Tabrez Esmail Suiwala vs Commissioner Of Customs Hyderabad

Anil Choudhary, Member (J)

The brief facts are that the appellant – Mr. Tabrez Esmail Suiwala was at RGI Airport, Hyderabad on 01.02.2020 for boarding Flight No. AI620 from Hyderabad to Mumbai. The appellant had checked in and had obtained boarding pass. The GHIAL Security and Vigilance detected three pieces of yellow metal while screening the checked in baggage at Inline baggage screening system. Accordingly, the appellant along with his checked in baggage and the three pieces of yellow metal totalling 1 KG approx, was handed over by the Senior Associate of GHIAL Security and Vigilance to the Customs officers on reasonable belief that he was carrying goods in violation of the Customs Act. As per Panchanama drawn by the Customs Superintendent on 01.02.2020, the appellant was brought with his luggage and the three pieces of yellow metal to the international arrival area of the Airport and the officers identified the appellant to the witnesses and showed the Aadhar Card of the appellant No. 236827597427. The appellant, on enquiry, stated that the three cut pieces of yellow metal are gold, which he was carrying to sell the same in Mumbai at a higher rate. Further stated that the said gold is of foreign origin and he bought it from one Mr. Sher Khan, who resided at Hussaini Alam, Hyderabad.

The three cut pieces of yellow metal were found to be having markings viz., one piece with marking “sam”, one piece with marking “1 KILO GOLD 995.0” and the third piece with marking “sam MELTER ASAYER” with serial No. “BL085755”. There were no markings on the other side of all the three pieces. On weighment, the total weight of the three pieces was found to be 1000 gms. The Customs officers got the goods verified by Mr. V. Vijay Kumar, Approved Valuer for Gold and jewellery, who submitted his test report dt.01.02.2020 certifying that the said three cut metal pieces are of 24 carat gold of 999 purity, having total weight of 1000 gms valued at Rs.42,22,000/-. The Officers also took photographs of three cut metal pieces of gold and printouts were taken which are stated to be enclosed as Annexure-B to the Panchanama. The appellant further informed that the said three pieces of gold which are having foreign markings was sold to him by Mr. Sher Khan. Further stated that he has knowledge that dealing in foreign origin gold and that too knowing that it was smuggled gold, which was expressly sold to him by Mr. Sher Khan and also that dealing in such foreign origin gold without any customs duties paid on the same is an offence. Further, on being questioned, he stated that he does not have any bill/invoice/receipt for the same and also stated that Mr. Sher Khan has not given any bill/invoice/receipt. The officers informed the appellant that they have reasonable belief that the said gold appears to be liable for confiscation and accordingly, they intend to seize the said gold. The officers seized the gold being three cut pieces totally weighing 1000 gms valued at Rs.42,22,000/-along with the packing material. The said pieces of gold along with the packing material were put in a metal box (marked as M1) and thereafter, wrapped with cloth and sealed in the presence of the witnesses. Separate seizure memo was also drawn duly signed by the appellant and the Panch witnesses.

The statement of the appellant was also recorded at the time of drawal of Panchanama, wherein, the appellant inter alia stated that he is a resident of ‘R.No.5, Wing A, First Floor, Aloo Paroo Building, Lady Jamshedji Road, Mahi (West), Mumbai – 400 016’. He has studied up to class 10. The appellant agreed with the contents of the Panchanama. He further stated that he knew Mr. Sher Khan for the last two years, who was introduced by his brother-in-law Mr. Sohail who stays in Hyderabad. Mr. Sher Khan informed him that three cut pieces of gold are of foreign origin and that he got it from someone else. Mr. Sher Khan has foreign exchange shop by the name ‘SAAD FOREX’ at Hussaini Alam, Hyderabad. Mr. Sher Khan did not give any invoice/bill/receipt for the sale of gold to him.

On being questioned as to how the gold is smuggled and finally delivered, the appellant stated that he does not know as to how the gold is smuggled and how it gets into the hands of Mr. Sher Khan. He further stated that on some earlier occasions also, he procured gold from Mr. Sher Khan during the last two years. Further stated that he had purchased foreign currency of 60,000 USD in Mumbai @ Rs.72/- per USD. He came to Hyderabad with the said 60,000 USD from Mumbai by bus. He exchanged the said 60,000 USD with Mr. Sher Khan @ Rs.72.40/- per USD. Further stated that he purchased the said gold @ Rs.4065/- per gram and would sell the same at a proft margin of Rs.20/- per gram in Mumbai. Thus, he expects to make profit of Rs.20/- per gram or Rs.20,000/- per KG. Also due to difference in forex rate at Mumbai and Hyderabad, he had made profit of Rs.24,000/-. Further stated that on earlier occasions, after purchasing gold at Hyderabad, he has travelled by bus to Mumbai. Further stated that he sells the gold at Mumbai to one Mr. Arvind, who has a shop by name M/s Arvind Choksi at Zaveri Bazaar, Mumbai, against cash payment.

