Customs, Excise and Gold Tribunal - Bangalore
Naveed Ahmed Khan vs Commissioner Of Customs on 7 December, 2004
Equivalent citations: 2005(182)ELT494(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. All these three appeals arise from a common OLA No. 363/2003-Cus., dated 15-9-2003 by which the Commissioner (Appeals) has dismissed the appeals of the appellants and confirmed the OIO absolutely confiscating the 58 Nos. of Mobile Phones, 2 nos. of Cordless Phones, 3 nos. of Digital Diaries and 57 nos. of Chargers valued at Rs. 2,13,000/- and directing the sale proceeds of Rs. 1,48,450/- to be appropriated to the Government, The Maruti Van in which these goods were carried was also confiscated, however, it was released on fine of Rs. 25,000/-. There is a penalty of Rs. 25,0007- on Shri Javeed Ahmed Khan and Rs. 5,000/- each on Shri Sayeed Ahmed Khan and Shri Naveen Ahmed Khan. The contention of the appellants are that these are not notified goods and they had been purchased from the open market in front of the Commissioner of Customs Office, Madras, where there are shops and they are sold openly. It is their contention that the goods are not smuggled ones and are sold from the shops, which are located near the Customs House, Madras, itself. These goods were brought by them to Bangalore in a Maruti Van and the Van was seized by the police and these goods and the persons were made over to the custom officials who recorded the statements and proceeded against them in terms of the Customs Act for absolute confiscation and for imposition of penalty. The Commissioner, in the impugned order, has come to the conclusion that the goods are smuggled goods; that the appellants did not produce any documents to prove their licit possession of the goods. He has also noted that the appellants did not possess commercial/sale documents purchase receipts, sales tax receipts or atleast some correspondence between the supplier and the purchaser to produce their licit possession of their goods. Therefore, in the absence of these documents, he has held that the burden to prove the same to be not of smuggled nature has shifted to the appellants and they have not discharged the same.
2. We have heard both sides in the matter. The learned Counsel submits that the goods are not notified goods and it is an admitted fact that the goods were purchased by them from open market in Madras in a place just opposite to the Commissioner of Customs Office where there are several shops selling these goods. The sellers of the goods normally purchase these goods from the auction conducted by the Customs itself and, therefore, it cannot be said that the goods are smuggled ones. He also submitted that the shopkeepers do not issue bills. They brought the same in the Maruti Van to Bangalore and the Police had seized the goods and handed over the same to the Department. He points out that the burden to prove that the goods are smuggled ones is on the Revenue. This has not been discharged and mere marking of foreign origin on the goods by itself could not render the goods to be smuggled ones and more particularly in the facts and circumstances of the present case, for the reason that these goods are openly available in the market and freely available for sale and hence there is no violation of EXIM Policy. The goods cannot be confiscated including the Maruti Van. He has relied on the Board's Circular No. 95/2003-Cus., dated 6-11-2003 wherein it has been noted that the Board has taken a serious view of the matter with regard to the goods, which are seizure of notified goods under Section 123 of the Customs Act. It also notes that the burden is on the Department to show that they are smuggled goods. He relied on the following citations :
CASE-LAWS (1) BURDEN TO PROVE SMUGGLED NATURE OF GOODS ON THE REVENUE WHEN THE GOODS ARE NOT NOTIFIED UNDER SECTION 123 OF CUSTOMS ACT, 1962.
(a) NIPA Traders v. Commissioner of Customs - 2004 (165) E.L.T. 435 (Mumbai) Confiscation of goods - smuggled goods burden to prove -goods contained chemicals of foreign origin which were freely importable - department not discharged burden of proving that they were smuggled goods - Confiscation not sustainable - Section 111 (d) and Section 123.
(b) Commissioner of Customs v. Kiran Electronics - 2004 (170) E.L.T. 288 (Mumbai) Seizure - non-notified goods burden of proof on revenue -goods not being proved to be of foreign origin, confiscation not sustainable - Sections 111(d) and 123 of Customs Act.
(c) Aslam Noor Mohammed v. CCs - 2004 (169) E.L.T. 243 (Mumbai) Confiscation - smuggling - burden of proof - foreign origin goods - departmental authorities to prove in a positive manner that the goods are smuggled and not appellant to prove negative fact that goods are not smuggled - confiscation not warranted - Section 111(d).
(d) V. Muniyandi v. CCs, Chennai - 2004 (167) E.L.T. 215 (Chennai) Confiscation of goods - foreign marking - merely because 'goods are in trade quantities and there are foreign markings -that by itself cannot lead to an inference that goods have been smuggled - goods involved being non-notified goods burden to prove that they are smuggled lies with the department which is not discharged - confiscation, penalty set aside. Section 111, 112 and 123.
