Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Customs (Preventive) vs Shri Shailesh N.C. Shah, Shri N.D. ... on 30 August, 2007
Equivalent citations: 2007(122)ECC84, 2007(148)ECR84(TRI.-MUMBAI), 2007(218)ELT377(TRI-MUMBAI)
ORDER T. Anjaneyulu, Member (J)
1. Heard both sides.
2. The Revenue has filed all the three appeals against the Order-in-Appeal No. 69/2005 TS (M&P) dated 26.08.2005 passed by the Commissioner of Customs (Appeals) Mumbai who has set aside the confiscation order of foreign origin ball bearings and the penalties imposed on the respondents. The facts that lead to in filing the afore-said appeals may be summed up as follows:
3. On the basis of specific information, the officers of SGP II Unit kept a discreet watch and intercepted two hand carts loaded with 20 bundles and 3 bundles of ball bearings of foreign origin respectively. There were no legitimate Customs duty paying documents or any other document available with the handcart puller. The handcart puller lead the officers to the godown from where the ball bearings were loaded on their hand carts. The said godown was inspected and found 99 similar bundles of ball bearing of foreign origin. The manager / supervisor of the godown Shri Hiten M. Metha was asked for the legitimate customs duty paying documents, however, he could not produce any documents and also he could not disclose the names of the owners of these ball bearing. As there were no documents evidencing payment of Customs duty documents or any other documents available, the entire ball bearings of foreign origin, of assorted sizes, packed in 122 bundles (including the 23 bundles off loaded from the hand cart), having a market value of Rs. 18,02,500/- were seized under panchanama dated 31.07.2004.
4. During the course of investigation statements of Shri Hiten Maheshbhai Mehta, Manager (Supervisor) of M/s. Jay Bhavani Transport Service, Godown No. 3, Hussien Bhai Mansion, Sardar V.P. Road, Null Bazar, Mumbai - 400 003 were recorded under Section 108 of the Custom Act, 1962 on 31.07.2004, 4.8.2004 and 5.8.2004. He failed to produce documents in the form of Bill of Entry or other documents in respect of 23 bundles which were intercepted from handcarts. On search of godown 99 more such bundles of ball bearings of foreign origin were found, for which no documents were produced. Consequently they were seized under panchanama dated 31.7.2004.
5. The statement of Shri. Shailesh Navin Chandra Shah, Proprietor of M.R. Corporation was also recorded under Section 108 of the Customs Act, 1962, who in turn claimed the ownership of 98 bundles of HCH brand ball bearings. Whereas Shri. Nilesh Hemani, Director of M/s. Chunilal Prabhudas & Co. (Bombay) Pvt. Ltd. claimed ownership of the balance 24 bundles. The investigation disclose that the seized goods totally valued at Rs. 18,02,500/- has been illegally imported into India in contravention of provisions of the Customs Act, 1962. A show cause notice dated 28.01.2005 was issued proposing confiscation of the seized goods and imposition of penalty. On due adjudication the seized goods valued at Rs. 18,02,500/- recovered from two handcarts and from the godown were confiscated while imposing penalty of Rs. 3,00,000/- on Shri. Shailesh Navin Chandra Shah, Rs. 2,00,000/- on Shri. N.D. Hemani and Rs. 20,000/-on Shri. H.M. Mehta.
6. The respondents challenged the said O-in-O in appeal before the ld. Commissioner of Customs (Appeals), Mumbai. The appeals were allowed vide the common impugned order-in-appeal, wherein it was held that admittedly the seized goods were not notified under Section 123 of the Act, and therefore the burden to establish that such ball bearings were smuggled into India is on the department. The department has failed to produce even n single piece of evidence to discharge the burden placed on them, and on the contrary vain efforts were made to reject the evidence produced by the respondents. Department cannot confiscate the goods on mere presumptions and they have to investigate and produce evidence to show that it was smuggled into India. The department has not made any investigation at all The ld. CC (Appeals) further found that -
(a) Regarding Shailesh Navinchandra Shah:
(i) The Revenue failed to falsify the evidence towards licit importation such as Bill of Entry, produced by the respondent. Moreover, the size of Ball Bearings was found substantially tallying with the import documents showing duty payment, submitted by the respondent.
