Cc, Lucknow Vs. S. Krishan and Co. Manglam Parivahn Pvt.Ltd. - Court Judgment

Excerpt:
customs act, 1962 - section 123 -manmohan singh, j. 1. all the six appeals filed by revenue are being disposed of by a common order as these arise out of the same impugned order passed by commissioner (appeals) as per order-in-appeal no. 23-cus/alld/2012 dated 16.03.2012 vide which he set aside the order of original adjudicating authority and allowed all appeals of the respondents. 2. going through the facts briefly, it is observed that the customs officers intercepted one truck bearing registration number hr 69-2157 at a place near raja talab at varanasi-allahabad high way. the truck was carrying betel nuts claimed to be imported from bangladesh. the driver santosh singh on demand showed following papers namely - transit declaration form (govt. of u.p.), - lorry challan of m/s manglam parivahan pvt. ltd kolkata, - bill of entry having serial number 06530 dated 3-11-2010, - lorry challan no. nil dated 14-11-2010 issued by m/s. chandra roadways, - tax invoice issued by m./s s. krishna and co., - consignment note no. 300770 dt. 14.11.2010, - copy of form 50 - invoice no. tec/exp/106/10 dt. 13.10.2010 and - packing list dt. 13.10.10. 3. on comparison of goods in the truck with details in above documents, it was found that mark on bags were different from one mentioned on b/e showed star brand, the bags carried mark l and the word golden. after conducting inquiries and investigations, revenue felt that these 175 bags of betel nuts totally valued at rs. 11.90 lakhs have been smuggled into india through off route from bangladesh in contravention of provisions of law. accordingly seized those bags under proper panchnama. revenue has felt that these 175 bags of betel nuts totally valued at rs. 11.90 lakhs have been smuggled into india through off route from bangladesh in contravention of various provisions of law. 4. later, show cause notice issued on 08.5.2011 was adjudicated vide oio no. 48/11 dated 29.9.11. betel nuts, and truck were confiscated and penalty was imposed upon m/s s. krishan and co. along with penalties upon 5 other notices. on appeal, the commissioner (appeals) set aside the order-in-original. 5. on going through the impugned order of commissioner (appeals)s order-in-appeal no. 23/cus/all/2012 dated 16.3.2012 it is seen that he has observed as under:- 7.8.1. i find that the investigation carried out by the department could not reach a conclusive end to prove the contraband nature of seized goods as there is nothing on record about the 118.367 mts of betel nuts imported vide bill of entry no. 06530 dated 3.11.2010 of which the said seized goods are being claimed to be a part. there is no evidence direct or indirect on record to conclusively establish that the seized consignment was imported illegally in contravention of provisions of customs act, 1962 rendering them liable for confiscation. there is just no conclusive evidence to disregard and reject the claim of the appellants that the seized goods were part of legally imported consignment duly cleared by customs under bill of entry no. 06530 dated 3.11.2010. i find the grounds of appeal convincing enough to conclude that the case of department lacks substance and is legally unsustainable. it is not the case of the department that no import had taken place against the bill of entry no. 06530 dated 3.11.2010 and the same was fake. it is also not the case of the department that the entire consignment cleared under above bill of entry had gone elsewhere. no contravention under customs act has been established against the seized consignment so as to justify its confiscation. 6. department did not agree with the findings recorded by learned commissioner (appeals). department has come in appeal before the tribunal on the following grounds: a). that the place of loading itself is disputed in the light of transport challans issued by m/s chandra oadway who has categorically accepted that he has issued the said challan merely on request/insistence of the party and he has not arranged any transport nor has received any payment. it is also conspicuous that the said challan is without any serial number and not issued from any regular genuine challan book. b). the markings found on the seized bags were different from those which had been imported under impugned bill of entry. c). commissioner (a) reliance on boards circular dated 14.12.65 is baseless as a plain reading of the circular suggests that in case of goods which are not covered under section 123 of customs act, 1962, the burden to prove that goods are smuggled is on the customs authorities. but when goods are recovered from a person who is not an importer, it is supposed that all documents of legal importation of said goods to be in possession of that person and thats why the burden to prove the goods to be smuggled one, is on the department. in the present case, the importer has failed to correlate the goods