(e) Commissioner of Customs v. J.T. Parekh - 2004 (167) E.L.T. 77 (Mumbai) Smuggled goods - burden of proof - goods of foreign origin found in shop premises and not notified - merely because goods are of foreign origin and bills not available not lead to a belief that goods are smuggled - smuggled nature of goods not proved by department - confiscation not sustainable - Section 111 (d) and 123.
(f) Muchipara Consumers Co-op. Stores v. C.C., Bangalore - 2003 (160) E.L.T. 372 (Mumbai) Smuggling - non-notified item - onus of proving foreign origin has to be discharged by department by materials showing corroboration thereof - confiscation and redemption fine set aside - Section 123 and 125.
(g) Ravinder Khurana v. CCs, Delhi - 2003 (161) E.L.T. 360 Smuggling - foreign markings - burden of proof failure to produce documentary evidence relating to purchase of goods cannot shift burden of proof regarding nature of goods from department to assessee when goods are OGL and freely available in market for sale - goods not liable to confiscation - nor assessee liable to penalty - Section 112(b) and 125.
(h) Loknath Singh v. CCs - 2003 (161) E.L.T. 808 (Kolkata) Smuggling - burden of proof - non-notified goods - mere failure on the part of the appellant to produce the legal documents showing importation of the same does not lead to conclusion that goods are smuggled - confiscation set aside,
(i) Ramprakash v. Collector of Customs - 2003 (161) E.L.T. 882 Smuggling - evidence - burden of proof - in absence of any evidence head by the department that copper scrap seized at New Delhi Railway Station is of foreign origin - confiscation under Section 111(d) not sustainable - initial burden to prove that goods are smuggled not having been discharged by the department - burden of proof cannot shift to the appellants.
(j) Ashok Kumar Jain v. CCs - 2003 (159) E.L.T. 683 Confiscation of goods - smuggled goods - silk yarn non-notified items under Section 123 - Revenue is required to show that the same is of smuggled nature by production of evidence - confiscation set aside - Section 111.
(k) HIM Electronics Traders v. Commissioner of Customs - 2003 (159) E.L.T. 761 New Delhi Smuggling - confiscation and penalty - non-notified goods -goods of foreign origin being freely tradable and available in open market and not being under Section 123 - not to be presumed as smuggled goods merely because purchase of entire could, not be accounted for - confiscation and penalty not sustainable - Section 111(d) and 112(b).
(l) Sadbhavana v. Commissioner of Customs - 2003 (158) E.L.T. 652 New Delhi Smuggled goods - confiscation and penalty - failure to produce document regarding legal import/possession of foreign origin goods - burden to prove smuggled character lies on the department - goods not notified goods and available in the open market - mere non-production of the bill by the appellant - a small concern - not leading to an inference that they had smuggled those goods - department having failed to discharge the initial burden - seizure of goods and penalty not sustainable - Section 111, 112 and 123.
(m) Commissioner of Customs v. National Radio Products - 2003 (156) E.L.T. 908 Smuggling - burden of proof lies with department unless goods notified under Section 123 - non-production of documentary evidence showing legal importation does not conclude to smuggled nature - purchase from unknown person may raise suspicious but not true of smuggled nature -confiscation not sustainable.
(n) Sodilal Mehta v. Commissioner of Customs - 2003 (154) E.L.T. 183 Smuggled goods - evidence - statement changing stand - appellant having failed to locate the broker from whom he has purchased the belts of foreign origin taken plea that goods being non-notified - onus is upon revenue that goods are smuggled - nothing on record to show that goods are smuggled -confiscation, fine, penalty set aside - Section 111, 112 and 125
(o) Sanjeev Kumar v. Commissioner of Customs - 2002 (150) E.L.T. 322 Smuggling - evidence - burden of proof - precious stones not notified under Section 123 - mere non production of documents showing the purchase of stones as also the accounts is not a concluding factor to prove smuggled character - burden to prove that the goods are of foreign origin and have been illegally imported is on the Revenue.
Satyanarayana Koti - 2002 (53) RLT 190 Bng.....Page nos. 1 & 2 Govindh Purohit - 2003 (58) RLT 1000 Bng.......Page nos. 3 & 6 Laxmi Narayana Somani - 2003 (156) E.L.T. 131...Pagenos......
