Commissioner of Customs (Prev.) Vs. Sri Sangpuia - Court Judgment

Excerpt:
1. revenue is in appeal against an order of commissioner (appeals) who vide the impugned order found as follows : 1. (a) "the appellant had raised a very valid point that the confiscated goods were not of foreign origin. therefore, it was essential to examine whether the confiscated goods are of foreign origin or not. as the goods were not available for examination, the examination was restricted to the relied upon documents only, and after going through the copy of the inventory memo of the seized goods drawn on 26-10-2002 by the seizing officer which described the seized goods as of f/o' to be considered that it was likely to mean - 'of foreign origin'". 1. (b) the commissioner further, found that the department had failed to discharge the burden of proving that the goods were of.....

Judgment:
1. Revenue is in appeal against an order of Commissioner (Appeals) who vide the impugned order found as follows : 1. (a) "The appellant had raised a very valid point that the confiscated goods were not of foreign origin. Therefore, it was essential to examine whether the confiscated goods are of foreign origin or not. As the goods were not available for examination, the examination was restricted to the relied upon documents only, and after going through the copy of the Inventory Memo of the seized goods drawn on 26-10-2002 by the seizing officer which described the seized goods as of F/O' to be considered that it was likely to mean - 'of Foreign Origin'".

1. (b) The Commissioner further, found that the Department had failed to discharge the burden of proving that the goods were of foreign origin.

1. (c) He further, agreed with the appellants that the confiscated goods were neither notified under Section 11B nor under Section 123 of the Customs Act, 1962 and on going through the order-in-original he observed that the same did not disclose the country of origin.

Therefore, from the records available he could not confirm that the goods were of foreign origin and contraband in nature.

1. (d) He, further observed from the Order-in-Original that the Adjudicating Authority had relied upon the judgment in the case of Jain Enterprises & Shri Richand v. Collector of Customs, Madras reported in 1986 (25) E.L.T. 811 (Tribunal) wherein it was held that even if the goods were not notified under Section 123 of the Customs Act, 1962, the burden initially cast on the Department would shift to the person challenging the seizure. He was of the view that in case of smuggled goods onus of proof does not shift from the Customs Authorities to the Appellants and in this context he had relied on the Hon'ble Supreme Court judgment in the case of Amba Lal v. Union of India and Ors. [Civil Appeal No. 153 of 1956 decided on 3-10-1960 and therefore, he found no reason to consider the other points raised before him by the appellants herein, and allowed the appeal with consequential relief by setting aside the order of the Adjudicating Authority.

2. (a) The learned Commissioner (Appeals) observed in para 6 of his Order - "I have gone through the case records very carefully. The appellant in this case has raised a very valid point that the confiscated goods are of foreign origin or not? As the goods are not available for examination, the examination is restricted to the relied upon documents only. From the available records it cannot be confirmed that the goods are of foreign origin and contraband in nature".

"This observation is not based on facts. Commissioner (Appeals) had failed to consider all aspects of the seizure and had failed to discuss other aspects of the case. Commissioner (Appeals) had set aside the Order-in-original (confiscating the goods and imposing Personal Penalty on the Appellant) solely on his conclusion that the goods are not foreign goods. His conclusion that the goods are not foreign goods lacked objectively. The brand names (brand names which are commonly used on Chinese goods) are given for the goods in Sr.

Nos. 1, 2, 4, 6 and 7 of Annexure-A of Seizure Inventory. The goods are still lying in the Customs Godown in Shillong and can be inspected any time if required." 2. (b) The appellant failed to produce any document in support of licit possession/importation of the goods. The goods bear Chinese brand names and markings. Inspite of this fact the learned Commissioner (Appeals) observed the goods as Indian origin either. The order of the Commissioner (Appeals) is unjustified and bad in law.

2. (c) "The efforts taken by the officers to collect intelligence and prevent the smugglers and people dealing in such smuggled goods in the North-East from flooding the Indian markets with cheap and poor quality Chinese/ Myanmar goods are and consequently destroying the Indian entrepreneurs was not appreciated by the Commissioner and he failed to see through the dubious character of the Appellant. The appellant could never have been a poor student. How could a poor student bring goods (of contraband nature) worth Rs. 3,22,650/- in a single trip and his dubious way of dilly-dally with the Customs Officers and his changing/contradictory statements clearly indicated that he was well entrenched in this smuggling activity." 2. (d) The facts and circumstances of the cited case are quite different from the instant case.