with his import documents. the documents submitted by him were found to be fabricated and the averments have been found to be after thought. d). several circumstantial evidences coupled with dubious conduct of the party reasonably lead to conclusion drawn by adjudicating authority that said goods were smuggled ones. e). the apex court in the case of cc, madras and ors vs. d. bhormul [1974 scr (3) 833] held that the department was not required to prove its case on mathematical precision to a demonstrable degree, for, in all human affairs, absolute certainty is a myth. f). that goods were of a foreign nature and chas representative opined that these were procured from bangladesh and that the department has duly discharged the burden cast upon him. 7. when the stay applications and appeals were listed before honble tribunal, after due consideration of the matter honble tribunal set aside stay applications and appeals on the ground that compliance to requirement of committee of commissioners was not fulfilled cestats order was challenged before honble allahabad high court who after due consideration set aside the order passed by the honble tribunal. it was held by honble court that cestat has dismissed the appeals on technical point that one of member of reviewing committee did not put date under his signature and remanded all the six appeals to cestat for hearing afresh. 8. now matter has been taken up for fresh decision in denovo proceedings on the directions of honble high court. learned dr reiterated grounds of appeal and insisted that were are clear findings in the order-in-original passed by adjudicating authority holding that there was smuggling of betel nuts via unspecified routes from bangladesh and department has discharged their burden. 9. on the other hand, ld. counsel for the respondents extensively argued that the difference in markings on bags had arisen as torn bags were discarded and re-bagging of the imported goods in new markings; that the importer possessed three godowns near indo-bangladesh border for storing, re-bagging etc.; that company from where sewing machines to stitch new bags was not non-existent unit; that supplier of new bags was very much in existence; that driver was illiterate person and evidence given by him could be doubted upon; that the department had miserably failed in pointing out the route through which the said contraband was imported into india. further department has failed to discharge burden of proof cast on them. learned counsel also raised the issue that filing of appeals by the department was against the national litigation policy as duty involved in these appeals was less than rs. 5 lakhs (rupees five lakhs only). actually there was no duty involved in these appeals as appeals related to imposition of penalty only. 10.  heard both sides. 11.  i have gone through the submissions made by both sides and also have perused the records. it is observed that the revenue have come up in appeal before tribunal against commissioner (appeals)s order wherein he has dropped penalties concluding that revenue has failed to establish that seized goods were smuggled one commissioner (appeals) has relied upon honble tribunals judgment in case of sultan dharani-2007 (220) elt 820 (tri.-mum). he also referred to honble bomaby high court judgment wherein it was held that burden to establish lies on the department to prove that seized goods were smuggled one. it was held that department has not been able to produce any material tangible evidence in this regard. 12.  on the other hand, department has not accepted finding of the commissioner (appeals) and in their grounds of appeal has pointed out that seized bags of betel nuts were different from those which had been imported under bill of entry produced by importer. they also referred to apex court judgment in the case of d.bhoormul-1983 (13) elt 1845 (sc) wherein it was held by apex court that department was not required to prove its case on mathematical precision to a demonstrable degree, in all human affairs, absolute certainty is a myth in this case, major reliance has been placed on the statement of chas representative who accepted that seized betel nuts were procured from bangladesh. 13.  from the above, the main issue for consideration is whether commissioner (appeals) is right in concluding that the department has failed to prove that the imported betel nuts are smuggled one or whether there is any force in the revenues contention. 14.  the findings recorded by commissioner (appeals) in para 7.8.1. has been perused. he has analyzed the issue and has come to conclusion that the goods were not smuggled one. further the whole case has been built upon the statement of driver of the truck carrying impugned goods. it is observed that the issue relating to procurement of sewing machine for stitching of bags was not very conclusive evidence to pin point smuggled nature of betel nuts. commissioner (appeals) has rightly come to the conclusion that the evidence to justify an interference of smuggling should be one which is relevant for providing the unauthorized importation of the goods and not the unauthorized possession of goods. 