Whether penalty can be imposed if Revenue failed to prove that gold was intended to be exported by unfair means?

PJ/CASE LAW/2015-16/2904

Case:- COMMISSIONER OF C. EX. & S.T., LUCKNOW VERSUS ANAND KUMAR ALIAS BABU

Citation:- 2015 (325) E.L.T. 609 (Tri. - Del.)

Brief facts:- The facts of the case as per the Revenue are that on 14-2-2012 at 6 pm officers of Customs Unit Khunwa in the presence of two independent witnesses caught a person who was trying to cross the border with a fast pace. He was brought to the Customs office and was searched. During the search of the person two flat pieces of gold were recovered. On enquiry, the person disclosed his name as Om Prakash Verma, resident of Village Uska Raja, Post Office Uska Bazar, Sidhartha Nagar. The officers called his local jeweler and got the gold pieces checked by him who found that the gold recovered from Shri Om Prakash Verma was of foreign origin. On measurement the weight of gold was found 734.5 gms. The weight of the bigger piece was 485 gms and smaller piece was 249.5 gms. Shri Om Prakash Verma said that he works in the shop of M/s. Abhishek Jewelers, Bank Road, Uska Road, Naugarh, Siddhartha Nagar. He was going to deliver the gold to Shri Ram Lakhan Verma and Shri Prem Kumar of Nepal on the instruction of Shri Babloo, proprietor of the shop. He also told that six months earlier also he delivered the foreign gold to Shri Ram Lakhan Verma after carrying it to Nepal. Shri Om Prakash Verma could not produce any valid document relating to export / import and sale of the recovered gold. Therefore, on the bona fide belief that recovered gold was attempted to be smuggled to Nepal in violation of Section 11 read with Foreign Trade (Development and Regulation) Act, 1992. Thereafter, the gold pieces and the pant were seized under Section 110 of the Customs Act, 1962. Shri Om Prakash Verma admitted in his statement that he was going to deliver gold to Shri Ram Lakhan Verma and Shri Prem Kumar, resident of Nepal. Again on 15-2-2012 he told that he was asked to bring sale paper regarding two gold on record from 4-2-2012 but he stated that there is no such document with him and the statement given by him on 4-2-2012 is true and correct. But on 18-2-2012 Shri Anand Kumar alias Bablu, proprietor of M/s. Abhishek Jewelers, was summoned for 23-2-2012 but he did not turn up and a letter was received stating that he is out of station in connection to the business work. Therefore, another summon was issue for 4-3-2012. On the said day Shri Anand Kumar alias Bablu appeared and handed over the documents and invoice pertaining to purchase of gold pieces. He stated that he is the owner of M/s. Abhishek Jewelers, Siddhartha Nagar. He also submitted that he purchased gold from registered/unregistered firm/individuals for making jewellery. At the same time he purchased gold/silver and some of the jewellery made by the local artisan and they are given gold bullion/silver bullion to prepare the jewelry. On being asked about the jewelry he told that above gold although used to be of foreign origin but not in form of biscuit and he did not import gold and foreign origin gold imported by importers in India and he used to purchase from businessmen to whom importers sell the imported gold. Since the importer sold the gold in good quantity thus he could not purchase directly from them. He was asked about the gold recovered from Shri Om Prakash Verma. He told that Shri Om Prakash Verma works on the basis of contract for carrying gold to artisans engaged in jewelry making. He admitted that gold recovered from Shri Om Prakash Verma on 14-2-2012 belongs to him and that this gold has been purchased from registered businessmen as he was having an order for delivering furnished jewelry to some local people and to complete his commitment he has given gold to Shri Om Prakash Verma to deliver it to local artisan Shri Santosh Kumar and Shri Ved Prakash both resident of Khunwa and Shri Deepak Kumar Verma and Shri Rajkumar Verma both resident of Soharatgarh. He also admitted that this gold pieces recovered from Shri Om Prakash Verma belong to him which have been purchased from registered businessmen. With regard to Shri Ram Lakhan Verma and Shri Prem Kumar, he told that he does not know these persons and the statement given by Shri Om Prakash Verma to say that these impugned gold was to be delivered to these persons were totally incorrect. He further submits that gold is purchased from M/s. Krishna Saraswati Payal Chain Institute and M/s. Krishna Priya Jewelry House, Agra. The invoices were also produced. Thereafter, the artisans namely Shri Ved Prakash, Shri Santosh Kumar, Deepak Kumar Verma and Shri Rajkumar Verma were called who have admitted that they were preparing ornaments out of gold sent by Shri Anand Kumar alias Bablu over the years and since last one year Shri Om Prakash Verma used to come to deliver the gold to prepare ornaments and after preparing ornaments they returned the jewelry to Shri Om Prakash Verma. In these set of facts, a show cause notice was issued to the respondent for confiscation of the gold and imposition of fine and penalty on other persons interrogated. The Adjudicating Authority confiscated the gold and imposed the redemption fine of Rs. 6 Lakhs and personal penalties on Shri Anand Kumar and Shri Om Prakash Verma, the respondents. The ld. Commissioner (A) set aside the adjudication order. Aggrieved from the said order revenue is before them.

