Customs, Excise and Gold Tribunal - Bangalore
Sh. Raja Gupta (M/S. Jajdhani Traders), ... vs Commissioner Of Customs, Bangalore on 12 April, 2001
Equivalent citations: 2001(75)ECC773, 2001(138)ELT519(TRI-BANG)
ORDER Shri, S.S. Sekhon, Member (T)
1. A Show Cause Notice dt. 03.03.2000 was issued by Additional Director General, Director General, Directorate of Revenue, Intelligence, Chennai to the two appellants herein as above -
"On the basis of intelligence gathered that Silk yarn imported India clandestinely without payment of Customs duty had been stored/secreted at No. 34/2, Annadanppa Lane, Avenue Road Cross, Bangalore, the said premises was searched on 20.9.99 by the officers of DRI, on the strength of a valid search authorization issued by the Joint Director if revenue Intelligence, Directorate of Revenue Intelligence, Bagalore and 66 Bales of Silk Yarn were and who introduced himself as the son of Bechan Mishra, Proprietor of M/s Mishra Enterprises, No. 34/2, Annadanappa Lane, Bangalore, he produced Invoices bearing Nos. 1629 and 1630 dated 17.9.99 issued by M/s Rajdhani Cotton, AS Char Street, Bagalore in the name of one Sri Huckumchand, Annadanappa Lane, Bangalore. He produced photocopies of Bills of Entry No 001024 dated 24.2.99 about two more bills of entry whose Nos. were not legible, of M/s Prashanth Glass works Pvt. Ltd Varanasi, and invoice No 99-2000/005 dated 28.7.99 of M/s Prashant Glass Works raised on M/s Rajdhani Cotton. He also produced copies of invoices Nos UL/7023/99 dated 2.2.99 with packaging list, UL/7024/99 dated 2.2.99, UL/7025/99 dated 2.2.99, UL/7022 dated 2.2.99 and UL/7058/99 dated 2.2.99 all of M/s Unisilk Limited, Rm 1615, 16/17, Star House, 3, Salisbury Road, Kowloon, Hong Kong. On verification of the invoices of Rajdhani Cotton it was found that the Silk Yarn was received in the name of Sri Hukumchand of Annadanappa lane and not in the name of Sri Anand Mishra or in the name of his father Sri Bechan Mishra or in the name of the Firm i.e. M/s Mishra Enterprises and an on further verification of the photocopies of the Bills of Entry and invoices produced it was noticed that the silk yarn was imported during February 1999 by M/s Prashanth Glass Pvt Ltd, Varanasi and there was no reference about the silk yarn for having received at Bangalore and therefore the 66 bales of silk yarn valued at Rs 25,04,337/- were detained for further investigations under the provisions of the Customs Act, 1962 under a proper mahazar dated 20.9.99."
and subsequent enquiries made by his officers at Bagalore and at Varanasi with the Transport Company Manager revealed that whereas Shri Rajat Gupta (here-in-after referred to as A-1) has admitted to his statement to be the owner of the 66 Bales of Silk Yarn, which he had sold to Shri Bechan Mishra (here-in-after referred to as A-2) and the Bills of Entry produced by A-1 were not acceptable as it was alleged -
"Form the above it was clear that the Bills of Entry produced by Sri Rajat Gupta were for imports made in February, 1999 where as the detention was made in September 1999 showing that there was a period of 7 months from date of import to date of detention which was a long period and silk yarn being a fast moving commodity would not remain unsold for such a log time which clearly indicated that the seized silk yarn did not pertain to the Bills of Entry produced and the bills of Entry had been produced only to cover up the illegal transaction of smuggled silk yarn. It also emerged that the silk yarn had not been physically transported from Varanasi to Bagalore as there was no entry in the Commercial Tax Check post register for the No o the invoice and the corresponding entry in the Commercial tax register for the No on the invoice showed that the goods transported were not silk yarn. It was also ascertained from the Commercial Tax Department that any consignment whose value is more than Rs 10 lakhs is entered in a special register and an extract of this register was obtained. Sri Rajat Gupta in his voluntary statement had admitted that the silk yarn had not been transported by the said lorry and that the 66 bales detained at M/s Mishra Enterprises were not covered by the lorry receipt No 11699 or the said Bills of entry. As seen from the statement of Sri Rajat Gupta and Sri Bechan Mishra and also Sri Kuchumchand it appeared that Sri Hukumchand who was only a loader (labourer) was used as a sacrificial goat in their smuggling operations.
Further, it was seen that 33 bales of silk had paper slips showing only the gross weight and net weight and no other markings or numbers not with any indication as to their origin, the remaining 33 bales had no tags or slips. The weights also did not tally with the packing list. Further Sri Rajat Gupta, when confronted with the fact that the vehicle had no passed through check post and other facts enumerated above and whether the goods can be constructed as smuggled silk, refused to answer. This showed his criminal intent. From the above and from the statements of Shri Rajat Gupta and Sir Bechan Mishra, it appeared that the silk yarn under seizure was illicitly brought in to the country and the documents furnished by Sri Rajat Gupta of M/s Rajdhani Cotton and Bechna Mishra of M/s Mishra Enterprises were clearly a ploy adopted by them to cover their smuggling activities in case they were caught."
and since Mulbarry Raw Silk Yarn is dutiable and import thereof is restricted being permissible only under an import license, in absence of which the import is prohibited. Therefore, A-1 & A-2 who claimed to be the owner of the Silk Yarn and A-2 who was in possession of the said goods were charged as -
"Accordingly, it appeared that Sri Rajat Gupta who had claimed to be the owner of the which is a prohibited item, with pour valid documents to prove licit possession of the same had contravened provisions of Section 11 of the Customs Act, 1962, read with Section 3 (3) of Foreign Trade (Development and Regulation) Act 1992, there by rendering the silk yarn of foreign origin imported liable to confiscation under Sec 111 of the Customs Act, 1962 and had further rendered themselves liable to penalty under Section 112 (b) of the Customs Act, 1962."
