Judgment:
Aravind Kumar, J.
1. The Commissioner of Customs has preferred this appeal questioning the order dated 29-8-2003 passed by the Customs, Exercise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore in Appeal No. C/40, 48, 49, 57, 65 and 66/2002 whereunder the Tribunal has allowed the appeals filed by the appellants and has set aside the order of the Adjudicating Authority dated 5-12-2001 passed in Order-in-Original No. 35/2001 and remanded the matter back for adjudication by the competent jurisdictional authority after due investigation of the facts by holding that Adjudicating Authority at Bangalore had no jurisdiction. Further, the order of the adjudicating authority passed by invoking the powers of Section 28 of the Customs Act, 1962 has also been set aside. It is this order which is under challenge before this. Court by the revenue.
2. This matter has been admitted on 28-2-2007. Following substantial questions of law are framed for consideration and decision of this Court:
(i) Whether the Tribunal has committed an error in holding That the Department cannot confiscate the smuggled goods without establishing the point where the customs barrier is breached?
(ii) Whether the Tribunal has committed an error in holding that the order of confiscation is not an 'action-in-rem'?
(iii) Whether the Tribunal has committed an error in holding that the smuggled goods cannot be confiscated wherever such goods are found?
(iv) Whether the Tribunal has committed an error in remanding the matter to the competent authority without specifying the details of the authority as to who should decide the matter?
3. The following facts would be of necessity to traverse the contentions raised in the appeal memorandum which are not disputed by the respondents. On 30-5-2000, 25 bales of Mulberry raw-silk yarn of Chinese origin valued at Rs. 23,54,100/- which had been described as waste cloth/old chindi cotton/old waste doth (as described in the goods consignment notes) were seized from godown of M/s Deluxe Roadlines No. 79, 4th cross, Narasimharaja Road, Bangalore-560002 by the Directorate of Revenue Intelligence, Bangalore. Four days prior to that, the very same goods had been intercepted by the Karnataka State Commercial Department at the check-post demanding penalty of Rs. 49,140/- for non-declaration of 300 K.Gs foreign origin silk yarn in respect of LR No. 120900 dated 26-5-2000- The first respondent claiming to be the consignee had deposited the penalty on 28-5-2000 in the office of the Karnataka State Commercial Tax Department and had got the goods released. When the Directorate of Revenue Intelligence had seized the said goods at Bangalore and from the godown of 6th respondent it was found by the authorities that said goods contained labels which described the goods as blossoms, white steam filature, China National Silk Import & Export Corporate Made in China and Jinding, China National Silk Imp & Exp.Corp. Sichuan Branch. During the Course of investigation by the authorities statements of all the respondents under Section 108 of the Customs Act came to be recorded and some of the respondents have retracted the said statement subsequently. It was the admission of the respondents in the said statement that they are only recipients of the goods and they had not imported the goods to the territorial waters of India and as such they are not liable to pay the Customs Duty. They further stated, that the goods were being supplied by Ashok Kumar Shroff and Subrata Mondal of Kolkota. Notice issued to these persons did not yield any result inasmuch as they were all fictitious persons. It is to be noted that the clerk of M/s Deluxe Roadlines, Private Limited, Bangalore, from which godown the goods came to be seized through its Manager Sri. Manjegowda, the delivery clerk had given a statement under Section 108 of the Act admitting there under that apart from the required routine work he was also asked the delivery parcels against slips issued from the office and those slip number contained number of parcels and they were entered on the right side of the delivery register and the said slips were sent back to the office. He also stated that he knew that the said bundles were silk yarn and he had delivered some of the silk bales. The said statement was also endorsed by another delivery clerk by name Sri. Neelappa Gowda. Department issued a show-cause notice dated 24-11 -2000 as to why:
i) the seized 1569.40 Kgs. of raw silk/silk yarn contained in 25 bales valued at Rs. 23,54,100/- should not be confiscated under Section 111(d) of the Customs Act 1962,
ii) the packing material namely the gunny bags and the cloth bags in which the seized goods were packed should not be confiscated under Section 118 of the Customs Act, 1962,
iii) customs duty Of Rs. 4,58,122/- along with interest due, if-any, payable on 17 bales (1067.19 Kgs.) of smuggled silk yarn seized should not be demanded from Shri. Vikram Jain under Section 28(1) read with 28AB of the Customs Act, 1962,
iv) customs duty of Rs. 2,15,584/- along with interest due, if any, payable on 8 bales (502.20 Kgs.) of smuggled silk yarn seized should not be demanded from Shri. Ashok Kumar Shroff under Section 28(1) read with Section 28AB of the Customs Act, 1962,
v) the customs duty of Rs. 27,13,548/- is liable to be paid along with interest due on the 111 bales of smuggled silk yarn, valued at Rs. 93,24,000/- received by Shri. Vikram Jain and sold by him in the past shall not be demanded from him under Section 28(1) of the Customs Act, 1962, read with Section 28AB of the Customs Act, 1962.
