2005 (98) ECC 409 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Shri S.S. Kang, Vice President and Shri V.K. Agrawal, Member (T)

Lakhpatrai & Sons

Versus

CC, New Delhi

Appeal No. C/473/2004-NB(A)

[Arising out of Order-in-Appeal No. CCA/CSP/(113)/D-II/2004 dated 19.5.2004 passed by the Commissioner of Customs (Appeals), New Delhi]

Final Order No. 989/04-NB-A, dt. 15.9.2004, Certified on 4.10.2004

Burden of proof

Smuggling -- Burden on Revenue -- Ball Bearings -- Mere fact that the Appellants could not produce bills for the purchase of the impugned ball bearings or they could not give the name and address of the seller/broker was not sufficient to come to the conclusion that the ball bearings in question had been smuggled from outside the country -- Thus, Revenue did not succeed in discharging its burden of proof that the ball bearings were smuggled into the country -- S. 123 Customs Act.

Appeal allowed

PRESENT :

Shri G.L. Rawal, Adv. for the appellants.

Shri S.M. Tata, SDR for the respondent.

Cases Cited :

1. Irfan Mohd. & Ors. v. CC, New Delhi, Final Order No. A/1028-29/98-NB(DB) dated 20.11.98 [Para 2]

2. Mohd. Zabiullah v. CC, New Delhi, 2003 (160) ELT 295 (Tri.-Del.)............... [Paras 2 & 5]

3. Premsagar Agarwal v. CC, New Delhi, 2003 (160) ELT 505 (T)................... [Paras 2 & 5]

4. Ratan Lal Daga v. CC (Prev.), Calcutta, 1996 (85) ELT 257 (Tri)................. [Paras 3 & 5]

5. Sha Rikhabdas Ghaganra v. CCE, Madras, AIR 1963 Madras 337.............. [Paras 2 & 4]

Per : V.K. Agrawal

The issue involved in this appeal filed by M/s. Lakhpatrai & Sons, is whether Ball Bearings seized from their premises are liable for confiscation and penalty is to be imposed on them.

2. Shri G.L. Rawal, learned Advocate, submitted that the Appellants deal in the business of selling and purchasing of ball bearings; that the Customs officers seized old and used ball bearings of different sizes from their premises on 7.9.99; that the Joint Commissioner under Order-in-Original No. 20/2000 had confiscated the seized ball bearing with an option to redeem the same on payment of a fine Rs. 1,20,000 and on payment of appropriate Customs duty besides imposing a penalty of Rs. 1 lakh on the ground that the Appellants could not produce any evidence for lawful import/acquisition/storage of ball bearings in question; that the Commissioner (Appeals) also under the impugned Order rejected their appeal on the ground that no bill or other document was produced to show the legal procurement/possession of the goods. The learned Advocate, further, submitted that the Commissioner (Appeals) has given a specific finding in the impugned Order that the Appellants in his statements dated 7.9.99 and 24.2.2000 had duly accepted smuggled nature of the confiscated goods procured through broker on part payment without any bill/receipt; that this finding in the impugned order is factually not correct inasmuch as in none of the statements it has been accepted that the ball bearings in question were smuggled one; that Shri Vinod Kumar in his statement dated 24.2.2000 has only stated that "had we knew (sic) that the goods under seizure were not properly imported we would not have purchased the same." The learned Advocate contended that it cannot be inferred from this statement that the smuggled nature of the goods had been accepted by the Appellants. He finally submitted that ball bearings have not been notified under Section 123 of the Customs Act and as such the burden of proof that these are smuggled goods are on the Department. He relied upon the decision in the case of Premsagar Agarwal v. CC, New Delhi, 2003 (160) ELT 505 (T) wherein it has been held that as ball bearing have not been notified under Section 123 of the Customs Act their confiscation is not sustainable in absence of any evidence by Revenue to prove that ball bearings are smuggled one. Reliance has also been placed on the decision in the case of Mohd. Zabiullah v. CC, New Delhi, 2003 (160) ELT 295 (Tri.-Del.) wherein it has bee held that if the goods have not been notified under Section 123 of the Customs Act the burden to prove their smuggled nature is on the Department. Reliance has also been placed on the decision in the case of Shri Irfan Mohd. & Ors. v. CC, New Delhi, Final Order No. A/1028-29/98-NB(DB) dated 20.11.98 and Sha Rikhabdas Ghaganra v. CCE, Madras, AIR 1963 Madras 337.