It is well-known fact that goods like readymade garments, undergarments, electronic goods, shoes/other footwear, blankets/quilts, cotton/synthetic fabrics, cutlery, etc. (mostly of third country origin) are smuggled into India from Myanmar through the porous Indo-Myanmar border, particularly through the border town of Moreh.

People dealing in such cheap Chinese and Myanmar goods go over to Namphalong (in Myanmar) and purchase miscellaneous goods. Then they smuggle the goods into the border towns of India. From the border towns (and in particular Moreh) the goods are taken to Imphal, Dimapur, Guwahati and Shillong (to name a few) are flooded with such goods of foreign origin. An article in the June 14, 2004 issue of the Shillong Times talked about Moreh being the famous transit point for goods ranging from electronic goods, clothing items and accessories, furniture, cutlery, poultry and second-hand clothes coming in from various South Asian countries via Myanmar.

2. (e) Buyers of such smuggled goods (particularly those who buy in bulk for resale) are also aware of this. Nevertheless, they take the risk (being tempted by the urge to make quick money) knowing fully well that such goods are not smuggled goods and are liable to confiscation under the Customs Act. They are of the hope that they would be lucky and escape getting caught by the Customs and other law enforcing agencies. But if they are caught they plead ignorance of the smuggled character of the goods and beg to release the goods on humanitarian ground, citing reasons like poverty, unemployment, responsibility of family/children, sibling's education etc. Their common contention is that such goods are freely available in Moreh, Imphal and Dimapur, taking undue advantage of the liberalized EXIM policy of the Government. Sellers of such goods do not issue sales document/cash memo in order to avoid getting implicated if subsequently Customs and other law enforcing authorities seize the goods. The buyers also do not insist for purchase memo because they know that the sellers would not issue such document even at the cost of losing their customers.

2. (f) "The order of the learned Commissioner (Appeals) terming the seizure as illegal- "the goods were firstly not liable to seizure nor were they liable to subsequent confiscation" has caused great damage to the Customs (Preventive) because the smugglers and people dealing in such smuggled goods (in the North Eastern Region-smuggling miscellaneous goods of third country origin into India from Myanmar/Bangladesh though the porous Indo-Myanmar and Indo-Bangladesh borders) will eventually use this Order of the Commissioner (Appeals) as a readymade weapon to challenge any seizure of smuggled goods.

And as a consequence open the floodgates for smuggling of miscellaneous goods (cheap and of poor quality) of third country origin into India and, thereby damaging the Indian Markets and in particular the North Eastern Region. It must be appreciated that absolute proof in such border-smuggling cases is not always possible and in fact very difficult." 2. (g) The decision relied upon by the original Authority would be applicable and even if goods are not notified at the time of seizure, should be held in favour of Department and would shift the burden on the person challenging the seizure.Amba Lal v. Union of India and Ors. [Civil Appeal No. 153 of 1956, decided on 3-10-1960 was not called for as it was a case of recovery from a person in 1961 where it was explained to have been brought from Pakistan before the year 1947 i.e. before the enactment of the Customs Act and there was no officer before 1947 and there Hon'ble Supreme Court held that before 1948 the section will not apply.

2. (i) They relied upon the decision in the case of ABC Roadways v.Commissioner of Customs, New Delhi (Tri.-Del.) and Commissioner's order No. 07/Cus/Ghy/03, dated 23-9-2003.

3. After hearing both sides and considering the material on record we find: 3. (a) The Commissioner (Appeals) has arrived at reasons, at length as to why the goods under seizure cannot be considered to be of foreign origin. The learned Consultant's submission to the effect that : "(i) from 1992 a liberalized Import/Export Policy was adopted by the Govt. wherein many items came under the OGL category. Slowly, this policy was further liberalized taking most items under the "Freely Importable" category. This means that once such goods are imported and cleared, they may be sold like any other goods in India. No account, bill, register, voucher are recommended by Customs for such imported goods. The position is like any item manufactured and cleared in India - once goods are cleared from a factory in India, no officer in normal course seize the goods - less confiscate, for not producing bills and vouchers/invoices.

(ii) garments fall under the OGL/freely importable category. Even if, for argument's sake the subject goods are of foreign origin, it is necessary to prove their smuggled nature in order to even seize them. They may be detailed on suspicions for a period, but seizure can be effected only after some concrete evidence of smuggled nature is produced.

