Mere Purity of Gold would not make it as Foreign origin: CESTAT sets aside Confiscation of Gold Bars in absence of Corroborative Evidence [Read Order]

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal(CESTAT) has held that mere Purity of Gold would not make it of foreign origin and set aside the Confiscation of gold bars under Customs Act in the absence of coroborative evidence.

Shri Monirul Mallick, Vill., wherein the Commissioner (Appeals), C.G.S.T., Central Excise and Customs, Guwahati has upheld the Order-in-Original dated 05.06.2020 passed by the adjudicating authority. On 02.03.2019, at around 12:30 p.m., one Sk. Amjad Ali, employee of Shri Monirul Mallick (the appellant herein) was intercepted at Platform No. 4 of Guwahati Railway Station by the personnel of Government Railway Police, Guwahati Railway Station while he was travelling from Guwahati to Howrah via Saraighat Express Train (12346 DN).

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Upon search, Sk. Amjad Ali was found to be in possession of 06 (six) pieces of gold bars, collectively weighing 499.17 grams. The above detected gold bars were taken to M/s. J.M. Assaying Testing Refinery, H.B. Road, Masjid Gali, Fancy Bazar, Guwahati wherein it was found that the 06 (six) pieces of gold bars were of 99.5% average purity, of 23.9 karat. The said gold bars were subsequently handed over to the Anti-Smuggling Unit, Customs Division, Guwahati for taking further necessary action under the Customs Act, 1962.

Samples were thereafter drawn from the said gold bars and testing of the same was done through the Senior Quality Control Officer, Assam Hallmarking Centre, Government of Assam, who confirmed the purity of the said six pieces of gold bars as “996.6, 996.1, 997.1, 996.8, 996.7 and 996.6 of 23.9 karat”.

Considering that the said Sk. Amjad Ali was not having any valid documents to prove licit purchase of the said gold bars, the same were seized under the belief that the same had been smuggled into India without payment of appropriate duties of Customs.

The appellant, namely, Shri Monirul Mallick, challenged the said order before the Commissioner (Appeals), who vide the impugned order dated 28.07.2021 has upheld the order of confiscation of the gold in question along with the penalty imposed on the appellant. Counsel appearing on behalf of the appellant submitted that the appellant is a goldsmith and he had purchased the gold from M/s Nirmala Trading Co, Kolkata, on two dates i.e., 13th February, 2019 and 27th February, 2019. He states that thereafter all the gold from these purchases were melted and formed into 12 gold bars. It is also submitted that out of the above 12 gold bars, 6 gold bars were given to local gold artisans for the purpose of making gold jewellery and the other 6 gold bars were sent to the Guwahati shop owned by the appellant, and were being brought back to Kolkata, which have been subsequently seized by the Customs Authorities in the impugned proceedings.

It is further submitted on behalf of the appellant that he has two Gold Jewellery shops viz. one in Hooghly, West Bengal and the other in Guwahati, Assam. The Counsel for the appellant informs as an internal process in the course of their jewellery business, gold is transferred from one branch to another i.e., Kolkata to Guwahati and Guwahati to Kolkata, which is for the purpose of making gold jewellery in the normal course of their business. It is also submitted that such transfer of gold depends upon their requirement and it is purely a business arrangement.

It is also pointed out by the Counsel for the appellant that the appellant is having valid documents for purchase of the said gold and have produced tax invoices in respect of purchase of the said gold bars from M/s. Nirmala Trading Co., Kolkata. It is thus the appellant’s contention that he has been able to produce sufficient documentary evidence to prove licit purchase of the gold in question.

The gold in question was seized from Guwahati Railway Station and it is a town seizure; the gold was also not having any foreign marking and was only having a purity of 99.5%. Therefore, it is contended by the appellant that there is no evidence on record regarding the alleged smuggling of the gold bars into the country. In this regard, it is further submitted that the burden of proof falls on the Revenue, under Section 123 of the Customs Act, 1962, to establish the smuggled nature of the gold; however, the Revenue has failed to bring in any evidence to substantiate the allegation that the gold in question had been smuggled without payment of appropriate Customs duties.

Moreover, the appellant has pointed to the fact that the gold was already in India and was only being transported internally between two branches, in the course of legitimate business. It is also his contention that the documents submitted by the appellant are not matching with the gold seized in this case and therefore, the evidence submitted by the appellant does not necessarily indicate that the gold in question has been procured from domestic sources.

A single bench of K. Anpazhakan, Member (Technical) observed that the mere gold having 99.5% purity would not automatically make the gold as foreign origin gold. Department must establish the foreign origin of gold with corroborative evidence. 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.

Further observed that minor variations in the statements of the employee at the time of his interception cannot be a reason to disregard the documentary evidence of domestic purchase submitted by the appellant. It may also be relevant to observe that the employee may not be having the full information regarding the source of domestic purchase of the gold at the time of his interception, but, in his statements, he always maintained that the gold was being brought from their other unit.

Since the Department could not produce any evidence for establishing the smuggled nature of the gold, the tribunal accepted the documentary evidence submitted by the appellant in this case for the domestic purchase of the said gold. The Tribunal found that the documentary evidence submitted by the appellant establishes domestic purchase of the gold.

The tribunal held that the confiscation of the gold bars is question is not sustainable and set aside the same and the penalty of Rs.1,60,000/- imposed on Shri Monirul Mallick under Section 112(b)(i) of the Customs Act, 1962.

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