Full Judgment
2. The relevant facts that arise for consideration are that the officers of the Central Excise, Aligarh searched the premises of one Shri Subhash Chand at Mathura and seized 37 silver bullions of different sizes weighing 367.701 kgs on the belief that these bullions are of foreign origin. The officers recorded the statement of Shri Subhash Chand who in his statement mentioned that the sard 367.701 kgs of silver bullions belonged to Shri O.K. Agarwal. Panchnama was drawn on the same day by the officers and the silver bullions were seized.
The authorities requested a local assayer to check the purity of the silver bullions who gave a certificate that out of the said bullions, 3 bullions were of foreign origin and the purity of silver content is 99.9%. The officers recorded the statement of Shri D.K. Agarwal and issued show cause notices to both the persons proposing confiscation of the seized silver bullions and imposition of penalty under the Customs Act, 1962.
3. During the pendency of the proceedings before the lower authorities, the main noticee Shri D.K. Agarwal expired in a road accident and the proceedings were continued by his wife Smt. Anju Devi. The adjudicating authority after considering the contention and arguments raised by the current appellant, held that the silver bullions are liable for absolute confiscation. Hence this appeal.
4. The learned Advocate submits that he is appearing only for the appellant Smt. Anju Devi who is the wife of Shri D.K. Agarwal who claimed the ownership of silver. It is his submission that out of 37 pieces of silver bullions seized; only 3 bullions were of the weight of more than 30 kgs each. It is his submission that the panchnama which was recorded on the spot, indicated that only 2 bullions were having some kind of markings which in itself would indicate that they are of foreign origin. He further submits that the markings which were noted in the panchnama were in fact imagined markings as registered by the current appellant's late husband. In support of that, he submits a sales tax registration application, which was acknowledged by the sales tax officer and a stamped receipt for payment made to Sales Tax authorities for registration. It is his submission that the purity of the silver bullion seized, as given by the assayer was challenged by them in the reply. Hence samples of the pieces of silver bullions were sent for analysis to Government of India Mint at Mumbai and the report of mint has indicated the purity of silver varies between 995.2% to 998.8%. He submits that the requirement of the London Bullion Mark Association i.e LBMA is that purity should be minimum 99.9% and any purity less than specified will not be considered as silver bar. It is also his submission that for registering in LBMA, silver bullion should have specific information as indicated in the said LBMA procedure for listing and according to that the current silver bullion seized would not get covered as being supplied by a foreign origin company. It is his submission that the panchnama drawn on the spot would indicate that there is no mention of origin or the place of the said bullion. It was also his submission that seizure in this case is done by the Superintendent of central Excise while the Board's Circular in this case very clearly states that any seizure in respect of silver has to be done by an officer not lower in rank than the Assistant Commissioner of Customs.
5. The learned DR on the other hand, submits that it is not clear how the current appellant i.e Smt. Anju Devi is claiming the ownership because the current appellant has not brought on record any succession certificate till date. It is his submission that if she is not a successor to the deceased Shri D.K. Agarwal, she is not eligible to file any appeal against the order in original. It is his submission that 'Degussa' is a International company established in 1997 and deals in precious metals. It is his submission that the panchnama drawn on the spot categorically records the marking as 'the goods are'. He submits that if this was true, then the appellant has got the foreign origin silver bullion without producing any document for licit possession of the said seized silver. It is his submission that reliance placed by the appellant on the CBEC Circular is not totally correct as in this case, the quantity of seized silver is more than 100 kgs and three pieces were more than 30 kgs. It is his further submission that the appellant even to day has not produced any document which would indicate the licit ownership of the seized silver bullion.
6. Considered the submissions made at length by both sides and perused the records. All arguments raised by both the sides are being decided in the following manner.