vi) the customs duty of Rs. 19,55,710/- liable to be paid along with interest on the 80 bales of smuggled silk yam, valued at Rs. 67,20.000/- received by Shri. Ashok Kumar Shroff and sold by him in the past, shall not be demanded from him under Section 28(1) read with Section 28AB of the Customs Act, 1962,
vii) the amount of Rs. 11 lakhs deposited vide TR 6 Challen dated 8.6.2000 should not be adjusted towards customs duties, fines, penalties and interest if any which would become payable on adjudication, and
viii) penalty shall not be imposed on Shri. Vikrarn Jain, Shri. Lalit Jain, Shri. Bheemraj Jain, Shri. Ashok Kumar Shroff, Shri. S. Muralidhara, Shri. Rahul. K. Dharamshi all of Bangalore and Shri. Vikas and Shri. Ashok of Calcutta, on each one of them, under Section 112 of the Customs Act, 1962, for their roles in smuggling and subsequent disposal of the subject goods.
by calling upon the respondents to show cause to the notice for proceeding further in the matter. The respondents herein submitted their written reply and after consideration of the same the adjudicating authority namely the Commissioner of Customs, Bangalore region by an order dated 5-12-2001 in OIO No. 35/2001 COMMR/CUS ADJN confirmed the demand made in the show-cause notice. This order came to be set aside by the Tribunal by holding that the place of importation is at Calcutta and hence the adjudication has to take place at Calcutta and accordingly remanded the matter on the said issue namely regarding confiscation. In so far as invoking the provisions of Section 28 of the Customs Act, 1962 by the Adjudicating Authority, the Tribunal set aside the finding of the adjudicating authority on the ground that there is no finding conclusively arrived at as to why the import duties in this case are being fastened on to transit handlers i.e., consignment agents at Bangalore and accordingly set aside the said finding. The Tribunal did not embark on giving a finding on other issues as it had left open to be determined by the adjudicating authorities in the remand proceedings.
4. Sri. Shashikantha, learned Central Government Standing Counsel appearing on behalf of the Department contended as follows:
(i) The Tribunal was in error in holding that the Commissioner of Customs, Bangalore had no jurisdiction to pass the adjudicating order since the goods have been seized at Bangalore and smuggled silk yarn was recovered at Bangalore.
(ii) Since both the name of consignors and consignees were fictitious the respondents were unable to produce documents to indicate importation of goods and there was mis-declaration as old waste clcth,
(ill) The Tribunal was in error in holding that Department is bound to trace out the place where the customs barrier is breached since the goods are found to be smuggled goods, the place where the goods enter is immaterial.
(iv) The Tribunal was in error in holding that original importers have not been traced and hence the Commissioner of customs, Bangalore was incompetent to adjudicate the goods.
In support of these contentions the learned Counsel relies upon the decision in the case of Collector of Customs, Madras and Ors. v. D. Bhoormull reported in : 1983(13) E.L.T. 1546 (SC) at paragraphs 30, 31, and 40.
5. Per contra Sri. Chidananda Urs appearing for respondent No. 2 contends as follows:
(i) when once any goods has crossed the customs barrier, the said goods gets merged with the goods of the land then it ceases to be imported goods.