Therefore, A-1 was asked the Show Cause to Commissioner of Customs, Bangalore why the yarn should not be confiscated under Section 111(d) and penalty be imposed on him under Section 112 (a) (b) of the Customs Act, 1962 and A-2 was asked to Show Cause to the same Commissioner why penalty should not be imposed on him under Section 112 (b) of the Customs, 1962. These two appeals are therefore being disposed off by this common order.
2. The Commissioner after hearing the parties and considering the matter, ordered the confiscation under section 111 (a) of the Yarn under seizure and since the same had been disposed off the terms of Ministers letter F. No. 711/31183-LC(AS)dt 22.5.1984. The sale proceeds amounting to Rs. 19,72,268/- was appropriated to the Government. A penalty of Rs 5 lakhs was imposed on A-1 and Rs 2 lakhs on A-2 under the proviso of Section 112 (b) of the Central Act 1962 as he found.
" 40. I have carefully considered the submissions of both the parties. I find the facts of the case that at the time of investigation three Bills of Entry bearing Nos.10213, 10242 & 10254 all dtd.22.2.99 were produced along with the related invoices of the foreign supplier and the packing lists. According to these Bills of Entry the goods were imported by M/s. Prashanth Glass Works, Varanasi. The representative of Shri. Rajat Gupta has furnished a statement (enclosed as Annexure 'A" to the reply to the SCN) indicating comparative weights of bales recorded at the time of seizure of the goods and the weights indicated in the packing list. I have perused this statement and I find that a comparison has been made between the net weight of the bales recorded in the mahazar with the gross weight indicated in the packing list, which is incorrect. As such this statement shows very minor difference of ranging from 0.01 kg to 0.40 kgs on the positive side and -0.45 to -0.45 on the negative side which gives an impression that the variation' is very minimal. To get a correct picture, only the gross weights should be compared. The investigating officers have weighted all the 66 bales individually and recorded the gross weight and net weight of each bale. A comparison of the gross weight so recorded with the gross weight indicated in the packing list shows that in almost all the cases the gross weight of bales are higher than the gross weight recorded in the packing lists and the variation ranges form 0.50 KGs to 1.50 KGs on the higher side. Even admitting that the atmospheric conditions, especially the moisture content affects the weight, variation can not be said to be minimal and in at least some of the cases the weights should tally. Therefore, the Bills of Entry in question do not relate to import of the impugned goods. Further, it is a well known fact that the imported silk has a great demand in Indian market and it moves very fast on account of superior quality. The imported silk is amenable to fine reeling with minimum wastage and also qualitiely superior fabric. Also, the cost of local silk yarn is higher than the imported silk yarn. The present market value of average grade Mulberry raw silk yarn is quoted at Rs. 1400/- per KG whereas the CIF value of the imported silk yarn is in the range of Rs. 700 - 750/- per KG which is almost 100% lesser than the market rate. The duty and taxes on the imported silk worked to more than 40% and thus if duty is avoided it would leave a margin of almost 100%. Moreover, importation of silk yarn requires production of special import licence. This situation therefore holds good attraction to the smuggling of this commodity and such an activity is noticed quite often. One of the modus operandi adopted for smuggling of silk yarn is to get hold of a set of import documents such as Bills of Entry, Invoice etc., and use the same as legal documents for several consignments smuggled / illicitly brought into India. It is also pertinent to mention here that Bangalore has a high potential for marketing imported silk yarn. Moreover, any investor who intends to deal in imported silk yarn would like to dispose them of as quickly as possible since it would not make any business / commercial sense to keep the goods idle and to have the investment locked up without any return for a long time. Therefore, by these considerations it is logical to conclude that the three Bills of Entry produced by the notices showing clearance of silk yarn imported in Feb'99 do not relate to the impugned silk consignments which were examined and detained by DIR officials in Sep'99.
