Customs, Excise and Gold Tribunal - Calcutta
Samsuddin Sheikh vs Collector Of Customs (Prev.) on 11 September, 1989
Equivalent citations: 1990ECR227(TRI.KOLKATA), 1990(47)ELT48(TRI-KOLKATA)
ORDER T.P. Nambiar, Member (J)
1. This is an appeal filed by the appellant against the orders passed by the Central Board of Excise & Customs in Order No. 450-455/82, dated 27-9-1982 wherein the learned Board confirmed the orders dated 6-3-1982 passed by learned Collector of Customs & Central Excise, W.B. Calcutta imposing a penalty of Rs. 20,000/- on the appellant and confiscating the goods in question.
2. Briefly stated the facts of the case are that on 16-1-1981, at about 3.30 hrs. the Customs officers of Divisional Preventive Unit Krishnanagore intercepted a Truck bearing Registration No. URC-69 on H.H. 34 near Jangipur and searched the aforesaid truck. As a result thereof they recovered 16.617 pcs. of old and used readymade garments of foreign origin for which, no evidence - documentary or otherwise as to their licit importation could be produced. Five persons including the appellant Shri Samsud-din were on board on the truck and they were apprehended. The appellant Sheikh Sam-suddin who claimed the ownership of the goods under recovery stated in a written statement tendered by him before the Customs Officers that he had procured the goods from one Rustam of Aurangabad who illicitly imported the same from Bangladesh. He also stated that the goods were loaded at the godown of Rustam at Chandrapara, Aurangabad and were scheduled to go to one Basirkhan, Begamgarh, Kanpur. Shri Taresh Mahaldar was also apprehended as an associate but he had no goods of his own in the truck. Thereafter, a statement of Taresh Mahaldar was taken on 16-1-1981 wherein he stated that he was an associate of the appellant Sheikh Samsuddin and was engaged in business of readymade garments illicitly imported from Bangladesh. The statements of Rambeer Singh, Aram Singh and Rampal Singh were also taken, who were the driver, khalasi and the representative of the owner in the aforesaid truck. In their statements all these three persons stated that they had no idea about the nature of the goods they were carrying.
3. The departmental officers, on a reasonable belief that the goods under recovery were smuggled into India from the neighbouring foreign territory, seized the goods as well as the vehicle under Section 110 of the Customs Act, 1962. During the follow up action, the premises of Rustam Biswas who was implicated by the appellant at Chandrapara, Aurangabad was searched on 21-1-1981 which resulted recovery and seizure of one paper-chit and one exercise book showing transaction of contraband goods like tape-recorders and readymade garments of foreign origin. It was also revealed by the department during the course of the enquiry that one Amrit Singh Mukhiya of Vill. Kharsulia Bazar, Raniganj was connected for arranging the truck under seizure and he gave a statement on 19-2-1981 to that effect. He stated that he had no knowledge about the nature of the goods.
4. From the above stated facts of the case, the department had the reasonable belief that the goods under seizure were illicitly imported into India in contravention of Import (Control) Order, 1955 as amended, issued under Section 3 (1) of Imports & Exports (Control) Act, 1947 and the Assistant Collector of Customs issued a Show Cause Notice to this appellant and eight other persons requesting them to show cause before the Collector of Customs & Central Excise, W.B. Calcutta as to why the goods and the carrier truck under seizure should not be confiscated and penalty should not be imposed on them under Section 112 of the Customs Act. In reply to the show cause notices the respective partiag filed their replies and statements before the learned Collector. The learned Collector after adjudication confiscated the truck under Section 115(2) of the Customs Act and imposed a redemption fine of Rs. 25.000/-. He confiscated the readymade garments seized and imposed a penalty of Rs. 20,000/- on the appellant. It is against that order the appellant filed an appeal before the C.B.E.C. and the learned Board dismissed this appeal, against which the present appeal has arisen.