(ii) Section 111(d) if applied the jurisdiction to adjudicate is a+ the place of the breach namely Calcutta even according to the show-cause notice and hence it has to be tried by the Jurisdictional Commissioner.
(iii) The burden of proof lies on the Department that goods are smuggled, since the Mulberry raw silk are not notified goods under Section 123.
(iv) The invocation of Section 28 is improper.
(v) When confiscation is held to be improper consequently levy of penalty has to go.
Learned Counsel relies on the following decisions:
(i) Collector of Customs, Madras and Ors. v. D. Bhoormull reported in : 1983(13) E.L.T. 1546 (SC)
(ii) 2006 (2005) E.L.T. 23 (Bom) Commissioner of Customs (preventive), Mumbai v. Aakash Enterprises.
(iii) : 1997(96) ELT 224 Union of India v. Ram narain Bishwanath.
Smt. Vijaya Prakash appearing for respondents 1, 3 and 5 contends that the order of the Tribunal is just and proper and in support of the same she relies upon the decision in the case of Commissioner of Customs (Preventive) West Bengal, Kolkata v. Ritu Kumar : 2006 (202) E.L.T. 754 (Cal).
6. We have heard the learned Counsel for the parties and perused the records as well as orders of Adjudicating Authority, Tribunal and the authorities cited at the bar and have given our anxious consideration to the rival contentions raised by the parties to the lis. At the time of the admission the substantial question of law as referred to in paragraph No. 2 supra had been formulated for being adjudicated.
7. In order to appreciate the contentions raised herein above, it would be just and proper to extract the relevant portions of the Customs Act which would be necessary for dealing with the said contentions.
2. Definitions
In this Act, unless the context otherwise requires-
2(33) 'prohibited goods' means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with;
2(39) 'Smuggling', in relation to any goods, means any act or omission which will render such goods liable to confiscation under Section 111 or Section 113;
5. Powers of Officers of Customs
(1) Subject to such conditions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act.
(2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any ether officer of customs who is subordinate to him.
(3) Notwithstanding anything contained in this section, [a Commissioner (Appeals)] shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV and Section 108.
28. Notice for payment of duties, interest, etc.
(1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may,-
(a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year;
(b) in any other case, within six months, from the relevant date, serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been short-levied or part paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
Provided that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously' refunded by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the exporter or the agent or employee of the importer or exporter, the provisions of this Sub-section shall have effect as if for the words 'one year' and 'six months', the words 'five years' were substituted:
111. Confiscation of improperly imported goods, etc.
The following goods brought from a place outside India shall be liable to confiscation:
(a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under Clause (a) of Section 7 for the unloading of such goods;
(b)any goods imported by land or inland water through any route other than a route specified in a notification issued under Clause (c) of Section 7 for the import of such goods;
(c) any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port;
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
(e) any dutiable or prohibited goods found concealed in any manner in any conveyance;
(f) any dutiable or prohibited goods required to be mentioned under the regulations in an import manifest or import report which are not so mentioned;
(g) any dutiable or prohibited goods which are unloaded from a conveyance in contravention of the provisions of Section 32, other than goods inadvertently unloaded but included in the record kept under Sub-section (2) of Section 45;
(h) any dutiable or prohibited goods unloaded or attempted to be unloaded in contravention of the provisions of Section 33 or Section 34;
(i) any dutiable or prohibited goods found concealed in any manner in any package either before or after the unloading thereof;
(j) any dutiable or prohibited goods removed or attempted to be removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission;
(k)any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under Section 109 is not produced or which do not correspond in any material particular with the specification contained therein;
(l) any dutiable or prohibited goods which are-not included or are in excess of those included in the entry made under this Act, or in the case of baggage In the declaration made under Section 77;
(m) [any goods which do not correspond in respect of Value or In any other articular] with the entry made under this Act or in the case of baggage with the declaration made under Section 77 [in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to Sub-section (1) of Section 54;]
(n) any dutiable or prohibited goods transited with or without transhipment or attempted to he so transited in contravention of the provisions of Chapter VI8;
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;
(p) any notified goods in relation to which any provisions of Chapter IVA or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened.]
