2004 (97) ECC 369 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench -- Chennai

Shri P.G. Chacko, Member, (J) and Shri Jeet Ram Kait, Member (T)

Rajesh Surana and M/s. Rukma Industries Ltd.

Versus

Commissioner of Customs, Chennai

Appeals No. C/28 & 29/2004

[Arising out of Order-in-Original No. 1170/03, dated 29.10.2003 passed by the Commissioner of Customs, Chennai]

Final Order No. 758 & 759/2004, dt. 2.9.2004, Certified on 10.9.2004

Smuggling

Evidence -- Burden of proof -- Plea of appellants that goods were not so notified and contended that the burden was on the Dept. to establish smuggling -- In respect of non-notified goods, the Revenue is required to show, by producing positive evidence that goods are of smuggled nature -- No such evidence available on record -- Goods have been held to have been smuggled by appellants merely on the ground they had not produced documentary evidence of lawful acquation thereof -- The decision runs against the law laid down in the Cases -- 2004 (167) ELT 77 (Tri-Mum.). 2003 (161) ELT 848 (Tri-Kolkata); 2001 (131) ELT 203 (Tri.Kolkata) and 2003 (159) ELT 683 (Tri.-Kolkata) -- Therefore, Confiscation cannot be sustained -- Penalties as well as demands of duty also set aside.

[Para 5]

PRESENT :

Shri S. Murugappan, Adv. for the appellant.

Smt. R. Bhagya Devi, SDR for the respondent.

Cases Cited :

1. Ashok Kumar Jain v. Commissioner of Customs (Preventive), Kolkata, 2003 (159) ELT 683 (Tri-Kolkata) [Para 10]

2. Commissioner of Customs, Hyderadad v. J.T. Parekh & Co., 2004 (167) ELT 77 (Tri-Mumbai) [Para 4]

3. Dinanath Maurya v. Commissioner of Customs, Lucknow, 2001 (131) ELT 203 (Tri-Kolkata) [Para 10]

4. Manikchand Prasad v. Commissioner of Customs, Patna, 2003 (161) ELT 848 (Tri.-Kolkata) [Para 10]

Per : Shri P.G. Chacko (Oral)

These appeals are against the following order of the Commissioner of Customs:

(i) "I order confiscation of 150.02 MTs of Tin Sheets seconds valued at Rs. 31,84,662, 124.86 MTs of Tin Sheets Misprints valued at Rs. 26,43,870 under Section 111 (m) of Customs Act, 1962 and 26,410 MTs of Tin Free Sheets Misprints valued at Rs. 2,76,384 under Section 119 of Customs Act, 1962. I order confiscation of 215.799 MTs of Defective Steel Sheets/Coils used to conceal the 70.461 MTs of Defective Steel Sheets/Coils under Section 119 of Customs Act, 1962.

(ii) I also order confiscation of the excess quantity of 70.461 MTs (forming part of 286.260 MTs) of Defective Steel Sheets/Coils valued at Rs. 5,39,151 under Section 111 (l) of Customs Act, 1962.

(iii) I also offer the importer to redeem the goods on payment of a fine of Rs. 13,00,000 (Rupees Thirteen Lakhs only) under Section 125 of the Customs Act, 1962.

(iv) I also order M/s Rukma Industries Ltd., to pay duty amounts of Rs. 21,36,475 on the import of 150.52 MTs of Tin Free Seconds, Rs. 17,73,677 on the import of 124.96 MTs of Tin Sheet Misprints and Rs. 3,61,697 on the import of 286.260 MTs of Defective Steel Plates/Coils under Proviso to Section 28 (1) of the Customs Act, 1962. The amount of Rs. 20,00,000 deposited by Rukma Industries Ltd., on 14.3.2002 and 15.2.2002 be adjusted towards duty liabilities.

(v) I also demand interest on duty at the rate applicable till the final payment in terms of Section 28AB of Customs Act, 1962.

(vi) I also impose a panelty of Rs. 42,71,849 (Rupees Forty Two Lakhs Seventy One Thousand Eight Hundred and Forty Nine only) on M/s Rukma Industries Ltd., under Section 114A of the Customs Act, 1962 alongwith interest payable at the rate applicable in terms of Section 28AB of the Customs Act, 1962, and

(vii) I also impose a penalty of Rs. 4,00,000 (Rupees Four Lakhs only) on Shri Rajesh Surana under Section 112 (a) of the Customs Act, 1962.