Appellant’s contention:- Shri Davinder Singh, ld. AR, appeared and submits that the ld. Commissioner (A) has held that the respondents have discharged their burden of ownership but he ignored that the case of the department was that recovered gold was being illegally exported to Nepal in contravention of provision of Customs Act, 1962 read with relevant provisions of Foreign Trade Policy. He further submitted that ld. Commissioner (A) felt an error doubting the panchnama in view of the cross examination of one of the witnesses. He further submitted that the ld. Commissioner (A) felt an error to allege that statement of Shri Om Prakash Verma was recorded under coercion and pressure and it was not a voluntary statement. In fact, the statement was voluntary and same has been affirmed on 15-2-2012 and there was no injury on him he was medically fine. To support his contention he relied on the decision in the case of Jasmat Parshottam Ganesh v. State of Gujarat - 1995 (76)E.L.T.548 (Guj.),Akai Impex Ltd. v. CCE, Mumbai - 2003 (156)E.L.T.700 (Tri.-Mumbai). He further relied on the decision in the case of S.G. Rajadhyakshya v. Leela Daulatram Uttamchandani - 1991 (51)E.L.T.3 (Bombay), Sidhharth Shankar Roy v. CCE, Mumbai - 2013 (291)E.L.T.244 (Tri.-Mumbai)and Ashraf Puliyulla Parambil v. CC (Airport), Chennai - 2007 (213)E.L.T.555 (Tri.-Chennai). He further submitted that ld. Commissioner (A) has felt an error to rely on the statements of goldsmith/artisan. He further submitted that ld. Commissioner (A) failed to appreciate the fact that the recovery of primary gold on Indo-Nepal Border and his attempt to cross border are proven fact which are never disputed. He further submitted that ld. Commissioner (A) has completely ignored the apparent and undeniable fact that as the shipping Bill is not filed as required under Section 50 of the Act. Failure also attracts the deliberate violation of pre-condition imposed for export under Section 46 of the Act. Therefore, he submitted that impugned orders are set aside. Appeals filed by the Revenue are allowed.

Respondent’s contention:- On the other hand. Ld. Counsel appearing on behalf of the respondent submits that initially the burden of proof was on Shri Om Prakash Verma for procurement of gold and same has been discharged by Shri Anand Kumar alias Bablu by producing the invoices of gold purchase by him from M/s. Krishna Saraswati Payal Chain Institute and Krishna Priya Jewellery house. The invoices were verified and found to be genuine. Therefore, primary onus has been discharged by the respondents. Moreover, the fact was that Shri Om Prakash Verma visited the artisans on 14-2-2012 in the morning when they were not available in their shop. He was asked to come in the afternoon. This fact has been affirmed by the statement of the artisan and the statements of the artisans have not been controverted by any cogent evidence. Moreover, the main reliance of the revenue is that Shri Om Prakash Verma has made a statement on 14-2-2012 which has been affirmed by 15-2-2012 and same was retracted after a gap of time and same cannot be discarded. To support his contention ld. AR has relied on various case laws but in the absence of any corroborative evidence of the statement recorded, the revenue's case does not stand in the light of the decision of The Pullangoda Rubber Produce Co. Ltd. v. State of Kerala - 1972 (4) SCC 683, Vinod Solanki v. UOI - 2009 (233)E.L.T.157 (S.C.) = 2009 (13)S.T.R.337 (S.C.) and M/s. Dhingra Metal Works v. CIT - MANU/DE/2590/2010. She also submitted that veracity of the panchnama was doubtful as considered by the ld. Commissioner (A) in the impugned order wherein in the cross examination of Shri Madan Tiwari one of the panchas revealed the true facts. Therefore, the impugned order is to be upheld.