6.1 As regards the primary objection raised by the learned DR regarding the maintainability of the appeal by the current appellant Smt. Anju Devi, I find that the current appellant had filed an affidavit on 13.10.04 before the lower authorities that she is wife of late Shri D.K. Agarwal. It is also noticed from the record that the Tribunal vide its order dated 1.12.04, dismissed the application for condonation of delay filed by Smt. Anju Devi. Consequently, the appeal was also rejected. As against this order, the current appellant approached the Hon'ble High Court of Judicature at Allahabad and in C.WP No 1318/05 and in the said writ petition, the current appellant Smt. Anju Devi stated on oath that she is the wife of late Shri D.K. Agarwal. The Allahabad High Court allowed the writ petition and directed the Tribunal to hear the matter and decide it on merits. Hon'ble High Court's judgement on the writ petition by Smt. Anju Devi is in itself an acknowledgement that she is wife of late Shri D.K. Agarwal. That being so, the Department's preliminary objection as regards the current appellant's locus standi is a non-est. Hence the preliminary objection raised by the learned DR is dismissed and I proceed to decide the appeal on its merits. 6.2 The main issue involved in this case is regarding the foreign origin of the silver bullion seized by the officers in the premises of Shri Subhash Chand. It is very evident from the panchnama drawn on the spot that except for three bullion bars, none of the bars had any marking on them. As regard the markings on three silver bullions, panchnama records the same as "DEGUSSA-999-1981", "DEGUSSA-999-1982", "36.14 Kgs" It is noticed that but for the above markings, no other markings were recorded by any of the panchas who participated in the panchnama proceedings. As against this, the learned adjudicating authority came to the conclusion that these three silver bars were of foreign origin based on the following findings: As regards point No. (v), the contention of Shri Subhash Chand that panchanama -were false as there was no foreign goods, is not acceptable because the silver bullions at SI No. 35 and 36 of the recovery memo dated 15.8.91 bore the marks as "DEGUSSA-999-1981-36.004 kgs" and "DEGUSSA-999-1982-34,401 kgs" and the silly at SI No 37 was also identical to the above bullions. This fact has been confirmed by Shri Subhash Chand in his on the spot statement. Further, on a reference made to London source, it has been reported that the silver bars were good delivery bars of Degussa AG Frunakfurt which were produced in 1981 and 1982 and the same were registered with the London market. Thus, the contention of Shri Subhash Chand that the silver was of Indian origin falls flat in view of the facts discussion above. It is not correct that the panchanama of Shri Raju Agarwal and Brij Agrawal was contradictory because in the panchnama they have clearly mentioned that the silver bullions bore foreign markings.
It can be noticed from the above finding of the adjudicating authority that the markings on the silver bullion as recorded on the seized silver bullion was not the same as recorded by the adjudicating in his adjudication order. It would be incorrect for the adjudicating authority to introduce or interpolate the markings on the silver bullion in his adjudication order, details of which were not indicated in the panchnama. By introducing additional markings in the order, the adjudicating authority has tried to justify that the seized bullion as being of foreign origin and hence smuggled. It is noticed that the markings of word 'Degussa' were in capital letter on the silver bullion (as recorded by panchnama) while the London Bullion mark Association has recognition for 'Degussa AG'.
6.3 In order to trade in LBMA, every manufacturer has to adhere to the "The Good Delivery rules for Godl and Silver Bars" as adopted by LBMA.Rule 9 of the said Rules, for trading in silver bars, the following requirement is a must: 9. Specification for a Good Delivery Silver Bar The physical settlement of a loco London silver trade is a bar conforming to the following specifications: Weight: Minimum silver content 750 ounces (approxi. 23 kgs) maximum silver content 1100 ounces (approxi. 34 kgs) Fineness: the minimum acceptable fineness is 999.0 parts per Thousand silver Fineness: expressed to either thred or four significant Figures Optionally, the weight, which if included, may be shown in either troy ounces or kilograms.