Further stated that he stayed at Hyderabad with his father-in-law and mother-in-law at Kishanbagh, Asad Baba Nagar, Hyderabad. His father-in-law has a garment shop by name ‘Taiba the Designer’ at Moosa Bowli, Hyderabad. Appellant further stated that he owns a shop by name KGN Stores which sells baby diapers and cosmetics in Mumbai. Further stated that the amount with which he buys foreign currency and/or gold is his own money, out of his savings over the last several years.

Subsequently, SCN dt.07.09.2020 was issued (after more than 6 months from the date of seizure) proposing as to why the three cut pieces of gold of 24 carat with 999 purity having total net weight of 1000 gms and valued at Rs.42,22,000/- seized under Panchanama dt.01.02.2020 should not be confiscated under Sec 111(d), 111(i) & 111(j) of the Act. Further, penalty was proposed under Sec 112 of the Act.

The appellant contested the SCN by filing written reply dt.10.10.2020, which was received by the Adjudicating Authority on 19.10.2020. Although the appellant did not dispute the seizure of the three gold pieces from him on 01.02.2020, however disputed his statement recorded at the time of seizure that the same was not freely given and that he had, under undue influence and duress, signed on the dotted line of the statement, as prepared by the officers. It was also urged that a copy of Panchanama and the statement recorded as well as seizure memo were not given to him and the same has caused prejudice to the appellant and further the proceedings are vitiated. The copies of these documents have been given to the appellant only along with the SCN, which is in violation to Sec 100(6) & 100(7) of CrPC. Further urged that no valid seizure was made and there was no seizure order/memo issued. Therefore, the proposal for confiscation of gold is not sustainable. He further urged that the act of taking possession of gold by the Customs officers under Sec 110 of the Act does not amount to seizure under Sec 110. In the absence of proper seizure, no proceedings can be undertaken for confiscation, being without jurisdiction. It was further urged that the siezure of the three pieces of gold is a town seizure, as the appellant was travelling from domestic terminal from Hyderabad to Mumbai on the domestic sector flight. Thus, admittedly, the appellant who has indulged in any type of smuggling or brought the gold in question from a place outside India. In this view of the matter, the provisions of Sec 111 are not attracted. The whole case of Revenue is based on assumptions and presumptions and the statement of the appellant recorded at the time of seizure, which is not voluntary. The fact is that the appellant had purchased the gold pieces in question at Hyderabad for selling in Mumbai at a profit. The fact recorded in the statement that it was in the knowledge of the appellant that the gold in question was smuggled, was never stated by the appellant and the same was recorded by the officers at their sweet will. The appellant at the time of seizure was not in the mental state to oppose the statement, as prepared by the officers and had signed on the dotted line. Thus, the statement, being not freely given, is not reliable for the purpose of confiscation proceedings. Confession statement given at the time of detention by the Customs officers, being not voluntary, is an inadmissible evidence under Sec 24 read with Sec 26 of the Evidence Act. It is further urged that the gold-cum-jewellery valuer in his Valuation Report dt.01.02.2020 has only certified that the three cut pieces of yellow metal are gold totally weighing 1000 gms having 999 purity. The said valuer has nowhere certified that the pieces of gold are of foreign origin. Thus, Revenue simply on the basis of the markings assumed that the gold pieces are of foreign origin. It is further urged that gold is freely available in India as it is being imported through various agencies as well as persons of Indian origin, returning to India after a specified stay in abroad, on payment of duty. Further urged that in the facts and circumstances, the Baggage Rules framed under the Import Export Policy are not applicable as the appellant had not arrived in India from a foreign destination and hence, there was not requirement to make any declaration under Sec 77 of the Customs Act. He further urged that in the facts and circumstances, Revenue has not brought any evidence on record as to the smuggled nature of the gold in question. Accordingly, the proceedings are fit to be dropped. It was also urged that as the SCN has not been issued within a period of 6 months from the date of seizure, as is required under Sec 110(2) of the Act, which provides that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized, provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of Customs for a period not exceeding six months.

The SCN was adjudicated vide OIO dt.01.12.2020 by the Additional Commissioner, ordering absolute confiscation of the seized gold under Sec 111(d), 111(i) & 111(j) of the Act. Further, consolidated penalty of Rs.8,50,000/- was imposed on the appellant under Sec 112(a)(i) and Sec 112(b)(i) of the Act.

Being aggrieved, the appellant preferred appeal before the learned Commissioner (Appeals). The Commissioner (Appeals) was pleased to uphold the order of absolute confiscation but was pleased to reduce the penalty imposed to Rs.4,50,000/-, taking into account the value of gold confiscated. Being aggrieved, the appellant is before this Tribunal.

