[Order]. - These appeals have been filed by the appellants against Order-in-Original No. 7/COMM/CUS/SLG/13-14, dated 6-2-2014 passed by Commissioner of Customs, Central Excise & Service Tax, Siliguri. Under this O-I-O dated 6-2-2014, Adjudicating Authority has confiscated 10 pcs. of Gold Bars, weighing 1746.580 gms., under Section 111(b) and (d) and allowed redemption of the same under Section 125(1) of the Customs Act, 1962 by an option of Rs. 40 lakhs fine to the claimant. Carrier vehicle TATA Indica Car WB-74M-5809 used by the appellants was also confiscated under Section 115(2) of the Customs Act, 1962 and allowed redemption to the owner Shri Rakesh Kumar Somani on payment of Rs. 70,000/- as redemption fine. Under this order penalties of Rs. 5.00 lakhs on Shri Nand Kishore Somani, Rs. 1.00 Lakh each on Shri Rakesh Kumar Somani & Shri Manoj Gattani and Rs. 50,000/- on Shri Krishna Roy (Driver) were also imposed under Section 112(b) of the Customs Act, 1962.

2. Brief facts of the case, as contained in the Order-in-Original, dated 6-2-2014, are that DRI received an information that about 1.5 kgs. of gold, believed to be of foreign origin, was to be transported in one Tata Indica Vehicle bearing Registration No. WB-74M-5809. It was also in the information that gold was believed to be from Bangladesh and that the same was subjected to some re-treatment for selling to different Jewellery Shops in and around Cooch Behar. On the basis of the above information the said vehicle was intercepted on 2-2-2012 by the officers of Cooch Behar Customs P.O. near Ghoogomali Area and two occupants (including a driver) were found in the vehicle. Both the occupants along with the vehicle were brought to Cooch Behar Customs office premises. When the said vehicle was being checked in the parking lot of the office premises, the person sitting on the back seat suddenly opened the dash Board on the driver’s side of the vehicle and picked some objects and tried to run away with the objects in hand. The said person running away was caught by the officers of Customs but the said person threw the objects in the nearby bushes. The officers of Customs traced out the objects which were found to be two packets containing 10 pieces of absorted shapes and sizes of gold bars without any markings or inscription. The name of the person who tried to run away was ascertained to be Shri Nand Kishore Somani. He could not produce any licit document in support of legal acquisition of the gold bars and his health deteriorated and was admitted to a hospital in Cooch Behar.

2.1 The driver of the said vehicle identified himself as Shri Krishna Kumar Roy of Cooch Behar. He stated in his statement dated 2-2-2012 that the vehicle belonged to Shri Rakesh Somani of Dinhata and he gets Rs. 150/- per day and a meal from his owner. That he started from the home of the owner with his father Nand Kishore Somani for Cooch Behar. Driver also corroborated the interception and recovery of gold bars etc. mentioned in Para 2 above. The officers of Customs seized 10 pcs. of assorted gold bars and the vehicle under the reasonable belief that the gold is of smuggled nature and occupants of the vehicle did not discharge the onus of its licit procurement as per the provisions of Section 123 of the Customs Act, 1962. Driver Shri Krishna Roy was arrested on 3-2-2012 and was granted bail on the same day by Chief Judicial Magistrate, Cooch Behar. In a statement dated 6-2-2012, Shri Nand Kishore Somani (recorded in the Hospital/Nursing Home) stated, inter alia, that the documents pertaining to the purchase of the gold from Kolkata were lying with him in some pocket and he was searching for the same in the Customs office on 2-2-2012. That when he saw more officers coming the same created tension and he fell unconscious. It was also stated that the seized gold was purchased in the same form from M/s. Saraf Jewellers, Kolkata. Shri Nand Kishore Somani was arrested on 7-2-2012 and was also granted bail on the same day. Subsequent investigation made by the officers also brought on record that Shri Nand Kishore Somani was also earlier involved in seizure of foreign marked gold which are pending at different appellate levels.

