2003 (11) TMI 409 - AT - Customs

Demand - Liability to pay Customs duty - Confiscation of goods - Smuggled goods - Burden to prove

Summary

Issues:
1. Seizure of chemicals of foreign origin from the factory.
2. Demand of duty, confiscation of goods, and penalty imposed on the appellant.
3. Interpretation of Section 28 of the Act regarding recovery of duty.
4. Sustainability of confiscation of goods under clause (d) of Section 111.
5. Burden of proof in cases of seized goods not notified under Section 123 of the Act.
6. Applicability of Section 28 to a person not connected with customs clearance.

Analysis:
1. The officers seized chemicals of foreign origin from the appellant's factory due to the appellant's failure to provide a satisfactory explanation regarding the purchase of the goods. The officers suspected the goods to be smuggled, leading to the issuance of a notice proposing duty recovery, confiscation of goods under clause (d) of Section 111, and imposition of a penalty on the appellant.

2. The appellant contended that Section 28 of the Act cannot be invoked for goods purchased post-customs clearance. Additionally, the appellant argued against the sustainability of confiscation under clause (d) of Section 111, citing the import policy at the relevant time, which did not prohibit the import of the goods. The appellant asserted that penalty imposition was unwarranted.

3. The departmental representative highlighted the suspicious circumstances surrounding the possession of the goods by the appellant and the appellant's inability to explain the purchase. The representative supported the Commissioner (Appeals)'s order in this regard.

4. The judgment noted that the seized chemicals were freely importable at the time of seizure and were not notified under Section 123 of the Act. The burden of proving that the goods were smuggled rested with the department, which was not discharged. Consequently, the confiscation of the goods was deemed unsustainable.

5. Section 28 of the Act pertains to duty recovery from persons chargeable to such duty, including importers or individuals involved in customs clearance. The judgment emphasized that the appellant had no connection with customs clearance or importation of the goods in question, rendering the provisions of the Act inapplicable. As a result, the appeal was allowed, and the impugned order was set aside.