2016 (1) TMI 1195 - AT - Customs

Confiscation of imported goods - penalty - prohibited goods u/s 123 of the Customs Act, 1962 - the person from whom the goods were seized was required to discharge the burden of proof that the same had been legitimately imported - confiscation and penalty on the ground that onus of proof had not been properly discharged - Held that - notwithstanding the proof furnished or nature of the documents produced, all of which merely relate to sale and purchase within India itself, it is but logical to conclude that the onus in section 123 has not been discharged at all. Accordingly watch movements and other watch parts of foreign origin cannot be considered to be licitly imported in compliance with the procedure laid down in the Customs Act, 1962. The goods have, therefore, correctly been held to be liable to confiscation. Penalty - Held that - unless a person, by an act of omission or commission, can be connected to import of goods that are liable for confiscation, penalty under section 112 will not be lie. The appeal of Shri Jatinder Singh is allowed by setting aside the penalty of ₹ 2 lakhs - Shri Rajendra Jain was the person from whom the goods were seized and the onus of proof regarding legality of imports of the said goods not having been discharged leading to confiscability, the person from whom these were seized cannot claim any mitigating circumstances in the absence of a bill of entry relating the seized goods to duty payment. Therefore, the imposition of penalty under section 112 on Shri Rajendra Jain cannot be faulted. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
- Confiscation of watch parts of foreign origin
- Imposition of penalty under sections 111 and 112 of the Customs Act, 1962
- Burden of proof under section 123
- Connection between appellants and confiscated goods

Confiscation of Watch Parts of Foreign Origin:
The impugned order confiscated watch movements, watches, button cells, and digital watches of foreign origin valued at Rs. 31,03,090 under section 111 of the Customs Act, 1962. The goods were seized by officers of the Commissionerate of Customs (Preventive), Mumbai, and the onus to prove legitimate importation lay with the person from whom the goods were seized. Despite claims by the appellants regarding the source of the goods, the original authority found them unable to establish licit importation, leading to the correct conclusion of confiscation.

Imposition of Penalty under Sections 111 and 112:
A penalty of Rs. 2,00,000 each was imposed on the appellants under section 112(a) of the Customs Act, 1962. The penalty was justified as the onus of proving legal importation was not discharged, and the goods were deemed liable for confiscation under section 111. The penalty provisions were invoked as the goods were disposed of before confiscation, leaving no further action other than endorsing the propriety of the confiscation.

Burden of Proof under Section 123:
Section 123 of the Customs Act, 1962 places the burden of proof on the holder of the property to establish the licit nature of import. The appellants failed to link the goods with any bill of entry, and despite producing documents related to sale and purchase within India, they could not demonstrate licit importation. Therefore, the onus under section 123 was deemed undischarged, justifying the confiscation of the watch parts of foreign origin.

Connection Between Appellants and Confiscated Goods:
Regarding the penalty under section 112, it was established that one appellant had a connection with the confiscated goods, leading to the imposition of the penalty. However, the other appellant, who allegedly did not handle the goods, was found not liable for the penalty as there was no connection established with the confiscated items. The provisions of section 112 require a clear connection with goods liable for confiscation under section 111 to justify the imposition of a penalty, which was lacking in one appellant's case.

In conclusion, the appeal filed by one appellant was rejected due to failure to establish a connection with the confiscated goods, leading to the imposition of the penalty. The appeal of the other appellant was allowed by setting aside the penalty of Rs. 2 lakhs.