It can be noticed from the above reproduced rules that two important requirements for trading of silver bars are fineness and markings. In the marking column, it can be noticed that there is a requirement of silver contents (fineness), stamp of manufacturer and year of manufacture. In silver bullions which has been recovered by the authorities, there is no indication of SI No. or does it contain the weight of the silver bullion. This would indicate that the silver bullion which was seized by the authorities from Mr. Subhash Chand may not be of foreign origin. Further, it is possible that the wording on the silver bars 'DEGUSSA' could be of the firm, which appellant's late husband had floated for doing business. This is evident from the fact that the appellant's late husband had got the firm registered in the name and style of "M/s. Degussa". The receipt No 202796 issued by the officers of the Sales Tax reads as under: OFFICE OF THE SALES TAX OFFICER WARD NO 40 Form of acknowledgement of documents 6.4 When a Government authority like sales tax officer has given a receipt for application for registration of the firm of late husband of the current appellant, it would indicate that there was existence of firm named Degussa as on 12.8.91. It is to be noted that the officers of Central Excise visited the premises of Sh- Subhah Chand on 15.8.91 i.e. after the company was in existence on 12.8.91. This would indicate that late Shri D.K. Agarwal had given some silver to Shri Subhash Chand for melting and making into silver bars in the name and style of his proprietorship firm 'DEGUSSA', the marking sought to be interpreted by the authorities as being of a foreign company. On the face of such evidence, the Revenue has not been able to establish clearly that the said silver bullions which had inscription 'DEGUSSA' was in fact of a foreign company. The proof brought on record by the learned Advocate before me and also before the lower authorities, indicates that the current appellant's late husband had floated a firm by name and style of M/s Degussa and is not contradicted by Revenue. It is the contention of the Revenue that the inscription 'DEGUSSA' would indicate that the silver bars were manufactured by Degussa AG but nothing is on record to show that the International company Degussa AG used the inscription 'DEGUSSA' 6.5 Considering all the evidences, it is noticed that the Revenue has not discharged the burden that the sized silver bars were in fact of foreign origin. It is also noted that out of 37 silver bars seized, only 3 silvers bars were having some inscription and out of 3, 2 were found with marking DEGUSSA-999 while other silver bullions was found with marking of only weight. In the absence of any direct evidence to link these 3 bullions are of smuggled nature, the confiscation of the seized silver bullions would not be correct on the face of the fact that 28 silver bullions were not at all having any markings and they were less than 30 kgs of weight individually.
6.6 Further it is noticed that the CBEC in its circular No. 334/233/88 Cus(AS) dated 11.6.99 had directed as under: 2. In order to prevent the possibility of undue harassment to law abiding persons possessing small quantities of silver bullion of Indian origin, it has been decided that normally the provisions of Section 123 of the Customs Act, 1962 should not be invoked against persons who are found to be in possession of silver bullion of less than 100 kgs. However, if the silver bullion is found to be in the form of bars weighing 30 kgs (approxi) each which are being smuggled into the country and also where silver bullion is found to bear foreign markings, the question of seizure may be considered even when the quantity is less than 100 kgs by an officer not lower in rank than that an Assistant Collector of Customs.
It can be noticed from the above reproduced paragraph that to prevent the possibility of undue harassment, the responsibility of seizure of silver was given to an officer who is not lower than the rank of Assistant Collector of Customs. In this case, I find that the seizure was done by the Superintendent of Central Excise, Aligarh in the presence of inspectors of Central Excise Aligarh. Since the panchnama and the seizure was conducted by an officer who is not authorized to do so, the seizure of the silver bullion is not correct and not in accordance with law. On this ground also, the appeal of the appellant is to succeed and order in original is unsustainable. 6.7 I find that the Tribunal in the case of N.S Allaudeen v. CCE has interpreted the CBEC circular dated 11.6.80 as regards the seizure made by the officers of the lower in rank of the Assistant Collector. The Tribunal in its order has held as under: I have carefully considered these rival submissions and records of the case. It is now well laid down law that the directions in the form circulars issued by Board are binding on all lower authorities.