5. Shri S. Mukhopadhyay, the learned Advocate for the appellants contended before us that these old readymade garments are not notified items either under Section 123 of the Customs Act or under Chapter-IVA of the Customs Act and, therefore, the initial burden is on the department to prove the same. That burden is not discharged in the circumstances of this case. He further contended that the learned Collector was wrong in holding that the initial burden was discharged and that the accused has not rebutted the same. It was his contention that the department had not led any evidence to discharge that burden. The admission of the appellant cannot be relied upon as it was retracted. Even otherwise, from the admission of the appellant nothing turns out so as to hold that the initial burden is discharged. The admission by itself does not establish that the goods were smuggled into India. The goods can be said to be smuggled into India when they are imported without payment of duty or in violation of restrictions or prohibition regarding the entry into India, for this there is no evidence in this case. He also contended that from the Panchnama itself it is clear that only a part of the goods seized bear foreign markings. So, it is not clear as to what part of the goods bear foreign markings. He also contended that no joint inspection was allowed to the appellant and he was not allowed to cross-examine the witness whom he wanted to cross-examine. He also contended that even assuming the department's case that some goods are of foreign origin that by itself will not be sufficient to order confiscation in the absence of clear evidence that they were smuggled goods. It was also contended that the circumstances and the other evidence relied on by the department would only give rise to suspicion and suspicion however strong is not a substitute for proof. It was also his contention that one Rustam Biswas is a person from whom the appellant claimed that he purchased the goods. Therefore, even assuming that the appellant has purchased the goods from Rustam Biswas, who purchased the goods from Bangladesh, then that very same person Rustam Biswas is given benefit of doubt and exonerated from the charges by the learned Board. Therefore, when Rustam Biswas, from whom the appellant purchased these yarns, is exonerated, the appellant cannot be discriminated and he could not be held liable for having purchased these goods. In this connection, he relied on the decisions of the Tribunal which will be discussed by us later. It was also his contention that in the Show Cause Notice itself there is nothing to show under which clause of Section 112B the appellant is imposed with the penalty and it is also not clear whether the penalty has been imposed under Section 112A or 112B, and in such circumstances it was his contention that the imposition of penalty was not in accordance with the law. In this connection, he relied on a decision of the Special Benches reported in 1987 (32) ELT 679 and Prem Narayan Doulutram v. Collector - 1989 (41) ELT 116 (Tribunal).
6. Shri P.C. Jain, the learned JDR contended that the department has discharged its initial burden. He further contended that the retraction was done on a later stage and it is only an afterthought. Therefore, he contended that the admission of the appellant is sufficient to hold that the department has discharged its burden. In this connection, he relied on a decision reported in 1986 (25) ELT 811 in the case of Jain Enterprises v. Collector. He also contended that the admission of the appellant is that he had purchased these goods from one Rustam Biswas and the house of Rustam was also searched. It was also the admission of the appellant that Rustam was getting the goods from Bangladesh and therefore, in the circumstances when the retraction is late it is only an afterthought and the circumstances are sufficient to shift the burden on the appellant. He also contended that from the facts of the case and from the narration as taken in the show cause notice the ingredients of Section 112B is implied and therefore the imposition of penalty is in order. In this connection he relied on a decision reported in 1987 ELT 385.
7. In view of the above contentions, the points that arise for our determination is-
(i) whether the department has discharged its initial burden on the appellant to prove that the goods in question are not smuggled in character; and
(ii) whether the imposition of penalty is in accordance with the law.
As far as point No. (i) is concerned it is now seen from the orders of the Board that considering the fact that the area where the goods were found is bordering Bangaladesh and such goods are found in that country there is reasonable belief for the conclusion that the goods have been smuggled from Bangladesh. The Board also held that the objection taken by the defence to the effect that the position of each and every garment is not ascertained and the reference to some of the garments only could in no way be applicable to all the garments, is not of much significance. It was also held that the plea of the defence that such goods are traded inside the country is also irrelevant because the goods were found within a distance from the border of Bangladesh. Therefore, the Board held that there was sufficient basis for the Collector to conclude that the goods had been smuggled into the country. Therefore, the Board held that the statement of Sheikh Sam-suddin cannot be taken to be under duress. The circumstances which are relied on by the Board are -
(a) The statement of Sheikh Samsuddin;
(b) That the goods were found near border area; and
(c) It was found at the dead of night in an obscure area.
