Custom, Excise & Service Tax Tribunal
Neeta Prakash Modi vs Mumbai on 31 January, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/751/2008
[Arising out of Order-in-Original No: CCP/ADJ/SR/05/2008 dated 31/03/2008 passed by the Commissioner of Customs (Preventive), Mumbai.]
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri P.R. Chandrasekharan, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Neeta Prakash Modi
Appellant
Vs
Commissioner of Customs (Preventive)
Mumbai
Respondent
Appearance:
Shri Vishal Agarwal, Advocate for the appellant Shri Navneet, Additional Commissioner (AR) for the respondent CORAM:
Honble Shri Ashok Jindal, Member (Judicial) Honble Shri P.R. Chandrasekharan, Member (Technical) Date of hearing: 31/01/2012 Date of decision: 14/02/2012 ORDER NO: ____________________________ Per: Ashok Jindal:
Heard as per the directions of the honble High Court of Bombay in Customs Appeal No. 86 of 2010 dated 06/01/2011.
2. The honble High Court has observed as under:
3 In the present case, the Tribunal has set aside the confiscation order passed by the Commissioner, by recording a finding in paragraph 6 to the effect that the assessee had produced purchase vouchers in relation to the diamonds in question, but the Commissioner has failed to verify the genuineness of those vouchers. However, perusal of paragraph Nos.36 & 37 of the order in original clearly shows that the Commissioner had in fact considered the materials placed before him and also recorded a finding on those materials. Since the order of the Tribunal is contrary to the facts on record, the order of the CESTAT is quashed and set aside and the matter is remanded back to the Tribunal for denovo consideration.
3. The facts of the case are as under:
3.1. Neeta Prakash Modi - the appellant has filed this appeal against the order confirming absolute confiscation of diamonds weighing 154.04 carets under Section 111(o) of the Customs Act, 1962. The appellants deceased husband Shri Prakash J. Modi was engaged in the business of the purchase and sale of cut and polished diamonds in the name and style of M/s. Koshin Gems as a sole proprietor. The said proprietary firm was registered with the Sales Tax department. It was also allotted RBI code and Import Export code. The appellant submits that the firm did not deal in rough diamonds. The firm was maintaining their books of accounts and having supporting bills / vouchers and documents with regard to their activities. The case of the department against Shri Prakash J Modi is that he had smuggled diamonds into India and it is these smuggled diamonds that were seized from him on 18.01.1991 in the office premises of M/s. Yogey Diamonds. Show-cause notice was issued and the seized diamonds were absolutely confiscated and penalty was imposed. Aggrieved by the said order, Shri Prakash J Modi challenged before this Tribunal and this Tribunal remanded the matter for fresh adjudication. In remand, the Commissioner of Customs again confirmed absolute confiscation of diamonds but penalty was dropped as Shri Prakash J Modi died during the course of proceedings. Smt. Neeta Prakash Modi, wife of deceased Shri Prakash J Modi filed this appeal before us.
4. Shri Vishal Agarwal, advocate/learned counsel appeared on behalf of the appellant and submitted that the absolute confiscation of the seized diamonds is illegal and without any basis of law. He further submitted that diamonds were purchased by Shri Prakash Modi were bona fide purchases. He further submitted that at the time of seizure, Shri Prakash Modi retracted inculpatory statements within a weeks period of time and also filed copies of purchase documents and application of sales tax registration, Import and Export Code No., RBI Code No., before issuance of the show cause notice itself. He today also produced before us the purchase register along with purchase vouchers in original. It is the contention of the appellant that, at the time of seizure of the impugned diamonds, Shri Prakash Modi produced all the relevant documents and no investigation has been conducted by the department at that relevant time. If those documents were not acceptable to the department then the genuiness of the documents should have been objected. Therefore, the appellant has been able to prove bona fide purchase. If Revenue has any contrary view about the genuiness of the documents, same could have been controverted at the time of investigation itself but the same has not been done. He further submitted that the observation of the adjudicating authority in the impugned order in paragraph 36 and 37 are factually incorrect as it has been recorded in the paragraphs that the document of purchases, i.e., statement in the purchase register/ vouchers were produced for the first time only at the time of hearing on 19/02/2008 which is contrary to the findings of the Tribunal in the earlier round of litigation vide order No. E/501/CSTB/2007 dated 06/07/2007. It is the burden of the Revenue to prove illicit purchase and Revenue has failed to establish that the impugned diamonds are smuggled one. Therefore, the impugned order has to be set aside. He further submitted that the impugned diamonds are non-notified goods and the burden of proof of illicit purchase is on the Revenue as held by the honble High Court of Bombay in the case of Commissioner of Customs, Mumbai vs. Foto Centre Trading Co. 2008 (225) ELT 193 (Bom.).
