Custom, Excise & Service Tax Tribunal
(1) Shri Umeshwar Prasad vs Commissioner Of Central Excise & S. Tax, ... on 18 December, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No. C/109-113/2011
(Arising out of Order-in-Original No. 177-181/PAT/Cus/Appeal/2010 dated 16.12.2010 passed by the Commissioner of (Appeals), Customs & Central Excise, Patna.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI H.K.THAKUR, 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?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
(1) Shri Umeshwar Prasad
(2) Shri Krishna Prasasd Sarraf
(3) Shri Sanjay Kr. Patel
(4) Shri Vijay Kr. Bajaj
(5) Shri Manish Kumar
Applicant (s)/Appellant (s)
Vs.
Commissioner of Central Excise & S. Tax, Patna
Respondent (s)
Appearance:
Shri N. K. Choudhary, Advocate for the appellant (s) Shri S. Nath, AC, (AR) for the Revenue (s) CORAM:
Honble Shri H.K.Thakur, Member(Technical) Date of Hearing/Decision: 18.12.2015 Date of Pronouncement: 18.12.2015 ORDER No. FO/A/75829-75833/2015 Per Shri H.K.Thakur These appeals have been filed by the appellants against OIA No. 177-181/PAT/CUS/Appeal/2010 dt 16/12/2010 passed by Commissioner of Customs & Central Excise (Appeals), Patna as first appellate authority.
2. Sh. N.K. Choudhary (Advocate) appearing on behalf of the appellant argued that on 5/9/2008 a quantity of 2458 bags (86030 Kgs) of paddy & 287 bags (14150 Kgs) of rice of India origin were found by the department stored in a godown owned by appellant Sh. Vijay Kumar Bajaj of Village Bhelahi, Palnwa, East Champran situated very close to Indo Nepal Border. The godown was rented out to the other appellant Sh. Sanjay Kumar Patel for temporary storage of Rice/Paddy. That some bill books sale Registers, Road permits (Form D-VIII) etc were also recovered, alongwith certain documents, showing transportation of similar good in the past from India to Nepal on tractors bearing Nepal Registrations and also showing names of Rice Mills situated in Nepal. That in his statement Sh. Vijay Kumar Bajaj stated that these goods stored in the godown were meant to be taken to Nepal as was being done in the past. That Sh. Vijay Kumar Bajaj in his subsequent statement made it clear that his first statement was made on the basis of hearsay.
2.1 That on 7/9/08 another godown, 100 meters away from the above godown, was found from the scrutiny of documents & DRI officers on 21/9/2008 seized 2510 bags from this second godown belonging to Sh. Krishna Prasad Sarraf given to Sh. Umeshwar Prasad Jaiswal. That the keys of the godown were provided by Smt Soni Jaiswal wife of Sh. Umeshwar Prasad Jaiswal. That Sh. Krishna Prasad Sarraf also stated that Sh. Umeshwar Prasad was selling the paddy of India origin to Nepal. The Sh. Sanjay Kumar Patel authorized the other appellant Sh. Manish Kumar for claiming the ownership of goods on behalf of Sh. Sanjay Kumar Patel.
2.2 Learned Advocate further argued that the paddy & Rice were seized from godowns situated in India and were not on move towards the International borders and can not be confiscated under Sec 113 of the Customs Act 1962 in view of the following case laws.
(i) Abdus Selam Biswas Vs CC (P), West Bengal, Kolkata [2004 (176) ELT 258 (Tri.-Kolkata)]
(ii) CCP (Prev) Kolkata Vs Md. Abdus Selam [2005 (186) ELT 293 (Tri.-Kolkata)]
(iii) Ajay Gurdamal Rahra Vs CC (P), Mumbai [2002 (147) ELT 943 (Tri.-Mumbai)]
(iv) Asif Hossain Vs I.G. BSF West Bengal [1997 (2) CLJ]
(v) CC (P) West Bengal Vs Kamala Rangan Saha [1990 (05) LCX 0087]
(vi) Sashmiri Vs CC [1991 (00) LCX 0033.] 2.3 After making the bench go through some of the paragraphs of above case laws it was argued by the Learned Advocate of the appellants that goods seized from the godowns can at best be a preparation but can not be said to be an act indicating attempt to export the same out of India. That the same appellate authority when working as Adjudicating Authority, under similar circumstances dropped the case of other appellants under OIO No. 5-CUS/CC/MTH/2009 dt 18/5/2009.
3. Sh. S. Nath AC (AR) on the other hand relied upon the following case laws in support of the argument that intention/preparation to export paddy/Rice in the present proceedings is sufficient to confiscate the goods and impose penalties upon the appellant.