8. In these circumstances, it is necessary for us to find out whether the retraction in this case is of any avail to the party. In this connection, the learned JDR relied on the decision reported in 1986 (25) ELT 811 in the case of Jain Enterprises v. Collector wherein at Para 8 the Tribunal held as follows :-
"Though the goods under seizure are not notified items under Section 123 of the Act at the relevant time, the foreign brand name 'YKK' on the goods, non-production of any valid voucher for the licit acquisition of the same by Raichand at the time of seizure, inculpatory statement of Raichand about the purchase of the contraband goods and other attendant circumstances would shift the burden initially cast on the Department to the appellant. We therefore hold that the Department has discharged the onus cast on it under law and the burden getting shifted on to the appellant in the circumstances indicated above has not been discharged by the appellants."
In that particular case the facts were that there was an inculpatory statement of one Raichand about the purchase of contraband goods and there was several circumstances against the appellant. The statement of the appellant was inculpatory in nature but in this case we have to find out whether the statement of the appellant in the circumstances is sufficient to shift the burden on the appellant to prove that the goods are not smuggled in character. It is necessary for us to look into the abovesaid statement of the appellant. The statement of the appellant is to the effect that the truck was intercepted at 3.30 A.M. and on being asked he replied that these were old and used readymade garments in the bags. He had no receipts for the same and he had purchased them unlawfully. Merely because he stated that he had purchased these goods unlawfully, it does not go to show that they are smuggled goods. Unlawfully has got several meanings and it does not necessarily to point to smuggled nature of the goods. He has stated that these goods were loaded at night from Rustam's Arat. He has further stated that there is another statement wherein he has stated that the goods are purchased by Rustam from Bangladesh. He takes these goods to one Basirkhan of Kanpur. So, the only statement that the appellant has made is that he has acquired these goods from Rustam and Rustam purchased them from Bangladesh. The circumstance is that the truck was intercepted in the morning at about 3.30 A.M. These circumstances, in our opinion, are not sufficient to hold that the burden had shifted on the appellant. In this connection, we may refer to a decision of the Tribunal in the case of Arvind Singh Kocher v. Collector of Customs, reported in 1986 (26) ELT 792 (Tribunal). In that decision the Tribunal held that the initial burden lies with the department when the goods are I neither notified under Chapter IV-A nor under Section 123 of the Customs Act, 1962 and even if it is assumed that the goods were of foreign origin that by itself would not be sufficient to order confiscation in the absence of clear evidence that they were smuggled goods. On this point we conveniently extract the observations found in the abovesaid decision which is as follows :-
"I have carefully considered the submissions made on both sides. Admittedly, the T-shirts and the half shirts were not the notified goods at the relevant time. Therefore, the provision of Chapter IV-A are not attracted. They were also not notified under Section 123 of the Customs Act. Therefore, there was no burden on the appellant to establish that the T-shirts and half shirts were licitly imported into India. The initial burden that T-shirts and half shirts were smuggled goods lies on the department. The department had not led any evidence to discharge that burden. The department however relied upon the admission of the appellant and two other circumstances, namely, recovery of goods of foreign origin from a purchaser from the appellant and the conduct of the appellant in not opening the door and wetting the T-shirts and half shirts which he got done before the police were called. The admission of the appellant was that the seized goods were purchased by him from the passengers coming from abroad. This admission by itself does not establish that the goods were smuggled into India. The goods can be said to be smuggled into India when they are imported without payment of duty or in violation of restrictions or prohibition regarding the entry of those goods into India. There was no evidence that the passengers who had sold the goods to the appellant had not paid the duty. The burden was on the department and the department may not discharge of this burden. Even if we assume that the goods are of foreign origin that by itself would not be sufficient to order confiscation in the absence of clear evidence that they were smuggled goods. The circumstances and the other evidence relied on by the department could only give rise to suspicion. Suspicion however strong is not a substitute for proof."
