Judgment:
1. These four appeals, arising out of a common Adjudication Order No.20/A & R/VZ/2000 dated 11.4. 2000, have been filed against the penalties imposed on all the Appellants under Section 112 of the Customs Act, 1962.
2. Briefly stated the facts are that acting on a specific information, the Customs Officers searched the residential premises of Shri Sansar Gupta on 6.7.1998 and nothing incriminating was recovered from the residence. The Officers, however, recovered and seized ball bearings of foreign origin totally valued at Rs. 79,21,970/- from a godown after breaking open the lock thereof in the presence of witnesses. Shri Sansar Gupta, in his statement dated 6.7.1998, deposed that about two months back, he met Ram Niwas of Bombay who agreed to supply to him smuggled ball bearing of foreign origin in bulk quantity which he could sell on a commission of Rs. 150/- per bag. Sansar then took the said godown on rent of Rs. 2000/- per month from one Anil Jain. He received first consignment of 135 bags of ball bearings in May, 1998 out of which he sold 60 bags in 15 days of its arrival and paid the sale proceeds to Ram Niwas after deducting his commission. He received another truck load of 150 bags of ball bearings on 10.6.1998 out of which he sold 70 bags and sale proceeds were collected by Ram Niwas on 4.7.1998. He received another consignment of 150 bags of ball bearing which was kept in the godown. The Customs Officer at Mumbai searched the business premises of M/s. Goel Bearing Co. but nothing incriminating was found. Ram Niwas, proprietor of Goel Bearing Co., in his statement dated 2.9.1998, denied to have ever met Sansar Gupta and his dealings in smuggled ball bearings. The Adjudicating Authority, under the impugned Order, confiscated the ball bearings which were not claimed by Sansar and Ram Niwas and imposed penalties on Sansar Gupta, M/s. Bhagwati Bearing, Ram Niwas and M/s. Goel Bearing Co. under Section 112 of the Customs Act holding that the ball bearings were smuggled into India as Sansar Gupta could not produce any duty paid documents or any proper bill or proof of legal import; retraction by Sansar Gupta on 24.7.1998 is merely an afterthought; Sansar Gupta had given his statement voluntarily without any duress or threat; it is clear from Sansar Gupta's statement that he was fully aware of the nature of the goods, i.e., the same was smuggled goods; it is also clear from Gupta's statement that Ram Niwas was very much concerned with the impugned goods which had been supplied by him: 3. Shri L.P. Asthana, learned Advocate, appearing on behalf of all the Appellants, mentioned at the outset that the impugned goods do not belong to any of the Appellants; that further penalties have been imposed both on the proprietors as well as their proprietory firms; that no evidence has been adduced by the Revenue, except the retracted statement of Sansar Gupta, that the impugned goods are smuggled goods; that these goods have not been notified under Section 123 of the Customs Act and the onus is upon the Department to prove the smuggled nature of the goods and the Department has failed to do so; that ball bearings are not prohibited goods and the same can be imported into India by any person and the same are covered under OGL; that this is not even the allegation of the Department that Sansar Gupta had smuggled the goods in question to India; that the godown where the impugned goods were seized from does not belong to Sansar Gupta and no evidence has been brought on record to prove that he had taken the same premises on rent. The learned Counsel, further, submitted that Ram Niwas had categorically deposed in his statement that he had no business concern or connection with Sansar Gupta; that there was no other evidence available on records to implicate him except the statement of Co-noticee, Sansar Gupta; that it is the settled law of the land that a person cannot be penalized only on the basis of the statement of a co-noticee without any other independent evidence. The learned Advocate mentioned that before any goods can be confiscated under Section 111 of the Customs Act, the following three conditions are to be fulfilled: (iii) The goods must have been imported contrary to the said prohibition/restriction.
