Customs, Excise and Gold Tribunal - Delhi
Kailash Chand Jain vs Commissioner Of Central Excise, Kanpur on 18 March, 2002
Equivalent citations: 2002(81)ECC440, 2002(143)ELT195(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. This appeal has been directed by the appellants against the impugned order-in-original dated 13-2-2001 passed by the Commissioner, Central Excise vide which he had ordered absolute confiscation of 72 pieces of silver recovered from the appellant and imposed penalty of Rs. 5,00,000/- on him.
2. The facts giving rising to this appeal may briefly be stated as under :-
On the strength of a specific information, the officers of the Central Excise, Agra Division, conducted raid at the residential premises of the appellant at Agra on 19-3-96 at 12.00 hours. They conducted search of his house in the presence of two independent witnesses which yielded recovery of 72 pieces of silver which were lying concealed in a room near the staircase. The appellant, in his statement, recorded at the spot at that time, admitted recovery and further stated that out of 72 pieces, 17 carried mark of foreign origin and that he had purchased the same on 18-3-96 from Rakesh Dalal but whose residential address he did not know. Regarding payment, he stated that the same has not been made by him so far to Rakesh Dalal. He failed to produce any document to prove the purchase of recovered silver pieces at that time. The representative samples from the recovered silver pieces were taken in his presence and in the presence of two independent witnesses and the same were got tested from the office of General Manager, Government of India Mint, Mumbai for ascertaining purity. On test, purity was found to be 991.8, 999.1 and 999.3. The test report of the samples indicated that the silver recovered from the appellants was of foreign origin. Thereafter, summons were issued to the appellant but the same remained unserved for want of his availability at home. He, however, submitted xerox copy of affidavit dated 5-4-1996, wherein he described himself as Managing Director of M/s. Padam Deep Analytical Lab. Ltd., Kinari Bazar, Agra and disclosed that silver was purchased by him from M/s. M.D. Textile Industries Ltd., Connaught Place, New Delhi on 18-3-96, through bills detailed in the impugned order itself. He also disclosed that two silver bars purchased by him were got cut into 20 pieces from Prabhat Bullion Melters, Chandni Chowk, Delhi on 18-3-96 after paying Rs. 100/- as labour charges. Similarly, another three silver bars were got melted and cut into pieces from that very Melters, on payment of Rs. 480/-. This affidavit was submitted by him after 22 days from the date of the seizure.
3. After serving the show cause notice on the appellants wherein confiscation of seized silver pieces and imposition of penalty on him, was proposed and on getting his reply, the Commissioner passed the impugned order.
4. The learned Counsel has raised two fold contentions. Firstly, the seizure of the impugned goods (silver) was not made by a competent officer and as such, the entire proceedings taken in pursuant to that seizure are illegal, without jurisdiction and bad in law. Secondly, there is no evidence to prove that the recovered silver pieces were of foreign origin and were smuggled into India. No presumption under Section 123 of the Customs Act regarding smuggled character of the impugned silver could be drawn as provisions or this Section were not attracted to the case. Therefore, no penalty under Section 112{b) of the Customs Act, could be legally imposed on the appellants, and as such/ the impugned order deserves to be set aside in toto.
5. On the other hand, learned SDR has reiterated the correctness of the impugned order.
6. We have heard both the sides and perused the record.
7. To eloborate the first contention, the learned Counsel has argued that seizure of silver could only be made as per Board's circular dated 11-6-1990 by an officer not below the rank of Assistant Collector of Customs and, as such, the seizure in the instant case made by the Superintendent is without jurisdiction and bad in law. He has sought support to his contention from the observations of the Tribunal in Anil Kumar Jain & Piyush Kumar Jain v. CC, Lucknow - 1999 (107) E.L.T. 460. The Counsel has also referred to the ratio of law laid down in V.D. Roy v. State of Kerala - AIR 2001 SC 137, Wazir Chand v. State of Himachal Pradesh - AIR 1954 SC 415, Union of India v. Abdulkadar Abdulgani Hasmani - 1991 (55) E.L.T. 497 (Guj.-DB) and Smt. Mahadevi Lohariwalla v. Union of India - 1988 (38) E.L.T. 585, to further contend that since seizure itself is without jurisdiction, the confiscation of the impugned silver also becomes without jurisdiction. But in our view, this contention of the Counsel is wholly mis-conceived and misplaced keeping in view the facts and circumstances of the case. At the outset it may be mentioned that no such plea was taken in reply to the show cause notice or even otherwise orally before the adjudicating authority i.e., the Commissioner that the Superintendent, Customs was not competent to make seizure of the impugned silver and that no adjudication proceedings in pursuance thereof could be drawn against the appellants. This plea has been taken by the Counsel for the first time and is only an afterthought.