Rakesh Gulati - 2002 (150) E.L.T. 473 (T) = 2003 (54) RLT 531..........Page nos. 7 & 10 Ravinder Khurana - 2003 (161) E.L.T. 360 (T) = 2003 (58) RLT 412........Page nos. 11 & 12 (2) MERE MARKING OF FOREIGN ORIGIN DOES NOT BY ITSELF RENDER THE GOODS TO BE SMUGGLED
(a) Commissioner of Customs v. Monoranjan Bainik - 2004 (165) E.L.T. 237 Confiscation of goods - smuggling - foreign origin - burden of proof - mere fact that goods were admitted to be of foreign origin does not ipso facto lead to inevitable conclusion that the same are of smuggled character - smuggled nature of goods to be proved by Revenue by producing affirmative and tangible evidence - assumption and presumption that goods are seized from the area which is a smuggling zone cannot be the basis for confiscation - Section 111
(b) Godari Rai v. Commissioner of Customs - 2003 (160) E.L.T. 1027 Smuggling - onus to prove - appearance of foreign markings of different countries of origin on few pieces of metal scrap not conclusive to prove of entire scrap being foreign origin - no evidence placed by Revenue to show that goods are smuggled - confiscation not justified - 111 (d) and 123 of Customs Act.
Confiscation of conveyance also not proper Section 115 (ii)
(c) Dipak Deb - 2003 (157) E.L.T. 237 Smuggled nature of goods - burden of proof - mere non-production of documents or acquisition of goods cannot lead to the conclusion that the goods are smuggled - foreign mark on paper/wrapper cannot be relied upon - penalty not imposable - confiscation of vehicle not warranted - Section 111, 112 and 115
(d) Laxmi Narayana Somani v. Commissioner of Customs - 2003 (156) E.L.T. 131 Smuggling - foreign origin goods - markings - mere trade opinion not sufficient to establish that betel nuts seized are of foreign origin - markings on outer bags also cannot conclusively prove that nuts toughed in bags to be foreign origin especially when such bags available in plenty in market - for want of evidence confiscation penalty set aside - Section 111, 112 and 123
(e) Jitendra Pawar v. Commissioner of Customs - 2003 (156) E.L.T. 622 Smuggled nature of goods - evidence - mere foreign marking not sufficient since at that time gold could be freely importable and was available in the market for sale evidence to prove smuggled nature not found - Section 111, 112 & 123
(f) Sayed Saleem - 2003 (151) E.L.T. 119
(g) Commissioner of Customs v. M. Banik - 2004 (165) E.L.T. 237........................page nos. 13 & 14
(h) Satyanarayan Koti - 2003 (53) RLT 190............page nos. 1 & 2
(i) Rakesh Gulati - 2002 (150) E.L.T. 473 (T) = 2003 (54) RLT 531.............pagenos. 7, & 8-10
(j) HIM Electronics - 2003 (159) E.L.T. 761 = 2003 (56) RLT 889.............page nos. 15 & 17 (3) SEIZURE BY POLICE
(a) Jitender Pawar v. Commissioner of Customs - 2003 (156) E.L.T. 622 Delhi Smuggled nature of goods - burden of proof Page Nos. 25 & 26 - goods initially seized by police - presumption regarding smuggled nature of goods not invocable - initial burden on department to prove smuggled nature.
(b) Rajkamal Departmental Stores - 2002 (51) RLT 756 (page no. 18) Burden of proof - Section 123 of Customs Act, 1962 - offending goods seized by police and handed over to Customs - Section 123 not applicable.
(c) State of Maharastra v. P.P. Jain - 2000 (126) E.L.T. 180 (page nos. 19 - 24) Smuggling - Burden of proof - Section 123 of Customs Act, 1962, Presumption under Section 123 of Customs Act, 1962 not available to Customs authorities when goods initially seized by the police (4) MAHAZAR VALUE OF GOODS TO BE RETURNED
(a) Bhogilal Mehta v Union of India and Ors. - 2004 (164) E.L.T. 239 (Cal.) = 2004 (60) RLT 6 (Cal.) (page nos. 27 - 28) "Release of seized goods - goods seized under Section 110 of Customs Act, 1962 - were ordered to be released by adjudicating authority in 1992 the same were sold by Customs in 1997 -value of goods as shown in seizure memo and not sale proceeds to be paid to petitioner."
(b) Shilp Impex v. Union of India - 2001 (128) E.L.T. 54 "Goods sold by department without notice at much lesser price than the one declared by the petitioner and much less than the value of the goods adjudicated by the authorities - Petitioner is entitled to receive the value of the goods as fixed by the Department - Section 111 of Customs Act, 1962."
(c) Sufal Dutta v. C.C., (Prev.), W.B - 2004 (167) E.L.T. 283 (Tri.) = 2004 (63) RLT 196 "Consequential relief - the confiscated goods auctioned before the appeal has been allowed by the Tribunal with consequential relief - appellant entitled to full value of confiscated goods as declared and accepted by the department at the time of seizure and not the auctioned value of the goods - balance amount to be refunded - appeal disposed of."
