2007 (11) TMI 633 - AT - Customs

Summary

Issues Involved:
1. Confiscation of Chinese toys.
2. Burden of proof for non-notified goods u/s 123 of the Customs Act.
3. Legality of the import and possession of the goods.

Summary:

Issue 1: Confiscation of Chinese Toys
The dispute pertains to the confiscation of Chinese origin toys valued at Rs. 94,200/-, which were confiscated by the original adjudicating authority due to the lack of documentary evidence proving legal import. The Commissioner (Appeals) set aside the confiscation, stating that the toys were non-notified under Section 123 of the Customs Act and freely available in the market. The burden of proof for non-notified goods lies with the Revenue, which failed to provide evidence of smuggling.

Issue 2: Burden of Proof for Non-Notified Goods u/s 123 of the Customs Act
The Revenue argued that once the initial onus is discharged, the burden shifts to the possessor of the goods. However, the Tribunal noted that the burden of proving the smuggled nature of non-notified goods rests heavily on the Revenue, which must produce tangible evidence. The failure to produce documents by the appellant does not automatically imply smuggling.

Issue 3: Legality of the Import and Possession of the Goods
The Tribunal observed that toys of Chinese origin are freely imported due to the liberalization of the Import Policy. The appellant's inability to produce purchase bills was not sufficient to conclude that the goods were smuggled. The Tribunal emphasized that legally imported goods are expected to be sold under proper invoices and payment of local taxes, whereas smuggled goods are likely sold without proper documentation.

Separate Judgments:
- Member (Judicial): Archana Wadhwa rejected the Revenue's appeal, stating that the burden of proof for non-notified goods lies with the Revenue, which failed to provide sufficient evidence.
- Member (Technical): C. Satapathy allowed the Revenue's appeal, restoring the order-in-original, arguing that the Customs Authorities had discharged the initial burden of proof and the goods were liable to be confiscated.
- Third Member (Judicial): T. Anjaneyulu agreed with the Member (Judicial), emphasizing that the Department failed to provide prima facie evidence of smuggling and that the burden of proof lies with the Revenue.

Majority Order:
In view of the majority order, the appeal filed by the Revenue is rejected.