2025(02)LCX0087

Hyderabad Tribunal

Munagapadi Raghavendra Kumar

Versus

Commissioner of Customs

Customs Appeal No. 30758 of 2024 decided on 12-02-2025

CUSTOMS

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
HYDERABAD
REGIONAL BENCH - COURT NO. – I

Single Member Bench
Customs Appeal No. 30758 of 2024

(Arising out of Order-in-Appeal No.VJD-CUSTM-000-APP-026, 027 & 028-2023-24, dated 31.10.2023 passed by Commissioner of Central Tax & Customs (Appeals), Guntur)

Shri Munagapadi Raghavendra Kumar           .. APPELLANT
23/60, Bacha Banda Street,
Patha Kadapa, Y.S.R,
Andhra Pradesh – 516 002.

VERSUS

Commissioner of Customs                         .. RESPONDENT
(Preventive), Vijayawada
D. No. 55-17-3, C-14, 2nd Floor Stalin Corporate,
Road No. 2, Industrial Estate, Autonagar,
NTR
Andhra Pradesh – 520 007.

WITH
Customs Appeal No. 30759 of 2024

(Arising out of Order-in-Appeal No.VJD-CUSTM-000-APP-026, 027 & 028-2023-24, dated 31.10.2023 passed by Commissioner of Central Tax & Customs (Appeals), Guntur)

Shri C. Chandrasekar                         ..         APPELLANT
D.No. 42/654-I, MJ Gunta,
Cuddappah,
Andhra Pradesh – 516 001.

VERSUS

Commissioner of Customs             ..         RESPONDENT
(Preventive), Vijayawada
D. No. 55-17-3, C-14, 2nd Floor Stalin Corporate,
Road No. 2, Industrial Estate, Autonagar,
NTR
Andhra Pradesh – 520 007.

AND
Customs Appeal No. 30760 of 2024

(Arising out of Order-in-Appeal No.VJD-CUSTM-000-APP-026, 027 & 028-2023-24, dated 31.10.2023 passed by Commissioner of Central Tax & Customs (Appeals), Guntur)

Shri K. Madhava                                 .. APPELLANT
39/209-2, Pakkipalli,
Chinnachowk, Kadapa, Y.S.R.,
Andhra Pradesh – 516 002.

VERSUS

Commissioner of Customs             .. RESPONDENT
(Preventive), Vijayawada
D. No. 55-17-3, C-14, 2nd Floor Stalin Corporate,
Road No. 2, Industrial Estate, Autonagar,
NTR
Andhra Pradesh – 520 007

APPEARANCE:
Shri T. Chezhiyan, Advocate for the Appellant.
Shri Sandeep Kumar Payal, Authorised Representative for the Respondent.

CORAM: HON’BLE Mr. ANGAD PRASAD, MEMBER (JUDICIAL)

FINAL ORDER No. A/30048-30050/2025

Date of Hearing:27.01.2025
Date of Decision:12.02.2025

    All the above three appeals have been filed against a common Order-in- Appeal No.VJD-CUSTM-000-APP-026, 027 & 028-2023-24, dated 31.10.2023 (impugned order). As the facts and circumstances of the case are same for all the three appellants, the appeals are taken up for disposal by way of this common order.

2. Brief facts of the case are that the Officers of Customs has seized 18 and 22 carat gold jewellery such as Bracelet, Short chains, short chain (broken), Long Chain, Mangalasuthra chain in Train No. 17651 Kachiguda Express at Puttur Railway Station. Though there is no power for seizure, since the seized gold jewellery does not bear any foreign marking, still the officers of Customs has effected the seizure. Thereafter the Appellants were asked as to why the seized gold jewellery should not be confiscated and as to why penalty should not be imposed.