8. Apart from this, even Board's Circular dated 11-6-1990 relied upon by the Counsel and to which the reference has been made by the Tribunal in the case of Anil Kumar Jain and Piyush Kumar Jain. (Supra) is of no help to the appellants. In Para 11 of the judgment of the Tribunal in that case, reference has been made to that circular. That circular of the Board, as reading of the said para shows, only spoke that if silver bullion is found to be in the form of bars weighing 30 Kgs. (Approximately) each, which are being smuggled into 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 Kg. by an officer not lower in rank than that of Asst. Collector of Customs. This circular did not specifically debar the Superintendent of Customs who is otherwise competent officer under the Customs Act, to make seizure, of the smuggled silver bullion when found from a person. The circular only provided that seizure in a case of recovery of silver bullion may be considered by the A.C. Therefore, the Superintendent of Customs having been not specifically excluded by this circular and otherwise being a competent officer under the Customs Act, cannot be said to had acted without jurisdiction, without power illegally or improperly while making the seizure of 72 pieces of silver from the residential premises of the appellant. He carried out search of the residential premises of the appellant on the basis of the search warrant issued by the competent authority and he served whose warrants on the appellants before starting search. As observed above, no objection regarding his competency and authority at the time of taking search or at the time of seizure was ever raised by the appellant. Even before the adjudicating authority such an objection was never raised.
9. Moreover, no prejudice could be said to had been caused to the appellants on account of seizure or the contraband (silver) from his residence by the Superintendent of Customs. He was afforded full opportunity to defend himself and to substantiate his plea regarding alleged purchase of the impugned silver for consideration from Rakesh Dalal or from M/s. Padam Deep Analytical Lab Ltd., but he failed to do so. After having remained unsuccessful in establishing this defence, the appellant has now come up with the plea that Superintendent had no jurisdiction to make seizure and that the entire proceedings taken after the seizure are illegal. But keeping in view the above referred facts and the position of law, this plea or the appellant, cannot be entertained and accepted.
10. The observation of the Tribunal in Anil Kumar Jain and Piyush Kumar Jain (Supra) that directions issued by the C.B.E. & C. are binding on all subordinate authorities except the appellate authority under the Act, are of no assistance to the appellants as there is no dispute about this proposition. The seizure made by the Superintendent of Customs of the impugned silver was proper and legal as he was competent to do so under the Customs Act. That being so, the confiscation of the same through the impugned order of the Commissioner cannot be struck down and held to be without jurisdiction. The ratio of the law laid down in none of the cases, relied upon by the Counsel, referred to above, is therefore, attracted to the present case. The first contention of the Counsel, therefore, fails.
11. This takes us to the second contention of the Counsel. The learned Counsel has argued that import of the silver ingots at the relevant time was governed by OGL. Therefore, neither the provisions of Section 111(d) for confiscation of the impugned silver nor of Section 112(a) of the Customs Act, for imposition of penalty could be invoked. He has also argued that as per provisions of Section 123 of the Customs Act, the initial burden was on the department to prove that seized silver pieces were smuggled goods and no presumption regarding their smuggled character could be legally drawn when silver was freely available in the open market. In support of his contention, the counsel has placed reliance on Akbar Badruddin Jiwani v. CC - 1990 (47) E.L.T. 161 (S.C.); Ambica Jewellers v. CC (Preventive) - 1990 (46) E.L.T. 103 (T). I. Longkumer v. CC (Preventive) - 1991 (52) E.L.T. 560; Usuf Umar Subhaniya v. CC - 1989 (41) E.L.T. 122 (T); S.K. Chains v. CC (Preventive), Mum-
bai - 2001 (127) E.L.T. 415 (T), Tayyab Junus Khatri v. CC (Preventive), Mumbai -2002 (139) E.L.T. 433. But in our view, this contention of the Counsel is not liable to be accepted keeping in view the facts and circumstances of the case. Even if it is accepted that silver ingots at the relevant time could be freely imported and traded for want of any restriction, but there is ample evidence on the record to suggest that silver pieces covered from the possession of the appellants were of foreign origin. On 16 pieces foreign marking was apparent while on others, though marking was not apparent, still from the test report of the samples drawn from the pieces, it was evident that silver was of foreign origin. The test of the samples was got conducted from the General Manager, India Government Mint, Mumbai and the purity found therein was 999.8, 999.1 & 999.3.
