Customs, Excise and Gold Tribunal - Delhi
Kulbhushan Jain vs Commissioner Of Customs on 21 May, 1999
Equivalent citations: 1999ECR955(TRI.-DELHI), 1999(111)ELT906(TRI-DEL)
ORDER
P.C. Jain, Vice President
1. Briefly stated, facts of the case are as follows :-
1.1 Acting allegedly on information, officers of the DRI conducted search of the house A-2/16, Sector 8, Rohini on 25-4-1997 which resulted in no recovery. At the time of search, the appellant was present. He was asked to accompany them to his godown situated in Kanhaya Nagar (Tri Nagar Delhi) on the same day search of the godown, in presence of the two panchas resulted in recovery of 9,029 pieces of ball bearings of Polish origin totally valued at Rs. 9,02,900. Ball bearings were packed in 43 gunny bundles. Since the appellant could not produce any document for legal import/possession of those ball bearings, the same were seized under Section 110 of the Customs Act, 1962 on reasonable belief that the same have been smuggled into India. The appellant was identified by the landlord of the house as the person to whom the premises, from where the aforesaid ball bearings were recovered, had been let out.
2. Statement of the appellant was recorded under Section 108 ibid on 25/26-4-1999. He inter alia stated that -
"He was engaged in the business of purchase and sale of ball bearings, that he did not have any shop of his own; that for storing ball bearings he hired a room/godown in house No. 3914/17, Kanhaya Nagar (Tri Nagar), Delhi-35 8-9 months back at a monthly rent of Rs. 1,000/-; that he had no rent agreement with the land lord.
He also stated that a party of Nepal carries the ball bearings to Delhi and after selling the ball bearings goes back to Nepal. He stated that the ball bearings which were seized by the officers of DRI from the godown at Kanhaya Nagar on 25-4-1997 were all of foreign origin that they were made in Poland as per his memory and that he purchased these ball bearings from one Shri Banwari who had brought them from one Hanuman, Birganj, Nepal; that Banwari used to sell ball bearings of Hanuman who belonged to Birganj, Nepal in Delhi; that he knew that bringing ball bearings of foreign origin from Nepal to India was an illegal act; that Banwari met him in the motor parts market in Kashmiri Gate, Delhi 3-4 months earlier and offered to sell smuggled ball bearings saying that he would earn a lot of profit on the sale of these goods; and that he agreed for the subject goods under seizure for Banwari gave him a transfer bilty for 46 number of packages of ball bearings of foreign origin which were booked from Ludhiana and was told that he should take delivery of that 'bilty' from Patiala Transport Co. Barakhana, Subzi Mandi, Delhi; that he did not remember the date of delivery; that all these ball bearings were FLT 30305 made in Poland and he kept them in his godown at 3914/17, Kanhaya Nagar, Delhi, Shri Kulbhushan Jain stated that Banwari had told him that these ball bearings after being smuggled from Nepal were first sent to Ludhiana by truck so that by taking this route no body will suspect regarding smuggled goods coming to Delhi; that out of 46 packets received by him he had sold 3 packets i.e. 630 pieces of FLT 30305 ball bearings in the retail market; that balance 43 packets have been seized by DRI Officers on 25-4-1997 valued at Rs. 9,02,900; that these ball bearings which were seized from him did not have any valid bills/vouchers for valid imports."
4. Statement of Dharmveer Gupta confirmed letting out the house to the appellant from where ball bearings were recovered. He denied any knowledge about the contents of the packets.
5. In the statement of Kulbhushan Jain recorded on 25/26-4-1997 he had stated that he had taken delivery of smuggled ball bearings from Patiala Transport Company, Barakhana, near Subzi Mandi Chowk, Delhi. The officers of DRI made enquiries to locate the said Patiala Transport Company. It was gathered that no such transport company in the name of Patiala Transport Co. existed in that vicinity. However, one transport company in the name of Patiala Carriers (Regd.) was found existing at G-l/1, Bhargav Lane, Old Sabzi Mandi, Delhi.
6. Statement of Shri Pargat Singh, Manager of Patiala Carriers was recorded under Section 107 ibid in which he stated that in the month of January, 1997, only one consignment consisting of 46 packets were received from Ludhiana on 6-1-1997. Goods receipt (bilty) for the said consignment indicated spare parts and not ball bearings. The Consignment was reportedly delivered to M/s. Rajdhani Expeller, Dayabasti.
7. In further statement recorded on 23-5-1997 under Section 108 ibid in judicial custody (Tihar Jail) the appellant denied any knowledge about the correct name and address of Banwari from whom he was alleged to have purchased the ball bearings.
8. On the basis of above facts and circumstances, it was alleged by Revenue, that the appellant was engaged in purchase, storage and sales of smuggled ball bearings with full knowledge that the said ball bearings were smuggled and that it was illegal to deal with such illegally imported goods.
9. Notice was issued to the appellant to show cause as to why the ball bearings be not confiscated under Section 111(d) ibid, penalty be not imposed under Section 112(b) ibid.