This decision is followed by the Tribunal (NRB) in another decision in the case of Collector of Customs & Central Excise, Chandigarh v. Shri Balkrishan reported in 1987 (29) ELT 65 (Tribunal). From the abovesaid decision it is clear that the admission of the appellant that the seized goods are purchased by him from the passengers going abroad by itself is not sufficient to hold that they are smuggled goods and they are imported without payment of duty or in violation of restrictions for prohibition regarding entry of these goods into India. It was held in that decision that there was no evidence that the passengers who had sold the goods had not paid the duty. That burden was on the department and it has not discharged this burden. It was also held that even if the goods are of foreign origin that itself is not sufficient to order confiscation in the absence of clear evidence that they were smuggled goods. In the present case the appellant has averred in the statement that he had purchased the garments from Rustam and when the department searched the residence of Rustam, only some documents pertaining to his garment business were found and there was nothing to show that this Rustam Biswas had imported these goods without payment of duty. On the contrary, the learned Board found that Rustam Biswas is not liable to be proceeded and he was exonerated. Therefore, when the source of the appellant's getting the goods in question is Rustam and when Rustam is exonerated by the Board of the charges against him, it is highly contradictory to hold the appellant guilty of such offence. The fact of exonerating Rustam goes to show that he has given benefit with respect to these goods that they were not smuggled. If the statement of the appellant is to be relied upon it should be relied upon as a whole and if his admission regarding purchase of the goods from Rustam is taken into account, and when Rustam is exonerated, the appellant also is to be exonerated of the charges.
9. The very fact that these goods were found in the dead of night at 3.30 A.M. is not sufficient to discharge the burden cast on the department. It was also held in a decision in the case of Chaganraj v. Collector of Central Excise, reported in AIR 1963 Madras 337 that merely to act on suspicion or upon grounds that the accused failed to substantiate the defence cannot be sufficient to discharge the onus which rested upon the Customs authorities and it is necessary that evidence must be forthcoming to show that the goods were in fact or must have been imported from a foreign territory in a clandestine manner.
[This decision was also discussed in the aforementioned judgment of the Tribunal in the case of Collector of Customs & Central Excise, Chandigarh v. Shri Balkrishan, reported in 1987 (ii) ECR 325 (Cegat NRB)].
Therefore, the contention of the learned JDR Shri P.C. Jain that the burden has been shifted on the appellant cannot be accepted by us.
10. The learned Advocate Shri Mukhopadhyay had also relied on the decision in the case of Md. Safi reported in 1988 (14) ECR 360. That was also a case of illegal importation and the Central Government in that case at Para 4 page 361 held as follows :-
"Government have carefully considered the submissions made in the revision application and those urged during the personal hearing. Government observe that the Original & Appellate Authorities proceeded on the basis that these goods were old and used readymade garments. These goods are said to have been bought by the petitioner from one Mohd. Ashick and accordingly the petitioner produced three receipts indicating date of sale as 21-4-1979, in the name of Shri Mohd. Ashick from Shri G. Debnath Port Trust Auction purchaser. Government observe that it is an admitted fact that the garments seized were old and used ones. Government further observe that such goods were from time to time disposed of through the auctions conducted by the Customs and Port Trust authorities and were often displayed for sale in the open market. Coupled with this, the petitioner has also produced documents to indicate that the goods were originally purchased from one Shri Deb Nath, Port Trust Auction purchaser. In the absence of any evidence to the contrary that such goods were illicitly imported or acquired, Government extend the benefit of doubt to the petitioner and set aside the confiscation of the goods and imposition of penalty on the petitioner."
