By TIOL News Service

KOLKATA, OCT 13, 2015: BY an O-in-O, the CC (P), Kolkata confiscated 22 pcs. of gold biscuits weighing 2566.29 gms. (valued at Rs.11,34,000/-) u/s 111 (b) & (d) of the Customs Act, 1962 without giving any option of redemption to the appellants. Penalties of Rs.2 Lakh & Rs.1 Lakh have also been imposed upon the appellants Nand Kishore Modi & R.K.Damani u/s 112 of CA, 1962.

Before the CESTAT, the appellant inter alia submitted that on 19/2/2001, Shri R.K. Damani wrote a letter to the CC (P) enclosing two bills and one certificate issued by M/s. Anand Silver Pvt. Ltd. claiming the said gold biscuits have been procured by him legally from M/s. Anand Sales Pvt. Ltd. of 10, Nalini Seth Road, Kolkata-7;that Shri Nand Kishore Modi of M/s. Anand Sales Pvt. Ltd. stated that the said gold bars were purchased by him from ABN Amro bank, Russel Street Branch , Kolkata under delivery Challan No. CAL-2001/C.L.G./124 dated-6/2/2001,CAL/2001/CLD/129 dated-7/2/2001 & CAL/2001/CLD/135 dated-9/2/2001. It is the appellant's case that onus of gold being of smuggled nature has not been discharged by the department under Section 123 of the Customs Act, 1962.

The AR argued that statement of co-accused Shri Mahendra Bahadur was not retracted even during his subsequent recording of statements in the jail; retraction made by Shri R.K. Damani is only an after thought and the purchase bills later produced cannot be accepted as valid documents.

The CESTAT observed –

In the very first statement of Shri Mahendra Bahadur as reflected in the brief facts of Order-in-Original dated-7/11/2006, it was stated that he mentioned that he had gone to Sealdah Station as per the instruction of his employer Shri Rajendra Kumar Damani. Only Shri Mahendra Bahadur was arrested on 15/2/2001 and not Shri Rajendra Kumar Damani by the officers of Customs. No investigation conducted and evidence has been brought on record to indicate whether any efforts were made to trace out Shri Jagadish Agarwal of Gangarampur from whom Shri R.K. Damani has stated to have purchased smuggled gold biscuits on past several occasions also. Conflicting facts regarding place of recovery of gold biscuits, whether from the pocket of Shri Mahendra Bahadur or from the waste paper box, are coming out from the records of the case. It is also not clear as to why Shri Mahendra Bahadur was shown as the owner of the seized goods if they were recovered from the waste paper box of the premises belonging to Shri Rajendra Kumar Damani and when Shri Mahendra Bahadur specifically mentioned that had had gone to the railway station as per the instruction of the employer Shri R.K. Damani. In view of these discrepancies the panchnama recorded on 14.92/2001 and the first day recorded statements do not project the correct nature of facts. It is not the case of the Revenue that seized gold biscuits were seized in a Customs area or was coming from the side of an international border with India.

Extracting liberally the observations from the decision in Samir Kumar Roy Vs. CC(P), Calcutta the Bench further noted –

+ It is settled proposition of law that every piece of gold possessed by a person in India cannot be considered to be of smuggled nature and that the possessor of such gold has to discharge the onus under Section 123 of the Customs Act, 1962.

+ However, it may be a requirement from a person in a Customs area who imported gold as baggage. In the instant case the foreign marked gold was not seized from a customs area or a person coming from an international border. Accordingly, it is held that in the present appeals, Revenue has failed to establish that seized gold was of smuggled nature.

+ It is true that no document of purchase of seized gold biscuits have been produced on the date of the panchnama or recording of of the first statement. But looking to the fact that Shri R.K. Damani was not arrested when Shri Mahendra Bahadur did implicate Shri R.K. Damani as his employer it has to be held that statements recorded on 14/02/2001 were not the correct representation of the facts. This is also fortified by the fact that recovery of gold biscuits was conflictingly shown to be from the pocket of Shri Mahendra Bahadur and as well as from the waste paper box.

+ Under the existing factual matrix, appellant Shri R.K. Damani is able to discharge his burden of licit acquisition of gold biscuits by furnishing the purchase bills from the M/s. Anand Sales Pvt. Ltd. The confiscation of 22 pcs. of gold biscuits is required to be set aside and the same are required to be handed over to the rightful owner.

Holding that, since on merits the case had been decided in favour of the appellants, the imposition of penalties was pointless, the appeals were allowed by the CESTAT with consequential relief.

(See 2015-TIOL-2182-CESTAT-KOL)