1999 (3) TMI 515 - AT - Customs

Summary

Issues Involved:
1. Confiscation of silk yarn under Section 111(d) of the Customs Act, 1962.
2. Imposition of penalties on the appellants.
3. Legality of the silk yarn's importation and subsequent movement.
4. Discrepancies in the statements and documents provided by the appellants.
5. Burden of proof regarding the smuggled nature of the goods.

Issue-wise Detailed Analysis:

1. Confiscation of Silk Yarn:
The impugned order involved the absolute confiscation of silk yarn valued at Rs. 21,64,000 under Section 111(d) of the Customs Act, 1962. The Central Excise Officers seized 1183.000 kgs of silk yarn from the premises of Md. Sammi Alam, who was not present at the time. His brother, Md. Salahuddin, stated that the yarn belonged to Md. Sammi Alam and was not in the house in the morning of the seizure. The yarn was identified as of foreign origin by local exporters. Md. Sammi Alam later claimed the yarn was received from three different units, producing documents to support his claim.

2. Imposition of Penalties:
Penalties of Rs. 1.00 lakh were imposed on each of the four appellants. The Commissioner of Central Excise, Patna, did not accept the appellants' submissions that the yarn was legally imported and given to Md. Sammi Alam for weaving purposes. Consequently, the yarn was confiscated, and penalties were imposed.

3. Legality of the Silk Yarn's Importation:
Md. Sammi Alam disclosed that the yarn was received from M/s. Gemini Silk Mills, M/s. Annapurna Silk Yarn Fabrics, and M/s. Ridhi Sidhi Textiles Ltd. He provided documents showing the importation and movement of the yarn. However, the adjudicating authority rejected this defense due to discrepancies in the statements and documents. For instance, Md. Salahuddin's statement suggested the yarn was not in the verandah on the morning of the seizure, conflicting with the challans showing earlier receipt. Additionally, the courier services denied delivering the consignment to Md. Sammi Alam.

4. Discrepancies in Statements and Documents:
The adjudicating authority pointed out several discrepancies:
- Md. Salahuddin's statement conflicted with the challans' dates.
- Md. Sammi Alam's delayed appearance was seen as an attempt to procure documents.
- The courier services denied involvement, and the condition of the yarn (loose vs. bales) did not match the invoices.

The appellants argued these discrepancies were explainable. Md. Sammi Alam's delayed appearance was due to jaundice, supported by a medical certificate. Md. Salahuddin's statement did not explicitly state the yarn was absent from the house. The condition of the yarn could change after reaching the master weaver's premises. The appellants also highlighted that the adjudicating authority doubted the courier services' statements due to potential fear of legal entanglement.

5. Burden of Proof:
The appellants argued that the burden of proof to establish the smuggled nature of the goods lay with the Department, especially since silk yarn is not a notified item under Section 123 of the Customs Act. The Department failed to provide positive evidence of smuggling. The appellants' documents and statements from the suppliers supported the legality of the yarn's procurement.

Conclusion:
The Tribunal found that the discrepancies pointed out by the adjudicating authority were satisfactorily explained by the appellants. The statements and documents provided by the appellants were corroborative. The expert opinions used by the Department were not disclosed to the appellants, violating principles of natural justice. The difference in weight was attributed to net vs. gross weight. The burden of proof was on the Department, which it failed to discharge. Consequently, the Tribunal set aside the impugned order and allowed the appeals with consequential reliefs to the appellants.