A perusal of the said circular noted above shows that those silver bullion has been brought within the ambit of Section 123, the Board itself was desirous of ensuring that citizens in possession of Indian Silver should not face harassment. To that extent, the Board has laid down a policy that Section 123 need not be enforced by Executive officer in certain cases. A perusal of the said order/circular shows that this exception was made in the case where either bullion was not in the form of 30 kgs ingots and also where silver bullion is found to bear foreign markings, the question of the seizure may be considered even when the quantity is less than hundred kilograms by an officer not lower in rank than that of an Assistant Collector of Customs. In the present instance, I find mahazar under which the seizure was effected clearly shows that seizure was effected by an officer lower than the rank of Asstt.
Collector even though the ingot bore no foreign markings, as per the mahazar itself and the quantity of the said silver was less than 100 kgs. To that extent, I find that firstly the seizure itself is in violation of the Executive's instructions noted above issued by the Board and secondly, in view of the quantity being less than 100 kgs and there being no foreign markings on the ingot, it would not be just and proper to shift the burden of proof under Section 123 on this appellant. Under these circumstances, the benefit of doubt is extended and the orders impugned are set aside and the appeal allowed with consequential relief, as per law.
The ratio as laid down by the Tribunal in the above case squarely covers the issue in the present case before me.
6.8 As correctly pointed out by the learned Advocate that Division Bench of the Tribunal in the case of Kirat Packers v. CCE Hyderabad 2001 (136) ELT 955 covers the issue. The Division bench in that case has held as under 8. On consideration of the submissions, we have to see at the first instance as to whether the seized silver bars are of foreign origin and whether it had foreign markings. The statement of the witnesses and the mahazar which has been drawn by the department does not disclose any foreign marking or country of origin of the silver bars in question except some numbers which were found on the seized silver. The Govt. witnesses who seized the silver bars disclosed before the Special Judge, Economic Offences that the numbers by itself does not lead to any conclusion that the silver bars were of foreign origin. There is no document to show that these silver bars were of foreign origin and the mahazar report does not make any mention of foreign origin of the silver. The assayer who examined the silver bars has also not stated that the seized silver had any foreign markings. There is no finding in this regard by the commissioner. Even independently considering the assayer's statement, we are of the considered opinion that the assayer has not stated about the foreign origin of the silver bars and the country to which they belong. The learned Special Judge has in his findings recorded that silver with purity of 999 and weight of 32 to 38 kgs bars is manufactured at Hyderabad and exported. In the present case, the assayer has only stated about the purity of silver and this itself cannot be a ground to consider that the silver bars are of foreign origin.
It can be seen from the above reproduced paragraph that the ratio which was laid down by the Division bench is that the purity of the silver in itself would not indicate that the silver bars were of foreign origin.
6.9 In the case before me, this is what being sought to be done by Revenue. Since the Revenue has not been able to bring on record anything to indicate that the silver bullions were carrying foreign marking they sought to make a case out of purity of silver being more than 999% as indicator that these silver bullions were of foreign origin, which is against settled law as reproduced in above paragraph.
It is also noted that the revenue has not brought on record any single evidence regarding foreign origin of the silver bars. Compliance of provisions of Section 123 have not been completely satisfied by the Revenue and the onus has not shifted to appellants to prove that the goods were not of smuggled nature.
6.10 The learned DR's reliance upon the case of Bula Ghosh v.Commissioner 2003 (157) ELT 69 would not be of any help due to the fact that in the present case, the Revenue has not discharged its onus of the goods being of foreign origin as indicated in the above paragraphs 6.11 Accordingly, in the facts and circumstances of the case, the impugned order is not sustainable for the reasons set out in the above paragraphs. The impugned order is set aside and the confiscation as ordered is also set aside and the revenue is directed to release the goods to the appellant. The appeal is allowed as indicated above.