2005 (4) TMI 510 - AT - Customs

Summary

Issues Involved:
1. Seizure of prohibited goods (sandalwood) and associated roofing tiles.
2. Allegations of smuggling and illicit export.
3. Confiscation of goods under Sections 113 and 119 of the Customs Act.
4. Imposition of penalties under Section 114 of the Customs Act.
5. Appellant's knowledge and involvement in the alleged smuggling.
6. Validity of retracted statements.

Issue-wise Detailed Analysis:

1. Seizure of Prohibited Goods:
On 10-3-98, Customs Officers searched a godown in Tuticorin and found 476 cartons, with 419 containing sandalwood and 57 containing roofing tiles intended for export to Singapore. The sandalwood, whose export was prohibited under the Customs Act, the Foreign Trade (D&R) Act, and the EXIM Policy 1997-02, was seized along with the roofing tiles, which appeared to be used for concealing the sandalwood.

2. Allegations of Smuggling and Illicit Export:
The investigation revealed that the sandalwood was intended to be smuggled to Singapore. Statements from various individuals, including Nathan (real name Rahuman Sait), indicated a plan involving multiple parties to export the sandalwood illicitly. The appellant was alleged to have assisted in the preparation of export documents and arranging a godown, despite being aware of the sandalwood's inclusion in the consignment.

3. Confiscation of Goods under Sections 113 and 119 of the Customs Act:
The department issued a show-cause notice for confiscating the seized sandalwood and roofing tiles under Section 113 and Section 119 of the Customs Act. The Commissioner of Customs adjudicated the dispute, ordering absolute confiscation of the goods and imposing penalties on the noticees, including a penalty of Rs. 5 lakhs on the appellant.

4. Imposition of Penalties under Section 114 of the Customs Act:
The Commissioner found that the appellant had knowledge of the sandalwood being part of the consignment but did not inform the Customs authorities, thus attracting a penalty under Section 114 of the Customs Act. The appellant's omission to act as required under the Customs Act was interpreted as involvement in the smuggling of sandalwood.

5. Appellant's Knowledge and Involvement in the Alleged Smuggling:
The appellant argued that he was unaware of the sandalwood being part of the consignment on the day the Shipping Bill was filed (7-3-98) and only came to know about it on 9-3-98. The appellant's initial resistance to the idea of exporting sandalwood in the guise of roofing tiles was noted. The statements from co-accused did not indicate that the appellant was aware of the sandalwood's inclusion at the time of filing the Shipping Bill.

6. Validity of Retracted Statements:
The appellant's retraction of his statement on 4-6-98 was considered too belated and was rejected as an after-thought. The law permits prisoners to state their defense as soon as confronted by investigators, and the appellant's claim of being prevented from retracting earlier was found unbelievable. However, the original statement did not disclose that the appellant was aware of the sandalwood's inclusion at the time of filing the Shipping Bill.

Conclusion:
The preponderance of evidence suggested that the appellant was not aware of the sandalwood being part of the export consignment on the date of filing the Shipping Bill. The omission to inform the Customs authorities about the sandalwood did not render the goods liable for confiscation under Section 113, thus not fulfilling the requirement for a penalty under Section 114 of the Customs Act. Consequently, the penalty on the appellant was set aside, and the appeal was allowed.