2.2 Shri Ajay Kumar Saraf, proprietor of M/s. Saraf Jewellers, Kolkata in his statement confirmed the supply of gold bars to Shri Nand Kishore Somani under Bill No. 97, dated 3-1-2012, 105, dated 9-1-2012, 110, dated 17-1-2012, 112, dated 19-1-2012 & 116, dated 24-1-2012. He also submitted certain photo copies of Purchase Bills of Jewellery & bank statements.

2.3 Shri Nand Kishore Sumani in his further statement dated 27-2-2012 inter alia, accepted the ownership of the seized goods believed to be gold and that the same were purchased on different dates from M/s. Saraff Jewellers, Kolkata. He denied the fact that during interception and checking he tried to flee. That on the contrary he was intercepted at hogohmali at about 5.30 p.m. and brought to Customs office, Cooch Behar and that the gold was recovered from the dash board of the vehicle. That the seized vehicle belonged to his son Shri Prakash Kumar Somani. It was also stated that he made a payment of Rs. 7,86,195/-for the said gold and remaining amount was on credit due to good relation of Shri Manoj Gathani of Kolkata (his son-in-law) with M/s. Shroff Jewellers. That the amount of Rs. 10.00 lakhs in his ICICI account was due to Rs. 4.00 lakhs and 3.00 lakhs loans respectively taken from his son Prakash Kumar Somani and his daughter-in-law Smt. Pinki Damani. Both these persons confirmed to have given such loan to Shri Nand Kishore Somani.

2.4 Chemical Examine under his report dated 13-3-2012 confirmed the seized goods to be gold having gold content by weight as 99.96, 99.96, 99.94, 99.92, 99.94, 99.96, 99.93, 99.84, 99.94 and 99.94 per cent for each of the 10 gold bars seized. After detailed investigation show cause notice was issued to all the appellants but adjudicating authority did not agree to the arguments and stand taken by the appellants.

3. Shri R.K. Choudhari (Advocate) and Shri B.N. Paul (Advocate) appearing on behalf of the appellants argued that the seized gold bars are not having a foreign markings. Secondly it was their case that the purity of the foreign marked gold is always 99.99% and above. That as the purity of all the gold bars tested in this case was less than 99.99%, therefore, the same cannot be of foreign origin. Secondly, it was also argued that weight of all the ten gold bars seized is not standard which is found in gold bars of foreign origin. It was strongly argued by the learned Advocates that seized gold bars were not of smuggled nature and that present case is not covered by the provisions of Section 123 of the Customs Act, 1962 where onus is required to be discharged by the appellants. That the claimant had the purchase bills covering the seized gold which were present in the pocket of Shri Nand Kishore Somani at the time of interception. Learned advocates relied upon the case law of [Kapildeo Prasad v. CC (P), Patna - 2002 (2) LCX 0099 = (Tribunal)] of this Bench and made the Bench go through Paras 8, 12 to 14 of this order to argue that even in case of seizure of foreign marked gold also it has been held that once bills are produced by the claimant, then such gold and vehicles are not liable to confiscation. It was also submitted that Shri Ajay Kr. Saraff has also stated to have received Rs. 39,15,982/- and only Rs. 9,30,292/- are remaining payment.

4. Shri S.P. Pal, Appraiser (AR) appearing on behalf of the Revenue argued that no document showing licit acquisition of gold bars was produced by Shri Nand Kishore Somani at the time of interception and seizure. That the bills of M/s. Saraff Jewellers, Kolkata were created later as an act of afterthought on the part of the appellant. Ld. AR made the bench go through Para VI, on Page 37 of the Order-in-Original dated-6-2-2014, to argue that statements of some persons in favour of the appellants cannot prevail over the test reports of the chemical examiner who has determined the purity of the gold bars. He also made the Bench go through the findings of Adjudicating authority on Page 39 to argue that said quantity and purity of seized goods cannot be produced from the Jewellery, purchased by M/s. Saraff Jewellers, Kolkata. Learned AR, therefore, strongly defended the order passed by the Adjudicating authority.