Appeal No. C/29/2004 of M/s Rukma Industries Ltd., is against clauses (i) to (vi) of the above order and Appeal No. C/28/2004 of Shri Rajesh Surana, Director of the above company, is against the penalty imposed on him as per clause (vii) of the order.

2. The above order was passed in adjudication of a show-cause notice issued by the Department on the basis of results of investigations held in respect of materials which were seized from the godown of M/s Rukma Industries Ltd., by officers of Customs on 28.2.2002. 150.52 MTs of Tin Sheets seconds, 124.96 Tin Sheets Misprints, 26.410 MTs of Tin Free Sheets Misprints, 286.26 MTs of Defective Steel Sheets/Coils were seized from the said premises, on the basis of a belief that the goods had been smuggled by the appellants or used by them for concealing the smuggled goods. The show-cause notice proposed to confiscate these goods under Section 111 or Section 119, as the case may be, of the Customs Act, 1962. It also proposed to demand duty on the goods allegedly smuggled. Penalties were also proposed on the company and its Director under Section 114A and Section 112 (a), respectively, of the Act. Contesting these proposals, the appellants, interalia, took a contention that, as none of the seized goods had been notified under Section 123 of the Customs Act, the burden was on the Department to prove, with positive evidence, that the goods had been illicitly imported. It was submitted that there was no positive evidence on the part of the Department. Confiscation was proposed only on the ground that the appellants had failed to prove licit acquisition of the goods. In their reply to the show-cause notices, the appellants also relied on case law on the above point. The Commissioner, however, passed the above order without addressing the above issue. Impliedly, he rejected the above contention and ordered confiscation of the goods on the ground that the appellants had failed to adduce documentary evidence of lawful acquisition of the goods.

3. In the present appeals also, the main ground raised by the appellants is with reference to the fact that none of the goods in question had been notified under Section 123. It is this ground which has been pressed by the appellant's Counsel today.

4. Counsel has submitted that, in the impugned order, the Commissioner has not disputed the fact that the goods had not been notified under Section 123. However, is it submitted, there is no finding in his order as to the burden of proof in relation to the goods. Ld. Counsel submits that the Department ought to have gathered positive evidence independently to substantiate their allegation that the goods had been illicitly imported by the appellants. In the absence of such evidence, the order of confiscation, penalty etc., cannot be sustained. In this connection, Ld. Counsel has relied on the following decisions:

(i) Commissioner of Customs, Hyderadad v. J.T. Parekh & Co., 2004 (167) ELT 77 (Tri-Mumbai).

(ii) Manikchand Prasad v. Commissioner of Customs, Patna, 2003 (161) ELT 848 (Tri.-Kolkata).

(iii) Dinanath Maurya v. Commissioner of Customs, Lucknow, 2001 (131) ELT 203 (Tri-Kolkata).

(iv) Ashok Kumar Jain v. Commissioner of Customs (Preventive), Kolkata, 2003 (159) ELT 683 (Tri-Kolkata).

Ld. SDR reiterates the findings of the adjudicating authority.

5. After examining the records and considering the submissions, we find that the main allegation in the show-cause notice was that the goods had been illicitly imported by M/s Rukma Industries Ltd. In other words, it was alleged that the goods had been smuggled. In this context, the question whether the goods had been notified under Section 123 of the Customs Act, 1962 becomes relevant. In their reply to the show-cause notice, the appellants pleaded that the goods were not so notified and it was contended that the burden was on the Department to establish smuggling. From the impugned order, however, it appears that the basic issue raised by the party was evaded. Ld. Counsel has made out a forceful case on the strength of ease law (vide supra). All the cited decisions are to the effect that, in respect of non-notified goods, the Revenue is required to show, by producing positive evidence, that the goods are of smuggled nature. In the instant case, no such evidence is available on record. The goods have been held to have been smuggled by the appellants merely on the ground that they had not produced documentary evidence of lawful acquisition thereof. The decision run against the law laid down in the aforesaid cases. Therefore, the confiscation of the goods under Sections 111/119 of the Customs Act cannot be sustained and, consequently, the penalties as well as the demands of duty also require to be set aside. It is ordered accordingly. The appeals are allowed with consequential reliefs to the appellants.

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