1. On 23.5.1995 and 2.5.1995 the Customs Officers searched the premises of M/s. Tiptop Watch Makers and seized Watch Parts totally valued at Rs. 3,48,650. Out of this, goods valued at Rs. 19,550 of Indian origin were later released. From the residence of D.D. Randeria watch parts valued at 13,24,000 were seized alongwith Indian currency of 4,05,000.
2. Statements of the employees of M/s. Tiptop were recorded. The statements of employees of M/s, Marks & Company who sent watches to Tiptop were also recorded. The employees stated that repair works were undertaken and that the spare parts were given by D.D. Randaria and his son.
3. Within a fortnight of the seizure D.D. Randeria in his letter stated that the watch parts were locally acquired and most of them were purchased from Customs Auction in the first sale.
4. One Shri C.N. Tolia in his statement claimed that he was routinely purchasing watch parts from the Customs auctions and supplying them to some other companies including M/s. Marks & Co. and M/s. Time Watch Works owned by D.D. Randeria, At a later date C.N. Tolia changed his statement disclaiming any supply to D.D. Randeria. D.D. Randeria in his statement continued to claim that a number of parts were purchased from C.N. Tolia and that they were regular purchasers of watch parts from other persons also. In his later statement recorded on 7.10.1995 Shri D.D. Randeria showed certain Bills of Entry in support of his claim.
5. Based on the investigations, a Show Cause Notice was issued alleging that the watch parts were liable to confiscation and that penalties were imposable on Tiptop Watchmakers, Marks & Co., Times Watchmakers and also on D.D. Randeria. It was alleged that the parts were liable for confiscation under Section 111(d) of the Customs Act, '62 read with Section 123 of the Act. It was alleged that the Indian Currency was liable to confiscation under Section 121 of the Act. Penalty was allegedly leviable under Section 112 of the Act. Shri C.N. Tolani [Tolia] and M/s. Aumit [Amit] Watch Specs were alleged to be liable to penalty.
6. After hearing the concerned persons, the Commissioner of Customs (Preventive) passed Orders. He ordered release of some of the goods but confiscated goods valued at 9,19,450 and permitted redemption of the same on a fine of Rs. 10 lakhs. He confiscated the Indian Currency absolutely. He imposed penalty of Rs. 5 lakhs on Shri D.D. Randeria and Rs. 1 lakh on Shri C.N. Tolia.
8. The case for the appellants were argued by Shri J.J. Bhatt, Senior Counsel appearing alongwith Shri Arun Mehta, Advocate. Shri B.K.Choubey, JDR, appeared for the Revenue.
9. We have carefully considered the submissions. Section 123 of the Act have been invoked in these proceedings. The basic tenet of the law is that the person making an accusation has to support his charge with evidence. Where no evidence is produced or where the evidence produced is rebutted by the accused, confiscation cannot be adjudged. Section 123 makes an exception and shifts the burden of proof on to the offeYider. This provision has been interpreted in a number of judgments.
10. One of the pre-requisites is that the offending goods should have been notified under this Section. Entry at Sr. No. 9 of the Notification 204/Cus. dated 20.7.1984 (as amended) reads as follows: 9. Watches, watch movements (including partly assembled movements), dials and cases for watches.
11. During the hearing the details of the goods seized under the panchnamas were placed before us. The claim was made that a very large portion of the goods were not: notified under Section 123. It appears that in the impugned proceedings this point was not raised. The breakup of the goods valued at Rs. 9,19,450 is as follows: Admittedly there is some gap in the figures when making the total, but that may not be material for the disposal of the case.
12. On comparison of the wording used in the notification and the description of the goods seized, we find that the provisions of the Section 123 apply only to the movements, dials and the cases which are totally valued at Rs. 3,58,600. The status of evidence will have to be separately examined for the goods under Section 123 and the other goods.
13. Indian Currency of Rs. 4,05,000 has been confiscated under Section 121 of the Act. For any confiscation to be so charged, evidence has to be shown that the currency was the actual receipt of the sale proceeds of smuggled goods and where the seller had knowledge that the goods sold by him were smuggled. In the present case no evidence has been placed in fulfilment of this requirement. Even it is to be assumed that the parts were smuggled in nature these parts were not sold. These parts were contained in the watches which were received for repair. The total consideration received for repairs would include cost of the parts as well as the labour charges. Shri D.D. Randeria was a partner in 3 companies which had a very substantial turn over. The quantum of currency found in his possession was not unusually large. There was no statement by D.D. Randeria or any other person to the effect that the Indian Currency seized was the sale proceeds of the smuggled goods. In that situation no specific label can be put on the currency. The Revenue has failed to establish the charge under Section 121 of the Act.
14. On these observations the orders of confiscation of currency are set aside.
15. We now come to the watch parts under seizure, which were not covered under Section 123 of the Act. The Tribunal and the Courts have in a number of judgments held that the burden of establishing unlawful importation in such case squarely rested on the Customs. Various case law has been discussed and summarised in an order of the Tribunal reported in and (Ravi Mittal v. C.C., New Delhi). The Tribunal in this case was discussing the liability to confiscation of ball bearings seized from the Appellant which were admittedly of foreign origin. On discussing the substantial case law, the Tribunal held that the Customs had not been able to discharge the burden cast upon them. This judgment is also . In making the judgment the Tribunal had relied upon an earlier judgment in the case of Hindustan Bearing Corporation . Even where the department had shown that the firm from whom the offender had claimed to-have purchased the goods was fictitious and did not exist, the Tribunal held that the suspicion created by this fact could not be a substitude for evidence to be led by the department.