112. Penalty for improper importation of goods, etc.
Any person,-
(a) who, in relation to any goods, does or omits to do any act. which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111.
shall be liable,-
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees], whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees], whichever is the greater;
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under Section 77 (in either case hereafter in this Section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater;
(iv) in the case of goods falling both under Clauses (i) and (iii), to penalty [not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest;
(v) in the case of goods falling both under Clauses (ii) and (iii), to a penalty [not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees], whichever is the highest;
122. Adjudication of confiscation and penalties
In every case under this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged,-
(a) without limit, by a [Commissioner of Customs] or a [Joint Commissioner of Customs];
(b) where the value of the goods liable to confiscation does not exceed [two lakh] rupees, by an [Assistant Commissioner of Customs or Deputy Commissioner of Customs]:
(c) where the value of the goods liable to confiscation does not exceed [ten thousand] rupees, by a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs.
[122A. Adjudication Procedure
(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires.
(2) The adjudicating authority may, if sufficient cause is shown at any stage of proceeding referred to in Sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing:
Provided that no such adjournment shall be granted more than three times to a party during the proceeding.]
123. Burden of proof in certain cases
(1) Where any goods to which this Section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be-
(a) in a case where such seizure is made from the possession of any person,
(i) on the person from whose possession the goods were seized; and
(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;
(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.
(2) This Section shall apply to gold [and manufactures thereof,] watches, and any other class of goods which the Central Govt. may by notification in the Official Gazette specify.
8. A preliminary objection has been raised as to the maintainability of the appeal on the ground that the Department has not challenged the original order i.e., dated 29 8-2003 and in fact the department itself had moved a rectification of mistake petition/application with a prayer to the Tribunal to clearly specify the proper officer as to who has got the jurisdiction to adjudicate and this petition/application had been rejected by the CESTAT on 6-1-2005. It is contended by the respondent that after dismissal of this petition/application on 6-1-2005 department has filed the present appeal on 2-12-2005 along with an application for condonation of delay and in the said application seeking condonation of delay the reasons assigned for delay they only speak about order dated 6-1-2005 and not the order dated 29-8-2003. Thus, in effect it is only order dated 6-1-2005 of Tribunal is challenged in the appeal and not the main order i.e., dated 29-8-2003 and thus appeal itself is not maintainable.
9. This contention is liable to be rejected in limine for two reasons namely:
(i) In the prayer made in this appeal what has been sought for being setting aside is the order dated 29-8-2003 passed by CESTAT in appeal C/40, 48, 49, 57, 65 and 66/2002; and
(ii) As found from the proceedings of this case namely the order sheet we find that on 19-2-2007 the Division Bench of this Court had condoned the delay in filing the appeal. Thus the delay having been condoned and subsequently on 28-2-2007 the appeal having been admitted it would be too late in the day for the respondents to contend that appeal is not maintainable.
Hence, this ground of non-maintainability of the appeal as contended by the respondents is liable to be rejected and we accordingly reject the same.
10. The object with which the Customs Act has come into existence is to levy duty on goods as contemplated under the Act and also to ensure that those goods which are dutiable do not escape from payment of customs duty. The object with which the Customs Act 1962, was introduced reads as follows:
The Sea Customs Act which lays down the basic law relating to customs was enacted more than 80 years ago. It has been amended from time to time and some important amendments were made by the Sea Customs (Amendment) Act, 1955. General and comprehensive revision of the Act has not so far been undertaken. Several provisions of the Act have become obsolete. Difficulties have also been experienced in the implementation of certain other provisions. The trade has been pressing for certain changes and facilities. Smuggling, consequent to controlled economy, has presented new problems. To meet these requirements, it has become necessary to revise the Act.
11. The said Act was brought about not only to check the smuggling but also to ensure that the goods that is imported into the territory of India to which the Customs Tariff Act are applicable suffers the duty in the hands of the importer.
