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Giridhari Dubey v. Commissioner Of Customs (Prev.), Kolkata
Tribunal Order — Summary and Analysis
Factual and Procedural Background
The appellant, Shri Giridhari Dubey, purchased 34 pieces of foreign-origin gold bars from M/s. Lalji Bhai Kanji Bhai Soni (Ahmedabad) under Voucher Nos. 44 and 45 (both dated 4-5-2001 according to the record) and returned to Calcutta on 7-5-2000. Because his father was ill, Dubey left the gold bars with his friend Shri Umesh Kumar Tiwari and left for Bihar. On returning to Calcutta on 15-5-2000 Dubey learned that the 34 gold bars kept with Shri Tiwari had been seized by Customs officials and that Shri Tiwari had been arrested and was in custody.
On 16-5-2000 the appellant claimed the foreign gold bars with the Commissioner of Customs (Preventive), Calcutta, enclosing copies of the cash/credit memos. Statements were recorded from the appellant and from Shri Lalji Bhai Kanji Bhai Soni. A show cause notice was issued proposing confiscation of the seized gold and foreign currency found at Shri Tiwari's residence.
The Commissioner (Preventive) ordered absolute confiscation of 32 pieces of gold bars bearing the marking “PERTH MINT” (Australia) under Section 111(d) of the Customs Act, 1962, and release of the remaining two pieces bearing the marking “UBS” (Switzerland) to Shri Giridhari Dubey. The Commissioner also ordered absolute confiscation of foreign currency (U.S. Dollar 2,170 and B.D. Taka Rs. 10,000) under Section 111(d), imposed a penalty of Rs. 3,00,000 on Shri Giridhari Dubey and Rs. 25,000 on Shri Umesh Kumar Tiwari under Section 112, and exonerated other parties (including the Ahmedabad supplier and two other firms). Shri Giridhari Dubey and Shri Umesh Kumar Tiwari filed appeals (Appeal Nos. 262 and 263 respectively).
Legal Issues Presented
- Whether the Commissioner was justified in ordering absolute confiscation of the 32 pieces of gold bars (marked “PERTH MINT”) recovered from Shri Umesh Kumar Tiwari.
- Whether the penalty of Rs. 3,00,000 imposed on Shri Giridhari Dubey under Section 112 was sustainable in respect of the 32 pieces of gold that were confiscated.
- Whether the confiscation of the foreign currency (U.S. Dollar 2,170 and B.D. Taka 10,000) and the penalty of Rs. 25,000 on Shri Umesh Kumar Tiwari should be interfered with on appeal.
- Relatedly, the proper allocation of the legal onus under Section 123 (and the relevance of brand/marking accounting) in proceedings for confiscation of foreign-marked gold.
Arguments of the Parties
Appellant — Shri Giridhari Dubey
- Produced purchase documents/cash-credit memos (Voucher Nos. 44 & 45) claiming acquisition of the seized gold bars from M/s. Lalji Bhai Kanji Bhai Soni.
- Claimed that at least two pieces of the seized gold were identifiable and covered by the submitted purchase documents; sought release of claimed gold.
- Relied on documentary evidence to discharge the statutory onus of proving lawful possession (as reflected in the Tribunal's analysis).
Shri Umesh Kumar Tiwari
- Initially made statements implicating Shri Giridhari Dubey, including admissions about Dubey's involvement in purchase/sale of smuggled gold and retention of such gold at Tiwari's premises.
- Subsequently retracted the initial statements while in custody, alleging that earlier statements were obtained under duress, coercion and inducement.
- In his appeal, he asserted that the foreign currency found was received from Shri Giridhari Dubey and did not press a specific ground to seek release of that currency; he also suggested the possibility of planting, a plea the Tribunal did not accept on the record.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| S.K. Chains (reported in [citation not provided in the opinion]) | Consideration of the effects of a liberalised policy on import and dealing in gold and the application of the onus under Section 123; illustrates circumstances where the statutory onus was held to be discharged. | The Tribunal relied on the reasoning in S.K. Chains (as described in the order) to conclude that the appellants in the present case had discharged the onus under Section 123 and therefore to set aside the confiscation of the 32 pieces of gold. |
Court's Reasoning and Analysis
The Tribunal reviewed the materials, including statements and documentary evidence, and proceeded through the following analytical steps (as recorded in the order):
- The Commissioner had accepted that Shri Umesh Kumar Tiwari retracted earlier statements made on 8-5-2000 and 9-5-2000, and recorded a legal principle that a retracted statement of a co-accused cannot support an adverse conclusion unless corroborated by independent evidence. The Commissioner expressly found a lack of independent evidence establishing that the gold bars were procured by Shri Dubey through unauthorised means.