(ii) Challan submitted for evidencing transportation has to be accepted unless it is proved to be fictitious and fabricated.
(iii) Octroi receipt is not relevant to prove the legal import of goods.
(iv) Requirement of fixing MRP sticker alongwith other details of the goods prior to clearance from Customs authorities as per Notification 44 (RE-2000) dated 24.11.2000 was not applicable after clearance of the goods for transportation within Indian Territory, moreover when the same were cleared from possession of DRI and a letter submitted to DRI in this regard, despite having been placed on record by the respondent, was rejected by the Department without verification from DRI.
(v) Subsequent to release of ball bearings by DRI, it can not be seized and confiscated by the M&P wing of the Customs saying that condition of notifications were not followed.
(vi) The original authority despite faithfully re-producing the ratio of several judgments in favour of the respondent, ignored the same without assigning any reasons, and proceeded to apply some judgments without establishing the facts of those cases which were out of context.
7. Aggrieved by the above said order, Revenue has filed these appeals. The Revenue has raised following contentions that the Commissioner (Appeals) has not appreciated the fact that the payment of octroi charges is mandatory for goods crossing and entering Mumbai Muncipal limit through any of the check post and there was no such evidence to show transportation of goods from Bhiwandi to Null Bazar. Since MRP stickers were not found on the bundles of ball bearing packages seized on 31.07.2004, it proved that the seized goods were different than those bearings cleared under B/E submitted by the respondents. The evidence submitted by respondent were fabricated documents. It was not necessary to verify the facts from DRI as DRI is not part of Marine & Preventive Organisation. Whereas, the condition put up by DRI to affix 'Made in China' on each piece of ball bearing, was discussed in letter dated 08.03.2004 submitted by the respondent, in seized bundles bearing Sr. No. 93 to 100 'URB' brand bearing of Romania origin were found. Moreover, there was no documentary evidence that the DRI released the goods without this condition. Hence it was evident that the goods seized by M&P Wing were different from those seized and released by DRI. The ld. Commissioner of Customs (Appeals), therefore wrongly relied upon the fabricated evidence produced by the respondent. In the appeal the Revenue seeks to impress that the O-in-O was legal and proper whereas the O-in-A is illegal and improper. It also placed reliance on following decisions:
a. Collector of Customs v. D. Bhoormal 1982 (13) ELT 1546 (SC). b. Kanungo & Co. v. CC (Calcutta) .
8. After hearing the ld. D.R. and the ld. Advocates for the respondents and after considering the submissions and material, it is found there is no dispute on the fact that the Revenue has not produced even single positive evidence to show smuggled nature of the admittedly non-notified goods. On non-notified goods, the contention of the Revenue, that it is for the appellant to produce the duty discharge non-smuggled nature of the goods cannot be upheld, even on reading of Section 106 of the Evidence Act, in view of five member bench decision in the case of Amba Lal v. Union of India D.S.C. wherein the larger bench of the Apex Court had held-
8. We cannot also accept the contention that by reason of the provision of Section 106 of the Evidence Act, the onus lies on the appellant to prove that he bought the said items of goods into India in 1947. Section 106 of the Evidence Act in turn does not apply to a proceeding under the said Act. But it may be assumed that the principle underlying the said section of universal application. Under that section, when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him. This came in Shanbhu Nath Mehra v. State of Ajmer 1956 S.C.R. 199 after considering the earlier Privy Council decision in the interpretation of Section 106 of the Evidence Act observed at Page 204 (of S.C.R.) thus-
The Section cannot be used to undermine the well established rule of law that save in a very exceptional class of cases, the burden is on the production and never shifts of Section 106 of the Evidence Act is applied, then by availing of the fundamental principles of criminal jurisprudence must equally be involved. If so, it follows that the onus to prove the case against the appellant is on the Custom authorities and they failed to discharge the same.