41. Next, I would like to point out that since the noticees have claimed that the goods have been transported from Varanasi to Bagalore, it is incumbent on them to show proper transport which agree in their contents not only with import documents but also with the entries made at the Commercial Tax Check posts. The Commercial Tax Authorities/Officers at the check post faithfully enter all the details available in the documents provided to them and they also record the lorry number of visual examination. Shri. Ramsunder Yadav, Manager of Baranwal Carriers, Varanasi has i this statement interlia that he transported 253 bales of raw silk yarn in his lorry No.MIIT 7321 on 28.7.99 form Varanasi to Bangalore vide invoice No. 11699 and challan No.5427 dt.28.7.99 and that no other goods were transported in the said lorry. Shri Rajat Gupta has claimed that 253 bales of silk yarn were transported in lorry No.M.I.T. 7921 and the said lorry passed through devanahalli check post on 2.8.99 and that the entry relating to this movement has been recorded in the Sales Tax register at Sl.No.14 dtd.2.8.99 (which was assigned special register Sl.No.11782). Verification of this entry in the extract of Sales Tax register furnished by the Sales Tax Authorities shows that it relates to lorry No.CRQ 7115 which has carried cotton valued Rs.99,62,741/- and the consignee if M/s.Rajdhani Cotton, Bangalore. Obviously, this does not pertain to the transport of silk Shri.Ramsunder Yadav of Barnwal Carriers, Varanasi. Further, the invoice No.99-2000/005 dtd.28.7.99 produced by Shri.Rajat.Gupta, has the special register Sl.No.11682 written on the check post seal. Verification of this serial number in the extract of the check post register shows that this entry relates to lory/transport vehicle No.AWB 9833 which has carried door shutters from M/s.Goel Timbertec to Shekar Devraj & Bros., the value of the goods carried being shown as Rs.2,14,171/- vide delivery note No 1910419. Even this entry also does not relate to transport of silk yarn from Varanasi to Bangalore. When Shri.Rajat Gupta was asked to comment on these observations he has in his statement dated 8.12.99 admitted that lorry No.MIT 7921 had not passed through Devanahalli Check post and had not entered Bangalore city; that there was no entry relating to this transport vehicle in the check post register; that the 66 bales of silk yarn detained at the godown of Shri. Bechan Mishra on 20.9.99 were not covered by lorry receipt No.11699 and were not transported by Baranwal Carriers in their lory MIT 7921; that the goods were also not covered by Invoice No.99-2000/005 dtd.28.7.99 of Prashnth Glass Works, Pvt., Ltd and were also not covered by three Bills of Entry Nos.0010213, 0010242 & 0010254 all dtd.22.2.99. In view of the facts revealed by the investigations and the admissions made by Shri. Rajat Gupta, it is clearly established that the goods are not legally imported / acquired and therefore are smuggled. In this context it is pertinent to mention that the Hon'bel Tribunal in the case of K.P. Basheer vs. Collector reported in 1999(109) ELT 247 (T) has held that admitted facts need not be proved/established by the department. Further, in the case of Commr. vs. Spectrum Pharmaceuticals Pvt., Ltd., reported in 1999(112) ELT 1058 (T), the Hon'ble Tribunal has held that what is established does not have to be proved.
42. Further, the following inconsistencies and contradictions in the reply/statements of shri.Rajat Gupta, Shri.Bechan Mishra and Shri.Hukumchand also prove that the goods are not licitly imported.
(a) Shri. Rajat Gupta has claimed that 66 bales of silk yarn were sold to Shri.Hukumchand and that the goods were not in his possession and hence the same cannot be confiscated from his possession.
(b) Shri. Hukumchand in his statement dtd.21.9.99 has stated that he is a poor man and had no money to do silk business; that he silk business was only between Shri. Rajat Gupta and Shri.Bechan Mishra; that he handed over the silk yarn from Rajat Gupta to Bechan Mishra and that he did not know anything about importation of silk yarn.
(c) Shri. Bechan Mishra in his statement dtd.29.2.2000 has stated that the silk yarn in question was kept in his godown belong to Shri. Rajat. Gupta of Rajadhani Cotton and that the same were kept i his godown for the purpose of sale only; that he gets a commission or RS.5/-per KG of silk yarn that he sold; that he had not made any payments to either Hukumchand or to Rajat Gupta for the said silk yarn; that Shri. Hukumchand was only a labourer and his name was only being used by himself and Rajat Gupta to raise invoices and Shri. Hukumchand had no other role to play.
(d) Shri. Rajat Gupta in his statement dtd.29.2.2000 has stated that he had sold the silk yarn to Bechan Mishra and that Shri.Hukum Chand had no role play in this transaction; that he is the owner of 66 bales of yarn as he has not yet received the payment for the same.
From the above, it can be seen the statement of Shri.Rajat Gupta and the other two persons in this transaction are contradictory. Shri.Rajat Gupta has stated that he has sold the impugned silk yarn to Hukum Chand/Bechan Mishra whereas both Hukumchand and Bechan Mishra have denied having purchased any silk yarn from Rajat Gupta. The statements of Shri. Hukumchand and Shri. Bechan Mishra clearly point out that Shri.Rajat Gupta is the owner of 66 bales of silk yarn and that he had kept the said silk yarn in the godown of Shri. Bechan Mishra for the purpose of selling and he had offered a consideration of Rs.5/- per KG of silk yarn sold, to Shri. Bechan Mishra. Shri.Bechan Mishra along with Rajat Gupta was responsible for selling the goods. In view of this, I hold Shri.Rajat Gupta to be the owner of 66 bales of imported silk yarn seized in the godown of Shri.Bechan Mishra and that Shri. Bechan Mishra had only lent his godown for sorting the silk yarn and was assisting Shri. Rajat Gupta is selling the silk yarn.
43. From the foregoing discussions, the silk yarn in question is found to be smuggled not only for the reason that the documents such as Bills of Entry, Invoice etc., produced by the noticees are proved to be false but also because of the admissions made by Shri. Rajat Gupta in his statement and also the contradictions/inconsistencies noticed as above. At this juncture, I would like to point out that in the case of Bhagwan Dass vs. Commr.of Customs, New Delhi reported in 2000(116) ELT 153(T) which involved recovery of contraband silver from a Maruti van be DRI Officers, the CEGAT has held that the appellants had not produced documents showing legal purchase/acquisition of silver in question and the circumstances indicated clandestine nature transaction. The CEGAT did not accept the peas of non-discharge of burden by revenue to prove that the silver in question was smuggled into India and it further up-held the penalty imposed on the appellants. The ratio of this decision for the Tribunal, is applicable to the facts and circumstances of the instant case. Further, as regards the admissibility of statements of the accused/witnesses in evidence, I take support of following decisions.