- Despite that, the Commissioner relied selectively on the initial (now-retracted) statements by Shri Tiwari to reach a conclusion that 32 of the 34 seized bars (bearing “PERTH MINT”) were of smuggled origin. The Tribunal found this approach internally inconsistent: if retracted statements were not reliable, they could not be used as a basis for confiscation.
- The Commissioner had examined records of the supplier firm (M/s. Lalji Bhai Kanji Bhai Soni) and other suppliers (e.g., M/s. Vishal Exports Overseas Ltd.) and found it difficult to correlate purchases with specific sold bars or to match brand markings with documentary records. The Commissioner accepted the documentary proof for two bars (marked “UBS”) and ordered their release, but rejected the same class of vouchers as to the remaining 32 bars (marked “PERTH MINT”). The Tribunal held that this selective acceptance was unjustified in commercial practice where brand markings may not be reflected in sale receipts and where a buyer lacks access to a supplier's detailed inventory.
- The Tribunal also observed that the recovery locations of items undermined the hypothesis that all seized items formed a single transaction: the gold was recovered from a cot while the foreign currency was recovered from a cupboard. Documents and other materials seized at the premises were not shown to be part of the same single transaction that would tie the foreign currency directly to the 32 bars.
- The Tribunal relied on its earlier reasoning in S.K. Chains with respect to the liberalised import/dealing regime for gold and the allocation of onus under Section 123. Applying that principle, the Tribunal concluded that the appellants had discharged the onus in the facts of the present case and that brand-wise accounting was not mandated by any notification under Chapter IVA of the Customs Act. The Tribunal therefore held that confiscation based solely on a failure to produce brand-wise accounts was not sustainable.
- On the foreign currency and penalty against Shri Umesh Kumar Tiwari, the Tribunal found no reason to interfere. Shri Tiwari did not mount a specific or acceptable challenge to the confiscation of the foreign currency; his plea that the currency had been planted or that it was received from Shri Dubey was not accepted on the record. Consequently, the Tribunal confirmed confiscation of the foreign exchange and the penalty imposed on Shri Tiwari.
Holding and Implications
Core Ruling:
The appeal of Shri Giridhari Dubey is allowed; the order of confiscation of the 32 pieces of foreign-marked gold and the penalty imposed on him are set aside.
Specific dispositional points and immediate consequences:
- The Tribunal set aside the Commissioner’s order of confiscation in respect of the 32 gold bars marked “PERTH MINT” and also set aside the penalty of Rs. 3,00,000 imposed on Shri Giridhari Dubey. Shri Giridhari Dubey’s appeal was allowed on these issues.
- The Tribunal did not interfere with the confiscation of foreign currency (U.S. Dollar 2,170 and B.D. Taka 10,000) and confirmed the penalty of Rs. 25,000 imposed on Shri Umesh Kumar Tiwari. Shri Umesh Kumar Tiwari’s appeal was dismissed.
- The Tribunal’s decision rests on findings that the Commissioner’s reliance on retracted statements was improper, that the documentary evidence furnished by the buyer could not be selectively accepted for part of the seizure while rejected for the remainder, and that the statutory onus under Section 123 had been discharged in the facts of this case (with support drawn from the Tribunal’s earlier consideration in S.K. Chains).
The Tribunal noted that no notification requires brand-wise accounting of foreign-marked gold under Chapter IVA of the Customs Act; therefore, confiscation for failure to furnish brand-wise accounts was not warranted on these facts.
[Order per : S.S. Sekhon, Member (T)]. - The appellant purchased 34 pieces of gold bars of foreign origin from M/s. Lalji Bhai Kanji Bhai Soni of 368, Khetarpole Naka, Manick Chowk, Ahmedabad under Voucher Nos. 44 and 45, both dated 4-5-2001 and came back to Calcutta on 7-5-2000. On getting to know that his father was seriously ill, the appellant left for his native place in Bihar leaving foreign gold bars with his friend Sri Umesh Kumar Tiwari. The appellant on return to Calcutta on 15-5-2000 learnt that the 34 gold bars kept with Sri Umesh Kumar Tiwari had been seized by the Customs Officials and Sri Umesh Kumar Tiwari was arrested and was in jail custody. The appellant claimed with the Commissioner of Customs (Preventive) Calcutta, foreign gold bars on 16-5-2000, enclosing therewith the copies of the cash/credit memos.