(i) Manilal Bhanabha Patel Vs UOI [1992 (60) ELT 99 (Guj)]
(ii) Zenith Drugs & Alled Agencies Vs CC, Shillong [2003 (160) ELT 600 (Tri.-Kolkata)]
3.1 Learned AR made the bench go through Paras 10, 15, 16 & 18 to 21 of the case law Manilal B. Patel Vs UOI (Supra) to argue that bringing of such huge quantity of paddy/Rice close to the border itself makes the intention of the appellants clear and that as held by Gujarat High Court intention can be inferred from the circumstances of each case. He also made the bench go through Para 1.05, 1.07 & 1.09 of the OIO No. 47-CUS/ADC/DRI/10 dt 28/6/10 to highlight the facts. Learned AR argued that documents retrieved from the Godowns indicated that on earlier accessions also similar goods were sent to Nepal through tractor trolleys to certain Rice Mills of Nepal. That wife of Sh. Umeshwar Prasad Jaiswal, Smt Soni Jaiswal, who provided the keys of the godown during investigations, also stated that the seized goods were meant to be exported to Nepal. That the words dutiable or prohibited existing in Sec 113 (c) of the Customs Act 1962 have been deleted w.e.f14.05.2003,..therefore, any goods brought near the land frontier with intent to export will be liable to confiscation as per law laid down by Gujarat High Court in the case of Manilal B. Patel Vs UOI (Supra).
4. Heard both sides & perused the case records. The issue involved in these appeals is whether Paddy/Rice stored by the appellants in two godowns situated close to the Indo-Nepal border are liable to confiscation under Sec 113 (c) and whether penalty can be imposed upon the appellants under Sec 114 of the Customs Act 1962. Sec 113 (c) of the Customs Act 1962 is thus very relevant and is reproduced below:-
SECTION 113. Confiscation of goods attempted to be improperly exported, etc.- The following export goods shall be liable to confiscation :-
(a)..
(b)..
(c). any goods brought near the land frontier or the coast of India or near any bay, gulf, creek or tidal river for the purpose of being exported from a place other than a land customs station of or a customs port appointed for the loading of such goods; 4.1 It is also observed from the relied upon case laws that the above provision has been interpreted differently by different Court CESTAT Benches, including this bench, in following cases that seizure from the godowns can at best be a preparation and can not be equated with the attempt:-
(i) Abdus selam Biswas Vs CC (P), Kolkata (Supra)
(ii) CC (P) Kolkata Vs Md. Abdus salam S
(iii) Ajay Gurdasmal Rohra Vs CC(P) Mumbai (Supra)
(iv) CC(P) West Bengal Vs Kamala Ranjan Saha (Supra)
(v) Sashmiri Vs CC (Supra) 4.2 At the same time this bench in the case of Zenith Drugs & Allied Agencies Vs CC, Shillong (Supra), relying upon Gujarat High Courts order in the case of Manilal Bhanabhai Patel Vs UOI (Supra) held as follows in Para-15 :-
15.To invoke the provisions of Section 113, it? must be shown that there was an attempt on the part of the noticee to export the prohibited goods through un-authorised manner. Such an attempt implies an act beyond any stage of preparation and towards the commission of offence. When the huge quantity of medicines which are not capable of being consumed in that area and the fact that the appellant, M/s. Sree Ma Drugs does not have proper licence or are not authorised stockist, is indicative of the act of attempt on the part of the appellants to export the same to Bangladesh. Attempt does not mean, as argued by ld. Consultant that the goods should have been in the process of being transported to Bangladesh. The entire evidence has given rise to only one inevitable conclusion that the consignment in question was brought near the border area with an intention to export the same. In terms of provisions of Section 113(c), any dutiable or prohibited goods brought near the land frontier for the purposes of being transported from a place other than land Customs station is liable to confiscation. The use of the words near in the said Section has to be interpreted keeping in view the peculiar facts and circumstances of each case. The Commissioner in his order has observed that the place of seizure in the instant case was within 3 km. from the International Border and the entire Agartala as within 5-6 kms. of Bangladesh Border on two sides. In the case of M/s. Manilal Bhanabhai Patel v. Union of India reported in 1992 (60) E.L.T. 99, it was held that ...............near the land frontier means that if it is brought at some short distance place from the coastal area of the land frontier, say 5-6 kms. from the coast or nearby than it would be near the coastal area or land frontier........... Inasmuch as the goods have been brought to Agartala which is only within 5-6 kms. to Bangladesh and read with the evidences on record, I uphold the views of the adjudicating authority that the goods were meant for illegal export to Bangladesh, the same have been rightly confiscated by the adjudicating authority. 4.3 In view of the above judicial pronouncements each and every case has to be seen separately in the light of the evidences available on record whether the act of the appellants can be categorized as a preparation or the same can be attributed to be an attempt and it can not be said that the same authority adjudicated seizure from a godown differently in another adjudication proceedings.
