CESTAT upholds Absolute Confiscation of Gold Bars which appeared to be of Foreign Origin [Read Order]

CESTAT - Absolute Confiscation - Gold bars - Foreign origin - Taxscan

The Allahabad Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the  Absolute Confiscation of Gold Bars which appeared to be of foreign origin.

The appellant, Mahendra Kumar Bajpai was travelling from Kolkata to Kanpur by train. He was intercepted by the officers of Government Railway Police. On finding that he was carrying 13 pieces of gold bars, which appeared to be of foreign origin, he was detained. The Police Officers thereafter called the Officers of Customs (P) Division, Varanasi to GRP Thana at Mugal Sarai and handed over the foreign origin gold bars alongwith Mahendra Kumar Bajpai to the Officers of Customs for further action at their end, under supurdaginama. Before taking the possession of the gold bars from the GRP, Government approved valuer was called by the Officers of Customs who valued the gold weighing 12,993.30 gms. valued at Rs.3,98,89,431/-, as per his report. Thereafter, the Customs Officers brought Shri Mahendra Kumar Bajpai to their office along with the gold for interrogation and for further investigation. 

Bajpai did not produce any documents of sale/ purchase/ transportation with respect to the recovered gold. He further stated that as per his knowledge these gold bars has been brought to India from Bangladesh through off route by way of smuggling. Further, the gold bars were also bearing the marking normally affixed on the gold bars by the foreign manufacturers. Thus, it appeared to Officers of Customs that gold bars were brought into India from Bangladesh in violation of the provisions of Section 7(1)(c), 11 and 46 of the Customs Act, 1962 read with Section 123 of the Customs and read with Regulation 3(2&3) of Foreign Trade (Development and Regulation) Act, 1992 and also Rule 11 & 12 of the Foreign Trade (Regulation) Rules, 1993. Hence, detained goods appeared liable to confiscation under Section 111 of the Act. 

The coram of Judicial Member, Anil Choudhary held that in view of foreign markings on 11 out of 13 gold bars seized, the appellant – M.K. Bajpai failed to discharge the onus under Section 123. The allegation of smuggling through Bangaladesh border is only presumption by Revenue, not established. Mr. Bajpai remained in jail for about 18 months (From 1 February 2018 to July 2019). The order in original was passed on 29.3.2019, thus Mr. Bajpai did not have proper opportunity to defend himself.

Two of the gold bars (as per seizure list, and show cause notice paras 2 and 4) are of Indian Brand MMTC, total weight 1999.100 gms, valued at Rs. 61,37,237/-. Mr. Bajpai is a person of small means, and was only a carrier. The reliability of statement of Mr. Bajpai recorded during investigation is doubtful, as he has alleged coercion and duress. The complicity of Mr. G. Agarwal is not established. Only evidence brought on record is the evidence of frequent calls (as per CDR) between the appellants, and the statement of co-accused, which cannot form the sole basis of imposing penalty. Mr. G. Agarwal has disowned the seized goods at the first instance, and also denied any connection of employer-employee or Principal – Agent with Mr. M.K. Bajpai. Nothing incriminating was found from Mr. G. Agarwal in the follow up search at his residence and business premises,” the CESTAT said.

The Tribunal ruled that the penalty under Section 112(b) on Mr. M.K. Bajpai is reduced to Rs. 2,50,000, as he is only a carrier, and a person of small means.

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