N.S. CHENGALVARAYAN Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THESE seven appeals are against a common Order -in -Original No. 1190/2003 dated 29.10.03 passed by Commissioner of Customs (Adjudication Sea Port), Chennai who has absolutely confiscated gold jewellery weighing 9819.830 gms. of foreign origin under Section 111(d)(2) of the Customs Act 1962 read with FTDR Act, 1992. He has also released the gold idols totally weighing 1058.896 gms. to M/s. Vignesh Kumar Jewellers and has imposed penalty under Section 112 of the Customs Act, 1962 on the appellants as detailed below:

(2.) BRIEF facts of the case are that on the basis of specific intelligence that huge quantity of gold coins/gold jewellery of foreign origin smuggled into the country were kept concealed in the shop premises of M/s Sri Vignesh Kumar Jewellers, (VKJ for short) of which NS Chengalvarayan is one of the partners, the DRI officers initiated investigation. As a follow up action statements were recorded from various persons such as Jitendra Jain on 1.11.2000 wherein he has inter alia stated that he had come in contact with one Chengalvarayan in 1997 who was a dealer in gold jewellery. He has stated that the said Chengalvarayan used to purchase gold ornaments and gold coins etc. from passengers who brought the said items without payment of duty and that such gold items were used to be kept in the house of One Kaliya, Sathya and Damodaran who are his employees. He has further stated that on 30.10.2000 he received a bag containing 1850 gold coins each weighing 8 gms and on the next day he had also received another bag containing 8 Kgs of gold ornaments and 25 gold biscuits with foreign markings from one Kaka who was known to him and to Chengalvarayan. He stated that the goods were intended for Chengalvarayan and that he had handed over the gold ornaments weighing 8 Kgs and 25 gold ornaments to three persons viz. Sathya, Kaliya, and Suresh, who is the brother of Chengalvarayan. On 1.11.2000 statement was also recorded from NS Suresh, brother of Chengalvarayan who in the statement inter alia stated that his brother is a dealer in gold jewellery etc. and that though some portion of the above jewellery was received on payment of duty, certain portion was smuggled goods. The officers searched the business premises of VKJ on 2.11.2000 in the presence of one Balaji brother of Shri Chengalvarayan and during the search the officers found gold jewellery, gold idols of foreign origin and some documents/registers pertaining to purchase and sale of gold. Shri Balaji could not correlate the gold jewellery and idols found in the shop with the documents and registers. Balaji also stated that he was not aware of any dealings relating to the gold jewellery in VKJ. The gold jewellery and gold idols were got assayed by a market assayer who certified that the items were of 22 carat and were of foreign origin. The officers seized 9819.830 gms of gold jewellery and 1056.896 gms of gold idols approximately valued at Rs 47.8 Lakhs. Suresh in his further statement dated 2.11.00 stated that the entries in the Registers were usually made by one Shri Dhanasekar working in the shop. Dhanasekar in his statement dated 2.11.2000 inter alia stated that he is an employee of VKJ and that no receipts were made for sale but were written in small chits which were kept in his house or in the house of Damu. The search of residential premises of Kaliya another employee of VKJ did not result in recovery of any incriminating documents or material. Searches made in the residence of One Damodaran @ Damu resulted in recovery of certain chits and papers, but the said Damodaran could not be contacted nor examined. Jitendra Jain in his further statement stated that most of the gold jewellery in the shop were smuggled ones and some were procured through legal sources. None of the persons involved in the transaction was able to furnish anything to support the licit import of gold coins or jewellery etc. It was in these circumstances that show cause notice was issued which culminated in the order of adjudication passed by the adjudicating authority as noted above.

(3.) LD . Counsel for the appellants Shri B. Kumar submitted that VKJ had meticulously maintained accounts and the documents show import of 916 purity gold jewellery fully and they have explained as to the lawful nature of the acquisition of the gold jewellery found in the shop. The adjudicating authority has overlooked these vital facts. As regards the chits that were seized from the house of one Damodaran alias Dhamu, he has submitted that mere recovery of some photo copies of chits from the house of one Damu cannot be connected with the transactions done by VKJ. Further the said Damu was also not contacted by the Department nor any statement recorded from him. No evidence has been shown that Damu was an employee of VKJ. Further, the so called chits did not contain any name of the shop nor the wordings written therein showed that they relate to any dealing relating to the goods under seizure. He, therefore, submitted that the such chits cannot be taken as evidence. The Counsel also referred to the documents such as sale bills, registers and pointed out that all the entries are supported by documents. He has also submitted that the adjudicating authority in paragraph 36 had come to the conclusion that none of the three items viz. 1850 gold coins, 8 Kg. of gold jewelleries of foreign origin and 25 gold biscuits was seized and he has dropped the proceedings on the above three items which were not seized. The adjudicating authority therefore proceeded to examine the liability to confiscation of the total gold jewellery weighing 9819.830 gms and gold idols weighing 1058.896 gms and released the gold idols weighing 1058.896 gms. to M/s VKJ on finding that they were lawfully acquired. The learned Counsel also submitted that the seizure of gold jewelleries from the shop of Vignesh Kumar Jewelleries was illegal as there was absence of any material whatsoever for effecting seizure. He submitted that there was absence of any circumstances to entertain any reasonable doubt in regard to any illegal transaction in gold. He has further submitted that in the present case the question of invocation of Section 123 does not arise as no evidence has been brought in by the department that the goods were smuggled ones. He submitted that the whole case is made out based on recovery of certain chits from one Damodaran who is not in any way connected with the appellants' business and who has not been examined. He has also invited our attention to the Circular issued by the Board vide Circular No. 91/2000 -Cus dated 20.11.2000 whereby seizure of gold jewellery from the shop which is also exporting gold jewellery should not be effected. He has also submitted that with the repeal of the Gold (Control) Act, the appellants are not required to show any accounts to the officers, regarding their transaction in gold. He, therefore, submitted that the seizure and confiscation and imposition of penalty is without the authority of law and he prayed for setting aside the order and allowing the appeals.