Learned Counsel for the appellant inter alia urges that the SCN being admittedly issued beyond the period of six months from the date of seizure is bad in law. Further, it is evident from the SCN that no permission was granted by the Commissioner of Customs under proviso to Sec 110(2) extending the period to issue SCN. Thus, the SCN is ab initio void, vitiating the whole proceedings of confiscation and penalty imposed. Reliance is placed on the ruling of this Tribunal in Ulla Baig vs CC, Bangalore [2019 (369) ELT 1553 (Tri-Bang)], wherein it was held in a similar matter that it is mandatorily required to be served/delivered SCN to the accused/noticee within six months from the date of seizure/Mahajar. Though the SCN in the said case was issued within six months of seizure but the same having not been served/received by the accused within the said six months, confiscation was held to be not sustainable and gold was directed to be released on payment of applicable Customs duties.

It is further urged that Hon’ble Tripura High Court in UOI vs Mandipa Debroy Choudhury [2020 (374) ELT A38 (Tripura)] has held that in the case of town seizure (travelling in domestic sector) on discharge of initial burden of legitimate acquisition, no confiscation can be ordered. It is further urged that after repeal of the Gold Control Act, gold is freely tradeable within India and there is no presmuption of it being smuggled. It is the onus on the Revenue to bring evidence as to the smuggled nature of the gold in question of town seizure. It is also urged that gold is not a prohibited good as defined under Sec 2(33) of the Customs Act. In the facts of the present case, as in the case of town seizure, the provisions of smuggling as defined under Sec 2(39) of the Customs Act is not applicable. Resultantly, Sec 111 & Sec 112 are not applicable in the present case. Accordingly, learned Counsel prays for allowing the appeal and setting aside of the impugned order with consequential relief.

Opposing the appeal, learned AR for Revenue relies on the findings in the impugned order. It is also urged that the appellant never bothered to retract his statement recorded at the time of seizure on 01.02.2020. The retraction in reply to the SCN after about 7-8 months is by way of an afterthought and such retraction is fit to be rejected. The appellant has categorically stated in his statement that he was aware of the smuggled nature of gold recovered and seized from him. On being asked specifically, he stated that he was not having any bill/invoice/receipt in support of the licit acquisition of the gold in question. The appellant also did not offer to file the proof of licit acquisition in due course. Thus, the gold was seized on the reasonable belief of it being smuggled as there were foreign markings on the gold pieces, which is not disputed. Further, under Sec 123, only a reasonable belief is required to be discharged by the department for initiating action by way of seizure and further proceedings. The appellant clearly indicated in his statement that the pieces of gold he was carrying was smuggled in nature. Further, even in the adjudication proceedings, the appellant has failed to give any evidence of the licit nature of acquisition and hence, order of confiscation and penalty is justified and fit to be upheld. Reliance is placed on the ruling of Hon’ble Kerala High Court in CC, Cochin vs Om Prakash Khatri [2019 (366) ELT 402 (Ker)], wherein absolute confiscation was upheld of even unmarked gold that too when the seizure was effected at hinterland (town seizure) when the evidence on record indicated that it was smuggled gold and the person intercepted was not able to establish the licit procurement of gold. Burden of proof under Sec 123 of the Act lies on the person from whose possession the goods are seized or the person who claims ownership and not on the department.

Learned AR places reliance on the following rulings:

a) UOI vs Rajendra Prabhu [2001 (129) ELT 286 (SC)]

b) Md. Akthar vs CCE & C, Patna [2015 (323) ELT 136 (Pat)]

c) Kanungo & Co vs CC, Calcutta [1983 (13) ELT 1486 (SC)]

d) Om Prakash Bhatia vs CC, Delhi [2003 (155) ELT 423 (SC)]

e) Sheikh Mohd. Omer vs CC, Calcutta [1983 (13) ELT 1439 (SC)]

f) CC (Air) vs P. Sinnaswamy [2016 (344) ELT 1154 (SC)]

g) Samyanathan Murugesan vs Commissioner [2010 (254) ELT A15 (SC)]

Having considered the rival contentions, I find that admittedly, it is the case of town seizure as the appellant was intercepted in the domestic terminal at Hyderabad. The only evidence brought on record by Revenue as to the smuggled nature of goods is firstly, that the three pieces of gold have got markings indicated their foreign origin and secondly, the statement of the appellant that he is aware that he has purchased gold at Hyderabad, which is of smuggled in nature and the same has been purchased without any invoice/bill/receipt.

From the tenor of the statement recorded from the appellant, its voluntary nature is doubtful as no person of ordinary prudence will state that the gold he is possessing is of smuggled in nature. I further find that it has been held by the Hon’ble Supreme Court in Vinod Solanki vs UOI in Civil Appeal No. 7407/2008 that where the accused/noticee disputes the voluntary nature of his statement, the onus is on Revenue to prove the voluntary nature of the statement recorded. Thus, I hold that, in the facts and circumstances, the statement as recorded of the appellant on 01.02.2020 is not voluntary in nature.

I further find that the SCN is bad and hit by limitation as the same has been issued after more than six months from the date of seizure as required under Sec 110(2) of the Act. In this view of the matter, the appeal is allowed and the impugned order is set aside.

Accordingly, I direct the said gold in question shall be released to the appellant forthwith, and if already sold, to return the sale proceeds, with interest as per Rules.

The appeal is allowed in the aforementioned terms.