12. The levy of, and exemption from customs duties is traceable to chapter V of Customs Act, 1962 Section 12 of the Customs Act provides for levy of Customs duty at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on the goods imported into or exported from India. Section 28 provides for levy of duty on goods where it had not been levied or had been short levied or erroneously refunded. Section 111 empowers the authorities to confiscate all improperly imported goods. Section 112 empowers the authorities to levy penalty for improper importation of goods etc. The Act itself provides for casting the burden of proof in certain cases as enumerated under Section 123 of the Customs Act. Section 125 provides for paying fine in lieu of confiscation of the goods namely the option is given to the person from whose possession or custody said goods have been seized. There might be instances that person from whom goods are seized may dis-own the goods itself and it would not be possible for the authorities to ascertain as to the person who brought the same into territory of India and in this background we have to look into Section 111 of the Customs Act. Section 111 provides for confiscation of improperly imported goods brought from a place outside India. In the instant case a show-cause notice came to be issued on 24-11-2000 to the respondents under Section 124 of the Customs Act and notifying the respondents as to why goods namely raw-silk/silk yarn should not be confiscated under Section 111(d) and as to why customs duty should not be demanded from respondents 1 and 2 should not be demanded under Section 28(1) read with Section 28AB of the Customs Act, 1962.
13. The authorities on the basis of the statement recorded under Section 108 of the Act and also on the basis of the evidence collected during the course of the investigations came to the conclusion that these goods were of Chinese origin and were classified under the Customs Tariff Heading 5002 and was subjected to 35% basic customs duty 10% Special additional customs duty, 4% SAD and a cess of 0.05% and is classifiable under EXIM code 5002.00 and it was a restricted item. It is also to be noticed that during April 1997 to March 2002 the said goods were not freely importable. From 1-4-2000 it required an SIL for import and in the absence of the same it was a prohibited item. Search and seizure of the goods, sample of goods have been forwarded to SCTRI for verification on 21-6-2000 for being examined by the Deputy Director of Eco Testing Laboratory, Bangalore for ascertaining the nature of the goods seized. The said office has opined that the raw silk seized was of Chinese origin. It is on this premise the show-cause notice dated 24-11-2000 came to be issued to the respondents demanding from them a reply as to why the confiscation should not be done, duty should not be demanded and penalty should not be imposed. A personal hearing also seems to have been given to the respondents and on consideration of their reply adjudicating authorities have come to the conclusion that the demand made in the show-cause notice requires to be confirmed. This order came to be reversed by the Tribunal on the short ground that it is the authority which has the jurisdiction to draw and adjudicate the same since the goods alleged to have entered the territory of India at Calcutta and not at Bangalore and accordingly the matter has been remanded to the jurisdictional authorities for adjudication by the competent authority after due investigation of the facts.
14. It is this precise issue which has been challenged by the revenue as also the other grounds namely the levy of penalty which is the subject matter of this appeal. Sri. Shashikantha learned Counsel appearing for the revenue has contended that the Commissioner of Customs has held in paragraph 234 and 235 of the Order In Original as to how the jurisdiction of the Commissioner of Customs, Bangalore has got powers to adjudicate and accordingly has given a finding and supports the said finding and further contends that order of Tribunal is erroneous and liable to be set aside.
15. Per contra Sri. Chidananda Urs along with Smt. Vijaya Prakash would contend that the authorities have invoked under Section 111(d) of the Customs Act which implies that it is an authority where the goods have entered Indian Territory who would get the jurisdiction and not any other authorities inasmuch as for attracting Section 111(d), the place of breach is the place where the jurisdiction vests, Sri. Shashikantha also relies upon the decision in the matter of Collector of Customs Madras and Ors. v. D. Bhoormull reported in : 1983(13) ELT 1546 (SC).
