Smuggling of Gold - Discharge of Initial burden by accused

PJ/Case Laws/2011-12/1175

Case: SRI NAND KISHORE SOMANI Vs COMMISSIONER OF CUSTOMS (PREVENTIVE), WEST BENGAL

Citation: 2011-TIOL-264-HC-KOL-CUS

Issue:- Smuggling of Gold – initial burden not discharged by mere production of document showing purchase of gold – correlation of seized gold and the documents required to be established

Brief Facts:- Officers of DRI, Siliguri Regional Unit, along with the Officers of Coochbehar Central Excise Division, apprehended one Md. Sahanat Ali while he got off from a bus arriving from Dinhata. On being asked, he submitted that he was carrying seven pieces of gold biscuits of foreign origin concealed inside his anklets. On being further asked, the said Md. Sahanat Ali stated that one Shri Rakesh Somani, son of Shri Nand Kishore Somani, had given the said seven gold biscuits for delivery to one Shri K. C. Banik at Coochbehar Mini Bus Stand and the gold biscuits were purchased illegally from different sellers who brought them in an unauthorized manner into India. He named another Shri Babla Ghosh of Dinhata and one Shri Sohin Bhai of Rangpur, Bangladesh. Md. Sahanat Ali was found to carry a small amount of Bhutanese Currencies in the pocket of the shirt worn by him and he stated that the Bhutanese Currencies were given to him by one Rakesh Somani for getting the same changed from any seller engaged in unauthorized money changing business.

The seized gold was weighed in presence of Md. Sahanat Ali and two other witnesses. Md. Sahanat Ali could not produce any valid document in support of the gold biscuits and the Bhutanese Currencies, which were seized under Section 110 of the Customs Act on the reasonable belief that those were imported into India in contravention of the provisions of Sections 3 and 4 of the Foreign Trade Development and Regulations Act, 1992 read with Section 11 of the Customs Act, rendering themselves liable for confiscation under Sections 111 and 121 of the Customs Act.

A statement was recorded under Section 108 of the said Act from Md. Sahanat Ali wherein he reiterated what had been confessed by him during the course of initial interrogation. Over and above, he further deposed that he was an employee of Shri Nand Kishore Somani for the last five to six years. He knew that his master was engaged in the illegal foreign exchange business in close association of one Shri Babla Ghosh of Boarding Para, Dinhata and another Sohin Bhai of Bangladesh. In his statement, Md. Sahanat Ali denied having any knowledge of the address of Shri K. C. Banik, but he knew him by face only, to whom he was directed by his master to hand over the confiscated gold biscuits at Coochbehar Mini Bus Stand. He further deposed that on earlier three occasions, he had delivered such goods to three different persons.

Investigation was carried out by the D.R.I. in the case and a show cause notice was issued to the appellant under Section 124 of the Customs Act and to the persons implicated in the instant case proposing confiscation of the gold biscuits and the Bhutanese Currencies under Sections 111(b) and 111(d) and 121 of the Customs Act and penal action under Sections 112 and 117 of the said Act.

The Adjudicating Authority confiscated the gold biscuits under Sections 111(b) and 111(d) of the Customs Act. The Bhutanese Currency was confiscated under Section 121 of the said Act and the anklets used for concealing the gold biscuits were also confiscated under Section 119. Personal penalties were imposed at different rates considering the gravity of offences on those appellants.

Being dissatisfied with the order of the Adjudicating Authority, all the appellants filed individual appeals to the Commissioner (Appeals) who vide his order rejected the three appeals and confirmed the order of the lower authority. The Tribunal also dismissed the appeal filed by the appellant and upheld the order of confiscation under Section 111(b) and 111(d) of the Customs Act and imposition of penalty under Section 112 of the said Act.

Appellant’s Contentions:- Appellant contended that the Tribunal below as well as the other authorities below erred in law in totally overlooking the fact that the customs authorities failed to discharge the burden of proving the fact that the gold biscuits were of foreign origin brought to India improperly by the appellant. Appellant contends that they had proved the receipt granted by a seller having appropriate licence to sell gold and thus, the moments of such receipt was produced and the initial burden was discharged, the onus shifted upon the customs authority to show that such receipt was a manufactured one. Appellant contended that in the absence of examination of the seller of such gold biscuits, as reflected from the receipt produced by the appellant, the Tribunal below ought to have held that the appellant had discharged his initial onus of proving the fact that the said gold biscuits were not imported illegally from Bangladesh, as alleged.