The observation of the Central Government is to the effect that such garments seized were old and used ones and such goods were disposed of from time to time through the auctions conducted by the Customs and Port Trust Authorities and were displayed for sale in open market. Therefore, in the absence of any evidence to the contrary that such goods were licitiy imported or acquired the Government extended the benefit of doubt to the petitioner. The decisions of the Government of India on such matters though not binding on the Tribunal should be highly respected. That is the view taken by the Tribunal also in several cases. Unless those decisions were expressly over-ruled by the higher courts, they continue to have pursuasive force. In this particular case, the readymade garments are available for auction and it is a well-known fact. In this connection, the learned Advocate further relied on order No. 1691A of 1980 dated 27-9-80 passed by C.B.E.C. and produced a certified copy of the order. It was held by the Central Board of Excise & Customs that such goods like old readymade garments are available through regular import channel and it was also held there that the fact of auction establishes the channel through which such goods could have been diverted to the market. Therefore, it was also held that there was a clear case for extending the benefit of doubt so far as the licit importation is concerned. Therefore, it was argued by the learned Advocate Shri Mukhopadhyay that this very Board itself had extended the benefit of doubt to such articled in several other cases and the Board was not right in not extending that benefit to the appellant. He further relied on another decision of the Board dt. 25-11-1989 in Shri Abdul Latif's case (a copy of the order has been produced by the learned Advocate). In this case also similar benefit of doubt has been extended to the parties as the goods were available from market, in auctions and other sales conducted by the Port Trust and Customs and it was also held that unauthorised importation was not established.
11. The learned Advocate Shri Mukhopadhyay further relied on the decision reported in 1984 ECR 2296 (Cegat) in the case of Shri S.N. Sarkar, Abdul Latif v. Collector of Central Excise wherein it has been held as follows :-
"It was for the Department to initially produce proof to at least prima facie establish the smuggled character of the goods and in the absence of any enquiry on this matter the Department had failed to establish any such prima facie case. In the circumstances, it was really not necessary for either of the appellants to positively prove that the goods had not been smuggled into India. As pointed out for them such goods are freely sold in the auctions held by the Calcutta Port Authorities or by the Customs Authorities. They are thereafter freely sold in the market place also. In the circumstances, there is no ground to presume that these goods must have been smuggled into India, thereby shifting the burden on the appellants to prove that they had not been so smuggled but had been lawfully acquired.
Therefore, in the absence of any proof to indicate that the goods claimed by the appellants were not legally imported, the appellants are entitled to the release of the goods claimed by them."
12. It is thus seen that the case of the appellant in this case is much stronger than those cases. The reason is that these goods are freely available in the market and there is also no proof to show that these goods are smuggled into India without payment of duty. Not only that but the very source from which the appellant claims that he purchased the goods from one Rustam Biswas and that Rustam Biswas was proceeded by the department and he was given benefit of doubt by the Board, clearly establishes that the goods which were found in the possession of Rustam Biswas were not found to be smuggled goods and that is why the learned Board extended the benefit of doubt to Rustam Biswas. The statement of the appellant is that he purchased these goods from Rustam Biswas and if the benefit is extended to Rustom Biswas, the appellant is also entitled to that benefit. Therefore, the case of the appellant is much stronger than the cases which were relied upon by the learned Advocate and in such circumstances, we are unable to agree with the arguments of the learned JDR that the burden has been shifted to appellant and the appellant has failed to discharge the burden which was so shifted upon him. The learned Advocate also relied on several other rulings. But, since the principles enunciated in all these rulings are similar, we need not multiply citing those decisions.
13. In the result, insofar as point No. (i) is concerned, we hold that the burden has not shifted on the appellant. We also hold that the department has failed to prove that the goods in question are smuggled in character. In view of this finding on point No. (i), the finding on point No. (ii) is not of much importance. The reason is that when the smuggled character of the goods is not established, the appellant is entitled for the benefit of doubt and it should be extended to him, and the confiscation of the goods and the imposition of penalty on the appellant are liable to be set aside.
14. In view of above discussions, we hereby accept the appeal and it is hereby ordered that the confiscated goods in this case be returned to the appellant. The penalty imposed on the appellant is also hereby set aside.