K.N. Eswaran Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. the case involves seizure of 37 bars of silver weighing less than 30 kgs on 19-9-1994 by the officers attached to central preventive unit, salem. the seizure was made in the shop of the appellant shri k.n.eswaran.2. learned counsel representing the appellant submitted that shri eswaran was a jeweller making various ornaments out of silver. in the course of the practice of his profession, he receives silver from various parties, converts them into ornaments and returns them to the principal. he works in the capacity of a job worker in such cases. he also does manufacture of silver ornaments on his own.3. ld. counsel submitted that the entire proceedings were bad in as much as the seizure of the goods were in violation of the guidelines issued by the central board of excise & customs to field formations under telex f. no. 394/233/880-cus. (as), dated 11-6-1990. the government had directed all field formations that the provisions of section 123 of the customs act, 1962 should not be invoked against persons who are found to be in possession of silver bullion of less than 100 kgs. the exception permitted was in cases where the silver bullion is found to be in the form of bars weighing 30 kgs. (approx.) each, which are being smuggled into the country and also where silver bullion is found to bear foreign markings. ld. counsel submitted that in the instant case the weight of individual bars was less than 2 kgs.and none of them bore any foreign markings. also proceedings have been confirmed against the appellant by relying on the provisions of sec.123 of the customs act. ld. counsel stressed that there was no positive evidence whatsoever produced during the adjudication proceedings, which would go to indicate the smuggled nature of the goods. he therefore, submitted that confiscation of the goods and the penalty imposed were entirely unjustified and against the policy of the government with regard to investigation of cases involving silver. he also took us through the decision of this tribunal in the case of shri n.s.allaudeen v. cc, tricky reported in 2001 (131) e.l.t. 198 (tribunal) -2000 (2) ecl 106 wherein in an identical case, the tribunal set aside the confiscation of the goods inasmuch as the seizure and confiscation were against the guidelines issued by the cbec under the aforesaid circular. he also drew our attention to the judgment of the high court of madras in the case of salem shevapet silver & katcha exchange brokers association v. supdt. of customs preventive, salem reported in 1999 (107) e.l.t. 292 (mad.). ld. counsel explained that in the writ petition filed by the brokers' association a complaint had been raised that investigations of customs authorities were causing hardship against the small brokers. the departmental authorities had in their affidavit informed the high court that circular, dated 11-6-1990 of the govt. had directed that small consignments of silver should not be subjected to seizure and investigation and those directions were being strictly followed by field formations. upon that assurance, writ petition was disposed of by the high court. he stressed that proceedings in the present case are clearly against revenue's assurance given to the high court.4. we have heard learned sdr also who explained that the impugned order has clearly brought out how the investigation in the present case was fully justified.5. a perusal of the records of the case makes it clear that there is no positive evidence regarding the smuggled nature of the goods under seizure. they bore no foreign markings and they were not in size of 30 kg. blocks, the common form in which silver is smuggled into the country. the consignment involved was also small weighing less than 69 kgs. and value was less than rs. 5 lakhs. the confiscation has been made taking resort to section 123 of the customs act.6. section 123 contains special provisions in respect of smuggling of specified goods. it shifted burden of proof to the possessor of imported goods. even though, silver was one such item, the central govt. had clearly instructed the revenue authorities not to invoke those provisions with regard to consignments involving less than 100 kgs., particularly when silver bars do not bear foreign markings or were not in 30 kg. blocks. thus, the policy of the govt. was not to take resort to special provisions contained in section 123 of the customs act in respect of small manufacturers and dealers. the circular further stipulated that if in smaller cases investigation was considered essential, the permission of the asstt. commissioner should be obtained. the proceedings in the present cases have been taken entirely contrary to the policy on investigation contained in the circular of the government. therefore, the seizure and the subsequent confiscation and imposition of penalty have to be held as bad as done by this tribunal in an identical case of shri n.s. allaudeen v. cc, trichy (supra). consequently, the appeal succeeds. the impugned order is set aside in its entirety with consequential reher to the appellants. the confiscated goods shall be returned immediately to the appellants. for hearing of the appeal, appellants had made a pre-deposit of rs. 10,000/- constituting part of the penalty of rs. 20,000/-. in view of our setting aside the penalty, that amount of pre-deposit shall also be returned to appellants forthwith.