(a) In the case of Rajendra Prabhu Vs. Commissioner reported in 1997 (96) ELT 412 (T), the Tribunal has held that the initial statement of the appellant giving wrong information to the department being voluntary and true sufficient to prove the guilt and subsequent claim made is only an after thought.
(b) In the case of Bhanakalpa Bhai Patel vs. Assistant Commissioner reported in 1997(96) ELT211 (SC), Hon'ble Supreme Court has held that statement recorded under Sec.108 of the Customs Act, when found to be voluntary and not vitiated in any manner, is admissible in evidence.
(c) In the case of Hazari Sigh vs. UOI reported in 1999 (110) ELT 406 (SC), the Hon'ble Supreme Court has held that confessional statements of appellant recorded by Customs Officers are admissible in evidence an do not come within in inhibitions of Sec.24 and 25 of the Indian Evidence Act, because Customs Officers are not Police Officers. A similar view has been expressed by the Supreme Court in the case of Shri. Rameshchandra Mehta vs. State of West Bengal reported in 1999(110) ELT 324 (SC) and Jethmal vs. UOI reported in 1999 (110) ELT 379 (SC).
44. The notices have contended that Mulberry Raw silk yarn is not a notified item number Sec.123 or Chapter IV A of the Customs Act, 1962 and hence the smuggled character of the goods is to be proved by the department. This apart,the learned advocate of Shri.Bechan Mishra has also pointed out to the Order-in-Original No.22/2000 passed by me in the case of M/s.Pacific Exports, wherein this established law was accepted and the proceedings were dropped. I have considered their conditions and perused the case laws/decisions relied upon by them in this regard. In the O-I-O No.22/2000 which relates to M/s.Pacific Exports, the goods viz., imported silk yarn belonged to the importer himself which he had imported against the advance licences and he produced all the valid documents such as Bills of Entry, Invoice, Balance Sheet etc., which proved the legal nature of the goods imported. Therefore, the facts and circumstances of this case stand distinguished from those found in the case of M/s.Pacific Exports. In the present case there is sufficient evidence in the form of statements and further, the documents produced by the notice are proved to be not relating to the goods under seuzure. Here it is pertinent to mention that the department is not required to prove the case with mathematical precision to demonstrate absolute certainty and exactness. In cases pertaining to smuggling which shakes and wrecks entire natural economy, absolute proof being unattainable, the law accepts for probability as a working substitute. In other words the law does not require the department to prove the impossible. All that is required is to establish a degree of probability that a prudent man may believe the existence of fact in the issue. Thus, legal proof is not necessarily perfect proof because smuggling is clandestine carrying of goods to avoid legal duties. Secrecy and stealth are its covering guards. It is impossible for the investigating agency to unravel every link of the process which remain in the special or a peculiar knowledge of the persons concerned. The oral evidence adduced by the department would rebut the presumption of innocence in favour of that pars and in the result prove him guilty. So in effect, the department would be deemed to have discharge its burden, it relies on both direct and circumstantial evidence which are sufficient to raise a presumption in its favour, with regard to the existence of the facts.
45. In view of the aforesaid discussion, I reject the contention of the noticees that the department has not discharged the burden or proving the smuggled nature of silk yarn. In the reply filed on behalf of Shri.Rajat Gupta, it is submitted that a list of invoices bearing numbers from 1201 to 1244 has been enclosed along with a copy of Sale Tax From No.3 as evidence to show that Shri.Rajat Gupta has sold the entire consignment of 253 bales of silk yarn received by from Varanasi to various customers and also that he had paid Sales Tax correctly on all the transaction which would prove his bonafides. The above documents have not been enclosed to the reply of Shri. Rajat Gupta as stated. However, this claim is not going to make any material difference in the face of elaborate findings and discussion above which have established that the goods are smuggled and illicitly brought into India."
3. We have heard both sides, considered the submissions and find-
(a) Mulberry Raw Silk Yarn or Silk Yarn mentioned in the impugned notice are not goods covered by Section 123 of the Customs Act, 1962. Therefore, the burden to prove that they were not smuggled goods, does not lie or does not shift to the person form whole possession they were seized i.e. A-2; who is claiming/found to be the owner i.e. A-1. We find the provisions of Section 123 are very clear viz.i.e.
(i) the goods must be one to which Section 123 applies
(ii) the goods are seized under the Act
(iii) the goods must be seized on the reasonable belief that the belief that they are smuggled.
