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weighing about 3097 grams under Section 111(a), (d) and (i) of the
Customs Act, 1962 while passing Order-in-Original No.65168 of 2018
dated 10.09.2018.
33. Learned Senior Counsel for the Respondent pointed that the
Appellant had failed to prove that the seized gold was of foreign origin.
Further, it is the case of the Appellant that the gold was seized from the
Respondent at a public place i.e., Bus Stand and that it was alleged in the
Show Cause Notice that the Respondent deposed that the gold was handed
over to him by one Murugan who in turn smuggled the same from Srilanka
and asked the respondent to hand over to Batcha @ Pitchai, but the
Department could not establish this version and no cell phone from the
respondent was seized by the Department to establish that he made calls to
the said Murugan and Batcha alias Pitchai.
34. The Learned Senior Counsel for the Respondent further submitted
that the method adopted by the Department to prove the purity of gold is
not an acceptable one, since they have not obtained any report from the
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competent agency like the Government Mint.
35. Therefore, the learned Senior Counsel for the Respondent would
urge this Court to dismiss the appeal as devoid of merits.
36. We have considered the arguments advanced by the learned
Senior Standing Counsel for the Appellant and the learned Senior Counsel
for the Respondent. We have also perused the various statements recorded
under Section 108 of the Customs Act, 1962 from the following persons:-
Sl. Date Name
No.
1. 23.01.2017 Mohammed Ali Jinnah *
2. 14.07.2017 Nashrina Begum (Respondent's wife)
3. 14.07.2017 G.Kannan (Gold Assayer)
4. 14.07.2017 K.Umar (Relation to the respondent's
wife)
* The Respondent.
37. We have also perused the letters sent by the Respondent's father,
mother, wife and the retraction letter of the Respondent.
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38. The Directorate of Revenue Intelligence (DRI) had gathered
intelligence to the effect that the gold bars of foreign origin were being
smuggled from Srilanka through Coastal Tamil Nadu and were being
brought to Chennai from a Coastal Village near Pudhupattinam by a
smuggling gang operating from Chennai, Tamil Nadu.
39. Based on the Intelligence gathered, the Officers from the
Directorate of Revenue Intelligence (DRI), Chennai Zonal Unit,
maintained a surveillance at the Pallavaram Bus Stand, Chennai on
23.01.2017 which led to seizure of the two gold bars from the custody of
the Respondent.
40. It has to be borne in mind that the seizure of gold bars from the
Respondent on 23.01.2017 was not a mere coincidence or a chance as
seizure was from an area which is normally and ordinarily under the
control of the local police.
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41. It has to be remembered that the Officer from the Customs
Department including the Directorate of Revenue Intelligence (DRI)
depend on tip-off from wide network of informants they have developed.
The Officers from the Directorate of Revenue Intelligence (DRI)
admittedly seized the gold bars from the custody of the Respondent at the
Pallavaram Bus Stand, Chennai on 23.01.2017. The Respondent has not
denied that the gold bars were seized from his custody.
42. But, for the intelligence gathered by the Officers from the
Directorate of Revenue Intelligence (DRI) from their sources, they would
not have got information regarding transportation of gold bars in person
with the Respondent.
43. Based on the aforesaid information gathered, the Officers from
the Directorate of Revenue Intelligence (DRI) intercepted the Respondent
at Pallavaram Bus Stand, Chennai at about 6.30 p.m. in the evening on
23.01.2017 in presence of two independent witnesses and seized 2 crude
gold bars weighing 3.097 Kg valued at Rs.91,98,090/- from the custody of
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the Respondent.
44. Statement was also recorded from the Respondent on the date of
seizure on 23.01.2017. The statement confirms that the seized gold bars
weighed about 3.097 Kg. In the statement, the Respondent has stated that
the seized gold bars were smuggled from Srilanka and were to be handed
over to him by one Murugan for being delivered to Batcha alias Pitchai
in Chennai.
45. The Additional Chief Metropolitan Magistrate (E.O.I) Court,
Egmore, Chennai vide Order dated 31.08.2017 passed under Section 123
of the Customs Act, 1962 in Crl.M.P.No.1818 of 2017 in
F.No.DRI/CZU/III/ENO-1/INT-01/2017, observed that the seized crude
gold bars did not have any foreign markings.