2. Statements were recorded from the appellant and from Sh. Lalji Bhai Kanji Bhai Soni Proprietor of the firm at Ahmedabad and thereafter show cause notice was issued proposing confiscation of the gold and foreign currency under seizure as effected at the residence of Sh. Tiwari. The ld. Commissioner (Preventive) after going through the material on record ordered absolute confiscation of 32 pcs. of gold bars with marking “PERTH MINT” Australia out of 34 pcs. recovered from the possession of Sh. Umesh Kumar Tiwari under Section 111(d) of the Customs Act, 1962 and ordered release of remaining 2 pcs. of gold bars bearing marking “UBS” SWITZERLAND in favour of the claimant Sh. Giridhari Dubey. He ordered absolute confiscation of foreign currency U.S. Dollar 2170 and B.D. Taka of Rs. 10,000 under Section 111(d) and penalty of Rs. 3,00,000/- on Sh. Giridhari Dubey, and Rs. 25,000 on Sh. Umesh Kumar Tiwari under Section 112, the appellants herein and exonerated the other notices from penal charges viz., M/s. Lalji Bhai Kanji Bhai Soni, M/s. Vishal Export Overseas Ltd. and M/s. Inter Continental Trade Links and Exports Ltd., Ahmedabad. The present Appeal No. 262 and No. 263 have been filed by Sh. Giridhari Dubey and Sh. Umesh Kumar Tiwari respectively.
3. The matter was heard. After considering the statement made in the materials, we find
(a) The ld. Commissioner after considering the statements has come to the findings as follows :
“.....In this particular case Sh. Umesh Kumar Tiwari retracted the statement recorded earlier on 8-5-2000 and 9-5-2000 and in his subsequent statement recorded while he was in jail custody submitted that such earlier statement was obtained under cureses, coercion and inducement and hence such statement, subsequently retracted, can not be placed as a valid and acceptable evidence. Further, it is settled principle of law that no adverse conclusion can be drawn only on the basis of retracted statement of co-accused unless such statement is further corroborated by independent evidence. In this particular case there is no independent evidence showing that such gold bars were procured by Shri Dubey through unauthorised means. It is, therefore, difficult to place reliance only on the statement of Shri Umesh Kr. Tiwari........”
“......I have examined very carefully the purchase and sale made by the said firm during the period from 1-4-2000 onwards. I find the closing balance of gold bars available with the said firm was 92 as on 1-4-2000. Thereafter the said firm procured quite a number of gold bars from different agencies such as M/s. Vishal Exports Overseas.”
“.....Hence it is very difficult to correlate each and every gold bar sold with the corresponding purchase document and it is not possible to identify the gold sold under cover of any particular sale document with the corresponding purchase document of the said gold bars. Out of 34 pcs. of gold bars seized in this particular case 32 pcs. bear marking “PERTH MINT” AUSTRALIA, and the remaining two pcs. of marking “UBS SWITZERLAND”. I find from the information furnished by M/s. Vishal Exports Ltd., that they have sold substantial pieces of gold bars with marks “UBS SWITZERLAND” mark gold bars to Shri Giridhari Dubey in the present transaction. However, M/s. Vishal Exports Overseas Ltd., did not indicate sale of any gold bar with mark “Parth Mint” to the Ahmedabad firm.”
As regards the remaining 32 pieces, he found that none of the agencies had sold gold bars with the said marking Perth Mint Australia and in spite of specific enquiries he made with M/s. Inter Continental Trade Links and M/s. Vishal Exports Overseas Ltd., they could not specifically satisfy to that effect. He concluded that the burden of proving that these 32 pcs. bars were not smuggled in character squarely lies on the person from whose possession such gold bars were recovered. The papers produced by Shri Giridhari Dubey of having purchased these 32 pcs. of gold bars from Ahmedabad could not be precisely corelated with the gold recovered from Shri Umesh Kumar Tiwari who in his initial deposition had confessed about Shri Giridhari Dubey was engaged in the purchase and sale of smuggled gold, keeping such gold in his (Tiwari’s) premises on earlier occasions also. Such emphatic statements of Sh. Tiwari were found by Commissioner to confirm the view that the said 32 pcs. bars were procured by Shri Giridhari Dubey from illegal source and on their recovery by Customs, an attempt to cover up the transaction had been made by presenting purchase documents issuing purchase of 32 bars from Ahmedabad. His considering the fact of recovery of U.S. Dollar and B.D. Taka from the possession of Shri Tiwari as a pointer to establish that the transaction of gold was totally unauthorised and in view of the same and failure on part of Sh. Giridhari Dubey to account for precisely 32 pcs. of gold bars, he passed his order.