5. Heard both sides and perused the case records. The first issue required to be decided in these proceedings is whether 10 gold bars (1746.580 gms.) seized by the officers on 2-2-2012 are of foreign origin. The said 10 gold bars of different size and weight were seized on a reasonable belief of being smuggled as per the information of DRI and that the same is brought from Bangladesh and subjected to some retreatment. It is observed from the weighment sheet of seized 10 gold bars that the weight of these gold bars was ranging from 52.470 gms. to 344.720 gms. None of the two seized gold bars were having identical weights. There were no markings of foreign origin of gold on the seized gold bars. No person in these proceedings ever confessed that the seized gold originated from Bangladesh. Though it was in the information that some retreatment on the said gold bars could have been done but no documentary evidence exist on record that any defacing of the foreign markings was done by the appellants on the seized gold bars. The weight of foreign origin gold bars is standard which is not the case in the gold bars seized. It is the argument of the Revenue that report of chemical examine will prevail over the oral statements made. However, it is observed that a chemical examiner can only give the percentage of gold in the gold bars but cannot say whether the seized goods are of foreign origin. Only the purity of the gold has been certified to be 99.92% to 99.96%. There is no rebuttal to the claim of the appellant that in case of gold of foreign origin the % purity of gold is never below 99.99%. Even the findings and calculations made by the Adjudicating authority at Paras 38 & 39 of the Order-in-Original dated 6-2-2014 will not help the case of the Revenue as to how seized goods will become of foreign origin when there are no foreign markings on them and there is no oral evidence also conveying the same of foreign origin. An information received in this case is only a hearsay not corroborated by any other documentary evidence. The seizure of gold bars was also not made in a Custom area or a vehicle coming from the side of Border with Bangladesh. In the light of the above factual matrix it has to be held that the seized goods cannot be considered to be of foreign origin.

6. Regarding applicability of Section 123 of the Customs Act, 1962 it is relevant to go through the provisions of this Section reproduced below.

“Section 123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be -

(a)     In a case where such seizure is made from the possession of any person, -

(i)      on the person from whose possession the goods were seized; and

(ii)     if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;

(b)     In any other case, on the person, if any, who claims to be the owner of the goods so seized.

(2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.”

7. It is true that as per the above provisions of Section 123 of the Customs Act, 1962 it is not required that gold should contain foreign markings and even gold in primary form or jewellary could also be covered as per the language of the provision. But whether onus of Indian origin on any primary gold or jewellery bearer is cast upon the person in possession of such gold. It may be appreciated that when the provisions of Section 123 of the Customs Act, 1962 were enacted the Gold Control Act was also in operation and gold was considered to be a very sensitive commodity. There was subsequent liberalisation in import policy with respect to gold and even foreign marked gold was allowed to be imported through baggage and through Banks on fulfilling certain conditions. On licit import these foreign marked gold bars can be freely bought and sold in India. However, if any person is found to carry a foreign marked gold in India without a bill then by simply having foreign markings on the gold it cannot be said that the same is of smuggled nature. Once the holder of such gold produces a bill, subsequently, then also the confiscation made by Revenue has been held to be improper by CESTAT in the case of Kapildeo Prasad v. CCP, Patna (supra) decided by this Bench. Following observations have been made by this Bench in Paras 12, 13 & 14 of this case law :

“12. The gold biscuits seized from Shri Awadesh Kr. Thakur have been confiscated by the adjudicating authority after rejecting the documentary evidence produced by the appellants showing the legal purchase of the same from M/s. Chauhan Zevares Pvt. Ltd. and by referring to certain discrepancy in the said document of the seized gold biscuits. However, I find that the discrepancies referred to by the adjudicating authority are not real inasmuch as he has held that whereas the sale voucher shows the goods to be “T.T. Bars”, the seized gold is biscuit. He has thus observed that such descriptive variation between the biscuits and the bars raises a reasonable doubt regarding the genuineness of the transaction. The appellants have contended that biscuits and the bars are synonymous terms used by the persons dealing in gold and are interchangeable “T.T. Bars” represent ten tola bars which are also referred to as biscuits. The Commissioner in his impugned Order has nowhere observed as to what is the difference between a biscuit and a bar. Similarly, as regards weight, I find that there is a variation of about 2 gms. in the weight of all the sixteen pieces of gold. The standard 10 tola bars weigh 116.640 gms., and as such, the total weight of 16 pieces of biscuits would come to 1866.240 gms., which is reflected in the sale voucher of M/s. Chauhan Zevares. Similarly, it is a matter of common knowledge that the standard purity of gold is 999.00. As such, as rightly contended by the learned consultant, the small variation in the weight or in the purity of gold is attributable to the human error and cannot be made the basis for rejecting the sale voucher of M/s. Chauhan Zevares who have admitted to have sold the goods to the appellants. This has also been observed by the Commissioner that M/s. Chauhan Zevares have subsequently stated that they were not sure that the gold under seizure was the same as was purchased from them. Naturally a person who has sold the gold, cannot confirm whether the gold seized by the Customs Officers from that person, is the same gold or not. But the said statement made by M/s. Chauhan Zevares further confirms that the sixteen pieces of gold were, in any case, purchased by Shri Kapildeo Prasad from the said M/s. Chauhan Zevares Pvt. Ltd.

