2006 (5) TMI 359 - AT - Customs

Summary

Issues:
Seizure and confiscation of imported yarn without duty paying documents, demand of duty, imposition of penalty and fine, possession of goods without proper documentation, redemption of goods under Section 125 of the Customs Act, liability of proprietor and firm in a proprietary firm.

Analysis:
The case involves the seizure and confiscation of 4800 Kgs. of imported yarn without proper duty paying documents. The appellant, engaged in the manufacture of sized yarn, received the yarn from a broker without the cover of any duty paying documents. The officers also found loose yarn bearing a foreign mark, which the appellant admitted to receiving from the same broker. The proceedings focused on the seizure, confiscation, and duty demand related to the 4800 Kgs. of yarn.

The appellant contended that the seized yarn was indigenous and provided invoices and bills to support their claim. However, the adjudicating authority and the Commissioner (Appeals) dismissed this evidence. The Commissioner demanded duty from the appellant despite acknowledging they were not the importers of the yarn. The appellant had redeemed the goods provisionally, believing they were indigenous and that duty would be refunded later. The appellant argued against the demand of duty, penalty, and fine, stating they were incorrect.

The Judicial Member noted that the seized yarn was confirmed to be of foreign origin, as admitted by both the appellant and the broker. The goods were supplied without duty paying documents, and the descriptions in the invoices did not match the actual goods. The burden of proof fell on the possessor of the goods, and since the appellant failed to prove the goods were duty paid, confiscation and redemption fine were deemed appropriate. The appellant's possession of the goods made them liable for penalty under Section 112(b) of the Customs Act, 1962.

Regarding the demand of duty, it was clarified that since the appellant was not the importer, duty could not be demanded from them. However, as they possessed the goods and chose to redeem them under Section 125 of the Customs Act, they were liable to pay the fine and duty. The argument that the show cause notice was issued to the proprietor but fines were imposed on the firm was dismissed, as in a proprietary firm, the proprietor and the firm are considered the same entity. Consequently, the appeal was rejected for lacking merit.

In conclusion, the judgment upheld the seizure, confiscation, and imposition of penalties related to the imported yarn due to the appellant's possession without proper documentation. The duty demand was clarified based on the appellant's role as a possessor, leading to the liability for fines and duties upon redemption of the goods in accordance with the Customs Act.