Customs, Excise and Gold Tribunal - Delhi
Prem Rattan And Shadi Lal vs Collector Of Customs on 10 April, 1990
Equivalent citations: 1990ECR200(TRI.-DELHI), 1990(50)ELT265(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Since both the appeals arise out of the same impugned order, a common order is being issued.
2. Brief facts of the case as alleged in the show cause notice are as follows:-
2.1. The Customs officer visited the business premises of M/s. Dashmesh Photostat Civil Court, Moga on 2-7-1987 and found a photostat machine, make 'Cannon', of foreign origin in operation there. Miss Parveen Bala, an operator of the photostat machine informed the officers that she was working there as an operator on a salary of Rs. 200/- P.M. and that she had no documents relating to the photostat machine in her possession. She, however, informed that it belonged to Prem Rattan, one of the appellants herein, C/o Prince Photo Studio, Court Road, Moga. The officers sent a message for Shri Prem Rattan and had waited for nearly two hours but he did not turn up. They seized the photostat machine on the reasonable belief that being of foreign origin and there being no document for licit purchase or possession of the machine it was liable to confiscation under Section 111 of the Customs Act, Statement of Miss Praveen Bala was also recorded in which she verified the facts as stated above.
2.2. Shri Prem Rattan appeared on 14-7-1987 before the officers. He admitted in his statement that the said photostat machine was purchased by him jointly with Shri Chander Parkash S/o Chetan Dass R/o New Town Moga and himself from one Shri Rajeshwar Singh, Prop. Raja Iron Store, Majestic Road, Moga for Rs. 40,000/- which was paid in hard cash. He further stated that Rajeshwar Singh did not give any document relating to the photostat machine. He further admitted that he had no documents in his possession relating to the purchase of the said photostat machine. He also admitted having employed Miss Parveen Bala as an operator of the said machine.
2.3 Shri Chander Parkash in his statement dated 9-9-1987 stated that he was operating the said machine on a monthly salary of Rs. 500/-. However, on 14-1-1987 he left the job on account of the fact that the said photostat machine operated by him was illegally imported and he did not want to involve himself in such type of business. He further stated that his father-in-law Shri Shadi Lal Tayal (another appellant herein) informed him that the latter was purchasing a* photostat machine in partnership with Shri Prem Rattan from Shri Rajeshwar Singh Prop. Raja Iron Store. He wanted him to be employed as an operator on a monthly salary of Rs. 500/-. He also stated that Shri Prem Rattan purchased the photostat machine from Shri Rajeshwar Singh by Finances raised from Shri Shadi Lal Tayal and a partnership deed between Shri Shadi Lal and Shri Prem Rattan was executed. This deed was, however, cancelled and he left the job of operating the machine as already stated. On 15-1-1987 Shri Prem Rattan was called by Shri Shadi Lal in his presence and was asked to produce documents relating to the photostat machine for which he expressed his inability since Shri Rajeshwar Singh had not given him any document. Shri Shadi Lal, therefore, asked Shri Prem Rattan to pay back his amount invested in the job and he was not interested to carry on such business and Prem Rattan promised to pay the whole amount (Rs. 34,500/-) within three months.
2.4 Shri Rajeshwar Singh, however, in his statement denied any connection with sale of the said photostat machine. He, however, admitted that he was a passport holder and had been to Singapore and Thailand for 8 days during Sept.-October 1986 as tourist.
2.5 It was alleged in the show cause notice that the statement of Shri Rajeshwar Singh appeared to be incorrect inasmuch as on hearing the seizure of photostat machine he approached the Session Court Faridkot and obtained anticipatory bail. On being questioned he stated that he approached the Court for bail because the investigating officer threatened him with arrest, but he could not specify the date of the visit of the investigating officer.
2.6 Shri Shadi Lal in his statement denied having any link with the photostat machine. He also stated that though a partnership was executed between him and Prem Rattan but it never materialised. Thus the investment made was converted by him into short term loan. A show cause notice was issued, on the basis of the above facts and circumstances to the 4 persons, namely Prem Rattan, Shadi Lal, Chander Parkash and Rajeshwar Singh to show cause as to why the photostat machine be not confiscated under Section 111 and why penalties should not be imposed on them under Section 112.
2.7 On adjudication, it has been found that the photostat machine is illegally imported and accordingly it has been absolutely confiscated under Section 111(d) of the Customs Act. Shri Prem Rattan and Shri Shadi Lal the two appellants herein have also been imposed with a personal penalty of Rs. 12000/- each. The other noticees Shri Rajeshwar Singh and Chander Parkash have not been found guilty.
