Customs, Excise and Gold Tribunal - Bangalore
Shri Syed Ibrahim And Ors. vs Cc on 4 January, 2005
Equivalent citations: 2005(191)ELT449(TRI-BANG)
ORDER S.L. Peeran, Member (J)
1. Both these appeals arise from common order in adjudication passed by the Commissioner of Customs, Bangalore. In his order in Sl.No.13/02, dated 6.3.02, he has ordered for confiscation of 12,80,000 numbers of cigarettes of Bangladeshi Origin seized from Truck bearing Reg. No. KA 06 8378 and 13,69,250 numbers of cigarettes of Bangladeshi Origin seized vide Annexure B to Mahazar dated 1.5.2001 said to have been sold to the appellants by Shri Syed Ibrahim and the same has been ordered for confiscation and the sale proceeds of Rs.8,10,662/- is directed to be adjusted towards it's value. There is confiscation of lorry bearing No. KA 06-8378 under Section 115 (2) of Customs Act. However, the same has been granted redemption to one Shri Chand Pasha on payment of fine of Rs.50,000/- under Section 125 of the Customs Act. The said Chand Pasha is not in appeal before us. There is a penalty of Rs.8 lakhs on Shri Syed Ibrahim and Rs.1.50 lakhs on Shri R.D. Raja in terms of Section 112 (b) of the customs Act. These two persons are in appeal. There are further penalties on other parties who are not in appeal. The simple contention of the appellants is that the goods are not smuggled ones and they are non-specified goods which have been seized in the town and therefore, the question of its confiscation does not arise, besides imposing penalty. It is their contention that mere fact of foreign origin does not by itself amount to holding that the goods are smuggled ones. In this regard he relied on the following judgements.
1) Shiv Sunder Shukla (2000 (131) ELT 465 (T.Kol)
2) Rajendra Kumar (2001 (134) ELT 148(T.Kol)
3) Tayyub juner Khatri (2002 (139) ELT 433 (T.Kol) and contended that since the goods are non-notified goods, therefore the burden of proving of non-notified goods to be seized is on the department as held in the following judgements.
1) Dasa Kashinath Bengal (2001 (132) ELT 380 (T)
2) Anil Gupta (2001 (135) ELT 35 F)
3) Rajesh Kumar (2001 (134) ELT 148)
4) Dinanath Maurya (2001 (131) ELT 203)
5) Ganesh Pd Agarwal (2001 (128) ELT 519 T)
6) Harison Mountain (2001 (137) ELT 767 T.K.) He also relied on the following two judgements to submit that no penalty is leviable.
Raj Kumar Keshari [(2001 (136) ELT 745 (T)] Harjom Mour (2001 (137) ELT 767) And also on the following judgements
1) Md Abdul Jabbar (2002 (141) ELT 443)
2) Anil Kumar Shaw (2002 (140) ELT 263)
3) Jtin Mehta (2002 (120) ELT 263)
4) Hasan Ali (2001 (138) ELT 197 T)
5) Rajendra Prasad (2001 (136) ELT 925)
6) Brijendra Kumar Singh (2001 (134) ELT 490 T)
7) Raj Kumar Keshari (2001 (136) ELT 745)
8) Dasan Kashinath Bengal (2001 (132) ELT 380 T)
9) Tahol Mondal (2002 (49) RLT 866 T)
10) Akbar Badruddin Jiwani (1990 (47) ELT 163 SC)
11) Tamilnadu Housing Board (1994 (74) ELT 9 SC) Learned counsel submits that the issue pertaining to non-confiscation of non-specified goods was considered by the Tribunal in the case of Naveed Ahmed Khan and Ors. by Final Order No. 1934 to 1936/04 dated 7.12.04 and contends that this judgements relies on large number of Tribunal judgements an the same squarely applied to the facts of the case. He prays for applying the ratio of the same and also for directing the revenue to reimburse the value of the goods seized and noted in the mahazar as laid down in the judgements of Naveed Ahmed Khan. He produced copies of the judgement. Learned DR reiterated the departmental view.
2. We have carefully considered the submission and pursued the order. Lorry bearing No. KA 06 8378 was stopped near Mulbagal check post. The officers of DRI examined the 400 boxes of pesticides as declared in the documents available with one Shri Chand Pasha. They were other 40 bundles different form the pesticide boxes whose mention was not available in the transport documents. On examination it was found to contain cigarettes of Bangladeshi Origin. Therefore they were seized on the plea that they are smuggled goods. The premises of M/s. Super Trax, No.5, Unity Buildings, JC Road, Bangalore-2 and the godown located at M/s. Bright Electricals, KCD Sheds, Gubbi Mission Press Compound, Bangalore and from their godown cigarettes of Bangladeshi Origin were also seized, besides goods of foreign origin like food stuffs, chocolates, electrical items. The statements of various persons were recorded and the case was booked for confiscation of these items as having been smuggled ones and after conclusion of the proceedings, these same have been confiscated and penalties have been levied. The contention of the appellants is that the goods are not specified and they are freely available in the open market, that in terms of large number of judgements, the burden is on the revenue to show that the goods are smuggled ones and as the same has not been discharged, therefore in terms of the judgement in the case of Naveed Ahmed Khan and others by Final Order No. 1934 to 1936/04 dated 7.12.04, the penalties are required to be set aside and revenue should be directed to reimburse the value of the goods as noted in the mahazar.
