Collector of Customs and Central Vs. Shri Satnam Singh - Court Judgment

Excerpt:
1. being dissatisfied with the impugned order, the appellant has filed the present appeal whereby the collector of customs (appeals) allowed the appeal of the respondent after setting aside the order of assistant collector confiscating the seized goods with an option to redeem the same and also imposing a penalty of rs. 5,000/- on the respondent.2. brief facts of the case so far as relevant for the purpose of this appeal are that on 17-4-84, preventive staff of the central excise collector, chandigarh intercepted the respondent while carrying one suit-case in his right hand. on examination of the suit-case it was found that it contained a protable video cassette recorder with one a.c. adopter alongwith two leads (made in japan), one coloured video camera panasonic with one attachment (made in japan) duly wrapped in one blanket alongwith three operating instruction book-lets. since the respondent on demand failed to produce any documentary evidence for legal possession/acquisition or importation of the aforesaid goods of foreign origin, total valued at rs. 29,300/- the same were seized on the spot on the reasonable belief that the same had been illegally/illicitly imported into india in contravention of the provisions of section 11 of the customs act read with import (control) order no. 17/55 issued under section 3(1) of the imports & exports (control) act, 1947.3. as a follow up action, a show cause notice calling upon the respondent as to why the seized goods and the said suit-case be not confiscated under sections 111 and 118 of the customs act, 1962 and why penal action be not taken against him under section 112 of the same act, was issued. in reply to the show cause notice, the respondent submitted that there is no ban on the import of vcr and coloured t.v.camera and import of these items is being allowed to anybody coming from abroad or the same can be sent as a gift by the relatives from abroad for which import licence is freely issued. he further submitted that the burden lies on the department to prove that the seized items are smuggled. in the alternative, he submitted that the seized vcr and camera were imported by shri santokh singh on transfer of residence and were cleared by the air customs, delhi airport and the same were left with him for use at the instance of a german lady. he further pleaded that at the time of seizure, he was not aware as to whether the said articles belong to a german lady or to santokh singh. he further added that on checking up from the german lady, it was ascertained that the said articles belong to santokh singh. after the usual enquiry, the adjudicating authority found the respondent guilty of contravening the provisions of the customs act and confiscated the vcr with one a.c.adopter alongwith two leads and coloured video camera alongwith one attachment but gave an option to the respondent to redeem the same on payment of redemption fine of rs. 10,000/-. he also confiscated the suit-case with an option to redeem the same on payment of a fine of rs. 507- only. he further imposed a personal penalty of rs. 5,000/- on the respondent. being aggrieved the respondent preferred his appeal before the collector of customs (appeals) who vide his impugned order allowed the appeal holding that though there is no doubt that the respondent had changed his version with regard to the acquisition of the vcr and camera but the fact remains that the video camera was by no means a photographic camera and that video cassette recorders were not notified under section 123 of the customs act when they were seized and even when the show cause notice was issued and that in the absence of evidence on record, it cannot be concluded that the seized goods were smuggled. he further held that the burden of proving that the seized goods were smuggled was on the department which the department has failed to discharge.4. shri rakesh bhatia, sdr appearing for the appellant vehemently contended before us that it is true that the vcr was not covered under section 11b and section 123 of the customs act, 1962 at the time of seizure but at the time of hearing of the case, the same was very much covered both under section 11b and section 123 of the customs act vide notification nos. 204-cus./84 and 205-cus./84 both dated 20-7-1984 and, therefore, the department can invoke the provisions of section 123 of the customs act. alternatively, he submitted that in. the instant case, apart from the question as to upon whom the burden of proof lay the department has discharged its burden by establishing the circumstances on record from which it can safely be inferred that in all probabilities the seized goods were smuggled and the respondent had the requisite guilty knowledge. he further submitted that in his statement recorded on the spot, the appellant had stated that the seized goods were given to him by a german tourist, but subsequently, he changed his earlier version and submitted' in his reply to the show cause notice that they belong to one santokh singh. this change of version, according to him, amounts to a false denial and, therefore, could be relied upon for concluding that the seized goods were illegally imported. shri harbans singh, learned advocate appearing for the respondent countered the arguments of the appellant and supported the impugned order.5. before we proceed to consider the merits of the case, we would like to mention at the outset that the collector of customs (appeals) has mainly allowed the appeal of the respondent filed before him holding that the adjudicating authority erred in applying the provisions of section 123 of the customs act, 1962 observing that the video casette recorders were not notified under section 123 of the customs act when they were seized and even. when the show cause notice was issued and that they were notified subsequently, cannot have the restrospective effect in our opinion, the collector of customs (appeals) erred in law in holding that the provisions of section 123, ibid, do not apply. in the instant case the seizure was effected on 17-4-84 and the show cause notice was issued on 13-6-84. the respondent vide his letter dated 6-8-84 requested for time to submit the reply to the show cause notice and actually submitted his reply on 8-10-84 and the case was decided thereafter. therefore, in our opinion, since the provisions of section 123 of the customs act only lay down the procedural rule, they could be applied when the case came up for adjudication before the adjudicating authority who admittedly decided the instant case only after the notification of the v.c.r. as specified goods. on this point, the law laid down by the supreme court in the case of balu mal jamna dass v.state of maharashtra, air 1975 sc 2083 is very clear. in