3. The appellants vide reply dated 14.10.2022 have given their reply. After the completion of personal hearing, Order-in-Original No. 13/2022-23 (cus.) -AC dated 31.03.2023 was passed absolutely confiscating the gold jewellery and penalty was imposed against the appellants by the Original Authorities. Aggrieved by this Order, they have filed an appeal before the Commissioner of Customs (Appeals), Guntur, who vide Order-in-Appeal No.VJD-CUSTM-000-APP-026, 027 & 028-2023-24, dated 31.10.2023 confirmed the Order-in-Original No. 13/2022-23 (Cus)-AC dated 31.03.2023.

4. Learned Counsel for the appellants submits that the Authorities below failed to note that since the seizure is a domestic seizure and the seized jewellery are 18 and 22 carat, it is not required to produce any proof for the same. Assuming such proof is required, the appellants has categorically produced the bills and the evidences, such as from where it is purchased, the seller name etc. It is clearly and categorically stated by the applicant that the statement is obtained by force and threat. Any person who is in custody of a law enforcing agency, if compelled to make a statement, that person is bound to give such a statement, as per the instructions of officers. And once the statement is retracted that too with evidences, then the authority must take only the version which is supported by evidences in clear terms vide the retraction letter. It is pertinent to mention here that the very burden of proof that goods are of foreign origin is with the department. Thus the findings of the authorities below are absolutely unsustainable and wrong. Therefore, he prays to set aside the same.

5. On the other hand, Learned AR argued that there is sufficient evidence to prove that the gold seized were smuggled gold and rightfully confiscated and imposed penalties. The onus to prove that it was not smuggled was on them in view of provisions of Section 123 of Customs Act, 1962 which they have failed to discharge.

6. Heard Learned Counsel for the appellant Shri T. Chezhiyan and Learned AR Shri Sandeep Kumar Payal for the Department and perused the records.

7. Statements recorded by Customs Officer under Section 108 of the Customs Act which is thus as mentioned in Order-in-Appeal in para 2.3 to 2.9:

2.3 A statement was recorded from the Appellant-1 under Section108 of the Customs Act, 1962 wherein he admitted, inter alia; that he is having a small shop and is working as gold worker since 10 years; that he proceeded to Chennai along with 90 grams of 24 carat gold on 05.04.2022 and obtained 100.962 grams of 22 carat gold from M/s Jain Jewellers, Chennai and 24.97 grams of 22 carat jewellery from M/s Shree Jewellers, Chennai; that he obtained the 24 carat gold from Mr. Nizam in Kadapa; that there are no documents to prove that the said gold ornaments are obtained from M/s Jain Jewellers & M/s Shree Jewellers-Chennai.

2.4 The Appellant-1 vide letter dated 23.05.2022 retracted the contents in the statement dated 05.04.2022 and submitted a list of owners; the details submitted vide letter dated 23.05.2022 is as mentioned below:

Name of the Actual owner of the gold ornaments seized on 05.04.2022 Description of goods & Quantity Weight in grams Details of supplier with invoice Nos.
Appellant – 1 3 – short chains 1 – Short chain (broken) 19.980 grams Invoice No. 100 dtd. 05.04.2022 of M/s Jain Jewellers, Jai Gurudev Complex, Shop No. 12, Thulasingam Street, Sowkarpet, Chennai
Appellant – 2 2 – Mangalasutra Chains 43.840 grams Invoice No. 01 dtd. 05.04.2022 of M/s Jain Jewellers, Jai Gurudev Complex, Shop No. 12, Thulasingam Street, Sowkarpet, Chennai
Appellant – 3 1 – Bracelet 27.120 grams Invoice No. 99 dtd. 05.04.2022 of M/s Jain Jewellers, Jai Gurudev Complex, Shop No. 12, Thulasingam Street, Sowkarpet, Chennai
  2 – Long Chains 30.002 grams  
  Total:- 125.932 gms  

