26 pieces of Gold Biscuit Smuggling: CESTAT Sets aside Penalty imposed under Customs Act In Absence of Documentory Evidence Showing Involvement [Read Order]

On 21.03.2015, the 24th Assam Rifles, Khudengthabi intercepted one ‘Tata Indica’ car bearing Registration No. MN-07D0424 which was being driven by Shri Moirangthem Ranjan Meitei, belonging to Khurai Thoidingjam Leikai, P.O.: Lamlong, P.S. Porompat, Imphal (East), PIN – 795 010 (Manipur). On examination of the said vehicle, the personnel of the 24th Assam Rifles inter alia found 26 (twenty six) pieces of yellow metal biscuits, believed to be gold of foreign origin, collectively weighing 4326.40 grams from the fuel tank of the said vehicle. On 22.03.2015, the personnel of Assam Rifles handed over Shri Moirangthem Ranjan Meitei along with 26 pieces of yellow metal biscuits and the Tata Indica car to the Customs Officers, Moreh, for further necessary action.

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Subsequent to the issuance of the ShowCause Notice dated 04.09.2015, Smt. Hanjabam Memtombi Devi,the appellant claimed ownership of the seized twenty six pieces of gold biscuits of foreign origin on 03.08.2015. Accordingly, investigation was extended to Smt. Hanjabam Memtombi Devi (the appellant) and her statement was recorded on 11.01.2016 wherein she inter alia stated that she had met one Ma Win Mar, a Myanmarese lady who deals in gold in Myanmar.

The appellant further stated in her statement that she was in need of gold and therefore, had requested Ma Win Mar to arrange twenty six pieces of gold biscuits, for which she was to pay Rs.20,00,000/- in advance. She further stated that Ma Win Mar had sent the said gold without completing the legal process and therefore the same was seized by the personnel of 24th Assam Rifles at Khudengthabi on 21.03.2015. Accordingly, she claimed ownership of the said gold and also submitted that she was ready to pay applicable duties.

In view of the fresh facts brought on record, the appellant was also called upon to Show Cause inter alia as to why the said twenty six pieces of gold of foreign origin claimed by her should not be confiscated. The matter was adjudicated by the Commissioner of Customs (Preventive), North Eastern Region, Shillong, Meghalaya vide Order-in-Original No. CCP/NER/18/2016 dated 25.08.2016 wherein the Ld. Commissioner has absolutely confiscated the 26 pieces of gold biscuits of foreign origin collectively weighing 4326.40 grams valued at Rs.1,14,51,980/- (Rupees One Crore Fourteen Lakh Fifty One Thousand Nine Hundred and Eighty only) under Section 111(b) and (d) of the Customs Act, 1962.

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She also ordered confiscation of the Tata Indica car bearing Registration No. MN-07D-0424 valued at Rs.60,000/- (Rupees Sixty Thousand only) and gave an option to redeem the said vehicle on payment of a fine of Rs.50,000/- (Rupees Fifty Thousand only) under Section 115(2) of the said Act. A penalty of Rs.10,00,000/- (Rupees Ten Lakhs only) was inter alia imposed on Smt. Hanjabam Memtombi Devi (the appellant herein) under Section 112(b)(i) of the Customs Act, 1962.

Aggrieved by the confiscation of the gold in question and the imposition of penalty on her, Smt. Hanjabam Memtombi Devi has filed this appeal. Counsel appearing on behalf of the appellant submitted that gold is not a prohibited item under the Customs Act, 1962, but is only a restricted item. Thus, he submitted that absolute confiscation of the gold is not warranted in this case. It is submitted by the Counsel for the appellant that the gold is eligible to be released to the appellant on payment of applicable duties, fine and penalty, if any, which they are ready to pay.

It is further submitted by the Counsel for the appellant that the Show Cause Notice issued in this case is in violation of Section 110(2) of the Customs Act, 1962 inasmuch as the Show Cause Notice was not issued within six months from the date of seizure of the gold; that the seizure in this case was made on 22.03.2015 while the Notice was served to the appellant beyond the period of six months prescribed under Section 110 of the Customs Act, 1962. Accordingly, it is contended that the Show Cause Notice is barred by limitation.

The Counsel also submitted that the impugned Notice is arbitrary, mala fide, improper and unreasonable. Accordingly, he prayed for setting aside the impugned order and releasing the gold to the claimant on payment of applicable duties, which the appellant is ready to pay.

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The Authorized Representative of the Revenue submitted that the gold was recovered from the fuel tank of the said Tata Indica car driven by Shri Moirangthem Ranjan Meitei by personnel of 24th Assam Rifles, Khudengthabi and subsequent investigation conducted by the Customs Officers has established that the gold is of foreign origin, smuggled into the country without payment of appropriate Customs duties. As gold is a notified item under Section 123 of the Customs Act, 1962, the Departmental Representative submitted that it is the responsibility of the appellant to provide the documentation showing licit purchase of the said gold. He therefore submitted that as the appellant has failed to provide any valid documents before the adjudicating authority, the adjudicating authority has rightly confiscated the gold in question.

The gold was seized on 22.03.2015, but Smt. Hanjabam Memtombi Devi (appellant) had not made any claim regarding ownership of the said gold during the course of investigation; it was only on 03.08.2015 that she claimed ownership of the said gold. He points out that even during that time, the appellant did not produce any documentary evidence to substantiate her claim for ownership. Accordingly, the Authorized Representative of the Revenue prayed that the appellant’s claim for ownership be rejected and the impugned order, confiscating the gold and imposing penalty on the appellant, be upheld.

The bench observed that this claim of the appellant is not supported by any documentary evidence. Smt. Hanjabam Memtombi Devi has merely submitted that she had intended to bring the gold and had requested Ma Win Mar of Myanmar to arrange the 26 pieces of gold biscuits for her. She could not submit any documentary evidence regarding the payment made for purchase of the said gold. In these circumstances, the court held that the claim made by the appellant is not supported by any documentary evidence and rejected her claim on the ownership of the gold.

A two member bench of Shri Ashok Jindal, Member (Judicial), and Shri K. Anpazhakan, Member (Technical) found that the investigation has not brought in any evidence to establish her involvement in the alleged offence. It is only after 03.08.2015 that she claimed ownership of the said 26 pieces of gold biscuits, she has been implicated in the Notice.

Since there is no documentary evidence available on record to establish her involvement in the alleged smuggling activity and her claim for ownership itself has not been established, we observe that her role in the alleged smuggling is also not substantiated by the investigation. Accordingly, we hold that no penalty is imposable on the appellant viz. Smt. Hanjabam Memtombi Devi and accordingly, we set aside the penalty imposed on her.

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The CESTAT upheld the order of confiscation of the 26 pieces of gold biscuits of foreign origin collectively weighing 4326.40 grams valued at Rs.1,14,51,980/- (Rupees One Crore Fourteen Lakh Fifty One Thousand Nine Hundred and Eighty only) under Section 111(b) and (d) of the Customs Act, 1962.

Further held that the penalty imposed on the appellant under Section 112(b)(i) of the Customs Act, 1962 is set aside as her role in the alleged offence is not established.

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