4.4 First appellate authority while deciding this issue has made following observations:-
The impugned goods were seized from the godown which is situated very close to the boarder. The owner of the goods is not the owner of the godown. The godown has been hired for the purpose of storing the paddy for a limited period. The claimant of the goods is also found to be not a regular business man of the area and his identity as the owner of the goods is also doubtful.
It is a common practice of many persons in that area who smuggle paddy after harvest season from India to Nepal. The people of Champaran district have no requirement of paddy as they all grow the crop themselves to meet their requirement. The small town of Bhelahi Where the godown is located has small production and the quantity of paddy seized from the godown appears disproportionate to the population of the town. Therefore, the huge stock of paddy stored is meant for smuggling across the border to Nepal where there is large demand for rice. Hence, circumstantial evidence goes to prove beyond doubt that the seized paddy are meant for smuggling two Nepal.
The attitude of the Noticees No. 1 to 7 in responding to the summon issued to them at the time of seizure of the goods also shows that they were hesitant to cooperate with the investigating officers, they also gave some contradictory statements which go to prove that their statements were after thought. The documents produced in support of their claim to the seized goods are also fabricated and none appears genuine. 4.5 In the present proceedings there are two statements of Sh. Vijay Kumar Bajaj & Smt Soni Jaiswal that the seized goods were meant for illegal export to Nepal. It is also observed that there are documentary evidences to the effect that on earlier occasions also appellants have illegally exported similar goods to certain Rice Mills in Nepal on tractor trolleys. There are also documentary evidence to that effect collected by investigation during search, as indicated in Para 1.02 of OIO No. 47-CUS/ADC/DRI/10 dt 28/6/2010. Denying the relevance of these documents later on can only be considered as on after though on the part of the appellants. Appellants did not cross examine the persons whose statements were implicating them. There is no reason to brush aside the statement of Smt Soni Jaiswal, wife of Sh. Umeshwar Prasad Jaiswal to the effect that the seized goods were meant for export to Nepal.
4.6 Honable High Court in the case of Manilal Bhanabhai Patel Vs Union of India (Supra) on the issue of attempt to export under Sec 113 (c) of the Customs Act 1962 held as follows in Paras 15,16, & 18 to 20:-
15. In our view this submission has no force. As per Section 113(c) it is not for the authority to establish that petitioner attempted to export the prohibited goods. The authority is required to establish that petitioner brought the goods near coastal area for the purpose of being exported. Therefore, the conditions existing at the time when the goods were brought near coastal area is to be ascertained for arriving at a conclusion whether they were brought near the coastal area for being exported.
16. To overcome the difficulty of establishing the ingredient of attempts to export Section 113(c) is added with a specific object that if the goods were brought near the land frontier or the coast of India for the purpose of being exported from a place other than a customs station the goods shall be liable to confiscation. This provision was added to overcome the difficulty that even if the large quantity of prohibited goods were brought to a small village near the border for the purpose of export, yet it was not possible to hold that there was an attempt to export the said goods illegally. This would be clear from the object and reasons of incorporating Section 113(c). Under the Sea Customs Act, 1878, similar provision was not there. The object and reasons of adding Section 113(c) is as under :-
Item (c) is a new provision under which if any dutiable or prohibited goods are brought near the land frontier or the coast of India for the purpose of being exported from a place other than customs station, the goods shall be liable to confiscation. This new provision is being made because an attempt to export cannot be said to have been made even if large amount of currency is taken to a small village near the border for the purpose of export in payment of smuggled goods. Further considering the provision of sub-section 113(b) and (d) it is apparent that it deals with any goods attempted to be exported while sub-section 113(c) provides for bringing of goods near the land frontier or the coast of India for the purpose of being exported. Hence under sub-section 113(c) there is no question of establishing ingredient of attempt to export. The authority is required to establish that the person has brought dutiable or prohibited goods near the land frontier or coast of India for the purpose of it being exported illegally. If goods are brought near the land frontier or coastal area, whether they were brought for the purpose of being exported would depend upon the intention of the person concerned. That intention can be inferred from the circumstances of the case.
