Customs, Excise and Gold Tribunal - Delhi
V.K. Jain And Sons vs Commissioner Of Customs on 19 July, 2003
Equivalent citations: 2003(89)ECC23, 2003(160)ELT910(TRI-DEL)
JUDGMENT V.K. Agrawal, Member (T)
1. The issues involved in this Appeal, filed by M/s. V.K. Jain & Sons, are whether the synthetic fabrics and synthetic laces seized from their godowns are liable for confiscation being smuggled goods and penalty is imposable on them under the Customs Act.
2.1 Shri V.N. Nankani, learned Advocate, submitted that the Appellant, a proprietary concern, is a trader in textiles/fabrics procured locally by them; that they own premises at Gulabi Bagh, New Delhi where they have office cum residence and godowns on the ground floor; that on 30.7.1999 Customs Officers seized 7,10,244 metres of fabrics and 1,59,123 metres of synthetic laces from the godowns; that during the course of search one Vinay Kumar Bansal, an Assistant of Mahesh Kumar, their Accountant, came there with a file which was also seized by the Customs Officers; that the Officers also seized fabrics/textiles from the premises of M/s. New India Agencies (NIA) on 31.7.99; that on 4.2.2000 a show cause notice was issued to the Appellant for confiscation of goods seized from Gulabi Bagh and imposition of penalty; the a show cause notice dated 27.1.2000 was issued to NIA and others for confiscation of goods seized on 31.7.99; that the Commissioner, under the impugned order confiscated the goods seized from Gulabi Bagh (except gent's coats and suits) with an option to redeem the same on payment of fine of Rs. 2 crores and imposed a penalty of Rs. 50 lakhs on the Appellants.
2.2 He also mentioned that the Commissioner by another Order No. 87/2001 dated 27.11.2001 also confiscated goods seized from NIA and imposed a penalty of Rs. 10 lakhs on NIA and Rs. one lakh on Naresh Mittal, partner in M/s. Alpine Overseas; that on Appeal, the Appellate Tribuanl has set aside the said Order vide Final Order No. C-II/215-216/2003-WZB dated 3.2.2003.
3. The learned Advocate, further submitted that all the goods seized both at Gulabi Bagh and Rohtak Road were imported by M/s. NIA and M/s. Alpine Overseas; that a part of these goods purchased by the Appellants under 6 invoices issued by NIA and 19 invoices by Alpaine; that 66 Bills of Entry were submitted to the Department claiming that M/s. NIA and Alpine had imported the goods and cleared the same in accordance with law; that part of the goods lying at Gulabi Bagh and part at Rohtak Road; that the Commissioner had set up a Committee (Panel of Officers) which examined all the goods vis-a-vis sixty-six bills of entry; that the Commissioner has observed in the impugned Order; "the Committee observed that on physical appearance, the nature and description of the items appear to be the same as that in various Bills of Entry"; that even then the Commissioner has given findings that this observation could not lead to a conclusion that the seized goods actually belong to the various bills of entry submitted by the party; that the said finding of the Commissioner is not correct as the Committee's Report in unequivocal and unambiguous terms admits that on physical appearances, nature and description of the seized goods appears to be that of in various bills of entry; that the said Report also reveals that wherever the width specification was given in the bills of entry, seized goods conform thereto; that similarly in respect of the country of origin the Report concludes that a few tags stitched to the Rolls conform to the country of origin and accordingly the goods are not liable to confiscation. He emphasized that the Appellate Tribunal had considered the said Report in the case of Anil Mahajan and had held that goods were imported in accordance with the law and were not illicit goods and no adverse inference could be drawn on the basis of the Committee's Report.
3. The learned Counsel further, submitted that as far as the Appellants are concerned, they had procured the impugned goods locally and had explained that the balance quantity belonged to M/s. NIA/Alpine who had not only owned the same but had also accounted therefore; that they have thus discharged the burden under Section 123 of the Customs Act; that it has been held by the Tribunal in the case of S.K. Chains v. Commissioner of Customs (Prev) Mumbai, 2001 (127) ELT 415 that "by providing lawful acquisition, the burden cast upon the Appellants has been discharged." Reliance has also been placed on the following decisions:
(i) Samir Kumar Roy v. CC (Prev), Calcutta, 2001 (135) ELT 1036 (T)
(ii) Rup Chand Jain v. CC (Prev), Calcutta, 1996 (88) ELT 335 (Cal)
(iii) Dhun Darbashaw Randeria v. CC (Prev), Mumbai, 2001 (136) ELT 1136 (T) wherein it has been held that "Even where the burden of proving licit importation is cast upon a person that burden cannot be discharged by him by tendering documentary evidence of importation of each single item. For such burden to be discharged it is generally sufficient for him to show that all such goods were importable, were available for sale, were sold and purchased and were acquired by him."