As pointed by the Supreme Court in J.K. Bardoline Mills (1994) 5 SCC 332. In the case of Gian Chand & others (1994 ECR 105 SC), the Supreme Court held that if the seizure was not under Section 178A of the Sea Customs Act, (predecessor and perimateria Section 123 of Customs Act, 1692), that care being made by the Police on July 16/17, 1958, they could not uphold the order of the Division Bench of the High Court, which proceeded on the basis that burden had shifted on the owner of the Gold and they remitted the matter back to the High Court to reconsider the conviction based on the findings of the learned 'Session Judge', "the prosecution had positively established that the goods were smuggled." The Supreme Court, again, on an appeal, by the same Gian Chand, for the very same seizure of Gold, held that 'Collector, therefore could not invoke any assistance from that Section, the burden of proof that the gold was smuggled gold, lay on the Customs; (Gian Chand etc. 1985 ECR 2232 S.C.). The Supreme Court in the later case, ordered the release of the Gold under seizure, while it upheld the confiscation on the Currency based on a findings of voluntarily and genuine nature of the statements recorded. In the present order impugned before vs, we find the Adjudicator has recorded in para 44 of the impugned order -
".....Here it is pertinent to mention the department is not required to prove the case with mathematical precision to demonstrate absolute certainty and exactness. In case pertaining to smuggling which shades and wrecks the entire natural economy, absolute proof being unattainable, the law accepts for probability as a working substitute. In other words, the law does not require the department to prove the impossible. All that is required is to establish degree of probability that a prudent man may believe the existence of fact in issue. Thus, legal proof is not necessary perfect proof because smuggling is clandestine carrying of goods to avoid legal duties. Secrecy and stealth are its covering guards. It is impossible for the investigating agency to unravel every line pf the process which remain on the special or a particular knowledge of the persons concerned. "The oral evidences adduced by the department would rebut the presumption of innocence in favour of that pars and in the result prove him guilty. So in effect, the department would be deemed to have discharge its burden, it relies on both direct and circumstantial evidence which are sufficient to raise a presumption in its favour, with regard to the existence of the facts."
The learned DR has relied on the Supreme Court decision in case of C.C. Madras Vs D. Bhoormul (1985 ECR 22 84 S.C.) wherein para 30 & 31 of the reported decision are almost verbatim, appear to have been extracted as found above, by the learned Adjudicator, without even mentioning this decision. However, the Adjudicator failed to notice, that in facts of that case, there was not only a declaimer of ownership, but also all knowledge about the contents. (para 36 of the reported decision refers) and other facts and conduct subsequent to the proceedings before the Collector. In the case before us there is no shadow of figure as 'D. Bhoormul' talking through Solicitors A-1 & A-2, are very much present and producing documents of possession and duty payments as made very much present and producing documents of possession and duty payments as made over to them in the course of normal trade in the goods. While applying the law as in 'D. Bhoormul's' case, the learned Adjudicator not only overlooked these important facts but also what the Supreme Court in D. Bhoormul's case stipulated, before adverting to the contentions raised in that case. In para 36 of the reported decision the Hon'ble Supreme Court has laid down--
".....But with regard to any other goods, the rule in sub Section (1) of 178-A would not apply unless the Central Government had specifically applied the same by notification in the official gazette. It is common ground that the material time, no such notification applying the Section to the categories in question had been issued. In respect of such goods the provisions of the Evidence Act and the Code of concerned procedure do not in term, govern the onus of proof in proceeding under Section 167 (8) of the Act. In conducting these penal proceedings, therefore Collector of Customs is to be guided by the basis canons of criminal jurisprudence and natural justice."
We would find that the Basic Canon of Criminal jurisprudence has been held by the Supreme Court in the case of Amba Lal Vs. U.O.I, (1983 ECR 1935 SC) to be -
"Para 8. We cannot also accept the contention that by reason of the provisions of Section 106 of the Evidence Act, the onus lies on the appellant to prove that he brought the said items of goods into India in 1947. Section 106 of the Evidence Act in term does not apply to a proceeding under the said Acts. But it may be assumed that the principles underlying the said Section is of universal application. Under the said Section, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. The court in Shambu Nath Mehra Vs. State of Ajmer, 1956 SCR 199 [(S) AIR 1956 SC 404] after considering the earlier Privy Council decision on the interpretation of Section 106 of the Evidence Act, observed at P. 204 (of SCR) : (at 406 of ACR) thus:
the "Section cannot be used to undermine the well established rule the law that save in a very exceptional class of case, the burden is on the prosecution and never shifts."
If Section 106 of the Evidence Act is applied; then, by analogy, the fundamental principles of Criminal jurisprudence must equally be invoked. If so, it follows that the onus to prove the case against the appellant is on the Customs Authorities and they failed to discharge that burden in respect of item 1 to 5. The order of confiscation relating to item 1 to 5 is set aside."
(Emphasis Supplied) Therefore, in the present case, as in all such cases, of goods not covered by Section 123 of the Customs Act 1962, the onus is the department to prove the case as a fundamental principle of Criminal jurisprudence, or basic canons of jurisprudence, the phrase used in D. Bhoormul's case (supra) which the Adjudicator is relying upon.
(b) Therefore, keeping in mind the above, and looking at the evidence we find-
(i) The appellant A-1 had submitted before the learned Adjudicator, a list of invoices bearing number 1201 to 1244 along with relevant Sales Tax forms for having conducted the business of selling 253 bales of silk yarn received by him from Varanasi, of which the seized 66 bales were a part and were sold to A-2. It was therefore, incumbent upon him to have looked at this positive proof of dealing with the goods in the normal course of Trade in Bangalore. The Adjudicator in para 45 of the order, has dismissed this essential evidence to prove the bonafides, only on the ground that invoices were not enclosed to the reply of A-1. What prevented him for calling for the same is not found without resorting to exercise of powers of summon search with him, the Adjudicator, however concluded, that this claim was not going to make any material difference to his findings to establish that the goods were smuggled and illicitly brought into India. We have looked into the findings and have extracted the same herein above. Even after going through them again and again, we cannot locate the findings about the establishment of 'illicit bringing about the goods into India.' The only finding as in para 41, is that 'what has been transported could be 'cotton yarn' or 'door shutters' as per the documents produced by A-1 and verification of Sales Tax check point Records. This would not indicate 'illicit import into India', even if it indicates illicit/unaccounted in Sales Tax Registrars movement into Bangalore or and Karnataka. Therefore, we cannot agree with the finding as arrived at that the 66 bales of Silk Yarn have not been legally imported and therefore are smuggled.