Appellant further submits that the alleged confession of Sahanat Ali having been subsequently retracted, the authorities below erred in law in relying upon the confession originally made by Sahanat Ali. In support of his further contention, appellant relied upon the following decisions:

- S. K. Chains Vs. Commissioner of Customs (Prev.), Mumbai, reported in 2001 (127) ELT 415;
- Samir Kumar Roy Vs. Commissioner of Customs (Prev.), Calcutta, reported in 2001 (135) ELT 1036;
- Rasilaben H. Rathod Vs. Commissioner of Customs, Ahmedabad, reported in 2008 (226) ELT 641;
- Commissioner of Customs (Prev.), West Bengal Vs. Sadhan Kr. Das, reported in 2010 (251) ELT 551;
- Commissioner of Customs (P), W.B. Vs. Golak Chandra Kamilla, reported in 2006 (205) ELT 665;
- Commissioner of Customs (Preventive) Vs. Puni Dhapa Lokeswara Rao, reported in 2009 (248) ELT 141;
- Kadarbhai J. Vora Vs. Commissioner of Customs, Ahmedabad, reported in 2004 (170) ELT 555;
- Rup Chand Jain Vs. Collector of Customs (Preventive), Calcutta, reported in 1996 (88) ELT 335;
- Commissioner of Customs, Jaipur Vs. Ashutosh Dubey, reported in 2004 (176) ELT 175 = (2004-TIOL-23-CESTAT-DEL)
- Mohini Bhatia Vs. Commissioner of Customs, Sahar, Mumbai, reported in 1999 (106) ELT 485.

Respondent’s Contentions:- Revenue contended that the Tribunal below rightly disbelieved the version of the appellant and in this case, the receipt produced by the appellant did not reflect the fact that those biscuits mentioned therein were really related to the seven biscuits confiscated by the customs authority. Respondent further submits that there was no proper explanation of even the one of eight gold biscuits which the appellant claimed to have already transformed into ornament and in the absence of such explanation, the Tribunal below rightly disbelieved the case of the appellant.

Revenue further submitted that even in the receipts produced by the appellant, there was no description of the gold biscuits whereas in the seized one it is specifically mentioned that those are of PAPUA NEW GUINEA origin. Respondent further submits that Narendra Sharma, the alleged purchaser from M/s. Rara Brothers Pvt. Ltd. also was not produced before the Customs authorities and the notice issued to his address came back with the endorsement ‘not found’.

According to respondent, on consideration of all the aforesaid factors, the Tribunal below rightly held that the appellant could not explain lawful acquisition of those seven gold biscuits. Respondent further prays for dismissal of the appeal.

Reasoning of the Judgment:- The High Court found that there is no dispute that seven gold biscuits were found in possession of an employee of the appellant. It is the specific case of the appellant that he purchased the same not by himself but through one Narendra Sharma from M/S Rara Brothers Pvt. Ltd and a receipt showing purchase of eight number of gold biscuits was produced. According to the appellant, in the past, he had already made ornaments from one of such biscuits. It appears that the said Narendra Sharma, who as an agent of the appellant allegedly purchased eight gold biscuits by cash payment, has not been examined or produced before the Customs Authorities to verify the allegation. The summons sent to Narendra Sharma came back with the postal endorsement “not found”. Even, no evidence has been given by the appellant showing the use of the other gold biscuit for manufacture of ornaments. If such fact is not proved, the explanation of the appellant of purchasing eight gold biscuits fails.

The High Court further found that the alleged receipt by M/s. Rara Brothers does not indicate that the biscuits were sold to either Narendra Sharma or the appellant. Even the said receipt does not give indication of the description of the gold biscuits to tally with the identity of the gold biscuits which is appearing from the seizer list. It was for the appellant to prove that out of the eight biscuits mentioned in the receipts of M/s. Rara Brothers, the seized ones were the selfsame seven and another had been already converted into ornaments. The appellant could only produce a receipt and nothing else; if Narendra Sharma was examined and he proved that he brought the eight biscuits out of which the seven were seized and got the receipt proved by facing cross-examination of the Revenue and at the same time, the utilization of the eighth one was proved by production of receipts of the goldsmith who allegedly converted the same into ornaments, it could be reasonably argued that the initial burden was discharged. By mere production of one receipt of M/s. Rara Brothers without anything more when the appellant himself did not purchase, the initial burden of proving the defence has not been discharged. The Tribunal below, in such circumstances, did not commit any illegality in disbelieving the version of the appellant regarding lawful entry of the biscuits in India and thus, no question of law is involved in this appeal.

Thereafter, the High Court perused all the cases relied upon by the appellant and held that the said cases were not applicable to the appellant’s case and therefore, they cannot be relied upon.

Decision:- Appeal dismissed.

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PJ/Case Laws/2011-12/1175

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