2.5 In view of the retraction vide letter dated 23.05.2022 submitted by the Appellant-1 statement dated 14.06.2022 was recorded under Section 108 of Customs Act 1962; wherein he stated; that he was tensed at the time of seizure; that the entire gold recovered from him on 05.04.2022 was purchased from M/s Jain Jewellers, Chennai; that he is submitting invoice’s and bank transactions as proof for the gold jewellery seized on 05.04.2022;

2.6 On submission of retraction vide letter dated 23.05.2022 by the Appellant- 1, a statement dated 14.06.2022 of Mr. S Dinesh, Proprietor M/s Jain Jewellers, Chennai was recorded under Section 108 of Customs Act 1962, wherein he stated,; that he got an order over phone from the three Appellants; that he issued three invoices dated 05.04.2022 for the orders received from the three Appellants; that he subsequently received the amount through RTGS transactions to his bank account; that as a trade practice he offer credit facility for 25-30 days for the purchased made from his shop for the sincere and committed customers (i.e three Appellants)

2.7 A statement dated 14.06.2022 was recorded from the Appellant – 2, under Section 108 of Customs Act 1962, wherein he stated; that he knew the Appellant-1 and the Proprietor of M/s Jain Jewellers as part of his business; that he ordered gold jewellery of 43.480 grams (2 mangalsutra chains) to M/s Jain Jewellers over phone; that he requested the Appellant-1 to collect the same from Chennai; that he paid the amount on 08.04.2022 through RTGS transactions and submitting invoice and Bank transaction details as proof against the purchase he made.

2.8 A statement dated 14.06.2022 was recorded from the Appellant – 3, under Section 108 of Customs Act 1962, wherein he stated; that he knew the Appellant-1 and the Proprietor of M/s Jain Jewellers as part of his business; that he ordered gold jewellery of 57.122 grams (27.120 grams 1-Bracelet, 30.002 grams 2- long chains) to M/s Jain Jewellers, Chennai over phone; that he requested the Appellant-1 to collect the same from Chennai; that he paid the amount on 08.04.2022 through RTGS transactions and submitting invoice no. 01 dtd 05.04.2022 and Bank transaction details as proof against the purchase he made. 2.9 A statement dated 05.08.2022 was recorded from Mr. Mukesh Kumar, Prop:-M/s Shree Jewellers, Chennai, under Section 108 of Customs Act 1962 wherein he stated; that he doesn’t why the Appellant-1 stated that he has given 25 grams of 24 carat gold to him; that the Appellant-1 has not purchased any gold jewellery from him; that he has not done any financial transaction with the Appellant-1.

8. The seized gold are gold jewellery and Appellant No. 1 Shri Munagapadi Raghavendra Kumar stated in his statement that he is having a small shop and is working as a gold worker since 10 years and purchased gold from M/s Jain Jewellers, M/s Shree Jewellers, Chennai and M/s Nizam in Kadapa. Later on stated on 14.06.2022 that he was tensed at the time of seizure that the entire gold recovered from him was purchased from M/s Jain Jewellers, Chennai. Mr. S. Dinesh, Proprietor of M/s Jain Jewellers, Chennai stated in his statement that he got an order over phone dated 05.04.2022 and subsequently received the amount through RTGS to his account that as a trade practice he offer credit facility for 25-30 days for purchase made from his shop for the sincere and committed customers.

9. Shri C. Chandrasekhar, Appellant No. 2 states that he knew the Appellant No. 1 and proprietor of M/s Jain Jewellers as part of his business and he ordered gold jewellery of two mangalasuthras to M/s Jain Jewellers over phone and requested to Appellant No.1 to collect the same and paid the amount on 08.04.2022 through RTGS.

10. Shri K. Madhava, Appellant No.3 stated in his statement that he knew the Appellant No. 1 and Proprietor of M/s Jain Jewellers as part of his business and ordered gold jewellery of 1 Bracelet and 2 long chains to M/s Jain Jewellers, Chennai over phone and also requested to Appellant No. 1 to collect the same and paid the amount on 08.04.2022 through RTGS.