12. At the time of seizure of the silver pieces from the residential premises of the appellant on 19-3-96, he could not produce any document showing legal possession/acquisition of the same, by purchase or any other lawful mode. He, no doubt, stated in his statement that he purchased silver pieces from Rakesh Dalal but when enquired about the details of said Rakesh Dalal, he showed his ignorance. He did not know his whereabouts and place of residence. He never at that time disclosed that purchase was directly made by him from M/s. M.D. Textile Industries Ltd., Connaught Circus, Delhi. No bill/invoice of that firm was produced by him regarding purchase of silver pieces. It is only on 5-4-96 after lapse of 22 days, from the date of seizure that he opened his mouth for disclosing the name of M/s. M.D. Textile Industries Ltd. and came up with a plea that he had purchased silver from that firm on 18-3-96. This too was not stated by him orally by putting up appearance before the competent authority but through xerox copy of the affidavit dated 5-4-96. Regarding payment for purchase of silver pieces, he in his statement dated 19-3-96, very fairy conceded that he had not made the same to Rakesh Dalal or to M/s. M.D. Textile Industries. Therefore, it can be safely concluded that he had got prepared the documents i.e. bills/invoices and statements, in his favour showing purchase of seized silver pieces from M/s. M.D. Textile Industries. Otherwise, if all these documents were actually in existence and procured by him on 18-3-96 from that firm, there was no reason for him not to produce the same at the time of search of the house. He, as observed above, did not utter any word regarding purchase of silver pieces from M/s. M.D. Textile Industries at that time, in his statement. At that time, the name of person from whom he purchased the seized silver disclosed by him, was Rakesh Dalal whose whereabouts he even did not know. He, apparently, thereafter, manipulated all these bills/invoices regarding purchase and statement for showing that numbers on the seized pieces, tallied with the silver which was imported by that firm, the details of cutting and melting, with the active connivance of M/s. M.D. Textile Industries. The Counsel has also after the close of the arguments, submitted copies of two drafts, one dated 23-3-96 and another dated 25-3-96 vide which payment of Rs. 7,31,458/- and Rs. 4,75,353/- respectively were allegedly made by the appellant to that firm. These drafts are, after the date of seizure of the silver pieces and were never produced by the appellant before the adjudicating authority. In his statement recorded on the date of the seizure, he never disclosed that this much amount through both these draft was ever paid by him to that firm. The drafts, obviously had been prepared subsequently to project the transaction of purchase of silver pieces by the appellant from that firm. Similarly, copy of the statement of account produced by the counsel alongwith the copies of the drafts showing the debit of the amount of both these drafts in his ledger, by the appellant, cannot be attached any value as the same had been prepared later on. No such statement was produced by him before the adjudicating authority.
13. Nodoubt, the initial burden was on the department to prove the smuggled character of the seized silver pieces from the possession of the appellant. But it was not at all essential for the department to discharge this burden only by adducing the direct evidence. This burden could be legally discharged by them by bringing on record the facts and circumstances leading to a conclusion that the seized silver was smuggled one. The aid of the provisions of Sections 106 and 114 of the Evidence Act could also be taken by the department. Section 106 of the Evidence Act creates exception to the general rule that burden of proof rests on the party who substantially asserts the affirmative of an issue. It enacts that when any fact is established within the knowledge of any person, the burden of proving that that fact is upon him. The Apex Court in Collector of Customs, Madras and Ors. v. D. Bhoormull -1983 (13) E.L.T. 1546, while dealing with a question of burden of proof how to be discharged in a case of seizure of smuggled goods, has observed that basic principle underlying Section 106 of the Evidence Act, to the case under Section 167(8) of the Sea Customs Act (corresponding to Section 111(d) of the Customs Act), is applicable and the department would be deemed to have discharged its burden if it adduces so much evidence, circumstantial or direct, as is sufficient to raise presumption in its favour with regard to the existence of facts sought to be proved. The Apex Court has also in that case further observed that in the absence of direct evidence of illicit importation of the goods, if there were several circumstances of determinative character which complied with inference arising from the dubious conduct of the party, an inference could be drawn that seized articles were smuggled goods.