(b) We find that once the Commissioner has come to a finding that “it was therefore difficult to place reliance only on the statement of Sh. Umesh Kumar Tiwari” then it is not understood how, why and in what circumstances Commissioner is placing reliance on the initial deposition on Shri Tiwari to arrive at a tainted nature of 32 pieces bars of gold. Similarly, when the Commissioner has come to a very positive finding as extracted herein above about the difficulty in corelating the records even after having a facility of examination of such records of not only M/s. Lalji Bhai Kanji Bhai Soni but also of M/s. Vishal Enterprises Overseas Ltd., other supplier of gold to Shri Giridhari Dubey in the normal course of business, it is not understood as to how the Commissioner is placing further burden on Sh. Giridhari Dubey who as a buyer from M/s. Lalji Bhai Kanji Bhai Soni had no access to any other record than the receipts issued for purchase to him. When the Commissioner is accepting that two pcs. out of 34 pcs. of bars seized from Shri Tiwari are covered by the two purchase documents of 17 bars each, produced by Shri Giridhari Dubey and has ordered the release of those 2 bars by accepting due discharge of onus. It is therefore not permissible for the Commissioner to reject the very same two purchase vouchers for the other 32 bars, on the grounds as arrived at by him when in commercial transactions gold bar brands are not considered relevant. Commissioner cannot introduce the same. In any case, if M/s. Lalji Bhai Kanji Bhai Soni cannot account for the brands the buyer i.e. Sh. Giridhari Dubey cannot be liable to a penalty and the supplier be discharged. Either the documents which admitted do not show the brand marking of gold, are covering sale/purchase transaction of all the 17 bars as shown therein i.e. 34 bars of foreign marked gold on two documents or they do not cover the transaction. When the document is being accepted by the adjudicator for covering part of the gold under seizure and his coming to a finding that Shri Umesh Kr. Tiwari’s statement are not reliable then the only circumstantial evidence about the recovery of U.S. Dollars and B.D. Taka from the possession of Shri Umesh Kumar Tiwari will not cause to conclude that the 32 pcs. of gold were smuggled in nature or that Giridhari Dubey has not discharged his onus. We find from the case records that the recovery of the said pcs. of gold were from the cot while the recovery of the foreign currency was from the cupboard found in the premises of Shri Umesh Kumar Tiwari; from Shri Umesh Kumar Tiwari’s premises other documents with certain transaction were found which has not been considered to be relevant by the adjudicator. From these facts we are led to believe that the gold under seizure, foreign currency and the indiscriminating documents seized by the proper officer under the reasonable belief were not part of the same single transaction. If that be so, and when Commissioner is accepting that part of the gold which is found by us and submitted by the appellant to be part of 2 purchase documents and is a separate transaction entered into by Shri Tiwari and Shri Giridhari, then we can not find the reasons arrived at by the Commissioner to justify the confiscation of the remaining 32 pcs. of gold in the facts of this case.
(c) In view of our findings we would set aside the order of confiscation of 32 pcs. of gold also relying at the findings of this Tribunal in the case of S.K. Chains reported in wherein in Para 10 of the reported decision the Tribunal has considered the effects of the liberalized policy as regards import and dealing in gold and thereafter concluded that that onus as placed under Section 123 was discharged in the facts of that case. We would also considering the onus under Section 123 has been discharged in the facts of this case by the appellants. If the Revenue wants that the gold dealers indulging in sale and purchase of foreign marked gold in India, should indicate the brand names and that discharge under Section 123 shall be only with respect to each brand then foreign marked gold should have been declared as one of the items under Chapter IVA of the Customs Act. We find that no such notification of placing foreign marked gold exists. Therefore the confiscation of the foreign marked gold for non satisfactory brandwise accounting as arrived at in the facts of this case was not called for.
(d) Since we find no reason for sustaining the confiscation of 32 pcs. of foreign marked gold which has been claimed by Shri Giridhari Dubey we find no reason for imposition of any penalty on Shri Giridhari Dubey.
(e) As regards, the foreign currency under confiscation, from the appeal of Shri Umesh Kumar Tiwari, we do not find that the confiscation of the same has been challenged. No grounds being urged specifically for the release of the same. He has only urged that the said currencies were received from Shri Giridhari Dubey and he has not claimed the same. This plea of Shri Umesh Kumar Tiwari of planting of foreign currency is not accepted since we find no reason why the Officers should bring such a large quantity of U.S. Dollars and B.D. Taka and implicate Shri Umesh Kumar Tiwari by placing the same in his cupboard from where the said goods have been admittedly recovered as deposed by Shri Umesh Kumar Tiwari. In this view we find no ground to interfere with the orders as regards confiscation of foreign exchange and penalty imposed on Shri Umesh Kumar Tiwari.
4. In view of our findings we set aside the order of the confiscation of 32 pcs. of foreign marked gold and penalty as imposed on Shri Giridhari Dubey and allow his appeal.
5. The orders of confiscation of USD 2170 B.D. Taka 10,000, are not interfered with. As regards penalty of Rs. 25,000 on Shri Umesh Kumar Tiwari, the same is confirmed. The appeal of Shri Umesh Kumar Tiwari is dismissed.
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