2011 (9) TMI 297 - AT - Customs

Goods of foreign origin and are smuggled - Selling various types of carpets - proceedings were initiated against the appellants alleging that goods seized from their premises were of Chinese origin and were imported by them, without payment of duty - confiscated the fabrics in question. In addition penalty was imposed on - Appellant contended that goods are not velvet fabrics as is clear from tests reports. They are 100% polyester fabrics that gives the appearance of velvet fabrics - Appelant also said that merely selling of fabrics to their customers by describing the same as of Chinese origin in their invoice, by itself does not establish the fact that the goods are of Chinese origin it was being done just to boost sale - Held that no evidence to prove that goods are of foreign origin - onus to prove that the goods in question are of smuggled goods, lies heavily on the revenue - therefore the provisions of Section 123 can not be invoked - Hence no reasons to confiscate the fabrics or to impose penalty - Appeal allowed with consequential relief.

Summary

Issues:
Alleged smuggling of foreign origin goods without payment of duty.

Analysis:
The case involved a shopkeeper selling carpets whose shop was searched, leading to the recovery of synthetic printed velvet fabrics believed to be of foreign origin and smuggled. Statements from individuals associated with the shop conflicted regarding the purchase and sale of the fabrics. Samples were sent for testing, confirming the fabric as 'velvet' and 'polyester-100%'. Subsequently, proceedings were initiated, resulting in the confiscation of the fabrics and imposition of penalties by the Deputy Commissioner. On appeal, the Commissioner (Appeals) upheld the order with a minor modification in the penalty amount.

During the appeal before the Appellate Tribunal, the revenue contended that the appellants were selling the goods as of Chinese origin to customers, while the appellants argued that the fabrics were not velvet but 100% polyester, capable of being used as bed sheets or carpets. The Tribunal noted the absence of concrete evidence establishing the fabrics as of foreign origin. The onus to prove the goods as smuggled lay on the revenue, requiring positive and concrete evidence, not mere doubts or assumptions. The Tribunal found no basis for reasonable belief that the fabrics were smuggled, as no foreign markings or other evidence indicated their origin. The Tribunal emphasized that merely mentioning goods as imported velvet in invoices did not prove foreign origin. As the revenue failed to discharge the onus of proving the fabrics as smuggled, the confiscation and penalties were set aside, allowing the appeal with consequential relief.

In conclusion, the Tribunal held that without concrete evidence establishing the fabrics as of foreign origin or smuggled, the confiscation and penalties imposed by the lower authorities were unjustified. The Tribunal emphasized the importance of positive evidence in proving smuggling allegations, ultimately ruling in favor of the appellants and setting aside the impugned order.