46. The above statements given by the Respondent on 23.01.2017 at
the time of seizure of gold bars was later retracted by the Respondent on
20.02.2017 and on 05.04.2017.
47. It is the case of the Respondent that the Office of the Directorate
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of Revenue Intelligence (DRI) had resorted a to third degree treatment to
extract the above Confessional Statement from the Respondent on
23.01.2017. It is therefore the case of the Respondent that such statements
are not true and in any event are not binding on the Respondent.
48. It is the further case of the Respondent that he had purchased
gold coins over a period of time, since his employment in Saudi Arabia
between 1993-1999 and thereafter in Malaysia between 2004-2013 and
that these gold bars were later melted into 2 bars for being sold in T.Nagar
in connection with the future marriage of his daughter who was aged about
16 years at the time of seizure of the Respondent.
49. After the Respondent had retracted the earlier statement dated
23.01.2017 on 20.02.2017 and on 05.04.2017, three letters dated
13.04.2017, 17.04.2017 and 18.04.2017 were sent by the father, namely
Shahul Hameed, the mother, namely Ayesha Beevi and the wife, namely
Nashrina Begum of the Respondent respectively.
50. These letters more or less reiterated that the Respondent had left
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Devakottai on 22.01.2017 with 2 gold bars for being sold in Chennai and
that they were purchased in the past as small jewellery and gold coins over
a period of time by the Respondent and his wife out of the savings from
his earning and were melted into 2 gold bars through a goldsmith.
51. However, in response to the summons issued by the Department,
the Respondent in his statement dated 07.06.2017, stated that he started
from Devekottai, Sivagangai District to Pudhupattinam on 21.01.2017
in the night and that he visited Kottaipattinam Dhargha at about
3.00 a.m. on the following day on 22.01.2017 and thereafter proceeded
back to Devakottai via Thondi, from where he proceeded to Pudukottai
and thereafter to Chennai via Trichy.
52. The Respondent had not stated that he visited his house in
Devakottai, Sivagangai District on 22.01.2017 enroute to Chennai via
Pudukottai, Trichy after returning from Kottaipattinam Dhargha. The
uniform and consistent statement of the Respondent from the date of
retraction and the letters of the father, namely Shahul Hameed, the mother,
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namely Ayesha Beevi and the wife, namely Nashrina Begum of the
Respondent are similar though with contradictions.
53. However, the facts remains that the Respondent's wife in her
statement dated 14.07.2017, has introduced the name of Kannan Aachari
of East Street, Nambudhalai who allegedly melted the jewellery and
gold coins purchased by her out of savings and chits into gold bars.
54. The Respondent's wife stated that the gold bars were melted way
back in 2015 after she handed over the jewellery to her uncle named
Umar Katha for melting who later handed over the gold bar after a month
to her.
55. In the same statement, the Respondent's wife has also stated that
the Respondent was earlier employed in Malaysia and used to send
amounts and that she had invested the savings in chits to purchase the
following jewellery:-
i. 2 ½ sovereign gold necklace
ii. 2 gold rings (each 8 grams)
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iii. 15 gold coins (each 2 grams)
iv. 60 sovereigns gold jewellery
v. Gold necklace (No.2)
vi. Bangles (4)
vii. Stone Bangles (2)
viii. Gold Chain (3)
ix. Bracelet (2)
56. The above quantity cannot total to the seized quantity of the
gold bars from the Respondent. Further, no records were produced to
show that the Respondent had sent money to his wife to purchase the
above gold jewellery.
57. In the statement given in response to summons, the
Respondent's wife clearly stated that the seized gold bars were melted out
with the jewellery purchased from and out of the savings made from the
amounts transferred by the Respondent, whereas it is the categorical
statement of the Respondent, his father and mother, that, gold coins were
purchased over a period of time by the Respondent which were melted
into two bars which were seized by the Officers from the Directorate of
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Revenue Intelligence (DRI) on 23.01.2017 from the custody of the
Respondent.
58. While it is case of the Respondent, his father, his mother and his
wife, and the statement of the Respondent/letters of the persons that, the
seized gold items were purchased in India, the statement of the
Respondent's wife contradicts her own statement. The wife of the
Respondent has stated that the gold bars were made / melted out of the
jewellery purchased by her in Chit Finance. Thus, there are contradictory
versions regarding the source of the seized gold.