16. Mr. Randeria is a person engaged in repair of watches. The bulk of the watches in use in India are of foreign origin. From the 70's to the 90's M/s. H.M.T. was the only company making watches in India and from 90's M/s. Titan came to the scene. There were other small manufacturers but their supply was of no significance. Therefore, for servicing the watches, parts had to be imported. Parts were also smuggled. Some of the smuggled parts were seized by the Customs and were ultimately sold by the Customs department in auctions. The goods sold by the Customs in such auction could thereafter be readily sold without any further restrictions. The watch parts imported and cleared under the Bills of Entry were stock and sale items and could be sold openly. In his statement Shri Randeria made a claim that the parts were purchased from local suppliers and also from the Customs. In internal page 22 of the order the learned Commissioner not accepting Shri Randeria's statement had held that on verification this claim was to be found bogus. The Appellants have placed on record a number of vouchers issued by M/s.
Amit Watch and Spects. Showing sale of apare parts of watches to the companies owned by Shri Randeria. The dates of issue range from 1992 onwards and cover the period upto the seizure. Copies of the Bills of Entry for such parts imported by one of the companies in June 1994 were also placed on record.
17. The Appellants have placed on record documents evidencing sale of such parts by Customs to M/s. Amit Watch Co. Who were one of the sellers of the watch parts to the Shri Randeria. Delivery Order No.32/92 dated 10.3.1992 shows sale of over 80,000 parts. Another document dated 9.3.1993 shows sale of 1000 movements. On 20.2.1992 Customs have sold 60 kgs. of watch parts to M/s. Amit Watches. Yet another cash memo dated 29.4.1994 shows sale of movements and other parts of over 2000 in number. In the light of the citation so made and in the vise of this evidence, the conclusion of the learned Commissioner that the claims were bogus is unfounded and without merit.
18. We hold that the burden of proof cast upon the Customs of proving illegal importation of watch parts not-notified under Section 123 has not been discharged and these parts are therefore not liable for confiscation.
19. We now come to the parts covered under 123 of the said Act. the evidence produced by the Appellants is common. In internal page 23 of the order the learned Commissioner has recorded that one of the allegations in the show cause notice was that the spare parts and tools bearing the brand name 'Rado' were clandestinely imported. In the very next sentence the Commissioner admits that there was no documentary evidence to substantiate this charge. The allegation that some of the parts were illegally imported was refuted by Shri Randeria. We have earlier discussed the status of evidence of the other watch parts, movements, etc. which were shown to have been imported under Bills of Entry. Similar movements were also shown to have been sold by the Customs also. The documents as discussed are also on record. The Commissioner on page 23 of his order remarked that the sale vouchers indicated cheap movements. The Commissioner has based his observation that these were cheap parts solely on the basis of its price ("No body will sell Rado at a lower value"). This presumption does not take the place of evidence. The cases of undervalution of goods sold by Customs are not uncommon. Even recently in newspapers a case was reported where certain officers in charge of sale were accused of undervaluation.
20. The Commissioner has placed strong reliance on the statements of Shri Tolia, one of the suppliers of movements to Shri Randeria. In the first statement dated 8.6.1995 Shri Tolia had accepted certain supply to Randeria. In the next statement dated 19.6.1995 he went away from his earlier statement. However, vide his letter dated 4.7.1995 he once again claimed that parts and movements were supplied by him. One more statement of Tolia was recorded on 10.11.1995 in which statement he once again claimed that the goods under seizure were not supplied by him. The picture that emerges from these statements is that as a witness Tolia is not at all reliable. We also find that such retractions will have to be examined in juxtaposition of the documentary evidence of sale by Tolia's company to Randeria's Companies. This evidence eclipses his deposition against Randeria. In page 27 of his order the learned Commissioner has branded Tolia as an aidor and abettor of Randeria and has accused him of making false claims. This has led to imposition penalty on Tolia also.
21. Even where the burden of proving licit importation is cast upon a person that burden cannot be discharged by him by tendering documentary evidence of importation of each single item. For such burden to be discharged it is generally sufficient for him to show that all such goods were importable, were available for sale, were sold and purchased and were acquired by him. There would of course be exceptions to this general statement. Where the quantity under seizure is very large, or where the goods bear a very specific nomenclature, much greater evidence would have to be put forth. But in the present case we find that the appellants have successfully discharged this burden. We have observed above that the very documents of sale by Customs shows sale of watch movements. The facts that this document and document of sale by Tolia do not indicate the brand name, cannot be held against the appellants. On the basis of the evidence produced, examined and analysed by us, we are satisfied that the burden has been successfully discharged by Shri Randeria. Thus the notified goods are not liable to confiscation.
22. In view of our finding, orders of confiscation do not survive. The Orders of imposition of penalty also do not survive. The appeals are allowed with consequential relief.