2007 (6) TMI 395 - AT - Customs

Summary

Issues: Confiscation of Chinese Origin Silk Yarn, Imposition of Penalty

Confiscation of Silk Yarn:
The case involved the confiscation of 70 kgs. of Chinese Origin Silk Yarn and the imposition of a penalty of Rs. 5,000 on the appellant. The appellant, a job worker engaged in twisting silk yarn, had his premises searched by Customs Officers, resulting in the seizure of the silk yarn. A show cause notice was issued alleging that the yarn was liable for confiscation under Section 111(d) of the Customs Act. The appellant claimed that the yarn had been received from a Co-operative Society for twisting, and he was unaware of its origin or import. However, this contention was rejected in adjudication and the first appeal, leading to the filing of the present appeal.

Analysis: The Tribunal noted discrepancies in the quantities of silk yarn as stated by the appellant and the actual quantity seized, along with contradictions in the appellant's statements regarding the balance stock of yarn. The Tribunal found the appellant's claims to be self-contradictory and unreliable. It was observed that the seized 70 kgs. of silk yarn were separate from the quantity claimed by the appellant for twisting, and the appellant failed to provide any justification for the presence of the yarn in his premises, especially since the label indicated it was of foreign origin. The Tribunal emphasized that only goods imported "contrary to any prohibition" are liable for confiscation under Section 111(d).

Imposition of Penalty:
The appellant's counsel argued that variations in quantities supplied by the Co-operative Society and the outstanding stock should not be a basis for rejecting the appellant's explanation. Additionally, it was contended that there was no evidence to suggest that the goods were imported in violation of the law, which is necessary to trigger confiscation under Section 111(d). The appellant, being a mere job worker, provided a reasonable explanation for possessing the yarn, supported by records from the sending Co-operative Society, which confirmed his account.

Analysis: The Tribunal agreed with the appellant's counsel, finding that the appellant had provided a reasonable explanation for possessing the silk yarn and that there was no evidence indicating a violation of import laws. The Tribunal concluded that in the absence of proof that the goods were imported contrary to any prohibition, confiscation and penalty were not sustainable. As a result, the impugned order was set aside, and the appeal was allowed with any consequential relief for the appellant.

In summary, the Tribunal overturned the confiscation of the Chinese Origin Silk Yarn and the penalty imposed on the appellant, as there was no evidence of import violation and the appellant's explanation for possessing the yarn was deemed reasonable, supported by records from the Co-operative Society.