(iii) some exporters are allowed to freely import fabrics, labels, zip fasteners, and other accessories as export replenishments, these are made into different garments/items and sold in India, they may look like imported-but mere visual appearances are deceptive and cannot be relied on.

(iv) the place of seizure is hundreds of kilometers away from the border, the respondent was travelling in an Indian bus, from and to Indian cities - there was no evidence, circumstantial or otherwise, nor any hint of an act of smuggling.

(v) garments are not notified under any section of the Customs Act, 1962." 3. (b) We find force in this appeal. These submissions cannot be ignored and have to be taken cognizance in interpreting the provisions of Section 111(d) which has to be read with the relevant EXIM policy, especially when we find that the Inventory Memo does not disclose the foreign origin. We, therefore, agree to the respondent's contention to the effect that mere suspicion is not enough to prove foreign and smuggled origin of the goods in the instant case and, therefore, we find that both these factors have not been established beyond doubt.

The burden and the onus of discharging the said burden is not cast on the Respondents.

3. (c) The appeal appears to be motivated by a desire of the Preventive Officers to justify the seizure. It is not based on any legal grounds which could go in favour of establishing the goods to be foreign origin and thereafter being of smuggled nature. After the liberalized EXIM policy regime w.e.f. 1992, we are of the view that mere presence of goods with foreign markings could not be considered to be goods of foreign origin which have been imported into India in contravention of the EXIM policy provisions and without payment of duty, especially in the case of non-notified or specified goods. An opinion of an officer, that the goods are of foreign origin and smuggled, therefore, would be liable to confiscation cannot be accepted without trade panel opinions accepting the goods at least to be of foreign origin, thereafter, investigations made to point their smuggled nature has to be on record.

There is no expert or trade panel opinions and/or satisfactory investigation results pointing to this foreign origin and smuggled nature of the goods in this case. The provisions of Customs Act, therefore, cannot be invoked on mere suspicion howsoever grave. We, therefore, confirm the findings of the learned Commissioner (Appeals), as regards the nature of goods are arrived at and non-applicability of the provisions of Customs Act, 1962 as applicable to imported goods in the facts of this case.

3. (d) When interdiction of personal private property of a citizen by an officer is effected the law as in that case, it has to be strictly applied. If the Commissioner (Preventive) is of the opinion that large scale smuggling will be resorted to or is resorted in a particular commodity, he is free to move the concerned authorities to get such goods notified or specified under Chapter IVA or IVB of the Customs Act, 1962 and thereafter liabilities of vouchers, bills, acquisition records could be invoked and failure would be relevant and onus will be cast on people who want to or possess such goods. In the present case there is no such notification shown to us under these provisions of the Customs Act, 1962. The absence of documents, therefore, does not induce us to share the views of the Commissioner (Preventive) that the goods are of foreign origin and are of smuggled nature. The present appeal made on grounds as in para 2 above cannot be upheld. This Tribunal has to enforce liability as it is written and cannot go into the pleas as made in certain grounds taken by Commissioner (Preventive) in this appeal.

3. (e) We find that the show cause notice talks about violation of Import Control No. 17/55, dated 7-12-1955. This prima facie cannot be made applicable after the new Foreign Trade (Development and Regulation) Act, 1992 was enacted. We also find that the goods bear certain names on the labels such as Meina, Shengxing, Sportsgirl, Huaxing, Lhasimi, Yaung Guang, Toffy Sweets etc. These terms do not appear in the show cause notice which merely states recoveries of foreign garments, ladies sweater etc. There is no finding in the Order-in-Original also as regards the goods to be bearing in clear terms a foreign brand name and as to how the names on the labels are brand names is not appearing in the records. We, therefore, find no reason to consider the goods to be of foreign origin merely on certain names, symbol etc. on the labels. In this view of the matter, we do not go into the applicability of the case laws relied by both sides.

4. After perusal of the impugned order-in-original, we cannot find how the goods were arrived at as to be smuggled. Mere finding of a passenger, with such goods in a Bus, 10 kms. short of Shillong town, cannot be a reason to arrive that the goods were smuggled through Indo-Burma Border as was submitted before us. Similarly the reason of the passenger claiming himself to be a poor student and not knowing English and other languages, cannot be a reason to arrive at that the goods, which he claims to be in his ownership, are of foreign origin and smuggled.

In view of findings, Revenue's appeal is found to be without merits and is rejected.