1. The Custom officers seized from the premises of the appellant in Mumbai various electronic goods consisting of integrated circuits, switches and transistors and connectors on the belief that they were smuggled. Notice was issued proposing confiscation and imposition of penalty on Kishore V. Vithalani and Afzal Ismail Lakadawala who are partners of the firm M/s. Component Supplies. The Additional Collector of Customs, after considering the cause shown, and hearing the appellant, has ordered confiscation of the goods and imposed penalties on the appellants of Rs. 25,000/- under Section 112(b)(i) of the Act.
The appeal against this order having been dismissed by the Collector (Appeals), the appellants are before us.
2. It is the contention of the common advocate for both the appellants that there is no material whatsoever to conclude that the goods are smuggled. The goods were not notified under Section 123 of the Act and the burden of proving that they are smuggled, which would fall on the department, has not been discharged. None of the goods except transistors was notified under Chapter FVA of the Act. Considerable quantity of transistors valued at Rs. 71,000/- has been accepted by the seizing officer to be of Indian origin. The valuation of the goods was not in order, and that the goods had not been released on payment of fine.
3. The departmental representative's answers are that the appellants in their statements had accepted that the goods were smuggled. The retraction of the admission came about six days after they were made with no explanation for the delay and hence is of no consequence. These statements establish that the goods were smuggled. He deposes the contention that the seizing officer has said that some of the transistors were of Indian origin and attempts to rebut the arguments on valuation.
4. The sole evidence relied upon by the seizing officer and the Collector (Appeals)'s conclusion that the goods were smuggled, is the statement of Kishore Vithalani dated 20-8-1988 which says that "we have purchased these components from various persons who come to the market to sell these components. These persons known as carriers do not have any legal documents with them for these components of foreign origin as all these are smuggled in by them" and of Lakadawala who has repeated more or less the same thing. In his statement dated 21-7-1988 Kishore Vithaiani says that Rakesh and Rajesh told him that these integrated circuits which they sold to him were part of a large consignment landed by sea at south coast and thus smuggled into India. He says that from the knowledge of integrated circuits he could also make out that they were of foreign origin and smuggled ones.
5. These statements do not impel us to conclude that the goods had been smuggled into India. Vithalani knew nothing about Rakesh and Rajesh more than their names. He says they were virtually strangers to him.
Why such strangers should decide to inform him about the place and mode of smuggling of integrated circuits that they sold to him, is to say the least, intriguing and difficult to believe. Again how they came to know that these were smuggled at some point in "south coast" is another question that remains for the answer. It is unusual to say the least to find such loquacity on the part of the persons concerns in smuggling of the goods. Their normal behaviour is to be tight lipped as far as possible even under interrogation. It is therefore difficult to conclude that these statements which have been attributed to the appellant were voluntarily made by them. Even if we accept that this is what Vithaiani voluntarily said, it does not in any event prove that these goods are smuggled. Even if we assume that Rakesh and Rajesh exist, the story of goods being smuggled could be camouflage the fact that the goods were obtained otherwise illegally, say by theft. Unless Vithalani possessed paranormal powers, he could not, merely by looking at the integrated circuits, conclude that they were smuggled. We could well accept that he knew from his experience that they were of foreign origin but that by itself does not lead to the conclusion that they were smuggled. At the relevant time, the import policy permitted import of the goods as components by actual users and others. This is in fact what has been stated by Dr Bhatt who is stated to be an expert on electronic goods and whose evidence has been relied upon by the department.
6. It is therefore not unreasonable to say that they can be consignments of such legally imported goods, which were being sold. The possibility of the seized goods being part of such imported goods has not been established. The fact that the appellant paid cash for the goods and bought from unknown persons does not itself establish that they were smuggled. We are satisfied that the burden of proof that they were smuggled has not been discharged. Therefore, none of the goods could be confiscated under clause (d) of Section 111 of the Act.
7. By notification, the provisions of Chapter 1VA were made applicable to transistors and therefore the appellant was required to maintain records, source of acquisition of the goods and intimate the place of storage to the goods and otherwise comply with the requirement of Chapter IVA. It is not denied that this requirement has not been complied with.
8. We are unable to accept the argument that the seizing officer has said that part of the transistors were of Indian origin. RS Matharu, who is the seizing officer, in our view has not said so. He seems to have said that Mr. Wadhwani of M/s. Jyoti Trading Corporation stated that three types of transistors are of Indian origin manufactured by M/s. Hindustan Conductors Ltd. Therefore, these transistors valued at Rs. 71,000/- are liable to confiscation under clause (p) of Section 111 of the Act. However, we do not find any justification for the absolute confiscation ordered by the Additional Collector and confirmed by the Collector (Appeals). As we have noted the import of these goods were not at the relevant time prohibited. An option to redeem these goods should have been given. Neither side was able to say whether these goods are still with the department or had been disposed of. We therefore order that these transistors be released on payment of fine of Rs. 35,000/- and the other goods seized from the appellant be returned to him. In the event that the goods have been disposed of, the proceeds of the sale of these goods less the expenses should be returned to the appellant.
9. Having regard to the facts of the case and the fact that the order of absolute confiscation which was not justified, depriving of the appellant from the use of these goods for more than 13 years, and the value of the transistors which are ordered to be confiscated, we set aside the penalties imposed on the appellants.