14. Similarly, Section 114 of the Evidence Act lays down that the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common cause of natural events, human conduct and public and private business, in their relation to the facts of the particular case. The Apex Court in the case of Shah Guman Mal v. The State of Andhra Pradesh [1983 (13) E.L.T. 1631 (S.C.) = 1980 AIR (SC) 793], while dealing with the question of burden of proof in a case of seizure of gold biscuits not in accordance with the Act and where presumption under Section 123 of the Customs Act was not available to the prosecution, was pleased to observe that presumption under Sections 106 and 114 of the Evidence Act could be availed by the prosecution in special facts of the case.
15. Keeping in mind the aforesaid proposition of law propounded by the Apex Court, and the tell-tale circumstances, referred to above, brought on record coupled the dubious conduct of the appellant, an inresistable presumption arises that seized silver pieces were smuggled goods. The facts about the lawful acquisition of the silver pieces were within the special knowledge of the appellants and he was required to disclose and prove the same by producing cogent and convincing evidence. But he has miserably failed to do so. His story regarding purchase of silver pieces from M/s. M.D. Textiles Industries is totally an afterthought. The documents produced and referred above had been manipulated and got prepared by him from that firm later on to cover up and camouflage his illegal possession of smuggled goods (silver pieces), as observed above.
16. The ratio of law laid down in none of the cases referred to above in Para 11 and relied upon by the Counsel, is therefore, attracted to the present case. However, it cannot be denied that instead of ordering absolute confiscation, the Commissioner should have given an option to the appellant to get the confiscated silver pieces redeemed on payment of appropriate redemption fine. Similarly, law laid down in CC, Cochin v. Arvind Export (P) Ltd. and Ors. [2001 (130) E.L.T. 54 (Tribunal-LB) = 2001 (44) RLT 32], N.S. Allaudeen v. CC, Tricky. - 2001 (131) E.L.T. 198, K.N. Eswaran v. CC, Trichy - 2001 (132) E.L.T. 192 (T), Ram Binoy Prasad v. CC, Patna - 2001 (132) E.L.T. 721 (T), Dasu Kashinath Bergal v. CC (Preventive), Mumbai - 2001 (132) E.L.T. 380 (T), referred by the Counsel, in his written submissions, is not applicable to the present case, in the light of the discussions made above. The smuggled nature of all 72 pieces of silver stands amply proved from the material on record. The mere non-appearance of foreign marking on 55 out of total 72 pieces could not lead to the conclusion that those were not of foreign origin, especially when according to the appellant himself, he purchased in all five silver bars from M/s. M.D. Textile Industries and from those bars, the pieces were got cut from Prabhat Bullion Melters. Therefore, all the 72 pieces having been got prepared from the silver bars, could be said to be of foreign origin. Similarly, non making of enquiry from the Melter and the supplier M/s. M.D. Textile Industries by the adjudicating authority has got no adverse bearing on the merits of the case. The appellant, at the time of seizure, neither disclosed the name of melter nor of the supplier in his statement. These names, for the first time, were disclosed by him after 22 days, from the date of the seizure. The documents produced by him from the supplier, as observed above, cannot be attached any credence having been apparently got prepared later on in connivance with the supplier. Therefore, no benefit can be claimed by the appellant on the ground that no enquiry was made from the melter and the alleged supplier of the seized silver. The Commissioner has recorded the detailed reasons for rejecting the theory of purchase of silver pieces by the Appellant from supplier M/s. M.D. Textiles Industries. We do not find sufficient grounds to disagree with his findings, in the light of the discussions made above.
17. In view of the discussions made above, the confiscation of the seized silver pieces under Section 111(d) and imposition of penalty under Section 112(b) of the Customs Act, on the appellant had been rightly ordered by the Commissioner. We uphold his order in that regard. However, the order of the Commissioner is modified to the extent that the appellant will be at liberty to get the confiscated silver pieces redeemed on payment of redemption fine of Rs. 3,00,000/-. However, if the confiscated silver pieces are not available on account of sale, the redemption fine will be liable to be deducted from the sale proceeds, before handing over those proceeds to the appellant. The personal penalty of Rs. 5,00,000/- as imposed by the Commisioner, on the appellant is also maintained. The appeal of the appellant accordingly stands disposed of in these terms.