1. These two appeals have common facts and arise out of the same order now impugned before the Tribunal. These appeals are, therefore, being disposed of vide this common order.
2. From private warehouse, the officers of the DRI seized ball bearings and spark plugs. The warehouse keeper had not kept any records but had maintained some entries in the private note books. He gave names of certain persons as having deposited the goods. They were summoned. One Kiritbhai of M/s M.P. International produced some Bs/E showing clearance of ball bearings and spark plugs. These goods were released.
One Bhupatbhai M. Shah whose name was given by the Manager of the warehouse as the depositor of 222 cartons of ball bearings denied ownership of the same but his brother Bharat M. Shah claimed ownership The book showed the figure of 222 cartons but DRI found only 219 cartons. Shri Bharat M. Shah in his later deposition corrected himself and adopted the figure as 222 cartons. He claimed that he had purchased the goods for cash. He was not able to supply details of the sales at all. Shri Harshad Doshi the other appellant claim to have kept 54 cartons and DRI seizure showed 55 of them. He named a broker who was not found. He also claimed that the goods were purchased for cash but was unable to show any documentation. The goods were seized. Show cause notices were issued alleging liability to confiscation of the goods under Sec.111(d) and Sec.111(k) of the Customs Act 1962. Before the Commissioner case law was cited. The ratio thereof being that where the goods such as ball bearings were freely importable, and where they did not fall under Sec.123 or Chapter IVA of the Act, the onus of proving their licit origin was on the department. The Commissioner negated the ratio of the judgement on citing the Supreme Court's order in the case of D. Bhoormul (1962) 1 SCR 358. He held that initial burden of proving that the goods were not validly imported having been discharged by the department, the burden to prove their licit importation had shifted to the claimants which burden they had failed to discharge. Holding thus, he confiscated the goods under Sec.1119(d) but not under Sec.111(k) of the Act. He, however, refrained from imposing any penalty upon either of the claimants. These two appeals arise out of this order.
3. Shri Kantawalla advanced the same arguments as were made before the Commissioner. Shri Sarkar arguing for the Revenue submits that the Commissioner's reliance on the Supreme Court's decision cited supra is well-founded.
4. The origin of the show cause notice is said to be the belief of the DRI that goods imported in Calcutta for over-land in bond transit to Nepal were being surreptitiously diverted to Mumbai. This is a general intelligence but no disclosure is made or claimed that it was a specific intelligence. There is no admission by any person concerned that these goods were imported and wrongly diverted. The Commissioner observed that no registers were kept by the warehouse keeper but that only note books entires were maintained. This warehouse was not licensed in terms of Sec.58 of the Customs Act and therefore, there was no legal requirement for maintenance of specific registers. The Commissioner had also found fault with the claimants in not knowing what cargo they had deposited.
5. It is true that the narration of facts made by the ld.Commissioner creates great suspicion as to the ownership and lawfulness of acquisition of the ball bearings but does not automatically create any presumption that the goods were surreptitiously diverted. For the burden initially to shift also much more has to be done by the department than what has been done in the present case. Once the goods on importation enter the stream of commerce, they would change hands frequently. Even a commodity like diamond which carry the burden of export change hands. The Customs Act does not control the manner of sale, the documentation or the manner in which the seller is to be compensated. This would be the prescription of other Acts such as Sales Tax Act or Income Tax Act etc. The contravention of these Acts had not been alleged in the show cause notice.
6. Having said a lot on the application of Supreme Court judgement, the ld. Commissioner has negated the entire logic in paragraph 25 of his order which is reproduced below:- "It was argued that the goods are not liable for confiscation under Section 111(d) as there is no prohibition in the import policy against the goods. Indeed there is no prohibition under the Policy.
But Section 111(d) speaks of any prohibition under the Customs Act as well. The department's case is that the goods are smuggled into the country which means no duty has been paid, no Bill of Entry filed, no order of clearance has been given in respect of the goods in question. They are therefore, certainly prohibited goods in terms of Section 111(d) of the Customs Act, 1962. They are therefore, liable to confiscation under that Section. I concede that no evidence exists that the said goods have been brought across the land boarder without payment of duty. I hold, therefore, that the good are not liable to confiscation under Section 111(k) of the Customs Act, 1962."(emphasis supplied).
7. We have earlier noted the intelligence about the diversion of goods.
Clandestine import through other borders is not alleged or even hinted.
In the face of this observation and the admission, the Commissioner thereafter, proceeded to confiscate the goods under Sec.111(d) of the Act. His order does not survive.
8. At this stage Shri Sarkar intervenes and submits that the adjudication order is of recent date and the Revenue have still time to file an appeal. The argument has merits but in the face of the lack of any cogent evidence either in the show cause notice or int he analysis made by the Commissioner, the proceedings would have no other outcome.
9. Accepting the contention that no evidence has been placed on record that the goods were illegally imported, the appeals are allowed with consequential relief.