(d) Ratan Kumar Saha v. Commissioner of Customs, Calcutta - 2001 (130) E.L.T. 115 "Seized goods or their seizure value to be returned. Department directed to pay the balance amount."
(e) State of Gujarat v. Memon Md. - AIR 1967 SC 1885 (f) Oswal Spinning and Weaving Mills v. CCE - 1988 (35) E.L.T. 244 (g) Shyam Lata Sharma - 1992 (57) E.L.T. 415 (h) U. Enowell Khonglan - 1991 (55) E.L.T. 80 (5) CONFISCATION OF CONVEYANCE NOT SUSTAINABLE (a) Shamim Akhtar Warshi v. Commissioner of Customs - 2003 (161) E.L.T. 943
"Smuggling - confiscation of conveyance - driver or owner of truck - no evidence to their involvement - confiscation set aside - Section 115 of Customs Act."
(b) Harshad Shah v. Commissioner of Customs - 2002 (141) E.L.T. 365 "Smuggling - Confiscation of conveyance - confiscation of goods alleged to be smuggled being set aside - confiscation of conveyance not justified - Section 115(2)."
(c) Prince Gutaka v. CCE - 2001 (135) E.L.T. 109
(d) Jaykrishna Bala v. Commissioner of Central Excise - 2004 (170) E.L.T. 574
Confiscation of conveyance and imposition of penalty not warranted.
(e) Harindar Pal Singh v. C.C., Mumbai - 2003 (160) E.L.T. 358.
3. The learned JDR submitted that the burden to prove had not shifted on the department and they are all smuggled goods. He pointed out to the judgment of the Delhi Bench in Kulbhushan Jain v. C.C., New Delhi - 2003 (154) E.L.T. 169 (Tri - Del.) and that of C.C., Ahmedabad v. R.P. Gangwal - 2004 (163) E.L.T. 391 (Tri - Mumbai); Ballav Daga v. C.C. - 1991 (52) E.L.T. 251 (Tribunal). The learned Counsel distinguished the judgments and pointed out that the goods in these cases were of foreign marked smuggled ones and had been seized at the time of smuggling and they were all notified goods.
4. The learned JDR fairly concedes that the goods in question were all non-notified ones. The learned Counsel submitted that they are eligible to receive. Mahazar value of the goods in the Department and prays for a direction to the Department to grant the Mahazar value to them on their succeeding in the appeal. In this regard also, he relies on the judgments already noted supra. The learned Counsel also pointed out that Section 123 of the Customs Act is not applicable in case the goods are seized by Police and in this regard also he relied on the judgment cited by him. He submitted that mere marking of foreign origin does not by itself render the goods to be smuggled ones. In this regard, he also relied on the judgments cited in the list.
5. On a careful consideration of the submissions, we find from the facts of the case that the goods were seized in Bangalore by the Police. And the appellants had handed over the goods under seizure to the Customs Department for further investigation. In terms of the judgments relied by the Counsel which are noted supra, Section 123 of the Customs Act is inapplicable when the Police have seized the goods and handed over the same to the Customs Department as held in the case of Jitendra Pawar v. C.C.; Rajkamal Departmental Stores; State of Maharashtra v. P.P. Jain. Therefore, the burden of proving that the goods are smuggled ones is on the Revenue. The Commissioner has taken a view that the department has discharged their burden of showing the goods having a foreign marking on the goods. On this point also we find that the Tribunal has held that mere marking of foreign origin does not by itself render the goods to be smuggled ones as noted in the citations extracted supra. The Statements of the appellants that they were not directly involved in the smuggle but they have purchased the goods from the shops located opposite to the Customs Office, Madras have not been contradicted by the Revenue and there is no finding in OIO that the appellants statements are incorrect and that they have directly smuggled the goods from abroad. Therefore, the fact of the appellants having purchased from open market has been established by the appellants. The fact that they did not carry the licit documents were not a ground to hold that the goods are smuggled ones. No doubt the goods carried the foreign marking but that by itself cannot be a ground to hold the goods to be smuggled ones as noted in the judgments cited supra. It is not the finding of the authorities below that the goods were not purchased by them from the local market and they are notified goods. All are non-notified goods and non-notified goods cannot be ordered for absolute confiscation. In view of the large number of judgments cited by the Counsel in which the Tribunal has taken a clear view that confiscation cannot be ordered in respect of non-notified items which have been purchased from the market and it cannot be held that they are smuggled ones. Therefore, we are of the view that in view of the large number of judgments cited on this very point, the appellants succeed in these appeals. The impugned Order is set aside and the appeals are allowed with consequential relief. The appellants are entitled to receive the value of the goods as seized and noted in the Mahazar in terms of the judgments already cited and noted supra.