3. Shri G.S. Bhangoo, the Ld. advocate for both the appellants has urged that the findings of the adjudicating authority are against the story of the department, as set out above, in the show cause notice. It had been alleged, in short, that Shri Rajeshwar Singh had brought the photostat machine illegally from abroad and then sold it to both the appellants without any documents of sale by letting off Shri Rajeshwar Singh. The adjudicating authority's finding belies the alligations set out in the show cause notice. In these circumstances, he submits that the department has not been able to prove the illicit import of the photostat machine. The onus being on the department to clearly establish the smuggled character of the said machine inasmuch as this commodity is not specified under Section 123 of the Customs Act for which the burden shifts to the person from whose possession the commodity is recovered. Since there is no other evidence except the foreign origin of the photostat machine, in view of the adjudicating authority's own finding regarding smuggled character of the photostat machine, the said machine should not have been confiscated at all.
3.1 Apart from the foregoing, the Ld. advocate has further submitted that photostat machine is not even notified under Chapter IVA of the Customs Act, Prem Rattan is, therefore, under no statutory obligation to maintain any account of purchase/acquisition of the said machine. Photostat machines are being imported as a matter of practice and they are released on payment of fine or otherwise under OGL. In these circumstances, it could not be said positively in the absense of any evidence adduced by the department that the photostat machine was illegally imported.
3.2 In his next submission is that once the machine is held to be not liable to confiscation on the basis of the above submissions, there would be no case for imposition of penalties on the two appellants. Even otherwise he submits that they purchased the photostat machine under the genuine belief that the machine was legally imported. They had no knowledge whatsoever that it was legally imported and there is no evidence to that effect that the appellants had any knowledge regarding the illegal character of the said machine. Penalty, therefore, in any view of the matter, according to the Ld. advocate, is not liable to be imposed on the appellants.
4. Learned SDR Smt. Dolly Saxena reiterates the findings of the adjudicating authority. She submits that the onus shifts on Prem Rattan once the goods are found to be of foreign origin. Even assuming the machine to have been imported under baggage still duty would require to be paid on the said machine inasmuch as it could not be covered within the free allowance available to a passenger under the Baggage Rules. No evidence regarding payment of duty on the machine has been produced by Prem Rattan.
4A. I have carefully considered the pleas advanced on both sides. I observe that the appellant Prem Rattan was running a regular business with the said photostat machine. He had also stated that he had purchased the said machine from Rajeshwar Singh of Moga but he did not get any documents of sale/importation from the said Shri Rajeshwar Singh. This fact should have alerted Prem Rattan about the smuggled character of the photostat machine. A photostat machine is not a small thing which could be imported within the Baggage Rules by a passenger without avoiding payment of duty and prohibitions of the Import Trade Control. No doubt, the photostat machine is neither notified under Section 123 of the Customs Act or under Chapter IVA ibid. Nevertheless, as a prudent businessman Prem Rattan has a responsibility to prove his bona fide purchase of the goods of foreign origin which are not normally imported under OGL and without payment of duty. In the overall facts and circumstances of this particular case, no doubt is left that the photostat machine has been imported illegally in contravention of the ITC prohibitions and without payment of duty. The machine has, therefore, been rightly confiscated under Section 111(d) of the Customs Act. However, having regard to the nature of the goods and the overall facts and circumstances of this case, I order release thereof on payment of a fine of Rs. 18000/- (Rupees eighteen thousand only) in lieu of confiscation of the said machine.
4.1. It is also apparent from the overall evidence on record that Shri Prem Rattan was impliedly in the knowledge that the said machine was illegally imported inasmuch as he could not get any documents of sale and legal importation, on his own admission, from Shri Rajeshwar Singh. He is, therefore, concerned in dealing with the goods liable to confiscation and as such is liable to penalty under Section 112 of the Customs Act. However, having regard to the overall facts and circumstances of the case, penalty imposed on him is rather too high. I reduce the penalty from Rs. 12000/- (Rupees twelve thousand only) to Rs. 5000/- (Rupees five thousand only) imposed on Shri Prem Rattan.
4.A.2. As regards the penalty imposed on Shri Shadi Lal, the other appellant, I find that there is not much evidence against him in so far as he is concerned with the purchase of the said machine. The only evidence against him is that of Prem Rattan according to which he and Shadi Lal were in partnership with the purchase of the said machine. Statement of Chander Parkash though a son-in-law of Shadi Lal and somewhat belated, however, makes it clear that the partnership never really started. The investment as a partner had been made was converted into a short term loan. This fact appears to be corroborated by the statement of Miss Parveen Bala who in the first instance gave out to Customs that the photostat machine belonged to Prem Rattan. Had it appeared a partnership business, there is no reason as to why Miss Praveen Bala a totally independent witness would not have given the correct position. Accordingly, I see that there is no justification for imposition of penalty on Shri Shadi Lal; the penalty of Rs.12000/- imposed on him by the adjudicating authority is, therefore, set aside.
5. In sum, the appeal of Shadi Lal is allowed, appeal of Prem Rattan is rejected subject to modification in the order of absolute confiscation of the machine and reduction in penalty.