(iv) Agha Khan v. CC, Delhi, 2003 (107) ECR 238 (T)
4. The learned Counsel also contended that merely because they could not produce the documents at the time of seizure it does not mean that the goods are liable for confiscation; that subsequently the documents have been produced for effectively discharge of the burden cast upon them; that the absence of documents at the place of storage of the goods would not affect the validity of the import, more so when the provisions of Chapter IV-A of the Customs Act are not applicable; that merely because the impugned goods could not be correlated with reference to length identification marks and markings on packing and colour, it does mean that the goods are liable for confiscation under Section 111(d) of the Customs Act in the absence of evidence/material on record to show that the same had been smuggled. He emphasised that the identical findings have been reversed by the Tribunal in the case of Anil Mahajan, Final Order No. C-II/215-216/2003-WZB dated 3.2.2003, The Tribunal has observed as under:
"It is clear, therefore, that..... to the extent that any particulars existed that can be correlated, the committee has found the goods to be covered by the documents. It has found physical appearance, the nature and description of the fabrics to be the same as in the bills of entry and has found the width to tally wherever the width was given in the documents..... It would therefore, not be correct to say that the documents did not tally in terms of the particulars with the goods, to the extent that they were tallied with these particulars... To the extent that fabrics bore on them any markings and, they confirm the claim of the Appellants".
5. He finally mentioned that the Commissioner had erred in relying on the statement dated 9.8.99 of Shri V.K. Jain, to the effect that part of the goods were procured by Anil Mahajan and Naresh Mittal clandestinely; that the said statement is contrary to the statements of Anil Mahajan and Naresh Mittal which had been overlooked and/or ignored by the Adjudicating Authority; that the Appellant is a local buyer and has no knowledge about the import; that it is his personal opinion and not even a hearsay; that the Commissioner has also ignored the stock statement submitted by the Appellant as well as by NIA and Alpine by which the total quantity has been fully accounted for; that the Bills of entry were produced before the Magistrate hence the statement is of no significance, particularly the Tribunal has found vide Final Order dated 3.2.2003 that the goods were licitly imported.
6. Countering the arguments, Shri R.C. Sankhla, learned Senior Departmental Representative, submitted that at the time of search of the premises on 30.7.1999, Shri V.K. Jain could not produce any evidence documentary or otherwise showing the lawful import/purchase/possession of the goods seized from his premises; that Shri V.K. Jain, in his statements recorded on the same day, stated that he did not have any bills with him or in his office and the same were with his accountant; that in his subsequent statement dated 9.8.1999, he admitted that he knew that part of the fabrics were imported by Shri Anil Mahajan and Shri Naresh Mittal and remaining goods were procured by them clandestinely. The learned Senior Departmental Representative further submitted that one Vinay Kumar, Assistant of his accountant Shri Mahesh Kumar, produced only 29 invoices/bills and no other documents pertaining to the impugned goods; that it was found that the four bills were issued by different firms in Surat and the enquiries conducted at Surat revealed that three of the firms did not exist at the address mentioned and the remaining fourth firm had not sent any synthetic cloth to the Appellants; that 66 Bills of Entries were given to the Department after 1 1/2 years of the search; that the Commissioner has given his specific finding in detail in the impugned order to the effect that "the Committee observed that no identification marks and numbers were found in any of the documents, that were submitted for correlation with the goods under seizure. Similarly some other parameters, which could be specified to particular goods such as packing identification and width/sizes, etc. could not be correlated. The report of the Committee, who has examined substantial quantity of goods under seizure, thus lands no support to the contention of the notice that the goods under seizure are covered under the documents produced by them." He, thus emphasised that the Appellants have not been able to discharge the burden cast upon them to produce evidence, documentary or otherwise, showing the lawful import, acquisition, possession, custody or control of the impugned goods.