13. The Tribunal in the case of S.K. Chains v. Commissioner of Customs (Prev.), Mumbai reported in (Tri. - Mum.) observed as under : -

“7.  Thus, today there exists a very peculiar situation. On the one hand the Customs Act considers it necessary to ask a person to establish the legality of the origin of the gold seized from him while on the other hand in pursuance of the relaxations made in the Import Policy and the Baggage Rules framed under that very Act, there is a flood of foreign marked gold in the town. Such gold changes hands several times on importation. Since the repeal of the Gold (Control) Act in 1968, there is no legal requirement for the buyers and sellers of gold to maintain any register nor is there any requirement to issue invoices under any Central Act.”

14. In the case of Sri Samir Kumar Roy & Others v. C.C. (Prev.) West Bengal, Calcutta - decided by the Tribunal in Order No. A-475-478/Kolkata/2001, dated 4-7-2001 [ (T)], the Tribunal has considered the effect of liberalised policy as regards the import and dealing in gold and thereafter, concluded that onus as placed under Section 123 was discharged when the appellants produced the sale/purchase vouchers showing the sale of the goods from the gold dealer who has admitted having sold the same. In the absence of any requirement of law requiring the gold dealers enjoying the sale/purchase of foreign-marked gold in India, to indicate the brand names of the same in the sale/purchase vouchers, the sale documents produced by the appellants cannot be dismissed on the said ground. In the instant case also, we find that the entire chain of sequence starting from importation of gold biscuits of M/s. Kan Karan Impex, its sale to M/s. Chauhan Zevares and further sale to Shri Kapildeo Prasad, is established. As such, taking the said factor into accounts, I am of the view that the onus cast upon the appellants under the provisions of Section 123 stands fully discharged. The confiscation of the gold biscuits is not called for. Accordingly, I set aside the same.

15. Inasmuch as the confiscation of the gold biscuits has been set aside, the confiscation of the truck is not called for. For the similar reasons, there is no warrant for imposition of penalties upon the various persons. The same is, accordingly, set aside.”

7.1 In the light of the above relied upon case law in the case of foreign marked gold also it was held by this Bench that appellant has discharged the onus when the bills covering the foreign marked gold bars are furnished. In the present case the seized gold bars do not bear foreign markings, do not have uniform weight/purity and appellant has shown the purchase bills covering the said gold bars having assorted size, weight and purity. The person who sold the seized goods has also confirmed to have supplied the same to Shri Nand Kishore Somani. In his statement, reproduced in Para (23) on Page 16 of the Order-in-Original dated 6-2-2014, Shri Ajay Kr. Saraff of M/s. Saraff Jewellers has confirmed to have supplied the gold bars made out of jewellery, purchased by him. Minor mismatching of difference in weight as calculated by the Adjudicating authority will not make the bills as an afterthought. There could be non-observance of provisions of some other enactments like income-tax or sales tax laws but the same cannot be grounds for confiscation of goods under Section 111 of the Customs Act, 1962 when there is no iota of evidence that seized gold bars are of foreign origin or smuggled into India. Suspicion/presumption howsoever strong cannot take the place of an evidence.

8. In view of the above observations and the settled proposition of law, present appeals filed by the appellants are allowed by setting aside the order-in-original dated 6-2-2014 passed by the Adjudicating authority with consequential relief, if any.

(Operative part of the order already pronounced in the Court)