2012 (12) TMI 230 - AT - Customs

Penalty confiscation - Non-notified items Held that - In case of non-notified items, the onus to establish the smuggled nature of goods is on the Revenue - appellant has produced on record copies of invoices showing sale of the zinc in question - supplier has also deposed in his statement to the above effect. Failure on the part of the Revenue to locate the supplier cannot be held to be conclusive proof of his non-existence - confiscation of seized zinc and penalty set aside

Summary

Issues:
1. Seizure and confiscation of goods suspected to be smuggled from Nepal.
2. Reliance on statements of illiterate deponents for establishing the smuggled nature of goods.
3. Burden of proof on Revenue to establish goods are of foreign origin for non-notified items.
4. Acceptance of invoices and supplier statements as evidence of legitimate sale.

Analysis:

Issue 1:
The Customs officers seized 162 bags of zinc suspected to be smuggled from Nepal along with the truck. The lower authorities initiated proceedings for confiscation of the goods and imposed penalties on the appellant.

Issue 2:
The Revenue's case was primarily based on the statements of the driver and other persons found in the truck. The appellant's advocate contested the reliance on these statements, arguing that they were illiterate deponents and recorded under thumb impression. The advocate emphasized the need for corroboration from independent sources and challenged the validity of the evidence provided solely by the co-noticees.

Issue 3:
For non-notified items like zinc, the burden lies on the Revenue to establish the smuggled nature of the goods. The appellant argued that there was no evidence to prove the foreign origin of the zinc. Additionally, the test report commissioned by Revenue did not confirm the foreign origin. The appellant stressed that the absence of tangible and positive evidence on record cannot lead to a conclusion of smuggling.

Issue 4:
The appellant presented three invoices from M/s. Shiva Scrap Mart as evidence of legitimate sale of the zinc. The supplier's statement corroborated the sale, but the Revenue disputed the existence of the company. The appellant argued that the failure to locate the supplier does not negate the validity of the invoices and supplier's statement. The advocate highlighted that the lower authorities did not address the crucial issue of whether the zinc was of foreign origin, and there was no evidence supporting this claim.

In the judgment, the presiding judge found no merit in the lower authorities' decision to confiscate the seized zinc and impose penalties. The judge emphasized the lack of evidence provided by the Revenue to establish the goods' smuggled nature. The judge noted the appellant's production of invoices and supplier statements as evidence of legitimate sale, highlighting the failure of Revenue to conclusively disprove their authenticity. Ultimately, the judge set aside the impugned order and allowed the appeal in favor of the appellants.