Applying the above finding, in the facts herein, it has to be held that the burden is on the Customs Department to prove the case and establish, at least, the existence of a chain to apply the "every link of chain not required to be proved" as held in D. Bhoormal's case. The Revenue cannot shift the burden cast on them. The judgment of Hon'ble Supreme Court in D. Bhoormal's case is infact in favour of the Respondents. The judgment in the Kanungo's case was given in the facts of the said case, which was pertaining to notified goods, and is not applicable in the facts of the instant case. The non-notified goods in the facts of this case have been correctly held to be not liable to confiscation.
9. In my opinion the statements of Shailesh N. Shah and Nilesh Hemani, regarding legal importation of the goods, can not be brushed aside, when the department has failed to produce a shred of even presumptive material to prove illegal importation of the seized goods. Mere absence of the octroi receipt or MRP stickers cannot ipso facto lead to a conclusion that the goods are smuggled and non-duty paid. No merits are found in the present appeals filed on facts as well as law.
10. If the contentions made in the appeals are held as correct, and even in non notified goods the respondents are compelled to prove that the goods are not smuggled, than the Section 123 of the Act, would be rendered meaningless. It is settled law that such an interpretation which renders any statutory provision meaningless shall be avoided. The Revenue has miserably failed to discharge the burden cast upon it, and have sought to shift the burden by alleging inconsistency in statement of the respondents, and the documents produced by them. Such a course is not available to the Revenue.
11. In the matter CC (Prev), Mumbai v. Shri Ganesh Enterprises , the Revenue relied on evidence suggesting discrepancies in bills of entry regarding wrong description or incorrect country or origin, however the Hon'ble Bombay High Court upheld the Tribunal's view that the Revenue having failed to produce any evidence to prove illegal entry into the country, has not discharged the burden cast upon it. Therefore reliance placed on the decisions in the matters 'Swiss Gallery v. Commissioner of Customs (Preventive), Mumbai' Joitkumar B. Jain v. Commissioner of Customs (Preventive), Mumbai; CC, Mumbai v. Shri. R. Ramalingam and Ors and Nazir-ur Rahman and Ors. v. CC, Airport, Mumbai, is of no avail to the Revenue. Infact in the instant case the Revenue has failed to even investigate into the relevant aspect and have chosen not to make any inquiry regarding the truth in the statements of the respondent, as to whether the goods were part of the consignment released by DRI, and whether the description of the bearing number was incomplete for want of typing space. The revenue can not first show laxity in the investigations and than seek to shift the burden on the notice to prove that the goods are not smuggled, especially when there is not even any 'presumptive evidence' produced to show illegal importation of the non-notified goods, and suggesting their non-duty paid nature. There is no evidence to show or even to presume as to when and which customs barrier was breached, to illegally import the seizsd goods. The confiscation was rightly set aside by the ld. Commissioner of Customs (Appeals). In such circumstances, question of imposing any fine in respect of goods or penalty on any of the respondents does not arise.
12. Morever, the guidelines issued by the Central Board of Excise and Customs, way back on 14.12.1965 vide Circular No. 04/149/65 - Cus-III, which still holds good, regarding 'principles governing onus of proof in town seizure and change in the method of investigation', also clearly suggest that the evidence to justify an inference of smuggling should be one which is relevant for proving the unauthorized importation of the goods and not unauthorized possession of the goods. No such evidence is forthcoming. On the contrary the respondents have produced evidence of licit imports. It appears that the investigation agency has not at all followed the guidelines framed by the Board, which are binding upon them.
13. I do not find any infirmity in the impugned order and the same is legal and proper. Consequently, the three appeals are to be ordered to be dismissed.
14. Ordered accordingly.
(Pronounced in Court on 30.8.2007)