18. Further in these type of cases of smuggling of goods the activity is done in a clandestine or stealthy manner. Therefore, it would be difficult or rather impossible to have direct evidence to establish that goods were brought for the purpose of being illegally exported. Still however, when there is no direct evidence, from the circumstantial evidence a reasonable and probable inference can be drawn from the facts which may emerge on the record. If the inference drawn by the competent authority is probable one or if that of a prudent mans estimate as to the probabilities of the case, this court would have no jurisdiction to interfere with the said findings of fact.
19. Similar type of contention is dealt with by the Supreme Court in the case of Collector of Customs v. D. Bhoormull - A.I.R. 1974 SC 859 = 1983 (13) E.L.T. 1546. In that case while discussing the provisions of Section 167 of the Sea Customs Act, the court also discussed the contention that burden of proof is always on the department and also the jurisdiction of the court under Article 226 of the Constitution of India. The court held that the burden of proving that the goods are smuggled goods, is on the Department. As it is a fundamental rule relating to proof in all criminal proceedings, where there is no statutory provision to the contrary. The court further held that one of the kindred principles is that the prosecution or department is not required to prove its case with mathematical precision to a demonstrable degree, for in all human affairs absolute certainty is a myth. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. With regard to smuggling the Supreme Court held that smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. If he fails to establish or explain those facts, an adverse inference of facts may arise against him. The relevant discussion is as under :
30. It cannot be disputed that in proceedings for imposing penalties under Clause (8) of Section 167, to which Section 178A does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, on universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty is a myth, and as Prof. Brett felicitously puts it - all exactness is a fake. El Dorado of absolute proof being unattainable, the law, accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof; often it is nothing more than a prudent mans estimate as to the probabilities of the case.
31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered - to use the words of Lord Mansfield in Elatch v. Archer (1774) 1 Cowp 63 at p. 65 according to the proof which it was in the power of one side to prove, and in the power of the other to have contradicted. Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden.
32. Smuggling is clandestine conveying of goods to avoid illegal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned, and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person and in the result prove him guilty. As pointed out by Best in Law of Evidence (12th Edn. Article 320, page 291), the presumption of innocence is, no doubt presumption juris: but every days practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property, though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice."
(Emphasis supplied.) The court further held that so long as the Collectors appreciation of the circumstantial evidence before him was not illegal, perverse or devoid of common sense or contrary to rules of natural justice there would be no warrant for disturbing his finding under Article 226.
20. In the present case, as stated above applying the aforesaid tests laid down by the Supreme Court, in our view, it cannot be said that from the circumstances which are narrated above, a prudent man may not on its basis, believe in existence of the facts in issue. Broadly the main circumstances are : (1) the conduct of the petitioner of not claiming the possession of the huge quantity of silver for a period of two months; (2) highly improbable story put up by him that he was taking the silver bars to Navsari but because of breakdown of the truck he brought it at village Tukwada; (3) no documentary evidence produced before the authority to show that it was being transported by a truck and that because of breakdown of the truck, the goods were taken to village Tukwada; (4) he brought the silver bars in jeep car instead of taking to Navsari, and (5) no documentary evidence or any bill was produced before the authority that petitioner was lawfully possessing 2770 kgs. of silver bars. The aforesaid circumstances coupled with the statements of Manibhai Desai and Bhagwanji Desai, in our view leaves no doubt for arriving at a conclusion that the silver bars were kept there for being exported, that is a place other than customs station. In any set of circumstances, it cannot be said that the order passed by the Additional Collector is illegal, perverse or devoid of any sense or contrary to rules of natural justice. 4.7 Further the words dutiable or prohibited existing in Sec-113 (c) have been deleted with effect from 14.05.2003,making the provision applicable to any goods brought near to the land fromties for the purpose of being exported.
4.8 The case law of Asif Hossain Vs IG BSF West Bengal (Supra) relied upon by the appellants is distinguishable on facts. In that case there were no statements clearly implicating the appellants. In the present case before this bench not only there are such statements but also certain documentary evidences which indicate that in past also appellants have indulged into illegal export of paddy to Nepal, therefore, case laws relied upon by the appellants will not help their case.
5. On the basis of the existing evidences in these proceedings the activities of the appellants have to be considered as an attempt to export and not a simple preparation. This bench, therefore, does not find it proper to interfere with the orders passed by the first appellate authority which is based on cogent reasoning.
7. Appeals filed by the appellants are according rejected.
(Operative part of the order was pronounced in the open court.) (H.K. THAKUR) TECHNICAL MEMBER Tushar kumar 17 Appeal No.C/109-113/2011