15.  it is further observed from the evidence on record that investigations conducted by the department could not conclusively prove the contraband nature of seized goods. respondent have shown bill of entry no. 06530 dated 03.11.2010 for import of betel nuts and 118.367 mts of betel nuts under seized were claimed to be part of that imported consignment. it also observed that respondent have shown ample evidence by way of bill of entry filed for the imported goods i.e. betel nuts, changing of torn bags and place of actual loading in the truck. on the other hand, revenue has failed to conduct investigations relating to import of betel nuts by referred bill of entry and consequent disposal of imported betel nut. without further corroboration and supplementary evidence, only statement of driver could not establish smuggling nature of the goods and cannot become sole ground to confiscate non notified goods. departments, contention that imported betel nuts have been smuggled through route which was not notified under the provision of law. commissioner (appeals) is right in holding that revenue was failed to conclusively proved that betel nuts have been smuggled into india from off route from bangladesh. even though i agree with revenues contention that certain irregularities in the nature of documents and statements from chandra roadways and mangalam parivahan pvt.ltd. has led to inconsistencies. even supplier of stitching machines has not been found in his declared place of business and there was statement of driver in favour of revenue. but i agree with the findings that merely on the basis of these indications, it could not be conclusively proved that seized goods were smuggled from bangladesh border. 16.  otherwise, in view of the fact that the betel nuts are non-notified items, the onus to prove that the goods are smuggled lies heavily upon the revenue and which required to be discharged by production of positive evidences. tribunal in the case of sultan dharani reported as 2007 (220) e.l.t. 820 (tri.) (relied upon by commissioner (appeals) has held that revenue cannot first show laxity in investigation and then seek to shift the burden to prove that the goods are not smuggled especially when there is not even any evidence produced to show illegal importation of seized non-notified goods. the said order of the tribunal was upheld by honble supreme court. it is true that in cases of non-notified items, burden lies on the revenue to prove illegal entry into the country to show that the goods were smuggled. 17.  based on apex courts judgment in d. bhoormals case, [1983 (13) e.l.t. 1546 (s.c.)] department has also argued that they were not required to prove its case with mathematical precision to a demonstrable degree and that the law does not require the prosecution to prove the impossible. however, i feel that, in fact, in d. bhoormal's case part of the goods seized were non-notified. in spite of that the honble supreme court held that the persons concerned could be asked to explain as to how they came to possess the goods. the apex court upheld the order of confiscations of non-notified goods when the person concerned was not able to satisfactorily explain the possession of the goods. once the dept. established that the contention of the appellants in regard to acquisition of the goods was false, the burden or the onus shifted to the persons from whose possession the goods were seized to establish how they came to posses the goods. but in the present case department failed to do so. actually availability of bill of entry and transfer of betel nuts from torn bags to new bags could not prove that possession was illegal. thus onus did not shift to the respondent following the ratio of the decision of the honble supreme court in the cases cited supra. accordingly the department could not discharge the burden cast upon them. furthermore, the department has no evidence to prove that goods were imported in violation of section 111(b) of the customs act, 1962. 18.  in view of above finding, i am inclined to accept order-in-appeal passed by commissioner (appeals) holding that betel nuts seized by department were not smuggled one inviting imposition of penalty on various respondents. consequently all the six appeals filed by revenue are set aside. 19.  learned counsel has raised point of irregularity in filing the appeal by the department as amount of duty involving in these appeals is less than rs.5 lakh. as per national litigation policy, no appeal should have been filed by the department, i agree with the contention raised by learned counsel on this account. however since decision has been taken on merit and appeals have been found not-maintainable, relief on this ground has no relevance. ordered accordingly.