3. We have considered the submissions and find that this very plea was raised in case of town seizure in the case of Naveed Ahmed khan and the Tribunal by Final Order No.1934 to 1936 dated 7.12.04 has allowed the appeals and directed the Revenue to reimburse the value of the goods as in the mahazar. The submissions made in that case and the citations relied on and findings as record in Para 2 to 5 are reproduced herein below.
"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 06.11.2003 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. C of Customs - 2004 (165) ELT 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) ELT 288 (Mumbai) Seizure - non-notified goods burden of proof on revenue - goods not being proved to be of foreign origin, confiscation not sustainable - Section 111 (d) and 123 of Customs Act.
c) Aslam Noor Mohammed v. CCS - 2004 (169) ELT 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. Muniandi v. CCS Chennai - 2004 (167) ELT 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) ELT 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. CC Bangalore - 2003 (160) ELT 372.
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 Kurana v. CCS Delhi - 2003 (161) ELT 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) ELT 808 Kolkatta 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) ELT 882 Smuggling - evidence - burden of proof - in absence of any evidence lead 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) ELT 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) ELT 761 New Delhi Smuggling - confiscation and penalty - non-notified goods - goods of foreign origin being feely 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) ELT 652 N. 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) ELT 908 Smuggling - burden of proof lies with the 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) Bhogilal Mehta v. Commissioner of Customs - 2003 (154) ELT 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) ELT 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 Lakshminarayana Somani - 2003 (156) ELT 133 Rakesh Gulati - 2003 (54) RLT 531 page nos. 8 & 10 Ravinder Khurana - 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. Manoranjan Banik - 2004 (165) ELT 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) ELT 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 Dev 2003 (157) ELT 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) Lakshminarayana Somani -v. Commissioner of Customs - 2003 (156) ELT 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) Jitender Pawar v. Commissioner of Customs - 2003 (156) ELT 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) ELT 119
g) Commissioner of Customs v. M. Banik - 2004 (165) ELT 237 page nos.13, 14
h) Satyanarayana Koti - 2003 (53) RLT 190
i) Rakesh Gulati - 2003 (54) RLT 531 page nos. 8-10
j) Him Electronics - 2003 (56) RLT 889. page nos. 15-17
3) SEIZURE BY POLICE
a) Jitender Pawar v. Commissioner of Customs - 2003 (156) ELT 622 Delhi (Page nos. 25 & 26) Smuggled nature of goods - burden of proof - goods initially seized by Police - presumption regarding smuggled nature of goods not invokable - initial burden on department to prove smuggled nature.
b) Rajkamal Departmental Stores - 2002 (51) RLT 756 (page nos. 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 Maharashtra v. P.P. Jain - 2000 (126) ELT 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 (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 1997 - value of goods as shown in seizure memo and not sale proceeds to be paid to petitioner."
b) Shilp Impex V/s. Union of India - 2001 (128) ELT 54 "Goods sold by department without notice at much lesser price than the one declared by the petitioner and much less that 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) Safal Dutta v. CC (Prev.), W.B. - 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/s. Commissioner of Customs, Calcutta - 2001(130) ELT 115 "Seized goods or their seizure value to be returned. Department directed to pay the balance amount."
e) State of Gujarat V/s. Memon Md. - AIR 1967 Sc 1885
f) Oswal Spinning and Weaving Mills V/s. CCE - 1988 (35) ELT 244
g) Shiamalata Sharma - 1992 (57) ELT 415
h) Enowell Khonglan - 1991 (55) ELT 80
5) CONFISCATION OF CONVEYANCE NOT SUSTAINABLE
a) Shamin Akhtar Warshi V/s. Commissioner of Customs - 2003 (161) ELT 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/s. Commissioner of Customs - 2002 (141) ELT 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 Gutuka V/s. CCE - 2001 (135) ELT 109
d) Jaykrishna Bala V/s. Commissioner of Central Excise - 2004 (170) ELT 574.
Confiscation of conveyance and imposition of penalty not warranted
e) Harinder Pal Singh v. CCS - 2003 (160) ELT 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. CC, New Delhi - 2003 (154) ELT 169 (Tri.-Del.) and that of CC, Ahmedabad v. R.P. Gangwal - 2004 (163) ELT 391 (Tri.-Mumbai); Ballav Daga v. CC - 191 (52) ELT 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 judgment 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 Jitender Pawar v. CC, 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."
4. On our consideration of the above judgments, we are of the considered opinion that the facts and circumstances of the above case and the citation and the rulings would apply completely to the facts of this case respectively. Following the ratio of the same and the noted judgements therein, we allow the appellants appeal by setting aside the penalties imposed. In so far as the prayer for reimbursement of the value of the goods is concerned, we notice form the appeal Memo of Shri Syed Ibrahim that he has stated that, he was carrying on trading business in partnership with M/s. Super Trax Car Decorators which was looked after by his brother-in-law and real agency business, that the godown was not owned by him and he was paying nominal rent of Rs.2,500/- and the godown was owned by Shri Rehman Shariff and most of the goods belong to the said Rehman Shariff. The appellant has only sought for setting aside the penalty. So also Shri R.D.Raja has only prayed for setting aside the penalty and there is no prayer for claiming the goods or for value of the goods. In that view of the matter, the appeals are allowed to the extent of setting aside the penalty in these two cases only and the impugned order is modified to that extent only.