5. On the other hand, the learned DR submitted that the appellant himself has admitted, during the course of seizure, that he was involved in the smuggling of the seized diamonds. Moreover, the statements of Shri Prakash Modi was corroborated by the other co-noticees, whose statements were also recorded at the time of seizure. Further, the purchase vouchers were not provided at the time of seizure and the same were showing only the name of the person from whom the diamonds were procured but, address and identification marks were not given. Therefore, investigation could not be done to that effect. In view of these facts, diamonds are liable for absolute confiscation and were to be upheld.
6. We have considered the submissions of both the sides and further observed that the matter was heard by this Tribunal and the appeal was allowed vide order No. A/128/10/CSTB/C-II dated 11/03/2010. At that point of time, this Tribunal has heard the matter in detail but inadvertently the findings with regard to paragraphs 36 and 37 of the impugned order were omitted to be recorded in the order. Therefore, we are considering the issue afresh.
7. We find that in the earlier round of litigation this Tribunal remanded the matter on 06/09/2007 with an observation which is reproduced herein below:
2. At the outset, we note that diamonds are not notified items under Section 123 of the Customs Act, 1962 and hence the burden lies upon the Revenue to establish that they were smuggled goods. From the Commissioners order we find that the burden has been sought to be discharged by reliance upon the statement of Mr. Prakash Modi who had admitted that the diamonds were smuggled. However, the statement was retracted within a period of one week, i.e. on 25.1.1991, and further the record shows that Mr. Prakash Modi had taken the stand that all the diamonds were accounted for in the books of account of the firm of M/s. Koshin Gems and the books of account had been filed with the sales tax authorities on 9.1.1991, along with application for registration and Mr. Prakash Modi had also taken the plea in the reply to the show cause notice that all the diamonds seized were duly accounted for. He had also produced payment receipts showing payment for the diamonds. These documents have not been analysed or commented upon by the Commissioner in the impugned order. Therefore, it is not possible for us to give a finding as to whether the purchases were really bona fide or not and this finding is required to be recorded by the adjudicating authority. We, therefore, set aside the impugned order and remit the case to the jurisdictional Commissioner to record a specific finding, on the basis of the documents produced by the appellant, as to whether the purchases of diamonds seized from Mr. Prakash Modi on 18.1.1991 were bona fide or not. Fresh orders are to be passed after extending a reasonable opportunity of hearing to Mrs. Neeta P. Modi. Since this is a sixteen-year old case, we direct that the proceedings be completed by the Commissioner within a period of three months from the date of receipt of this order.
8. On perusal of the above said order, we find that it was recorded by this Tribunal that Shri Prakash Modi has taken the plea, in reply to the show cause notice that all diamonds seized were duly accounted for. He also produced the payment receipts showing payments for diamonds and these documents had not been analysed or commented upon by the Commissioner in the impugned order. From the text of above order of this Tribunal dated 06/09/2007, it is clear that Shri Prakash Modi had produced purchase vouchers and purchase registers while replying to the show cause notice and the said contends have not been challenged by the Revenue. Therefore, the same has attained finality. In the remand proceedings in paragraph 36 and 37 of the impugned order the Commissioner has observed as under:
36. It is after lapse of a goods sixteen year after seizure of said diamonds on 18.01.1991, after the unfortunate demise of the Noticee, the legal heir of the Noticee submitted cash vouchers from Sr. No. 1 to 40 bearing name of the seller without their addresses, application in form 1 from M/s. Koshin Gems for registration under Section 22 of the Bombay Sales Tax Act, 1959 along with receipt of said application on 09.01.1991, statement of purchase enclosed with the said application and pages 1 to 11 of purchase register (for the period from 02.01.1990 to 05.11.01990) written in Gujrati with its English translation.