(ii) We find that the importers at Varanasi i.e. M/s Prashanth Glass Works, have sent the goods to M/s Rajdhani Cotton proprietary concern of A-1, A-1 has paid by cheque, Bills of Entry of legal import have been produced, yet no enquiries have however been made with the importers at Varanasi, since the Show Cause Notice tells of enquiry being made with the Manager of the Transport Company at Varanasi who has admitted to have transported the 253 bales on 28.7.99 from Varanasi to Bangalore and he has sent the photocopy of the bill of entry of the goods given to him by the importers. The DRI sleuths went on looking for the elusive driver of the said Truck, but could not locate him till 23.2.2000. The notice is silent, as to what did the enquiry reveal if and when made with the importers. Bills of Entry and invoices were admittedly produced at the time of seizure itself on 20.9.99. In the statement of the importers, verification of the records of stock etc., A-1 on 22.9.99, had stated that he was paying the importers through Bank and deals were accounted and declared to Sales Tax Department at Bangalore. Enquiries with Banks and the Importers at Varanasi would have clinched the issue in favour of the department or otherwise. We cannot accept, this large lacuna to be a loop hole in the investigations, since DRI is the premier intelligence agency for Anti-smuggling operations. They could not have slipped on this, the conclusion we can draw is that, possibly, enquires with M/s Prashanth Glass Works would have made the claim of A-1 & A-2 unassailable. In any case, there is no denial of the goods not having been supplied by the importers, which was the initial defiance A1 & A2. We cannot subscribe to the findings of the Commissioner in para 41 -
"....it is clearly established that the goods are not legally imported/acquired and therefore are smuggled...."
(ii) We have considered the findings in para 44, regarding entry No S/No 11682 written on one of the books by the Sales Tax Check Post clerk. The same finding, conveniently, omits the entry No 11782, claimed by A1 to be the correct entry made on 2.8.99 and the plea of clerical mistake. This absence of a finding on plea of defence, not only weakens the findings and the need for upholding of the orders, but also exhibit a pre-determined approach to a case, if not bias, on the part of the Adjudicator. Either way, such orders cannot be sustained, when the invoice bears a stamp of the Check Post. An entry has been made on 2.8.1999 on II shift, of the entry No 14, column 3 showing M/s Rajadhani Cotton, with value and invoices number under running S/No 11782; there is no allegation and or finding that this entry is incorrect or that it has been interpolated, especially when the specimen signatures and the specimen stamps used at the check post in the normal course were summoned by the department (the DRI investigators vide DRI F. No SIV 52/99 dt 6.12.99) and have been supplied by the concerned State government Department to the Jt. Director DRI Bangalore vide their letter dt 6.12.99. We are left to assume once again what happened to this attempt of the enquiry. The results, as at para 10 of the Show Cause Notice only allege that the "entry at S. No 11782 show the goods being transported from M/s Prasanth Glass Works to Rajdhani Cotton, Bangalore to be 'Cotton'. However, this will not indicate that a truck load of goods were never transported from Varanasi to Bangalore. The natural inference would be either the words 'cotton' is a misdeclaration or that 'cotton' was transported. If some goods were transacted between the importer at Varanasi and A-1, it was necessary, key+ vital to dig further and question the importers to establish what were the goods transacted and paid for, since the entries are for the full invoice value, which prima facie at Rs 99,62,241/- in one lorry cannot be for a load of Cotton. We would therefore find, a fatal flaw in the enquiries made. One can also find safely that entry of S/No 11782 could be written due to clerical mistake as S. No 11682 and nothing more than that, should be read into the error.
(iv) We have considered the findings of the Adjudicator as at para 40 regarding the gross and net weight actually found as per Mahazar and that given in the packing list supplied by the Exporter in the foreign Country. The Adjudicator finds -
".....A comparison of the gross weight so recorded with the gross weight indicated in the packing list shows that in almost all the cases of gross weight of bales in higher than the gross weight recorded in the packing list and the variation ranges from 0.50 Kgs on the higher side...."