that case, after posing the question whether the presumption contained in section 123 of the customs act would place the onus of proving innocent possession of the goods in question upon the appellant answered as follow : "it is true that lighters and flints were notified as provided in section 123 (2), in the official gazettee of 26-8-1967. nevertheless, as the provisions of section 123(1) of the act only lay down a procedural rule, they could be applied when the case came up for trial before the presidency magistrate who actually decided it on 15-7-1969. indeed the complaint was filed on 30-10-1968. it is immaterial that the respondent was found in possession of the goods on 21-4-67".we also observe that the collector of customs (appeals) has observed in the impugned order that the video camera is by no means a photographic camera. according to him, "video camera acts on optical principles while the photographic camera operates according to the electromagnitism. the medium, on which the image is recorded significantly differs as does the equipment use, cost of the material processing etc., and it would be far-fetched in the extreme to call video camera a photographic camera." it appears that the collector of customs (appeals) has drawn out the said difference to show that the video camera was not a notified camera. since in the instant case, apart from the legal presumption under section 123 of the customs act, there is also other evidence on record to prove the guilt of the respondent, therefore, we restrain ourselves from deciding as to whether the video camera falls within the definition of photographic camera or not-a. course permissible in law as laid down by the hon'ble supreme court in the case of balu mal jamna dass v. state of maharashtra, supra, wherein it was held that even if the goods were not seized under the customs act as provided by section 111 of the customs act but if there is some evidence to enable the courts to come to the conclusion that the goods must have been known to the respondent to be smuggled even if he was not a party to fraudulent evasion of duty, the charge can be sustained.6. from the evidence on record, we find that even without applying the presumption laid down in section 123 of the customs act, the charge levelled against the respondent stands proved. from the record, we observe that at the time of interception and seizure of the goods in question, the respondent instead of producing any bill/voucher or documentary evidence or otherwise for the lawful possession/acquisition or importation of the seized goods of foreign origin, stated that the german national who had come to india two months back had presented these items to him and he was carrying these items to show to one of his friends. however, in his reply to the show cause notice, he took to the somersault and submitted that the seized items were imported by one shri santokh singh of vill. bhar-sing-ptir, teh.. phillaur, distt.jallandhar on transfer of residence and the same were cleared by the air customs, delhi airport vide entry no. 3985 dt 4-4-84'. in the reply to the show cause notice, he further stated that at the time of the seizure, he was not fully aware as to whether the articles belong to the german lady or to santokh singh and the position could be elucidated only after checking up with the german lady after the seizure. no affidavit of german lady was ever filed. however, the photo copy of t.r. no. 3985 dt. 4-4-84 which was in the name of the said santokh singh was filed with the reply to the show cause notice. the affidavit of the said santokh singh was also filed. the adjudicating authority while negativing the said contention of the respondent held that the affidavit of santokh singh stating that the goods in question belong to him and the same were given to the respondent through a reliable acquaintance in connection with some function appears to be managed by the respondent to save himself from the clutches of law and the contention that the same were left with him at the instance of the german lady is only an after-thought. he also took into consideration the material contradiction in the defence of the respondent namely the immediate version that the seized goods in question belong to one german lady and the subsequent version in reply to the show cause notice that the same belong to one santokh singh. after analysing the evidence on record, the adjudicating authority concluded that the goods in question neither belong to the so called german lady nor to santokh singh but belong to the respondent. we agree with these findings. shri harbans singh, learned counsel for the respondent during the course of arguments vehemently urged that it was necessary for the department to prove : (i) that the goods in question were actually smuggled or brought into the country without payment of customs duty at a time when the payment of such duty had become obligatory; & (ii) that, the respondent was dealing with them knowing them to be smuggled goods.7. it was contended that mere possession by the respondent of such goods could not enable the prosecution to ask the court to presume that the respondent knew that the goods have been smuggled or imported in contravention of the law. it was urged that there is no evidence which would enable the respondent to know that duty, if leviable was not paid on them. in nutshell, the contention of the learned advocate, shri harbans singh was that even if the respondent is deemed to be in possession with full knowledge of what the goods actually were, the court could not go further and assume them to be smuggled or imported into country without payment of duty. in our opinion, none of these contentions of the learned counsel for the respondent has any force in the teeth of the admission of the respondent that the seized goods were of foreign origin and were recovered from his possession. the very fact that the respondent was intercepted while carrying on one brown coloured suit-case in his right hand and on opening the suit-case, the seized goods were duly wrapped in one blanket alongwith three instruction book-lets, indicates that they were brought into india without payment of duty. the respondent's conduct including his contradictory stand indicates of their smuggled character or mensrea.in any case, there is some evidence on record to enable us to come to the conclusion that the goods in question must have been known to the respondent to be smuggled even if he was not a party to a fraudulent evasion of duty and the defence of the respondent that the same were brought by one santokh singh or were given by a german lady is an after-thought.8. in the light of the foregoing discussions, the appeal is allowed.impugned order is set aside and the order-in-original passed by the adjudicating authority is restored.

