1. This is an appeal filed by the appellant against the order of the Collector of Customs (Appeals), Calcutta dated 17-3-1986.
2. The brief facts of the case are that the Preventive Officers of the Central Excise Collectorate, Bhubaneswar, on 19-11-1983 seized one Video Cassette Recorder and a Sony Colour TV, Japan, valuing Rs. 20,000/- and Rs. 15,000/- respectively from the appellant and the appellant produced two baggage receipts before the Customs officers with respect to the above articles and these two articles were seized on 19-11-1983 under a panchnama.
3. Before the seizure of these two articles, verification was done by the Central Excise department with respect to these two baggage receipts and it was found that the receipt with respect to the Sony T.V. is a genuine one, but the Customs authorities of Trivandrum reported that the baggage receipt with respect to the VCR is a fake one.
4. Thereafter, a Show Cause Notice was issued to the appellant by the Assistant Collector of Central Excise (Preventive), Bhubaneswar narrating the seizure to the abovesaid properties as well as the baggage receipts. It was also brought to the notice of the appellant that since no valid documentary evidence was made available substantiating the legal importation or acquisition of the goods under seizure, the same should have been imported illegally without a valid import licence and it was also stated in the Show Cause Notice that the provisions of the Import (Control) Order, 1955 issued under Section 3(1) of the Import & Export (Control) Act, 1946, as amended, read with Section 11 and Chapter IVA of the Customs Act, 1962 were violated and the goods are liable to be confiscated under Section 111(d) and 111(p) of the Customs Act, 1962. Therefore, the appellant was asked to show cause as to why the goods should not be confiscated under Section 111(d) and (p) of the Customs Act, 1962 and why penal action should not be taken against him. As against this show cause notice, the appellant filed his reply. It was stated in the reply that the baggage receipt No. 22/31 dated 8-7-1983 of the Madras Airport is with respect to the Sony T.V. Colour and the baggage receipt No. 07621 dated 30-6-1983 of Trivandrum Airport is in respect of National VCR. The former one for the TV is in the name of K. Mohammad Ali, Madras, and the latter one for VCR is in the name of Mrs. Brinda Gusai, Bombay. It was also contended in the reply that the said sets were actually in domestic use. It was also stated that the appellant had no reason to suspect any mala fide in the deal of the subject goods when baggage receipts were made over to him by the abovesaid persons. It was one Murali who gave the documents to the appellants and he claimed protection under Section 110 of the Customs Act. It was also contended that the TV was mortgaged to him and, therefore, there was no sale. Alternatively, it was contended that he had paid a substantial amount to the purchase of the VCR and that he should not be made to suffer for the faults of others, if any.
5. After the receipt of the reply, adjudication proceedings were taken against the appellant and the learned Deputy Collector confiscated both these articles and further imposed a penalty of Rs. 250/- against the appellant under Section 112 of the Customs Act, 1962.
6. An appeal was filed before the learned Collector who also dismissed the appeal, against which this appeal has been filed before the Tribunal.
7. The point that arises for determination is whether the order passed by the learned Deputy Collector confiscating those two items and that of learned Collector (Appeals) confirming the same are to be interfered with. Secondly, whether the imposition of the penalty of Rs. 250/- against the appellant is to be interfered with.
8. In dealing with the first point, the learned Collector has come to the conclusion that as reported by the Assistant Collector, Customs, Madras vide their letter dated 24-12-1983, the said TV set has been imported as baggage and was cleared on payment of duty by one Shri Md.
Ali of Madras on 8-7-1983. Therefore, the legal importation of the TV is clearly proved. But, according to the learned Collector, the goods have been sold and purchased in contravention of the provisions of ITC(PN), as stated in the Show Cause Notice and that the TV is a notified item and the provisions of Chapter IVA are applicable. It is, therefore stated that the sale and purchase has been done in contravention of the provisions of Chapter IVA of the Customs Act, 1962. But, in so coming to the conclusion the learned Collector has not taken into account the plea of the party that it was mortgaged to him.
The case pleaded by the appellant in reply to the Show Cause Notice and before the authorities is that he had taken this item on mortgage.
Therefore, it cannot be stated that he had taken the same under sale.