3. Countering the arguments Shri S.M. Tata, learned SDR, submitted that in all 4711 pieces of ball bearings of foreign origin were recovered from the godown of the Appellants; that as the Proprietor of the Appellant firm gave satisfactory evidence of 111 pieces of ball bearings the same were released; that the Proprietor could not produce any evidence for the remaining 4600 pieces of ball bearings; that further, he did not know the names and whereabouts of broker or the seller of the impugned goods; that though he had only made part payment to the so-called seller/broker, he did not know their whereabouts; that this clearly shows that conduct of the Appellants is very suspicious; that no proof about the legal possession of the impugned goods has been brought on record including the names of persons from whom the goods were purchased; that the goods are smuggled one and liable for confiscation. He relied upon the decision in the case of Ratan Lal Daga v. CC (Prev.), Calcutta, 1996 (85) ELT 257 (Tri) wherein it has been held by the Tribunal that once the ball bearing of foreign origin are seized on reasonable belief that they are smuggled into the country and they are not covered by any documents the initial burden of the Department is discharged and it was for the Appellants to prove that he had purchased it from the open market and for the purpose of proving the same he should have named the persons from whom he had purchased the same so that the Department could have made inquiries from their persons; that the Tribunal had further held that as the Appellants had not told the names of the same to the Department it goes to show that the Appellants had not come out with the straightway story, and therefore, the initial burden which is discharged by the Department has not been rebutted by the Appellants.

4. We have considered the submissions of both the sides. It is settled law that in a case of prosecution the burden of proof is on the prosecutor. In the present case the Revenue has seized the ball bearings of foreign origin from the premises of the Appellants. The initial burden is on the Department to prove that the ball bearings in question were smuggled into the country. Nothing has been brought on record by the Revenue to prove that the ball bearings in question are of smuggled nature. The initial burden has to be discharged by the Revenue to prove the smuggled nature of the impugned goods. Only when the Revenue discharges its burden of proving the smuggled nature of the impugned goods the burden will shift of the Appellants to prove that they are not smuggled goods. The mere fact that the Appellants could not produce bills for the purchase of the impugned ball bearings or they could not give the name and address of the seller/broker is not sufficient to come to the conclusion that the ball bearings in question had been smuggled from outside the country. It has been rightly contended by the learned Sr. Counsel that the ball bearings have not been notified under Section 123 of the Customs Act, and therefore, it is not their burden to prove their non-smuggled nature. The circumstances that the Appellants could not name the broker may at best create suspicion. Suspicion, however, cannot take the place of proof. The Madras High Court in the case of Sha Rikhabdas Ghangara (supra) has held that where the goods are not of prohibited variety and the goods lawfully imported into the country are available in the open market, it is not justifiable on the part of the Customs authorities to demand proof of licit origin from a person in possession of the goods and on the failure to establish it, to draw the inference that the goods such have been illicitly imported. The Court has further held as under:

".............in the case of goods other than those covered by a notification under S. 178-A the onus of proving all the ingredients of an offence is upon the Collector of Customs. It is not open to the Collector of Customs to call upon any individual and demand to be satisfied that the goods in his possession are illicitly imported."

5. The similar views have been held by the Division Bench of the Tribunal in the case of Prem Sagar Aggarwal and Md. Zabiullah, relied upon by the Sr. Counsel. The decision in the case of Ratan Lal Daga was pronounced by a Single Member which is not binding on the Division Bench. We, therefore, hold that Revenue has not succeeded in discharging its burden of proof that the ball bearings in question were smuggled into the country. We, therefore, set aside the impugned Order and allow the appeal.

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