Judgment:
1. Being dissatisfied with the impugned order, the appellant has filed the present appeal whereby the Collector of Customs (Appeals) allowed the appeal of the respondent after setting aside the order of Assistant Collector confiscating the seized goods with an option to redeem the same and also imposing a penalty of Rs. 5,000/- on the respondent.

2. Brief facts of the case so far as relevant for the purpose of this appeal are that on 17-4-84, Preventive Staff of the Central Excise Collector, Chandigarh intercepted the respondent while carrying one suit-case in his right hand. On examination of the suit-case it was found that it contained a protable video cassette recorder with one A.C. Adopter alongwith two leads (Made in Japan), one coloured video camera Panasonic with one attachment (Made in Japan) duly wrapped in one blanket alongwith three operating instruction book-lets. Since the respondent on demand failed to produce any documentary evidence for legal possession/acquisition or importation of the aforesaid goods of foreign origin, total valued at Rs. 29,300/- the same were seized on the spot on the reasonable belief that the same had been illegally/illicitly imported into India in contravention of the provisions of Section 11 of the Customs Act read with Import (Control) Order No. 17/55 issued under Section 3(1) of the imports & Exports (Control) Act, 1947.

3. As a follow up action, a show cause notice calling upon the respondent as to why the seized goods and the said suit-case be not confiscated under Sections 111 and 118 of the Customs Act, 1962 and why penal action be not taken against him under Section 112 of the same Act, was issued. In reply to the show cause notice, the respondent submitted that there is no ban on the import of VCR and Coloured T.V.Camera and import of these items is being allowed to anybody coming from abroad or the same can be sent as a gift by the relatives from abroad for which import licence is freely issued. He further submitted that the burden lies on the department to prove that the seized items are smuggled. In the alternative, he submitted that the seized VCR and camera were imported by Shri Santokh Singh on transfer of residence and were cleared by the Air Customs, Delhi Airport and the same were left with him for use at the instance of a German Lady. He further pleaded that at the time of seizure, he was not aware as to whether the said articles belong to a German lady or to Santokh Singh. He further added that on checking up from the German lady, it was ascertained that the said articles belong to Santokh Singh. After the usual enquiry, the Adjudicating Authority found the respondent guilty of contravening the provisions of the Customs Act and confiscated the VCR with one A.C.Adopter alongwith two leads and coloured video camera alongwith one attachment but gave an option to the respondent to redeem the same on payment of redemption fine of Rs. 10,000/-. He also confiscated the suit-case with an option to redeem the same on payment of a fine of Rs. 507- only. He further imposed a personal penalty of Rs. 5,000/- on the respondent. Being aggrieved the respondent preferred his appeal before the Collector of Customs (Appeals) who Vide his impugned order allowed the appeal holding that though there is no doubt that the respondent had changed his version with regard to the acquisition of the VCR and camera but the fact remains that the video camera was by no means a photographic camera and that Video Cassette Recorders were not notified under Section 123 of the Customs Act when they were seized and even when the show cause notice was issued and that in the absence of evidence on record, it cannot be concluded that the seized goods were smuggled. He further held that the burden of proving that the seized goods were smuggled was on the department which the department has failed to discharge.