16. Section 111 of the Act empowers the authority to confiscate the goods brought from a place outside India. The heading of the said Section reads: 'Confication of improperly imported goods etc.' The various contingencies are the circumstances under which the goods could be confiscated are enumerated in Clauses (a) to (p). In the instance case show cause notice was issued under Clause (d) of Section 111 and the said Clause reads as follows:
(d) Any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
and by invoking this provision the goods came to be
confiscated, duty levied under Section 28(1) and penalty imposed under Section 112 of the Act. The said show-cause notice came to be adjudicated and confirmed as per the order dated 5-12-2001 which came to be reversed by the Tribunal by holding that the goods in question were not notified goods and the authorities were cast with the burden to prove and trace out the place where the custom barrier had been breached or violated particularly in the background of the contention by the respondent that the goods were imported and cleared from Calcutta port. It was also held by the Tribunal that it was imperative on the part of the Directorate of Revenue to have located the persons at Calcutta and proceeded at Calcutta where the breach of Custom barrier has taken place. It is on this premise the confiscation of the goods in question were held as improper. The Tribunal remanded the matter back for adjudication by the competent authority.
17. The scheme of the Customs Act is to ensure that the goods which are brought into the territory of India if susceptible to tax under the Act are to be paid by such persons who brings the goods and if the same is not brought under any valid documents were to be noticed by authorities then they would be liable for confiscation under Section 111 though not prohibited goods under Section 123 of the Act. It is not dutiable goods or prohibited goods found at any place which can be confiscated by the authorities but all such goods when found that they are dutiable and have not suffered custom duty, the burden of proving that the goods has suffered duty or the duty has been paid on the goods is on the person from whom it is sought to be seized by the Department. It cannot be said by universal application chat the Departmental Authorities are required to prove with mathematical precision that goods are smuggled or has not suffered the Customs duty since it is on the basis of suspicion that authorities act in order to prevent the leakage of the revenue. When the action of the authorities are viewed from this angle it is to be examined as to whether the authorities have given full opportunity to the person from whom the goods are attempted to be confiscated and if it is found in positive then the authorities would pass this test and the only one inference that can be drawn is that the onus of proving it to be otherwise, automatically shifts to the person from whom the goods are attempted to be confiscated or recovered/seized.
18. In the absence of any cogent evidence from the said person to establish that goods have suffered duty it is to be presumed otherwise and the said person or persons are liable to be proceeded with under the provisions of the Customs Act. Hence, the contention of the respondent that the burden of proving that the goods had been smuggled or brought into the territory of India without payment of duty, lies on the authorities would facilitate the mischief since all human affairs require absolute certainty, is a myth and 'all exactness is a fake' and absolute proof being unattainable the law would accept probability as a working substitute in this work-a-day world.
19. Hence, when viewed in this background the contention of the respondents that the burden was on the Department to prove that the goods were smutted would recede background and has to be rejected.
20. It is no doubt true that as contended by the learned Counsel Sri. Chidananda Urs that in respect of the notified goods burden is on the Department to prove that goods were smuggled for which proposition he relies upon the decision in the case of Commissioner of Customs (Preventive), Mumbai v. Aakash Enterprises reported in 2006 (205) ELT 23 (Bombay). Wherein it is held that in so far as 'non-notified goods' are involved, burden lies on Revenue to prove illegal entry into country. However, in the instant case the admitted fact is that the goods have been seized from the godown of M/s Deluxe Roadlines, Bangalore and the authorities at Bangalore have initiated the proceedings after seizure of the goods and proceeded with the matter. During the course of investigation and in the statement recorded under Section 108 of the Customs Act, the first respondent admits to have used M/s Deluxe Roadlines for clandestine transportation after mis-declaration of goods using fictitious consignors name as also consignees addresses by ingeniously setting up the bills without entering in the dally registers which all led to the irrefutable conclusion of the goods not having suffered the Customs duty.
21. One another aspect which requires to be noticed by us is that respondents 1 and 2 herein were detained in COFEPOSA vide Detention Orders No. 673/54/2000-Cus VIII dated 19-9-2000 and No. 673/55/2000-Cus VIII dt. 18-9-2000 respectively, passed by the Joint Secretary to the Govt. of India, Ministry of Finance and were lodged in the Central Prison, Bangalore, as detenue No. 1410 and 1411 respectively.
