2004 (97) ECC 424 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

South Zonal Bench : Chennai

Shri Jeet Ram Kait, Member (T)

A.K. Hamsa Mohideen

Versus

CC, Chennai

Appeal No. C/42/2004/Md

[Arising out of Order-in-Appeal No. C.Cus No. 751 & 753/2003 dated 28.11.2003 passed by the Commissioner of Customs (Appeals) Chennai]

Final Order No. 523/2004, dt. 21.5.2004, Certified on 1.7.2004

Confiscation & Penalty (Customs)

Smuggled goods -- Burden of proof -- Merely because the goods are of foreign origin, it cannot be said that the goods are smuggled into the country. It is not the case of the department that the assessee herein was the importer. In the initial statement itself he has stated that the goods have been purchased from one Sujavuthin -- Hence, confiscation and penalty set aside -- Sec. 123, 111(m), 112(a) of Customs Act, 1962.

Appeal allowed

PRESENT :

Shri A Ganesh, Adv. for the appellant.

Shri A. Jayachandran, JDR for the respondent.

Cases Cited :

1. Gian Chand & Ors. v. State of Punjab, 1983 ELT 1365 (SC)........................ [Paras 3, 5]

2. Sadbhavana v. CC, Indore, 2004 (91) ECC 607 (T)........................................... [Para 5]

Per : Jeet Ram Kait (Oral)

This appeal is directed against the Order-in-Appeal No. C. Cus No. 751 & 753/03 dated 28.11.2003 passed by the Commissioner of Customs (Appeals) Chennai) by which the Commissioner has modified the Order-in-Original and reduced the penalty on the appellant herein from 75,000 to Rs. 20,000. The original authority has confiscated the goods with option to redeem the same on payment of Fine of Rs. 1,50,000 besides imposition of penalty of Rs. 75,000 on the appellant herein. He has also confiscated the Ambassador Car used for transport of the goods with an option to redeem the same on payment of duty of Rs. 20,000.

2. The brief facts of the case are that the Police Personnel attached to B-1 North Beach Police Station, Chennai, have registered a case under FIR No. 111/03 dated 14.3.2003 and seized various electronics goods such as assorted mobile phones, assorted mobile chargers etc. of foreign origin valued at Rs. 3,76,400-(cif) (Market value Rs. 5,64,600) as detailed in the Order-in-Original, alongwith vehicle Regn. No. TN-01 J-2868. The appellant herein and the driver of the vehicle Kannabiran who were the occupants of the vehicle were asked whether they had any receipt or bill for the legal possession of the goods for which they replied in the negative. Therefore, they were arrested and produced before the Hon'ble ACMM (EO II) on 14.3.2003 and were remanded to judicial custody. On the direction of the Hon'ble Court, the seized goods were handed over to the Customs Authorities for further action in the matter in terms of the Customs Act, 1962. The Customs department thereupon deposited the goods in the Customs warehouse for further action. As a follow up action statement was obtained from the appellant herein on 24.3.2003 wherein he has inter alia stated that he was having one STD booth at Egmore and the goods were purchased by him from one Sujavuthin. He has also stated that he did not have any bills/receipts with him. Statement was also taken from the driver of the car viz. Kannabiran who stated that he owed (sic, owned) a car and used to lend it to his friends for their use and in the instant case, he took Rs. 100 to drop the appellant in Parrys Bazar and that he has no connection with the goods. It was in these circumstances that show cause notice was issued to the appellant herein and to the other person which culminated in the order of adjudication passed by the original authority as noted above. In the present appeal, I am concerned with the appeal of the present appellant only.

3. Shri A Ganesh, learned Counsel appeared for the appellant and submitted that the goods involved in the present case are electronic goods and are easily available in the market and that these goods are non-notified under Section 123 of the Customs Act, 1962 and therefore, the burden to prove that they are smuggled goods is with the Customs and which burden has not been discharged. He has further submitted that in the instant case, the goods were first seized by the local police personnel who have handed over the goods to the Customs on the direction of the Hon'ble ACMM (EO-II). He has also invited my attention to the judgment of the Hon'ble Apex Court in the case of Gian Chand & Ors. v. State of Punjab, 1983 ELT 1365 (SC), wherein it has been held that in case of seizure by the local police and later handed over the goods to the Customs, the provisions of the Customs Act, are not satisfied and consequently that provisions cannot be availed of to throw the burden of proving that the goods were not smuggled, on the accused and the accused also knew that the goods were of that character. The learned Counsel also pressed into service various judgments passed by this Bench and also by other co-ordinate benches of the Tribunal, the Circular issued by the Board on Town seizure vide File No. 04/149/65-Cus dated 14.12.65, wherein it is clarified that except for commodities which attract the provisions of Section 178-A of the SCA or Section 123 of the Customs Act, 1962, the burden to prove that the goods seized are smuggled, is on the Customs authorities. He has therefore, prayed for setting aside the impugned order and allowing the appeal.

4. Heard Shri A Jayachandran, learned JDR, who defended the impugned order.

5. I have considered the submissions made by both the sides. I observe in the instant case, the seizure of the goods were first made by the local police who handed over the goods to the Customs Department for further proceedings in terms of the Customs Act, 1962. I also observe that the goods involved in the present case are non-notified goods and the goods are freely available in the market. Confiscation has been ordered on the grounds that the goods are of foreign origin and that the goods are not covered by any bills for their licit import. Merely because the goods are of foreign origin, it cannot be said that the goods are smuggled into the country. The burden of proving that the goods are smuggled into the country is on the department and undoubtedly this burden has not been discharged by the department. The Central Board of Excise & Customs vide their Circular noted above, has issued guidelines in regard to town seizure, wherein it is clearly stated that when goods are recovered from a person who is not proved to be the importer of the goods and claims to be a purchaser of the goods, onus is always on the customs authorities to establish that the goods were imported contrary to the import or prohibition or restriction. In this case it is not the case of the department that the appellant herein was the importer. In the initial statement itself he has stated that the goods have been purchased from one Sujavuthin. Further, I note that the Hon'ble Apex Court in the case of Gian Chand & Ors. v. State of Punjab (supra) has also held that in the case of seizure by the police and transfer of the goods to the Customs, the provisions of Section 123 of the Customs are not satisfied. Further, in identical cases this Bench has allowed the appeal V. Muniyandi and Ors. vide Final Order No. 186 to 188/2004. Co-ordinate Benches of the Tribunal has also taken similar views in identical cases. One such order is in the case of Sadbhavana v. CC, Indore, 2004 (91) ECC 607 (T) : 2003 (158) ELT 652. In view of the above, I hold that there is no material to sustain the order of confiscation of the goods and imposition of penalty on the appellant herein. I therefore set aside the impugned order and the attendant Order-in-Original insofar as it relates to the present appellant and allow the appeal with consequential relief, if any.

6. Operative portion of this order was pronounced in the open Court on 21.5.2004.

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