4. Shri Rakesh Bhatia, SDR appearing for the appellant vehemently contended before us that it is true that the VCR was not covered under Section 11B and Section 123 of the Customs Act, 1962 at the time of seizure but at the time of hearing of the case, the same was very much covered both under Section 11B and Section 123 of the Customs Act vide Notification Nos. 204-Cus./84 and 205-Cus./84 both dated 20-7-1984 and, therefore, the department can invoke the provisions of Section 123 of the Customs Act. Alternatively, he submitted that in. the instant case, apart from the question as to upon whom the burden of proof lay the department has discharged its burden by establishing the circumstances on record from which it can safely be inferred that in all probabilities the seized goods were smuggled and the respondent had the requisite guilty knowledge. He further submitted that in his statement recorded on the spot, the appellant had stated that the seized goods were given to him by a German tourist, but subsequently, he changed his earlier version and submitted' in his reply to the show cause notice that they belong to one Santokh Singh. This change of version, according to him, amounts to a false denial and, therefore, could be relied upon for concluding that the seized goods were illegally imported. Shri Harbans Singh, learned Advocate appearing for the respondent countered the arguments of the appellant and supported the impugned order.

5. Before we proceed to consider the merits of the case, we would like to mention at the outset that the Collector of Customs (Appeals) has mainly allowed the appeal of the respondent filed before him holding that the Adjudicating Authority erred in applying the provisions of Section 123 of the Customs Act, 1962 observing that the Video Casette Recorders were not Notified under Section 123 of the Customs Act when they were seized and even. when the show cause notice was issued and that they were Notified subsequently, cannot have the restrospective effect In our opinion, the Collector of Customs (Appeals) erred in law in holding that the provisions of Section 123, ibid, do not apply. In the instant case the seizure was effected on 17-4-84 and the show cause notice was issued on 13-6-84. The respondent vide his letter dated 6-8-84 requested for time to submit the reply to the show cause notice and actually submitted his reply on 8-10-84 and the case was decided thereafter. Therefore, in our opinion, since the provisions of Section 123 of the Customs Act only lay down the procedural rule, they could be applied when the case came up for adjudication before the Adjudicating Authority who admittedly decided the instant case only after the Notification of the V.C.R. as specified goods. On this point, the law laid down by the Supreme Court in the case of Balu Mal Jamna Dass v.State of Maharashtra, AIR 1975 SC 2083 is very clear. In that case, after posing the question whether the presumption contained in Section 123 of the Customs Act would place the onus of proving innocent possession of the goods in question upon the appellant answered as follow : "It is true that lighters and flints were notified as provided in Section 123 (2), in the Official Gazettee of 26-8-1967.

Nevertheless, as the provisions of Section 123(1) of the Act only lay down a procedural rule, they could be applied when the case came up for trial before the Presidency Magistrate who actually decided it on 15-7-1969. Indeed the complaint was filed on 30-10-1968. It is immaterial that the respondent was found in possession of the goods on 21-4-67".