Reasoning of judgment:-After hearing the arguments of both the sides and facts of the case the question arose before them is whether Shri Om Prakash Verma has attempted to smuggle the gold to Nepal or not. Admittedly, in this case as per the facts of the case Shri Om Prakash Verma was apprehended before crossing to the Nepal border. Moreover, particularly in Khunwa which is well within India. Another fact is that the case of the revenue is that they were having an intimation that some person will smuggle the gold through this check post in Nepal and they have called the pancha for the same. But in the cross examination of one of the pancha Shri Madan Tiwary, is clear that when he was called at Khunwa office Shri Om Prakash Verma was very much present over there. It means that when the panchas were called Shri Om Prakash Verma was there and as per the panchnama the panchas were present before Shri Om Prakash Verma was apprehended. Therefore, the panchanama was doubtful. Moreover, from the cross examination it is also revealed that Shri Om Prakash Verma was not caught in the presence of the panchas and as per the panchnama Shri Om Prakash Verma was apprehended in the presence of the panchas. As the panchnama is doubtful, therefore, ld. Commissioner (A) has created doubt on the truthfulness of the panchnama. Moreover, as per the panchnama it is coming out that Shri Om Prakash Verma had to deliver the gold to Shri Ram Lakhan Verma and Shri Prem Kumar in Nepal. But these two persons were not interrogated. Moreover, not made to the parties of the proceedings. Further, it is a fact that gold is of foreign origin and primary burden of proof lies on the respondent and Shri Anand Kumar, Proprietor of M/s. Abhishek Jeweler has produced the invoice in support of the procurement of the gold. Therefore, primary burden of proof has been discharged by the respondent. Now, it is for the revenue to prove that the gold in question was intended to export to Nepal by unfair means which revenue has failed to prove. The main grounds of the ld. AR is on the statement of Shri Om Prakash Verma which was recorded on 14-2-2012 and 15-2-2012 in the custody of the Custom Officers. The said statement was retracted by Shri Om Prakash Verma on 1st possible opportunity before the Magistrate. Moreover, when panchnama itself is doubtful, therefore, statements have no relevance. The case laws relied upon by the ld. AR are not relevant to the facts of this case as in all the cases the crux is that the statement recorded under Section 108 of the Customs Act is a reliable evidence and same is required to be retracted before the customs authorities. If the statement is retracted after a gap of time the retraction is not admissible. In this case panchnama and statement are doubtful with the cogent evidence. Moreover, the statement has not been corroborated by any tangible evidence to testify the statement of Shri Om Prakash Verma. In these set of facts, ld. Commissioner (A) has rightly dropped the proceedings against the respondent.
Therefore, they do not find any infirmity with the impugned order. Same is upheld. Appeals filed by the Revenue are dismissed.

Decision:- Appeals dismissed

Comment:- The analogy of the case is that initially the burden of proof was on Shri Om Prakash Verma for procurement of gold and same has been discharged by Shri Anand Kumar alias Bablu by producing the invoices of gold purchase by him from M/s. Krishna Saraswati Payal Chain Institute and Krishna Priya Jewellery house. The invoices were verified and found to be genuine. Therefore, primary onus has been discharged by the respondents. When panchnama produced by revenue itself is doubtful, then confessional statement on first possible opportunity have no relevance. Revenue failed to prove that gold intended to export to Nepal by unfair means. Hence no penalty and confiscation arise.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2904

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