11. Therefore, appellants satisfactorily proved that seized gold belongs to them. There are no any material retractions or contradictions in their statement. Their statements are natural. No any special delays in statement of Appellant No. 1 on 05.04.2022 and 23.05.2022. Findings of Adjudicating Authority as well as Commissioner (Appeals) are based on assumptions and presumptions. M/s Jain Jewellers accepted to receive payment through RTGS. In business, payment as such in the statement are natural transaction.

12. The word “smuggling” is defined under Section 2(39) as:

“smuggling” , in relation to any goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113;

Section 111: Confiscation of improperly imported goods, etc -- The following goods brought from a place outside India shall be liable to confiscation ----

xxx

xxx

xxx

xxx

13. In these cases, no any facts relating to Section 113 of the Customs Act. Accordingly, Section 111 the goods brought from outside India. The seized goods recovered from Railway Station, Puttur. The seized goods are domestic ornament. Appellant No. 1 stated in his statement that he is having a small shop and is working as a gold worker since 10 years.

14. In this regarding, Section 123 of The Customs Act, 1962 is important to mention that is:

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 and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.

15. Hon’ble Supreme Court in the case of Union of India Vs Kasambhai Umerbhai Kureshi [1979 SCC online Bom 267] held that where there was nothing on record to show that the goods were seized by the Police on reasonable belief that they were smuggled goods, Section 123 would not apply.

16. Learned Counsel for the appellants relied on the decision of the Coordinate Bench of this Tribunal Shreyas Agarwal and Other Vs Commissioner of Customs (Prev) in which it is held as follows in para no. 60:

60. The goods must be smuggled goods. The word 'smuggled’ means that the goods were of foreign origin and they had been imported from abroad. Only then does the presumption under Section 123 arise. The goods themselves did not suggest that the petitioner was an old smuggler or a dealer in smuggled goods. If there was such information with the customs, they ought to have disclosed it. The goods themselves did not suggest any illicit importation. Nor was there any inscription on the goods which could be the basis of the reasonable belief that the goods were of foreign origin.

17. He further relies on the case law of R. Mahaveer Pipada Vs Commissioner of Customs dated 31.08.2023. In the case of town seizure, the initial burden is always on Revenue to prove as to what prompted it to reasonably believe that the gold/gold jewellery in question were smuggled/of foreign origin.

18. Learned DR relied on Commissioner of Customs, Cochin Vs Om Prakash Khatri [2019 (366) ELT 402 (Ker)] in which it is held that “Burden of proof, reasonable belief, unmarked gold recovered from the possession of two persons and their statements as to the source of the gold sufficient to have a reasonable belief that gold is smuggled. No satisfactory explanation given to prove the legitimacy of the gold carried by intercepted persons. Burden of proof under Section 123 of Customs Act, 1962 being only of a reasonable belief, effectively discharged by Department. Mere fact that interception and seizure not affected in an international border or near an airport or seaport irrelevant. Onus to prove that the gold was not smuggled, so as to upset the reasonable belief entertained by Department shifted and squarely rested on owner. Registered produced and the transactions alleged as well as the quantity seized and that seen from the alleged Travel Authorisation Vouchers not tallying”. The seized gold or ornament, there is no sufficient reason to believe the gold is smuggled. Appellants have given satisfactory explanation about the seized gold. Therefore, this case law is not applicable in this case.

19. As mentioned above fact, evidence & circumstances, Revenue prima facie failed to establish reasonable belief that they are smuggled gold. Whereas appellants successfully proved the legitimacy of the gold carried by them.

20. Therefore, Appeals have merit as discussed above and are liable to be allowed.

21. Appeals allowed with consequential reliefs, if any, as per law.

(Pronounced in open court on 12.02.2025)

(ANGAD PRASAD)
MEMBER (JUDICIAL)