thereafter he concludes that variations due to atmospheric conditions especially moisture content may affect the weight, they cannot be said to be minimal and at least in some cases it should have tallied. Therefore, the B.E. in question does not relate to the goods under seizure. We have pursued the packing slips placed in the paper book and find that the goods supplied are of Grades 2 A & C. The B/No the Grade and the N.W, G.W & C.W. in Kgs are given. Therefore, there is an accepted practice of differences in the declared weight and ascertained weights. The trade practice appears to be to charge a weight, in between Gross weight & Net weight. The invoices from Rajdhani Cotton to R. Hukamchand are for 25 bales each vide invoice No 1627 & 2628 dt 17.9.99 and invoice Nos 1629 & 1630 both dt 20.9.99 i.e. 100 bales were transacted out of this quantity only 66 have been seized. These invoices give the bale numbers as per the packing list of the Foreign Supplier, the net weight as given in the packing list and are billed on that quantity. Therefore, the Adjudicator should have considered a comparison of net weight and not gross to gross weight. Since gross weights are not commercially acceptable, for any purpose, as evidenced by these documents. The net weights as per Mahazar and packing list were compared and a compilation handed over to the Adjudicator during the hearing. The compilation has the Bale Nos and the net weight as per Mahazar, but the column heading shown therein reads "Gross to difference according to Packing List". A perusal of this packing list shows these figures to be Net weight and not Gross weight and therefore there is an error in giving the heading. A quick perusal of this compilation shows that a comparison of net weight as per Mahazar and the packing list does tally, except for small differences in few cases. A mistake in making in labeling the column heading and a quick comparison by the Advocate, cannot be a ground to reject the same. Therefore, we cannot agree with the findings of the learned Adjudicator, "they should tally at least in some cases." As they do tally in most of the cases. We cannot find the variations observed to cause a belief and be a ground to dismiss the procurement of the seized goods to be not covered by the B.E., invoices and documents produced.
(v) We have considered that the Adjudicator has relied upon the findings -
(1) That duty and taxes on imported silk works out to more than 40% and leaves a margin of about 100% to attract smuggling of the yarn.
(2) Modus Operandi adopted for smuggling yarn is to get hold of a set of import documents and use to same as legal acquisition documents for several consignments smuggled illicitly brought into India.
(3) Therefore the Bills of Entry for clearance of yarn in Feb 99 at Bombay Port do not relate to the consignment detained in Sep 99. Silk yarn being in great demand in Indian Market, amenable to less wastage is, fast moving item giving qualitatively superior fabrics.
These reasons arrived at by the Adjudicator are assumptions and presumptions and disregard the fact, the Silk Yarn could be and is being imported for trading purposes, as in this case. A quantity of 253 bales have been received in the first week of September 1999, out of them 100 bales could be sold/transacted only on 17.9.99 and 20.9.99 out of which 66 bales were found in the Godown of A-2, unsold on 20.9.99 when the officers visited these premises. This is itself cannot establish the fact that the same document is being used again and again for illicitly obtained/smuggled goods. This coupled with the immediate clarification of A-1 & A-2's brother, about the goods being covered by the commercial documents in course of normal trade for which payments were made by cheques, etc. to the importer, lead us to conclude that the findings are arrived on an assumption and are presumptive. Especially when the importer has not been questioned, as no evidence of his is on record. We therefore reject these arguments for being reasons to confiscate the goods under seizure.
(vi) We have considered the findings of an alleged contradiction in the statements of A-1, A-2 & one Hukamchand, arrived at in para 42 of the order. We find that the statements are not in conflict, it is only the interpretation being given which is causing the trouble. A perusal of the invoices shows that they are addressed to Hukamchand, Anandanappa Lane, Bangalore and bear the signature of receipt, the quantity is 100 bales on four invoices. Only 66 bales have been found and seized and there is no finding about the remainder Hukamchand, Bechan Mishra (A-2), his brother A. Mishra who was found in the premises and produced the documents at the time of seizure, or A-1 have not been questioned on this aspect. Therefore, the case being made out that Hukamchand was a broker and the Mishra brothers were storing the goods belonging to A-1, appears to us to be the reasonable explanation of the alleged contradiction. The findings of the Adjudicator do not appeal to us.
(vii) In view of what we find herein, when we find that Silk Yarn is regularly being imported, it is not covered by Section 123 of the Customs Act, 1962 and the onus was on the department to prove its duty evaded illicit import which is not established. The enquiries have not been made with the importers we cannot find any reason to conclude as in the manner the Adjudicator has concluded, and came to support his findings.
(viii) In the case of M/s Kanungo & Co. (1974 Dec. Cen-Cus 10 SC) the Hon'ble Supreme Court has held-
".....what the impugned order does is that it refers to the evidence on the record which militates against the version of the appellants and then states that the appellants had not been able to meet the inferences arising thereon. In our opinion the High Court was right in holding that the burden of proof had shifted on the appellants after the Customs authorities had informed the appellants of the results of the enquiries and the investigation...."
In the facts of this case, we find that there is no evidence on record that militates against the version of the appellants. The appellants have more than adequately discharged the burden if any, that had shifted on them by the Show Cause Notice. The impugned, order based on assumptions and inferences, we find no reasons to uphold. The confiscation and the penalties imposed are required to be set aside.
(d) We find that with a liberal Import Control Regime, the summary of Justice K.T. Desai of the Bombay High Court, relating to gold as an article of trade in this country in context of the shifting of onus its not of smuggled nature (recorded by him in the case of M.G. Abrol Vs Amichand (19580 62 Bam L.R 1043 would be very relevant especially following -
".......It is precisely the difficulty experienced by the Customs Officers with the whole machinery of Government at their disposal in proving that the gold has been smuggled which in itself made a reason for throwing the burden upon the citizens to establish that the gold was not smuggled.....Gold as such has no earmark. It is impossible to identify gold in the possession of a person with the gold mentioned in the Bill of Entry of any importer of gold....Gold has been imported through countries into this country and it is virtually impossible for a person to establish that any particular quantity of gold in possession was the gold not smuggled in the country at a particular time without resort to smuggling....."