22. The contention of the learned Counsel Sri. Urs that invoking of Section 111(d) of the Act, would attract that the proceedings will have to be adjudicated by the authorities where the Customs barrier is breached on the premise that the conclusion is arrived at by the Tribunal to the effect that it was breached at Calcutta will have to be examined with reference to the facts of this case. It is to be noticed by us that the goods were seized at Bangalore is not in dispute. It is only during the course of investigation that the authorities tumbled upon the fact that persons in Calcutta were suppliers of the goods. On investigation it was found that such persons were not traceable and hence the persons from whom the goods were seized were proceeded with and as such when the goods were seized at Bangalore the proceedings for confiscation of the seized goods being an action in rem, pertains to the sale of goods perse the proper officer having jurisdiction over the situs of the goods had the authority to initiate proceedings, which admittedly has been done in the instant case namely by issuance of the show-cause notice dated 24-11-2000 by the Additional Director General, DHI to show-cause to the Commissioner of Customs, CR Building, Queen's Road, Bangalore which is in consonance with the notifications issued under Section 4 of the Customs Act which has been succinctly examined and explained by the adjudicating authority at paragraph 236 of the adjudication order. Hence, we do not accept the contention that the action initiated by the authorities at Bangalore would be contrary to the provisions of the Customs Act, particularly Section 111.
23. Be that as it may, yet another contention which the respondents contend is, that Section 111(d) contemplates that action to be initiated is at the place of breach and that admittedly the breach had occurred at Calcutta. This factum of averment regarding the breach at Calcutta remains an averment in the reply to the show-cause notice inasmuch as the burden of proving that the goods has suffered the customs duty had not been discharged by the respondents. One another factor that requires to be noticed by us is that the goods in question was under prohibition as per Import Trade Control Order 17/55 for the reason that condition No. 10-A of the said order stipulated that an importer had to describe the goods in the bill of entry. Once the goods are considered as of foreign origin a duty is cast on the person from whom the goods are seized to prove otherwise the fact that it had suffered duty and that the goods has not been illicitly imported into the territory of India.
24. The question as to whether the Customs barrier is breached at a particular place or otherwise depends on facts and circumstances of each case and it cannot be said that the authorities are bound to unearth the place at which the breach of customs barrier had occurred as a universal application and to contend that even in a situation where the goods having been seized at a particular place, which in the instant case is at Bangalore and to drive the authorities to unearth the occurrence of breach and thereafter wards the adjudication has to be proceeded at the place where the breach is alleged to have occurred. This contention is fallacious inasmuch as a situation may crop up as it has occurred in the instant case where the consignor of the goods is a fictitious person and in such a situation it would never be possible to trace the person who despatched the goods. As seen from the adjudication proceedings of the instant case we find that the consignor was 'M/s Jhunjhunwala and Company' and consignee was 'Samsuddin Bhai' and the seizure of the goods took place at 'M/s Deluxe Roadlines Private Limited, Bangalore' and as a follow up action by the seizing authorities namely revenue intelligence have cross checked with their counter parts i.e., Joint Director-Directorate, Revenue Intelligence, Mumbai to verily and ascertain about the authenticity and genuineness of the consignor which was found by them to be fictitious. Hence, in such a situation it cannot be said that the adjudication proceedings itself ought to fail, and such visualisation ought not to be eschewed since the scheme of the Customs Act when examined on the touchstone of collection of Custom duty on the goods and checking the evasion of levy of Customs duty is examined it becomes fallacy in drawing logical conclusion.
25. In this factual matrix when we examine the contention of the respondent that adjudication has to fail on account of non location of the actual breach of customs barrier by the authorities, we find that only conclusion that can be drawn in all such situation is that the consignor/recipient of the goods himself/itself could have booked the goods as consignor in fictitious names in order to evade payment of Customs duty and hence it cannot be held even in a situation as we are faced with to direct the authorities to first ascertain the place of breach of customs barrier and only thereafter the authorities should proceed. This would result in driving the authorities to wall and lead to a incongruous situation. Hence it would be proper to interpret Section 111 as a whole in its true perspective and in such a manner as to plug the leakage of Revenue and in such a case the action of the authorities in holding that the burden is on the person from whom the goods have been seized or the person who claims to be the owner of the goods to prove that the goods which have been seized had suffered duty or that it was not a dutiable goods or it is purchased by valid documents which are all matter for adjudication is fully justified.
