2004 (3) TMI 579 - AT - Central Excise

Issues Involved:
1. Jurisdiction of the Collector of Customs, Meerut.
2. Classification and confiscation of seized goods.
3. Burden of proof regarding smuggling.
4. Denial of natural justice and right to cross-examination.
5. Reliance on prior adjudications and findings.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Collector of Customs, Meerut:
The appellants contended that the Collector of Customs, Meerut, lacked jurisdiction to pass the order as neither the import of the goods nor any part of the cause of action occurred within his territorial jurisdiction. They cited the Supreme Court's judgment in Union of India v. Ram Narain Biswanath, asserting that only the Collector of Customs within whose territorial jurisdiction the goods were imported had the authority to adjudicate the case.

2. Classification and Confiscation of Seized Goods:
The seized goods included integrated bracelet (IB) cases, finished watches, semi-finished watches, under-repair watches, and watches received for re-work, all of French and Hong Kong origin. The Collector ordered the confiscation of these goods under Sections 111, 118, and 119 of the Customs Act, 1962, but allowed an option to redeem the confiscated goods on payment of Rs. 75,00,000/- as redemption fine. The appellants argued that the IB cases were not 'watch cases' and thus not liable for confiscation under Sections 11B and 123 of the Customs Act. They relied on a prior Order-in-Original No. 16/93 by the Collector of Customs, Bangalore, which held similar goods as watch case parts, not watch cases, and thus not liable for confiscation.

3. Burden of Proof Regarding Smuggling:
The appellants argued that the burden of proving that the goods were smuggled into India was on the Department, especially since the goods bore no markings of foreign origin. They contended that the burden of proof was wrongly placed on them by the investigators and the adjudicating authority. They cited several Tribunal decisions to support their claim that the Department failed to meet this burden.

4. Denial of Natural Justice and Right to Cross-examination:
The appellants highlighted that their request to cross-examine key witnesses, Nagin Kothari and Sunil Kothari, was denied by the adjudicating authority, which then relied on their conduct to penalize the appellants. This constituted a violation of natural justice. The Tribunal noted that the adjudicating authority's order was vitiated by denial of natural justice and consideration of irrelevant materials. The Tribunal directed that the parties be given an opportunity to cross-examine the witnesses if their roles were to be considered in the case.

5. Reliance on Prior Adjudications and Findings:
The appellants relied on the findings of the Bangalore Customs Collector in Order No. 16/93, which had become final and binding. The Bangalore Collector had found that M/s. KHL had the capability to manufacture watch cases and that a person named Chandulal was involved in the transactions. In contrast, the Meerut Collector found that KHL lacked the capability and that Chandulal was non-existent. The Tribunal noted that the Revenue could not resist the challenge against these findings as the contrary findings by the Bangalore Collector were accepted by the Department.

Conclusion:
The Tribunal set aside the impugned order and remanded the case for fresh adjudication in accordance with law and principles of natural justice. It directed the jurisdictional Commissioner to allow cross-examination of relevant witnesses and to decide the substantive issues afresh. The Tribunal clarified that it had not expressed any view on the substantive issues, leaving them open for the adjudicating authority to decide.

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