Judgment:
1. The case involves seizure of 37 bars of silver weighing less than 30 kgs on 19-9-1994 by the Officers attached to Central Preventive Unit, Salem. The seizure was made in the shop of the appellant Shri K.N.Eswaran.

2. Learned Counsel representing the appellant submitted that Shri Eswaran was a jeweller making various ornaments out of silver. In the course of the practice of his profession, he receives silver from various parties, converts them into ornaments and returns them to the principal. He works in the capacity of a job worker in such cases. He also does manufacture of silver ornaments on his own.

3. Ld. Counsel submitted that the entire proceedings were bad in as much as the seizure of the goods were in violation of the guidelines issued by the Central Board of Excise & Customs to field formations under telex F. No. 394/233/880-Cus. (AS), dated 11-6-1990. The Government had directed all field formations that the provisions of Section 123 of the Customs Act, 1962 should not be invoked against persons who are found to be in possession of silver bullion of less than 100 kgs. The exception permitted was in cases where the silver bullion is found to be in the form of bars weighing 30 kgs. (approx.) each, which are being smuggled into the country and also where silver bullion is found to bear foreign markings. Ld. Counsel submitted that in the instant case the weight of individual bars was less than 2 kgs.

and none of them bore any foreign markings. Also proceedings have been confirmed against the appellant by relying on the provisions of Sec.

123 of the Customs Act. Ld. Counsel stressed that there was no positive evidence whatsoever produced during the adjudication proceedings, which would go to indicate the smuggled nature of the goods. He therefore, submitted that confiscation of the goods and the penalty imposed were entirely unjustified and against the policy of the Government with regard to investigation of cases involving silver. He also took us through the decision of this Tribunal in the case of Shri N.S.Allaudeen v. CC, Tricky reported in 2001 (131) E.L.T. 198 (Tribunal) -2000 (2) ECL 106 wherein in an identical case, the Tribunal set aside the confiscation of the goods inasmuch as the seizure and confiscation were against the guidelines issued by the CBEC under the aforesaid circular. He also drew our attention to the judgment of the High Court of Madras in the case of Salem Shevapet Silver & Katcha Exchange Brokers Association v. Supdt. of Customs Preventive, Salem reported in 1999 (107) E.L.T. 292 (Mad.). Ld. Counsel explained that in the writ petition filed by the Brokers' Association a complaint had been raised that investigations of customs authorities were causing hardship against the small brokers. The Departmental authorities had in their affidavit informed the High Court that circular, dated 11-6-1990 of the Govt. had directed that small consignments of silver should not be subjected to seizure and investigation and those directions were being strictly followed by field formations. Upon that assurance, writ petition was disposed of by the High Court. He stressed that proceedings in the present case are clearly against Revenue's assurance given to the High Court.

4. We have heard Learned SDR also who explained that the impugned order has clearly brought out how the investigation in the present case was fully justified.

5. A perusal of the records of the case makes it clear that there is no positive evidence regarding the smuggled nature of the goods under seizure. They bore no foreign markings and they were not in size of 30 kg. blocks, the common form in which silver is smuggled into the country. The consignment involved was also small weighing less than 69 kgs. and value was less than Rs. 5 lakhs. The confiscation has been made taking resort to Section 123 of the Customs Act.

6. Section 123 contains special provisions in respect of smuggling of specified goods. It shifted burden of proof to the possessor of imported goods. Even though, silver was one such item, the Central Govt. had clearly instructed the Revenue authorities not to invoke those provisions with regard to consignments involving less than 100 kgs., particularly when silver bars do not bear foreign markings or were not in 30 kg. blocks. Thus, the policy of the Govt. was not to take resort to special provisions contained in Section 123 of the Customs Act in respect of small manufacturers and dealers. The circular further stipulated that if in smaller cases investigation was considered essential, the permission of the Asstt. Commissioner should be obtained. The proceedings in the present cases have been taken entirely contrary to the policy on investigation contained in the circular of the Government. Therefore, the seizure and the subsequent confiscation and imposition of penalty have to be held as bad as done by this Tribunal in an identical case of Shri N.S. Allaudeen v. CC, Trichy (supra). Consequently, the appeal succeeds. The impugned order is set aside in its entirety with consequential reher to the appellants. The confiscated goods shall be returned immediately to the appellants. For hearing of the appeal, appellants had made a pre-deposit of Rs. 10,000/- constituting part of the penalty of Rs. 20,000/-. In view of our setting aside the penalty, that amount of pre-deposit shall also be returned to appellants forthwith.