59. The further statement of the Respondent's wife dated 14.07.2017
is that the jewellery items were given to one Kannan Aachari of East
Street, Nambudhalai with the help of her uncle namely Umar Katha for
melting. This statement also stands contradicted by the statement of
G.Kannan Aachari, who also deposed and gave statements under Section
108 of the Customs Act, 1962 on 14.07.2017.
60. The statement of the Respondent and his wife also stands
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contradicted by the statement of the said Umar Katha, the uncle of the
Respondent's wife. Both these person have denied either melting of the
jewellery or having any connection with the gold bar or jewellery seized
from the Respondent.
61. In fact, in his statement dated 14.07.2017, the said G.Kannan
Aachari of East Street, Nambudhalai has clearly stated that the
Respondent's wife's uncle namely the said Umar Katha used to
sometimes place orders for small jewellery and that barring the same, there
were no other transactions and that the Respondent and his family
members have merely used his name deliberately to extricate themselves
from the problems they were facing under the Customs Act, 1962.
62. In his statement dated 17.07.2017, the Respondent has however
tried to downplay the statement given by his wife on 14.07.2017 by stating
that the Respondent's wife's uncle Umar Katha was acquainted with
another Aachari namely Kannan Aachari of Thondi, Ramanathapuram
District when the Respondent was employed in abroad, the said Kannan
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Aachari was known the Respondent's wife's uncle namely Umar Katha.
63. The Respondent has further contradicted by stating that he used
to hand over the gold coins to the said Kannan Aachari and this was
done as a matter of routine. However, the Respondent has stated that the
Respondent's wife's uncle namely Umar Katha was unaware of the habit
of the Respondent in melting gold coins given by the Respondent to the
said Kannan Aachari from Thondi, Ramanathapuram District and that
it was not melted by the Kannan Aachari of East Street, Nambudhalai.
If that was the case, it was open for the Respondent to have produce the
said Kannan Aachari from Thondi, Ramanathapuram District as a
witness.
64. There are several contradictions in the statement of the
Respondent inasmuch as an impression that the gold coins were melted
from time to time by Kannan Aachari, Thondi, Ramanathapuram
District and that the Kannan Aachari, Thondi, Ramanathapuram
District was different from Kannan Aachari of East Street,
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Nambudhalai.
65. However, in the retraction statement of the Respondent dated
20.02.2017, the Respondent has clearly admitted that the Respondent had
got the gold bars melted from the same Kannan Aachari of East Street,
Nambuthalai. Relevant statement reads as under:-
Statement in Tamil Statement in English
ehd; vd;Dila fLikahd I used to buy and store this gold
ciHg;gpd; K:yk; btspehLfspy; with the savings I had
ntiy bra;J rpWf rpWf nrh;j;j
nrkpgi ; gf; bfhz;L ,e;j accumulated little by little through
j';fj;ij th';fp nrkpj;J my hard work in foreign countries.
itg;gJ tHf;fk;/ mt;thW Then, I would give the gold ingots
nrh;;j;J j';ffl;oia
to the Aachari from Nambuthalai
ek;g[jhisiar; nrh;e;j
Mr;rhhpaplk; bfhLj;J cWf;fp and grind them into big ingots.
bghpa fl;ofshf bra;J
bfhs;ntd;/
66. The Respondent, in his statement before the Appellant/Customs
Department on 07.06.2017 has also specifically admitted that he did not
have any steady job either in Malaysia or in the Middle East or in South
Korea. In his statement, the Respondent stated that he worked in Saudi
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Arabia as a cook and earned around Rs.2000/- per month From 1993-
1999.
67. The Respondent further stated that he ran a provision shop in
India between 1999-2001 where he sustained loss. The Respondent has
admitted that in 2001, he went to South Korea in search of job but was
arrested and deported back from South Korea by the Government and he
did not have money to even buy a ticket for his return journey to India.
68. Therefore, it is inconceivable as to how a person like the
Respondent with limited income who was on the very go insolvency, was
deported back from South Korea could have purchased gold which was
valued at Rs.91,98,090/- on the date of the seizure from the Respondent
on 23.01.2017.
69. Thus, there are several contradictions in the retraction statement
dated 20.02.2017 of the Respondent and the statement given on
17.07.2017 by the Respondent. It is only on the strength of these
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contradictory statements, Show Cause Notice dated 21.07.2017 was
issued subsequently to the Respondent, to the said Murugan and to the
said Batcha alias Pitchai.