In that case, the appeal preferred by the Customs Authorities, however was dismissed on the ground that even if Section 178A was valied as held by the court previously, its terms were bot attracted to the particular case because of non-fulfillment of an essential requisite for its application (see para 13 of CC Madras Vs N. Sampath Chetty & Other 1983 ECR 2198D SC). This summary, would be applicable to all such goods, now being freely or almost freely being allowed to be imported on payment of duty as far as Import trade Control & Licensing law is concerned and are not covered by Section 123 of the Customs Act, 1962.
(e) We have considered the decisions relied upon by the Adjudicator viz. -
(i) Rajendra Prabhu 1997 (96) ELT 412 where initial statements volunteering wrong information is not applicable in this case since there is no initial misleading statement, the claim and presentation of the Import documents, invoices, etc. was almost spontaneous and the documents are not enquired in to from the importers at Varanasi and Banks.
(ii) There can be no doubt about that, if statement recorded by Customs Officer are found to be voluntary, they are admissible evidence. The statements are voluntary, except of A-1 dt 8-12-99 which was retracted, immediately by letter dt 9-12-99 and which has not been denied to have been recorded up to the late hours of 8.30 p.m. by the denied of retraction letter dt. 15-12-99 of the Dy. Director, DRI. The delay of 5/6 days mentioned in this rejection letter of DRI has been explained as postal delay it being written on 9-12-99 and posted on 10-12-99. There is therefore no delay in the retraction. We follow the S.C. decision relied upon by the Adjudicator and rely on the other statements prior to and subsequent to this statement dt 9-12-99; we do not accept, therefore statement dt 9.12.99, to be voluntary, therefore admissible. We respectfully follow the same Supreme Court decisions as relied upon by the Adjudicator i.e. 1999 (110) ELT 379 SC), 1999 (110) ELT 324 SC, 1999 (110) ELT 406 SC & 1997 (96) ELT 211 SC to find that the adjudicators reliance on statement dt 9-12-99 is not supported by these decisions.
(iii) the case of 2000 (116) ELT 153 (T) as recorded by the learned Adjudicator, concerns Silver, a commodity which was covered for same time under Section 123 of the Customs Act and also specified goods under chapter IV B of Customs Act 1962 requiring specific control systems as an article prone to smuggling. Seizure of Silver therefore cannot be equated with seizure of Silk Yarn, which was never covered under Section 123 of the Customs Act or and Chapter IV A or IV B of the said Act, as article prone to smuggling. In this Silver case, the Adjudicator has recorded that 'no documents showing legal purchase/acquisition were produced. While in the case impugned before us, the documents of import have been produced, they tally, legal Acquisition documents from the importer till the transfer to the Godown from where the 66 bales have been seized were produced. But they have not been proved to be bogus or forged. The importers have not been questioned even after the Transport Company Manager having admitted admits to such a Transport from Importers at Varanasi to M/s Rajadhani at Bangalore; Only on a ground of an error on recording a S.No on the invoice at the Sale Tax Check point the documents are being ignored. No enquiries are made from Banks regarding the receipt/remittance for the goods, nor any efforts made to call for and check the sale invoices of not only the subject goods, but other part of the very same consignment which were brought to the notice of the enquiry officers. We therefore find that the equating the case of seizure of Silver without purchase document s with seizure of Silk Yarn and non verification of acquisition documents cannot be made.
(iv) We agree that reliance on 1999 (109) ELT 247 & 1999 (112) ELT 1058 for 'admitted facts' not to be proved is validly held by the Adjudicator, but he is not admitting the facts so admitted.
(v) The appellants have relied upon many case-law to contest the confiscation and the liability of penalty. We find the High Court and the Tribunal have held in may cases that the onus rests with the department and they should prove the illicit import and the smuggled nature of the goods. We need not deal with all those cases except look at the very latest case as reported, are relied upon by us also, to find that no case for confiscation and penalty is made out by the department. They are (2000 (124) ELT 133 (All) wherein it was found that there was no other evidence than the petitioners statement to show foreign origin of the goods as in this case. 2000 (128) ELT 519 (T) Ganesh Pd. Aggarwal's case the tribunal did not uphold the seizure and confiscation arrived at, based on opinion of local traders & experts and found that there was nothing to show the foreign origin. In the present case, but for the statement of A-1, A-2 & his brother that goods are covered by the Bills of Entry, there is no independence evidence from any one much less experts, of the good to be of foreign origin. Therefore, confiscation cannot be upheld. In the case, 2000 (124) ELT 482 (T) Ramesh Kumar Sharma where the Tribunal held that once Baggage Duty Receipts were produced, onus passes on the department to verify the same from the importer, which in this case has not been done.the B.E. duty payments should ave been verified. Im 2000 (123) ELT 1054 (T), reliance on Sole Retracted Statement was not approved, as in this case reliance on A-1 statement dt. 9-12-1999. In 2000 (123) ELT 730 (T), relying on an earlier case of Hindustan Boring Corporation (1999 (50) ELT 91) and the fact no efforts were made to locate the source of the seized goods it was held would be fatal for the confiscation. In this case also, besides disproving the crossing of the Sales Tax Check Post, no efforts are made to enquire about the source otherwise, than receipt from Varanasi. In this view of the matter, relying only on these decisions, the impugned order could be set aside and appeals allowed.
3. In view of our findings, the order is set aside and appeals allowed with consequential benefits as prayed as per Supreme Court decision in case of Northern Plastics 1999 (sic) ELT 3 (SC).
(Pronounced in the court on 12/4/2001)