7. In reply, the learned Advocate submitted that the four invoices issued by Surat Parties do not relate to the impugned goods and reference to them in the impugned Order is irrelevant; that this fact has been emphasised by the Appellants; in their reply dated 1.12.2000 to the show cause notice; that out of remaining 25 invoices, 6 invoices were issued by M/s. NIA and 19 by M/s. Alpine Ovprseas covering quantity of 2 lakh metres; that Naresh Mittal in his statement dated 2.8.99 had given full account of the fabrics in question and also the manner in which the same were imported and cleared by NIA and Alpine from the Ports of Mumbai & Goa; that Anil Mahajan also in his statement dated 2.8.99 had deposed that the textiles imported were stock lot and permissible for import under OGL and that part of the imported goods were sold to the Appellants and the balance quantity was kept for storage in the godown of the Appellant as V.K. Jain is the brother-in-law of Naresh Mittal, He also mentioned that the Commissioner, in the impugned Order, has nowhere mentioned that the Bills of Entry were given after 1 1/2 years; that in Para 11 of the impugned Order it is clearly mentioned that "Shri Naresh Mittal submitted the import documents before the ACMM, New Delhi, on 6.8.1999, therefore, there could be no basis for having a reasonable belief that the said goods were smuggled." He also referred to Para 13 of the impugned Order wherein it is mentioned that on 12.6.2001 Advocate appeared before the Adjudicating Authority and handed over a copy of the written additional reply to show cause notice alongwith Annexures, that the annexure were Bank Account, Balance sheet and Sales Tax Returns.
8. We have considered the submissions of both the sides. The Revenue's case based on the arguments that the Appellants could not produce any document at the time of seizure of goods; V.K. Jain admitted in his statement that part of the goods were smuggled by NIA and Alpine and the Committee's Report does not support the Appellant's case. We observe that Shri V.K. Jain, in his statement dated 30.7.99, has clearly deposed that he was purchasing fabrics locally and that the bills are lying with his Accountant Shri Mahesh. Said Mahesh Kumar in his statement recorded on 30.7.99, has deposed that all the purchases are made from NIA, Rohtak Road and M/s. Alpine Overseas. Anil Mahajan has admitted in his statement dated 2.8.99 that part of the goods imported by him had been sold to the Appellants and part of the goods was kept for storage in the Appellant's godown. The Department has not controverted these statements. The Appellants have given the source of procurement of the goods in question. It is also not the case of the Revenue, nor any material has been brought on record to show that the impugned goods were smuggled by the Appellants. There is also no rebuttal of the averment, by the Revenue, that the photocopies of the Bills of Entry were produced by Naresh Mittal and Anil Mahajan in the Court of the Additional Chief Metropolitan Magistrate who gave directions to the Customs to correlate and verify the same. In the light of these facts, the goods cannot be treated as smuggled goods merely on the ground that V.K. Jain, in his subsequent statement on 9.8.99, had stated that some parts of the goods are imported by Anil and Naresh and the remaining goods are procured by them clandestinely. The learned Counsel has rightly contended that this was stated by V.K. Jain without any basis whatsoever. No doubt the impugned goods have been notified under the provisions of Section 123 of the Customs Act and the burden of proof is cast upon the persons from whose possession the goods are seized or who claim to be the owner of the goods. However, the onus to prove can be shifted to the Department once the person discharges his onus of proving that the goods are not smuggled one. In the present matter the Appellant has produced bills of entries under which the impugned goods according to him were imported and part of the goods have been claimed by others also. It has been held by the Tribunal in S.K. Chains, supra, wherein the Appellant has given the source of acquisition of foreign marked gold, that "by proving lawful acquisition, the burden cast upon the Appellants has been discharged." The Tribunal has also held that the admission of Manager of the Appellants, to the effect that they were purchasing foreign marked gold biscuits from the open market without receipt, "by itself is no indication that the gold under seizure was not legally imported... no Central Act in existence required maintenance of any documents indicating such receipts... the mere non-entry of the chains would not automatically result in the belief that the unrecorded chains were manufactured out of the gold illegally imported." Similar views have been expressed by the Tribunal in Samir Kumar Roy v. CC (Prev) Calcutta, 2001 (135) ELT 1036 (T) wherein the Tribunal has held that once the seller has admitted to have sold the gold in question to the Appellant, that fact "by itself is sufficient to show the legal acquisition of the gold by him" and "the onus placed upon the Appellant under provisions of Section 123 is discharged to the requisite extent." Thus in the present matter also non-availability of documents at the time of seizure cannot be advanced to support the contention that the impugned goods are smuggled one.