70. The fact however remains that the Respondent has not
discharged the burden of proof cast on him under Section 123 of the
Customs Act, 1961. The Respondent has not proved the means of
purchase of huge quantity of gold bars which according to him were
purchased as bullions / gold coins over a period of time and melted.
71. As per Section 123 of the Customs Act, 1962, the burden of
proof in certain cases, where any goods to which the Section applies are
seized in the reasonable belief that they are smuggled goods then the
burden of proving that they are not smuggled goods shall be, in a case
where such seizure is made from the possession of any person, the burden
of proof would be on the person from whose possession the goods were
seized and if any person, other than the person from whose possession the
goods were seized, claims to be the owner thereof, also on such other
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person.
72. Section 123 of the Customs Act, 1962 is extracted hereunder:-
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 so seized.]
(2) This section shall apply to gold, 6 [and manufactures
thereof], watches, and any other class of goods which the
Central Government may by notification in the Official
Gazette specify.
73. A perusal of the aforesaid Section would reveal that where any
goods, namely gold, watches or any other class of goods as specified in
the Section are seized under the Act in the reasonable belief that the said
goods are smuggled goods then the burden of proving that they are not
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smuggled goods shall be on the person from whose possession the seizure
was made or if any other person claims ownership of the said goods, the
burden of proof is shifted on the person in case he claims to be the owner
of the goods so seized.
74. In “Kewal Krishan Vs. State of Punjab”, AIR 1967 SC 737,
the Hon'ble Supreme Court, while dealing with Section 123 of the
Customs Act, 1962 regarding burden of proof in certain cases, held that
when goods are seized under the reasonable belief that they are smuggled
goods, then the onus of proving that they are not smuggled goods and is
not of foreign origin is on the person from whose possession the goods
were seized. Relevant portion of the aforesaid Judgment of the Hon'ble
Supreme Court is as follows:-
“When goods are seized by the Customs Officer in the
reasonable belief that they are smuggled goods then
under Section 178A of the Sea Customs Act the onus of
proving that they are not smuggled goods, that is, not of
foreign origin on which duty is not paid, is on the
person from whose possession the goods are seized. The
onus is not on the prosecution to show that the goods
are not of Indian origin”.
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75. The Hon'ble Supreme Court in “Union of India Vs.
Shyamsunder”, AIR 1994 SC 485, held that the persons from whom the
contraband articles were seized had not satisfactorily discharged the
burden of proof cast on them as required by Section 123 of the Customs
Act, 1962 that they are not smuggled.
76. Applying the decisions of the Hon'ble Supreme Court to the
facts of the case, it is clear that that if the goods are seized on a reasonable
belief that they are smuggled goods, then the burden is shifted on persons
as specified in the aforesaid Section.
77. The Respondent has not produced any document to establish the
means to purchase 3.097 Kg of gold bars / coins or gold jewellery as was
stated by the Respondent and later by the Respondent's wife Nashrina
Begum on 14.07.2021.
78. The Respondent has not explained the source of Income for
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having purchased gold worth valued at Rs.91,98,090/- on the date of
seizure. Therefore, it cannot be said that the Respondent had discharged
the burden of proof under Section 123 of the Customs Act, 1962.
79. That apart, adjudication under the Customs Act, 1962 is
governed by the Principle of Preponderance of Probability. In our view,
the Additional Commissioner was right in ordering confiscation of the
gold bars seized from the Respondent, as there were no convincing
reasons to believe that seized gold bars were that of the Respondent and
were purchased by the Respondent out of his income.
80. Though the Respondent had retracted the earlier statement dated
23.01.2017 on 20.02.2017 and 05.04.2017, three letters dated 13.04.2017,
17.04.2017 and 18.04.2017 sent by the father, mother and wife of the
Respondent respectively contradict with each other regarding the nature of
procurement of gold and their melting. Similarly, statement records also
contradict with each other.
81. That apart, the authorities adjudicating a Show Cause Notice
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under the Customs Act, 1962 are not governed by strict rules of evidence.
Rather, they are governed by Preponderance of Probability. This Court is
also governed by Preponderance of Probability. The Preponderance of
Probability is that the Respondent was merely a hired labour who was
employed by regular smugglers on commission. The role of the
Respondent was to merely deliver the smuggled gold to the contact in
Chennai.