26. It is brought to our notice by the learned Counsel that the decision of the Hon'ble Supreme Court in the case of Union of India v. Ram Narain Bishwanath reported in : 1997 (96) E.L.T. 224 (SC), to contend that the order of the Tribunal in remanding the matter to the adjudicating authority at Calcutta is just and proper and in this regard has drawn our attention to paragraph 4 of the Judgment which reads as follows:
It seems to us, having regard to the facts set out above, clear that it was for the Customs authorities at Paradip to initiate Proceedings against the respondents on the ground that the goods had been imported on fictitious licences and not for the Customs authorities in West Bengal to do so.
The said judgment is distinguishable on facts inasmuch as that was a case where the licence which were fictitious in nature were produced as importation and cleared at Paradip Port (Orissa State) which came to be seized and adjudicated by Customs authorities in West Bengal. Hence in the facts of the said case as held by their Lordships it was in the facts set out therein the Hon'ble Supreme Court directed the authorities at Paradip to initiate proceedings as it was known as a fact that the breach had occurred at the customs port at Paradip. However, in the instant case, the goods were seized at Bangalore and hence to say that breach took place at Customs barrier at Calcutta port no documentary evidence has been produced except the statement made under Section 108 of the Customs Act and even on enquiry by authorities at Calcutta the enquiry having yielded no positive result to arrive at the conclusion that the goods had entered the country at Calcutta by breaching the Customs barrier at Calcutta, the said decision pressed into service by respondents would not be of any assistance to them nor can the Principle applied to the facts of this case.
27. Per Contra Sri Shashikanth, appearing for the Appellant contends that it would be appropriate to direct the authorities at Bangalore to adjudicate inasmuch as the theory of 'action in rem' is squarely applicable to the facts of the case since the confiscation of goods have taken place at Bangalore. In the instant case the goods were seized at Bangalore by DRI authorities which goods were admittedly dutiable and prohibited goods which were found concealed and described in the Lorry receipts used for transportation as 'five bundles of old chindi bales' or as 'five bundles of old waste cloth' but on verification by authorities at the time of examination of goods, it was found to contain labels describing the goods as Blanons white Steam Filature, China Silk Import and Export Corporation, made in china and JINDING, China National Silk Import and Export-Corporation Sichuan Branch. In view of this factual matrix it would be unsafe to call upon the authorities to Kolkota to adjudicate the matter. On the other hand it would be just and proper for the Customs Authorities at Bangalore to adjudicate the matter particularly in the circumstances of the case and also due to the situs of the seizure being Bangalore and goods having been seized from persons viz., respondents who are residents of Bangalore, as also on the premise that respondents have been unable to demonstrate satisfactorily about the goods having suffered customs duty and were being transported or stored under valid documents as otherwise in all such instances the person from whose custody goods have been seized can wriggle out of facing consequences even after violating the provisions of the Customs Act only on the technical plea of goods having entered the customs barrier elsewhere knowing folly that it would not be possible to trace the occurrence of breach or ownership of goods. But on the other hand when the onus shifts to the person from whom goods have been seized to prove about the goods which are of foreign origin which comes to be seized, that It ha4 differed applicable customs duty that will be proper understanding and Interpretation of the provisions of the Act, even in the context of Section 111(d) of the Act, and on this touchstone and the scheme of Customs Act, the fact situation will have to be scrutinised and examined.
28. Hence, the questions of law are answered as follows:
Question No(i): Affirmative
Question No. (ii): Affirmative
Question No. (iii): Not answered as the matter is remanded to the Adjudicating Authority at Bangalore.
Question No. (iv): Affirmative in part.
and Appeal is allowed in part and parties are directed to bear their own costs.