9. The Commissioner has also recorded his findings in the impugned Order that the Report of the Committee lends no support to the contention of the Appellant that the goods in question are covered under the documents produced by them as identification marks and numbers were found and packing identification and width/sizes, etc. could not be correlated. We find that the said Report came up for consideration of the Tribunal in the case of Anil Mahajan and Naresh Mittal v. CC, New Delhi, Order No. C-II/215-216/2003/ WZB/2003 dated 3.2.2003. The issue involved in this Appeal was whether the quantities of fabrics seized from the premises of New India Agencies are liable to confiscation as having been smuggled. This seizure of fabrics was also effected on 31.7.99 and the Appellant herein had purchased the impugned fabrics from the said NIA.
10. The Tribunal observed in the said decision that "on 6.8.99, he produced before the Court at Delhi copies of Bills of entry under which he claimed to have imported the goods ..... the emphasis placed upon by the Departmental Representative to the delay on the part of Anil Mahajan in producing the documents, would have significance, if it related to documents which could be fabricated or obtained, by taking advantage of such delay..... The documents produced by Anil Mahajan are not those which were capable of fabrication, as being obtained subsequent to clearance of goods. They consists bills of entry which were filed before the Mumbai Customs House. A simply reference to the Customs House could show whether these were genuine or not. The Commissioner, or the enquiry committee, or the Departmental Representative did not allege that these documents were fabricated. These documents therefore, were in existence long before (more than a year) the goods were seized." Thus there is no force in the submissions of the learned Senior Departmental Representative that the Bills of entries were given to the Adjudicating Authority after 1 1/2 years.
11. The Tribunal in the said decision has held in respect of report of the Committee as under:
"The Committee has divided its observations into four sections dealing with the textile fabrics, men's suiting and jumpers and another set of textile fabrics. We are not concerned with men's suiting, these having been released by the Commissioner. As to the others, the committee has this to say. It finds that wherever the width is indicated in the bills of entry, the goods conform to the width specified. Wherever the bills of entry gave the range width, the goods fall within the range. No " verification is possible where the bill of entry does not specify any width but merely says "various widths". The committee did not find the length to be relevant, since it noted the importer's claim that the seized goods were only part of the quantity that it imported, the rest having been sold. It found the country of origin, to tally to the extent that they were a few tags attached on the goods show origin, conforming with what was stated in the bills of entry, pointing out that for the rest of the fabrics correlation was not possible, as there was no indication on the fabrics of the country of manufacture. It found that identification by colour could not be correlated in the absence of the particulars in the bills of entry and identification of the packing could not be carried out as the goods were not in original packing and packing list only showed total number of rolls or cartons.
It is clear, therefore, that to the extent that any particulars existed that can be correlated, the committee has found the goods to be covered by the documents. It has found physical appearance, the nature and description of the fabrics to be the same as in the bills of entry and has found the width to tally wherever the width was given in the documents. The Commissioner has dismissed the finding with regard to the nature and description by saying that this finding itself could not lead to the conclusion that the goods were covered by the bills of entry. He has said incorrectly that the committee could not correlate the goods in regard to width "for the reason that this parameter in itself is quite vague and no definite opinion as to conformity followed." This is at variance with what the committee found, that wherever width was shown it is specifically or as a range in the bills of entry, the width of the fabric tallied.
It would therefore, not be correct to say that the documents did not tally in terms of the particulars with the goods, to the extent that they were tallied with these particulars. The Commissioner says that the most relevant consideration is markings as to the origin of the goods and this is against the Appellant. However, it is not the department's case that there has been a positive variation between the markings as to origin of the goods and markings in the bills of entry. It is not as if, the goods bore markings of, say, Japanese origin, where the bills of entry showed them to be of Korean origin. In such a situation, an adverse inference could be drawn on the claim against claimant. The Committee has said in fact as follows as to country of origin. "Textile fabrics -- These parameters could not be correlated for all the fabrics examined. However, a few tags stitched to the rolls confirmed the country of origin." For the laces and instantly in the men suits and casual jumpers "this parameter is correlated." Now, this conclusion is in favour of the claimant that the goods were covered by the bills of entry with regard to lace and nothing is clear and categorical. To the extent that fabrics bore on them any markings and, they confirm the claim of the Appellant."
12. The Tribunal finally concluded that "the report of the enquiry committee does not contain one fact which goes against the Appellants' claim; it does not say in regard to any of the criteria that it adopted that the appellant claim was found to be false ....... To the extent that it was possible that therefore, the Appellants has discharged the burden of proof that the goods were imported by him." Thus following the decision of the Tribunal in Anil Mahajan's case in which the same inquiry report has been considered, we set aside the impugned order and allow the Appeal.