82. The following Table will further reveals that mobile numbers
with fake SIM identities were used to raise a cloud of dust to not only
disorient the law enforcing authorities but also the adjudicating
authorities:-
Mobile SIM Name of the Actual user of the Remarks
Number person in whose Mobile Number
name the number
was registered
7395940600 Latha Batcha alias Person who
Pitchai allegedly
handed over
the two Gold
Bars to the
Respondent.
7397320012 Krishnaveni Mohammed Ali The carrier
Jinnah * respondent.
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Mobile SIM Name of the Actual user of the Remarks
Number person in whose Mobile Number
name the number
was registered
7530059389 Nagendran Murugan The person
who was to
allegedly
receive the
seized Gold
Bars.
* The Respondent
83. The Notice served on Batch alias Pitchai and Murugan remained
unserved. We therefore summoned files from the Customs Department.
We were surprised to note that the investigation was incomplete, perhaps
to allow the main kingpin who was indulged in the smuggling to go
scot-free.
84. It is noticed that though call details were summoned as early as
01.02.2017 by the Directorate of Revenue Intelligence (DRI) from the
M/s.Bharthi Cellular Limited (M/s.Bharti Airtel Limited), the
investigation was incomplete. The Department has not made an attempt to
trace out the call details of the persons and their whereabouts on the date
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of the seizure and few days before the date of the seizure.
85. Records reveal that the mobile SIM number which was used by
the Respondent was registered in the name of one Krishnaveni and was
procured from a retailer namely 'Filosa Communications'.
86. The photographs attached to the SIM Registrations Forms /
Applications for the aforesaid mobile SIM number and the photographs in
the Electoral Photo Identity Card / Voter Identity Card itself indicates that
photos are of two different persons but the name of Krishnaveni was used
to register the SIM.
87. The call data between 09.01.2017 and 23.01.2017 indicates that
several calls were exchanged between Mobile No.7395940600 and
Mobile No.7397320012. Mobile No.7395940600 which was used by the
said Batcha alias Pitchai had been in regular touch with Mobile
No.7397320012 used by the Respondent.
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88. It was incumbent on the part of the Customs Department to have
also taken steps to get to the root of modus operandi adopted by the
smugglers right from the registration of mobile numbers with fake names /
identity and how an ordinary person like the Respondent with modest
means of income could possess huge quantity of gold bar and where the
Respondent was employed.
89. In the statements before the authorities, there is also no clear
explanation forthcoming from the Respondent as to who were the persons
to whom he had made panic calls particularly on 23.01.2017. There are
few calls made to few other mobile numbers on 22.01.2017 as well.
90. Similarly, the Customs Department or the Directorate of
Revenue Intelligence (DRI) should have obtained statement of
Krishnaveni, Nagendran and Latha and the dealers who are issued the
SIM Cards in their name.
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91. The file also indicates that the Department has rewarded the
Officers from the Department and the informants. A sum of Rs.2,32,000/-
was sanctioned on 08.02.2019 and paid to these persons. It is also noticed
that the Respondent was also being prosecuted before the Additional Chief
Metropolitan Magistrate (E.O.I) Court, Egmore, Chennai, in connection
with the smuggling of 3.097 Kg of gold bars / coins.
92. It was also incumbent on the part of the Directorate of Revenue
Intelligence (DRI) to have thoroughly investigated how the SIM numbers
with fake identity were registered and were allowed to be used. The call
details would have revealed the foot prints of the calls including the
locations of the recipient of calls and the time of seizure of the Gold bars
on 23.01.2017 and few days before the same. This aspect was required to
have been probed by the Directorate of Revenue Intelligence (DRI).
93. The file also indicates that the seized quantity of 2 gold bars
weighing about 3.097 Kgs value at Rs.2,970/- per gram was sent to India
Government Mint, Mumbai for conversion into standard gold bars and the
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sale proceeds were also deposited with the Commissioner of Customs
vide TR-6 Challan No.587 dated 21.12.2017.
94. It is evident that no serious steps were taken by the Customs
Department or by its elite wing of investigators in the Directorate of
Revenue Intelligence (DRI) to trace out the said Murugan and Batcha
alias Pitchai or the Murgan even though there were several calls made
from the mobile SIM numbers registered in the name of Krishanaveni,
Nagendran and Latha which were given by the Respondent on
23.01.2017 to the Officers at the time of seizure.