In this connection, the learned Advocate for the appellant relied on a decision reported in 1988 (37) E.L.T. Page 320 wherein at Para-4 the North Regional Bench held as follows :- "I have carefully considered the findings in respect of the two VCRs advanced on both sides. I immediately agree with the learned advocate for the appellant that the Baggage (Conditions of Exemption) Rules, 1975 do not apply to the two VCRs, on the ground that both these sets have been cleared from the baggage after due payment of duty and not under exemption from duty. I also agree with the learned advocate in respect of both the VCRs that the provisions of Section 110(1) would apply in the instant case inasmuch as the VCRs in question were either in personal use of the appellant or were kept in the residential premises of the appellant. Professional use of certain goods by a person has to be taken as a personal use.
For example, a legal practitioner making use of the law books though in his business premises would be deemed to be using those law books for his personal use; use of an article in one's own profession is no less a personal use. Provisions of para 5 of the ITC Public Notice prohibits the goods cleared under the said notice from being "sold, advertised or offered for sale or displayed in a shop".
Obviously, none of these things has been resorted to in respect of the VCRs. Therefore, it cannot be said that the appellant has contravened the provisions of the said ITC Public Notice. It has already been held that Baggage (Conditions of Exemption) Rules, 1975 do not apply. Therefore, it cannot be said that the 2 VCRs have contravened any of the provisions either of the Export Control Act or any Public Notice issued thereunder or of the Customs Act. It is not the case of the department that the VCR has been acquired by the appellant herein before depreciation of the market price of the VCR to less than 50%. There is neither any allegation to this effect nor any finding to that effect. It is also pertinent to note that transfer by mortgage of imported goods does not appear to have been prohibited under the ITC Public Notice 27/80, dated 15-7-1980." 9. We are in respectful agreement with the abovesaid proposition and, therefore, the transaction by mortgage does not appear to have been prohibited. In such circumstances, the order of confiscation of the TV is to be set aside and the appellant is entitled for the same.
10. As far as the VCR is concerned, it is seen that the same was covered under a baggage receipt No. 07621 dated 30-6-1983. On verification from the Trivandrum Airport it was reported that the same is a forged one. This fact that it is a forged one was also intimated to the appellant through the Show Cause Notice but the answer of the appellant is that he had no requisite mens rea about the nature of the smuggled goods and he did not smelt anything mala fide. Therefore, in spite of an opportunity he did not produce any evidence to contradict the finding of the Trivandrum Customs authorities that this is a forged one. In such circumstances, it is proved that this is a forged one.
Therefore, the VCR has not been legally imported into India. The learned Deputy Collector confiscated this VCR which was upheld in appeal by the Collector, but the plea of the appellant that he had not smelt any mala fide nature of the transaction and that it was a bona fide purchase, was not taken into consideration by both the authorities. It is not the case that this appellant is regularly dealing in those goods. As a householder, he had purchased these two articles and no mala fide can be attributed to him. So also the requisite mens rea is not found in this case, which could be attributed to the appellant. In such circumstances, this plea of the appellant has to be taken into consideration and if that is taken into consideration, we are of the opinion that he should be allowed to redeem properties on payment of the Customs duties as well as the redemption fine in this case. So also in such circumstances, when he had no requisite mens rea, no penalty can be awarded against him in the peculiar circumstances of this case.
11. The learned Advocates for the appellant had also relied on a decision reported in 1987 (30) E.L.T. 547 wherein the West Regional Bench had taken a view that when the baggage receipt produced by the appellant was a genuine receipt, it cannot be said that the goods were illegally imported and confiscation of such goods under Section 111(p) is wholly illegal. Applying the above principle, so far as the TV is concerned, the confiscation of the same is not in accordance with law.
12. In the result, we are of the considered view that the TV should be returned to the appellant and so far as the VCR is concerned, he should be allowed to redeem the same on payment of redemption fine of Rs. 4,000/-. However, in view of the circumstances stated by appellant, a lenient view is taken and the penalty is set aside. Hence, the following order : 13. The order passed by the learned Collector in confiscating the TV in question is hereby set aside and it is ordered that the TV be given to the possession of the appellant.
14. In so far as the VCR in question is concerned, the appellant is allowed to redeem the same on payment of the redemption fine of Rs. 4,000/-.
15. The order of imposing penalty of Rs. 250/- against the appellant is hereby set aside.