4. He contended that the Revenue has completely failed to discharge the onus cast on it to prove that the ball bearings in question were smuggled goods. He relied upon the decision in the case of Bon-Ton Sight Care v. Collector of Customs, wherein it was held that "in respect of goods which are not notified under Section 123 or to which the provisions of Chapter IV of Customs Act are not applicable, the burden of proof that they are not smuggled is on the Customs Authorities." He also referred to the decision in Shanti Lai Mehta v. UOI, 1983 ELT 1715 (DEL) wherein it was held that if there was no obligation on the petitioner to prove that the goods were not smuggled the burden of proof was wrongly cast on him and the entire enquiiy is vitiated and order of confiscation is liable to be set aside. He also relied upon the decision in the case of Hindustan Bearing Corporationv. Collector of Customs, wherein it was held that "the mere fact that the goods were foreign in origin is not sufficient to hold that they are smuggled goods. The circumstances that the consignee firm was fictitious and that the Appellants could not name the broker, may at best create suspicion against the appellants. Suspicion, however strong, cannot take the place of proof." The learned Advocate also relied upon the following decisions:Ravi Mittal v. CC, New Delhi, 1999 (32) RLT 709 (T) : 1999 (85) ECR 85 (T),Kulbhushan Jain v. CC, Delhi, 5. Countering the arguments Shri Jagdish Singh, learned D.R., submitted that Sansar Gupta has admitted categorically that Ram Niwas was sending only smuggled ball bearing to him and that Ram Niwas informed Sansar Gupta that he could supply only smuggled nature of ball bearing; that thus the smuggled nature of ball bearings gets established on the categorical admission of Sansar Gupta; that Sansar Gupta also admitted to have a godown at the address where the goods in question were recovered and seized from; that he has also not retracted the statement immediately as the same was retracted only on 24.7.1998 Le. after 19 days which is nothing but an afterthought; that the Revenue has discharged the onus of proving the smuggled nature of the ball bearings in question by way of voluntary statement of Sansar Gupta and the burden to prove that the goods are not smuggled one has shifted to the Appellants; that the Appellants have not produced any evidence to show that the ball bearings in question, which are of foreign origin, were licitly brought into the country.
6. We have considered the submissions of both the sides. We observe that the entire case of the Revenue is based on the statement given by Shri Sansar Gupta and absence of any documents to show the legal import of the ball bearings in question. Mere statement of Sansar Gupta, in our view, is not enough to prove that the ball bearing were smuggled one. What has been stated by him in his statement is that Ram Niwas told him that he could supply ball bearings of foreign origin of smuggled nature in bulk quantity. Ram Niwas, in his statement dated 2.9.1998 has completely denied to have supplied the ball bearing to Sansar Gupta. On the other hand he had deposed that he used to purchase ball bearing from the local importers and he was also importing himself and selling these ball bearings for the last 18 years. There is nothing to suggest the ball bearings in question were smuggled one. It is not the case of the Revenue that the Sansar Gupta himself smuggled these ball bearings. It has been the consistent view of the Tribunal that suspicion as to the ownership and lawfulness of acquisition of the ball bearings does not automatically create any presumption that the goods were smuggled one see Harshad P. Doshi case, 2001 (45) RLT 238. The Tribunal in the case of Arvindbhai Nyalchand Mehta, supra, has held that "foreign origin of goods by itself is not evidence when goods are freely importable by actual users and there are no restrictions on their purchase and sale under Customs Act, 1962. Lack of accounts of purchase and sale, no doubt a circumstance against the appellant, but not sufficient by itself to show an inference of smuggled nature of goods." Similar views were expressed by the Tribunal in the case of Hindustan Bearing Corporation. We do not find any substance in the argument of the learned D.R. that the Revenue has discharged its burden of proving the smuggled nature of the goods by recording the statement of Sansar Gupta. As observed by us earlier, the statement does not suggest that the ball bearings in question were smuggled into the country. The law has been settled that in cases of goods not notified under Section 123 of the Customs Act or not covered by Chapter IVA of the Customs Act, the Department has to lead the evidence to prove that the goods were imported illicitly into the country. We are of the view that the Revenue has not discharged the initial burden of proving the smuggled nature of the ball bearings in question and the burden has not been shifted to the Appellants. Accordingly we hold that no penalty is imposable on any of the Appellants in the present matters. We, therefore, set aside the penalty imposed on all the Appellants.