We also observe that the Collector of Customs (Appeals) has observed in the impugned order that the video camera is by no means a photographic camera. According to him, "video camera acts on optical principles while the photographic camera operates according to the electromagnitism. The medium, on which the image is recorded significantly differs as does the equipment use, cost of the material processing etc., and it would be far-fetched in the extreme to call video camera a photographic camera." It appears that the Collector of Customs (Appeals) has drawn out the said difference to show that the video camera was not a notified camera. Since in the instant case, apart from the legal presumption under Section 123 of the Customs Act, there is also other evidence on record to prove the guilt of the respondent, therefore, we restrain ourselves from deciding as to whether the video camera falls within the definition of photographic camera or not-a. course permissible in law as laid down by the Hon'ble Supreme Court in the case of Balu Mal Jamna Dass v. State of Maharashtra, supra, wherein it was held that even if the goods were not seized under the Customs Act as provided by Section 111 of the Customs Act but if there is some evidence to enable the Courts to come to the conclusion that the goods must have been known to the respondent to be smuggled even if he was not a party to fraudulent evasion of duty, the charge can be sustained.

6. From the evidence on record, we find that even without applying the presumption laid down in Section 123 of the Customs Act, the charge levelled against the respondent stands proved. From the record, we observe that at the time of interception and seizure of the goods in question, the respondent instead of producing any bill/voucher or documentary evidence or otherwise for the lawful possession/acquisition or importation of the seized goods of foreign origin, stated that the German National who had come to India two months back had presented these items to him and he was carrying these items to show to one of his friends. However, in his reply to the show cause notice, he took to the somersault and submitted that the seized items were imported by one Shri Santokh Singh of Vill. Bhar-Sing-Ptir, Teh.. Phillaur, Distt.

Jallandhar on transfer of residence and the same were cleared by the Air Customs, Delhi Airport vide entry No. 3985 dt 4-4-84'. In the reply to the show cause notice, he further stated that at the time of the seizure, he was not fully aware as to whether the articles belong to the German Lady or to Santokh Singh and the position could be elucidated only after checking up with the German Lady after the seizure. No affidavit of German Lady was ever filed. However, the photo copy of T.R. No. 3985 dt. 4-4-84 which was in the name of the said Santokh Singh was filed with the reply to the show cause notice. The affidavit of the said Santokh Singh was also filed. The Adjudicating Authority while negativing the said contention of the respondent held that the affidavit of Santokh Singh stating that the goods in question belong to him and the same were given to the respondent through a reliable acquaintance in connection with some function appears to be managed by the respondent to save himself from the clutches of law and the contention that the same were left with him at the instance of the German Lady is only an after-thought. He also took into consideration the material contradiction in the defence of the respondent namely the immediate version that the seized goods in question belong to one German Lady and the subsequent version in reply to the show cause notice that the same belong to one Santokh Singh. After analysing the evidence on record, the Adjudicating Authority concluded that the goods in question neither belong to the so called German Lady nor to Santokh Singh but belong to the respondent. We agree with these findings. Shri Harbans Singh, learned Counsel for the respondent during the course of arguments vehemently urged that it was necessary for the department to prove : (i) that the goods in question were actually smuggled or brought into the country without payment of Customs duty at a time when the payment of such duty had become obligatory; & (ii) that, the respondent was dealing with them knowing them to be smuggled goods.

7. It was contended that mere possession by the respondent of such goods could not enable the prosecution to ask the court to presume that the respondent knew that the goods have been smuggled or imported in contravention of the law. It was urged that there is no evidence which would enable the respondent to know that duty, if leviable was not paid on them. In nutshell, the contention of the learned Advocate, Shri Harbans Singh was that even if the respondent is deemed to be in possession with full knowledge of what the goods actually were, the court could not go further and assume them to be smuggled or imported into country without payment of duty. In our opinion, none of these contentions of the learned counsel for the respondent has any force in the teeth of the admission of the respondent that the seized goods were of foreign origin and were recovered from his possession. The very fact that the respondent was intercepted while carrying on one brown coloured suit-case in his right hand and on opening the suit-case, the seized goods were duly wrapped in one blanket alongwith three instruction book-lets, indicates that they were brought into India without payment of duty. The respondent's conduct including his contradictory stand indicates of their smuggled character or mensrea.

In any case, there is some evidence on record to enable us to come to the conclusion that the goods in question must have been known to the respondent to be smuggled even if he was not a party to a fraudulent evasion of duty and the defence of the respondent that the same were brought by one Santokh Singh or were given by a German Lady is an after-thought.

8. In the light of the foregoing discussions, the appeal is allowed.

Impugned order is set aside and the order-in-original passed by the Adjudicating Authority is restored.