10. In reply, the appellant stated that he purchased ball bearings from a dalal (brocker). Copy of an affidavit dated 27-8-1997 from one Shri Raj Kumar in this regard was submitted. He also submitted that Section 123 ibid is not attracted to ball bearings. It is, therefore, the burden of the Revenue to prove the smuggled character of the goods which has not been discharged by Revenue. Statements dated 25-4-1997 and 26-4-1997 were recorded from the appellant under force, coercion when the appellant was under the custody of the Revenue. The appellant had brought this fact to the notice of the Commissioner of Customs on 28-4-1997 stating that these statements were dictated by the Customs Officers and that the statements were not voluntary. Ball bearings of foreign origin are freely available in Delhi and there is no prohibition on sale and purchase thereof. Same pleas were reiterated before the adjudicating authority citing case laws in support of the various propositions of law.
11. On adjudication, the Additional Commissioner of Customs has absolutely confiscated the ball bearings and has imposed personal penalty of Rs. 1 lakh. The authority has essentially relied on Apex Court's judgment reported in 3 SCR 197, page 833 (Customs Collector v. D. Bhoormal). It is also reported in 1983 (13) E.L.T. 1546. Extensive quotations have been given from the said judgment.
12. The appellant herein did not succeed before the Commissioner (Appeals). On the appellant's plea that the adjudicating authority has not dealt with the affidavit of Raj Kumar, the said Commissioner (Appeals) has dismissed the same as an afterthought. Raj Kumar's name was not mentioned at all at the first stage. On the plea of the statements being retracted and that no reliance can be placed on those statements, lower appellate authority has stated that retraction was not referred to in the statement dated 23-5-1997 recorded in judicial custody. The authority below has, therefore, treated the statement dated 25/26-4-1997 as voluntary.
12.1 Hence this appeal before us.
13. Learned Advocate Shri Vivek Sood submits that merely because the goods are of foreign origin, it does not mean that the goods are smuggled because the goods are freely importable by actual users and their entry into market is not illegal. Being freely available, their sale and purchase without any accounts does not attract the provisions of the Customs Act.
14. As regards reliance on the statement of the appellant, learned Advocate submits that it was taken under threat and coercion. It is apparent from the fact that the appellant brought this fact to the notice of the Commissioner of Customs soon after his release from the custody of the Customs authorities. The said authorities have not denied the retraction from the statement dated 25/26-4-1999. That being the factual position undisputed by the Revenue, it was the duty of the Revenue to prove the smuggled character of the goods by some corroborative evidence. There is an utter lack of the same except the confessional statement.
15. He has also urged that the adjudicating authority has ignored the effect of the affidavit filed by a broker Raj Kumar. Appellate authority has discarded that affidavit by merely stating it to be an afterthought. This is highly improper. It is a settled legal position, submits the learned Advocate, that no affidavit could be ignored without a proper enquiry into the facts deposed therein.
16. The appellant's learned Advocate has assailed the finding of the lower appellate authority to the effect that retraction statement dated 28-4-1997 was incorrect inasmuch as there was no reference to it in his subsequent statement dated 23-5-1997 recorded in judicial custody. He submits that a statement is recorded in narrative form to the question put by the departmental officer. Since no question was put by the officer of Customs recording his statement, the appellant had no occasion to deny or confirm retraction. No inference adverse to the appellant can be drawn from the said statement.
17. Learned JDR Shri S. Srivastava, on the other hand, reiterates the findings of the lower authorities as already set out.
18. We have carefully considered the pleas advanced from both sides. We find substantial force in the pleas of the learned Advocate that the goods being merely of foreign origin could not be considered to be smuggled goods when the goods are freely importable by Actual users. There is no restriction on purchase and sale of the goods under the Customs Act. It was not, therefore, necessary that the appellant should have kept the accounts of purchase and sale. Absence of these accounts is no doubt a circumstance against the appellant, but the inference of smuggled character of the goods on that circumstance alone is not sufficient to hold that the goods are smuggled. We also observe that the appellant produced an affidavit of one broker, Raj Kumar but one authority did not discuss it at all and the lower appellate authority has dismissed that affidavit by holding the contents therein as an afterthought on the ground that Raj Kumar's name was not disclosed by the appellant in his first statement dated 25/26-4-1997. It may be that it is an afterthought if we look at it in the light of statement dated 25/26-4-1997 but the said affidavit could not be rejected by the authorities below without making an enquiry from Raj Kumar. This is a clear failure on the part of the lower authorities. If the authorities had desired to make an enquiry from Raj Kumar and he had not come forward to depose or stand cross-examination by departmental officer, then the authorities could rightly reject the affidavit of Raj Kumar. To reject the affidavit at threshold on the superficial finding of afterthought is neither legal nor fair.
18.1 Learned JDR's submission is that the affidavit does not inspire confidence. This finding has not been made by the lower authorities. Such a submission could not be made at this stage.
18.2 Even if we ignore the affidavit of Raj Kumar, we are of the view that evidence is not adequate enough to hold that the goods are smuggled, as already found. Goods are not liable to be confiscated nor is the appellant liable to be visited upon with a penalty.
19. In view of the above discussion, we set aside the impugned order and allow the appeal with consequential relief to the appellant.
20. Both sides have relied on some precedent judgments to fortify the various contentions made by either side or in rebuttal of the contention made by the opposite side. We do not consider it necessary to discuss those cases which are peculiar in their facts and circumstances. Controversy regarding the admissibility of the statement dated 25/26-4-1997, in the face of the retraction dated 28-4-1997, is not very material in the approach we have taken in arriving at our finding regarding lack of evidence about the smuggled character of the goods.