37. I have carefully examined the above said documents. It is seen that the documents i.e. cash vouchers, statement of purchase and pages 1 to 11 of purchase register were first time submitted at the time of hearing on 19.02.2008. I find that the cash vouchers 40 in Nos. were issued by the Noticee himself. The said vouchers were issued to 6 difference persons. It is seen that all the above said vouchers do not have the addresses of the suppliers. It is impossible to verify the genuineness of the said payment vouchers only on the basis of name. All the documents are non verifiable and prepared by the Noticee. The Noticee had ensured not to mention the address of the seller in the said cash vouchers/payment slips so as it could not be verified. At the time of hearing on 19.02.2008, Smt. Neeta P. Modi expressed her inability to provide the addresses of any of said seller as the whole affair was looked after by the Noticee. Further, it is seen that the copy of purchase register submitted during hearing on 19.02.2008 was endorsed by the sales tax officers in the month of Nov.-93 much after the date of seizure. This shows that the said register was submitted to the sales tax authority only to strengthen his claim that the diamonds were duly accounted for in the books of account of M/s. Koshin Gems. The copy of receipt dated 09.01.1991 of application in form-1 of submitted by the Noticee to the sales tax department, have also a number of corrections without any endorsement of receiving officer. It is seen that the Noticee went on claiming at every forum that the seized diamonds were purchased by him legally and duly accounted for, but at the same time, he carefully chose not to submit any verifiable documents. All the time Noticee never submitted any legal purchase documents showing that the seized diamonds were legally acquired by him. The above documents were generated by the Noticee himself. The Noticee has not submitted any documents which were issued by the seller and also at any given point of time, the Noticee did not come forward with the documents which could be verified. He submitted documents which were prepared by himself after the seizure as could be seen from the above discussion. The above discussion lead to the conclusion that the Noticee purposely avoided submission of verifiable documents.
9. On analysing the contents of paragraph 36 and 37 of the impugned order it is a clear cut finding of the Commissioner that the documents have been produced for the first time on 19/02/2008 which is factually incorrect in view of the remand order dated 06/09/2007 of this Tribunal. Therefore, the contents of paragraphs 36 and 37 have no evidential value and cannot be relied upon. Further, we find that the purchase documents have been produced by Shri Prakash Modi in reply to the show cause notice, no effort was made by the adjudicating authority to verify the correctness of the said documents and no enquiry was made from Shri Prakash Modi with regard to documents, which otherwise prove that the adjudicating authority has found those documents as correct. Therefore, the appellant have been able to prove the bona fide purchase of the seized diamonds. Further, except from the statements of the appellant, no other corroborative evidence has been brought out by the Revenue to prove illicit purchase of the seized documents.
10. The charge against the appellant has been confirmed without corroborative evidence that the purchase of the seized diamonds is illicit purchase. As held by this Tribunal in the case of Rang Birangi Sarees (P) Ltd. vs. Commissioner of Customs, Kolkata 2007 (219) ELT 574 (Tri.-Kolkata), that in the event of seizure of non-notified goods burden of poof is on Revenue to prove that there was illegal import and inability of the litigant to produce documents showing legal importation does not ipso facto prove that the goods were smuggled. Same view was confirmed by the honble Calcutta High Court in the case of Commissioner of Customs (Prev.) vs. Raj Kumar Jaiswal 2006 (204) ELT 561 (Cal.) and the honble High Court of Bombay in the case of Foto Centre Trading Co. (supra). The department has failed to prove that the purchase of seized diamonds is illicit without any corroborative evidence. On the other hand, Prakash Modi has been able to prove bona fide purchase by producing the documents discussed above.
11. Therefore, in the facts and circumstances of this case, we hold that the appellant has been able to produce the documents with regard to bona fide purchases of the seized diamonds and the department has failed to discharge their burden to prove that these documents are fabricated and diamonds in question are illicitly purchased. Therefore, benefit of doubt goes in favour of the appellant. Accordingly, we set aside the impugned order and allow the appeal with consequential relief.
(Pronounced in Court on 14/02/2012) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) */as 12