95. The fact however remains that the Respondent has not stated
why he was using Mobile Phone with SIM No.7397320012 which was in
the name of Krishnaveni. The Respondent has also not given any
explanation as to why he was not having a mobile SIM registered in his
name. It is quite possible this information was elicited but was
deliberately not kept in the official records to allow the real persons
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behind the scene out of the bounds of law.
96. It is clear that the Respondent was employed by high and
mighty. They were regularly indulging in nefarious activities including
the smuggling of gold and contraband items using mobile phone with fake
identities and employed the Respondent as a carrier to transport the
smuggled gold bars.
97. It is thus clear that there are several infirmities in the shoddy
investigation carried out by the Directorate of Revenue Intelligence (DRI).
The investigation was shoddy only to allow the actual smugglers of the
gold bars to go scot-free and to punish the Respondent who was merely
used a cheap labour to transport the smuggled gold bars. It is clear that
the Customs Department and the Directorate of Revenue Intelligence
(DRI) have allowed the main culprit to go scot-free.
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98. It was incumbent on the part of the Respondent to have explain
to the Customs Department that the calls made on 22.01.2017 and
23.01.2017 were regular calls made to only the family members and not
acquaintance any of the persons who were behind the smuggling.
99. Further, the Respondent gave a statement on 23.01.2017
accepting his involvement in the smuggling, wherein the Respondent
admitted that he was merely entrusted with the job of transportation of
smuggled gold bars to be delivered to the said Batcha alias Pitchai. There
are also indication of involvment of the Respondent in the past in similar
activity for Murugan.
100. It is evident that the Respondent was merely a puppet in the
hands of the smugglers, who are funding and bankrolling the litigation for
the Respondent both before the Original Authority, First Appellate
Authority before the Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) and before this Court. A person like Respondent with modest
means cannot possibly have the resource except in case of pro bono
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appearance.
101. The statement of the Respondent as mentioned above is
bundled with contradictions and therefore the Order passed by the
Appellate Commissioner vide Order-in-Appeal Seaport C.Cus.II No.550
of 2019 dated 14.11.2019 reversing the Order-in-Original No.65168 of
2018 dated 10.09.2018 from File No.OS.No.08/2017-
PAU/DRI/CZU/VIII/48/ENQ-1/INT-01/2017 of the Additional
Commissioner of Customs, (Chennai-III) Commissionerate was erroneous
and ought to have been reversed by the Customs, Excise and Service Tax
Appellate Tribunal (CESTAT).
102. The Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) has given a very superfluous finding in the Impugned Order to
uphold the order dated 14.11.2019 of the Appellate Commissioner in
Order-in-Appeal Seaport C.Cus.II No.550 of 2019 and therefore warrants
an interference. The Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) as the ultimate fact finding authority, has miserably failed to
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perform its duty while passing the Impugned Order under the provisions
of the Customs Act, 1962. We are therefore left with no other option
except to reverse the impugned decision of the Customs, Excise and
Service Tax Appellate Tribunal (CESTAT).
103. Therefore, the Impugned Order dated 20.04.2023 passed by the
Customs, Excise and Service Tax Appellate Tribunal (CESTAT) is liable
to be set aside. Since the Respondent was only a carrier with no means,
we are inclined to partly modify the penalty imposed on him. It is reduced
to Rs.1,00,000/- to allow him to start his life afresh.
104. Since the Respondent has not proved that he had no means to
buy gold worth Rs.91,98,090/-, we hold that it was correctly ordered to be
confiscated by the Additional Commissioner of Customs, (Chennai-III)
Commissionerate in the Order-in-Original No.65168 of 2018 dated
10.09.2018 from File No.OS.No.08/2017-PAU/DRI/CZU/VIII/48/ENQ-
1/INT-01/2017.
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105. Thus, this Civil Miscellaneous Appeal stands allowed. No
costs. Connected Civil Miscellaneous Petition is closed.
[R.S.K., J.] [C.S.N., J.]
09.05.2025
Neutral Citation : Yes / No
arb
To:
1.Commissioner of Customs,
Chennai II Commissionerate,
Custom House,
60, Rajaji Salai,
Chennai – 600 001.
2.The Customs, Excise and Service Tax
Appellate Tribunal (CESTAT),
Chennai.
R.SURESH KUMAR, J.
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and
C.SARAVANAN, J.
arb
Pre-Delivery Judgment in
and
09.05.2025
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