Customs, Excise and Gold Tribunal - Bangalore
E. Eswara Reddy vs Commissioner Of Customs on 30 January, 2006
ORDER T.K. Jayaraman, Member (T)
1. These appeals arise out of Order-in-Original No. 6/99-Cus., dated 10-9-99 passed by the Commissioner of Customs and Central Excise, Hyderabad - II Commissionerate.
2. The brief facts of the case are as follows.
The officers of Anti-Corruption Bureau, Govt. of Andhra Pradesh seized Foreign Marked Gold (FMG) Biscuits from the bank lockers of the first appellant Shri L. Eswara Reddy and his wife Mrs. L. Vijaya Lakshmi the second appellant on 10-4-1997. However they were handed over to the customs and subsequently, the customs officers seized them on 2-6-1997 under Section 110 of the Customs Act on the reasonable belief that the impugned FMG biscuits were liable for confiscation under Section 111 of the Customs Act. After taking statements of various persons during the course of investigation, Show Cause Notices were issued to the appellants for confiscation of the impugned goods under Section 111(d) and 111(o) of the Customs Act, 1962 read with Section 11 of the Customs Act, 1962 and Section 3(3) of the Foreign Trade (D & R) Act, 1992 and for imposition of penalty under Section 112 read with Section 114A of the Customs Act, 1962 for acquiring and possessing the FMG biscuits which they knew were liable for confiscation under Section 111 of the Customs Act, 1962. The Adjudicating Authority held that the appellants have totally failed to discharge the burden cost on them under Section 123 of the Customs Act to prove that the gold under seizure was not smuggled goods. Hence, he passed the impugned order confiscating the gold valued at Rs. 13.98 lakhs absolutely. Furhter he imposed a penalty of Rs. 2,00,000/- on Shri L. Eswar Reddy and Rs. 50,000/- on Smt. Vijaya Lakhsmi. The appellants have strongly challenged the findings of the Adjudicating Authority. Hence, they have come before this Tribunal for relief.
3. Mr. D.V. Anjaneyulu, learned CA appeared for the appellant and Shri Ganesh Havanur, learned SDR appeared for the Revenue.
4. The learned CA took us through the chronology of events leading to the passing of the impugned order. He said that the first appellant is presently the Zonal Manager of AP States Civil Supplies Corporation Ltd., when the impugned goods were recovered from the bank lockers, Shri Eswar Reddy was working as Manager of the same organization. The proceedings instituted against the appellant by the Anti-Corruption Bureau (ACB) were decided in his favour. In other words, no case could be made against the appellant by the ACB. Since the gold had the foreign markings, they were handed over to the Customs on 2-6-1997. The Department issued Show Cause Notice under Section 124 of the Customs Act on 7-11-1997 but the same was dispatched by speed post only on 28-11-1997 and the Department in the original Show Cause Notice did not invoke Section 123 of the Customs Act. Therefore, they issued a Corrigendum on 1-12-1997. He made the point that the Show Cause Notice is clearly time barred, as the goods were originally seized in April 1997 and the Show Cause Notice has been issued beyond the period of six months. The Corrigendum issued in the present case is not admissible because it changes the character of the notice entirely. As per the Customs Act, the Corrigendum can be issued only for arithmetical errors and it cannot entirely change the character of the original document. He submitted that in cases where the goods are initially seized by the police and later handed over to the Customs authorities Section 123 of the Customs Act is not applicable. He relied on the following case laws.
(i) Naveed Ahmed Khan v. CC, Bangalore -
(ii) Tulsi Das Agarwal v. CC, Kanpur
(iii) Jitendra Pawar v. CC, Raipur
(iv) A.N. Agarwal v. CC, Kanpur
(v) Ram Lubhaya v. CC, New Delhi 2002 (147) E.L.T. 807 (Tri.-Del.)
(vi) Nirmala Mitra v. CC, Patna 2001 (138) E.L.T. 1037 & 1038 (Tri.-Cal.)
5. He also stated that the appellant is a responsible government servant and he cannot be equated with smuggler and he has given the explanation as to how the impugned goods came under his possession. To that extent, he has discharged the burden of proof, even though in terms of the above cited case laws, it is for the department to prove that the goods are smuggled and for the appellant. Further, he said that in view of the time bar as per Section 110(2) of the Customs Act, the goods seized shall be returned to the appellant. He relied on the following case laws.
(a) Dyna Lamps & Glass Works v. CC, Chennai .
(b) Navneet Goswami v. CC, Patna He said that the Adjudicating Authority has not accepted the documentary evidence produced by the appellant to show that the impugned goods were given by the family members. In view of the above submissions, he requested the Bench to allow the appeals.
6. The learned SDR took us through the adjudication order and urged that the appellants were not in a position to account for all the gold seized from them. He said that in respect of 14 biscuits, 4 dollars and one biscuit piece weighing 350.50 grams, there is absolutely no explanation from any of the concerned person. He also said that the Show Cause Notice has been issued in time because the relevant date should be the date on which the goods were seized from the Customs and not the date on which the ACB seized them. In the present case, the Customs seized the goods on 2-6-97 and the Show Cause Notice was issued on 7-11-97 this is within the time limit of six months. Even the corrigendum issued on 1-12-1997 is within the time period allowed by law. Therefore, he said that there is no question of Show Cause Notice being barred by limitation of time.
7. We have gone through the records of the case carefully. The Tribunals in a large number of cases have held that Section 123 is not applicable when the offending goods are seized by the police and handed over to the Customs. If the above ratio is followed in the present case, there is no justification for holding that the goods are liable for confiscation because the Revenue has not discharged its burden. The appellants have stated that the gold under seizure was actually purchased by Smt. G. Sumitra Devi, mother of L. Vijaya Lakshmi from one Shri P. Krishnan who had bought it when he came to India from Singapore on 14-9-96 and from Shri M. Nagaraj, who had bought it from MMTC Ltd. Secundrabad on 9-4-96. The baggage receipt and the original invoice were produced. A part of the gold purchased by G. Sumitra Devi was kept in bank lockers at Kurnool and Hyderabad for safe custody by Smt. L. Vijaya Lakshmi, daughter of Smt. Sumitra Devi with the consent of Shri L. Eswar Reddy, Son-in-law of G. Sumitra Devi and husband of Smt. L. Vijaya Lakshmi. The rest of the gold under seizure was gifted by Smt. Sumitra Devi to her daughter-in-law Smt. G. Sudha Madhuri, wife of Shri G. Pratap Reddy (son of Smt. G. Sumitra Devi) who in turn kept in the bank locker of Smt. L. Vijaya Lakshmi. The Adjudicating Authority has not accepted the above version. According to the Adjudicating Authority, the defence of the notice is totally fabricated. In our view, since the initial burden to prove that the goods are smuggled is on the Department's, the department has a responsibility to come out with positive evidence and establish the source of procurement of the gold, especially when the explanation of the appellants is not accepted. The department has failed to discharge its owners under Section 123 of the Customs Act. Therefore, on this point alone the order-in-original cannot be sustained. The other pleas of the appellants have not been considered. Hence, we allow the appeal with consequential relief.
(Pronounced in open Court on 30-1-2006)