2007 (3) TMI 154 - Commissioner - Customs

Smuggled goods - Alleged that vanaspati ghee were smuggled from Nepal and seized on the ground that on their wrapper not mentioned their batch number, date of manufacturing and M.R.P. - Held that department contention was not valid and allowed appeal with consequential benefits

Issues Involved:
1. Validity of the seizure and detention process
2. Reasonable belief requirement under Section 110 of the Customs Act, 1962
3. Burden of proof under Section 123 of the Customs Act, 1962
4. Investigation adequacy regarding the origin of the seized goods

Detailed Analysis:

1. Validity of the Seizure and Detention Process:
The Appellant challenges the seizure and detention process, highlighting a fundamental infirmity in the proceedings. The detention and seizure occurred on 29-10-2004, but the Panchnama and Seizure Memo were prepared only on 29-11-2004. This discrepancy raises questions about the legality of the process. The judgment notes, "The Lower Adjudicator has completely avoided discussing this fundamental discrepancy as to why the seizure Memo and the Panchnama were prepared only after a month?"

2. Reasonable Belief Requirement under Section 110 of the Customs Act, 1962:
The judgment emphasizes the necessity of "reasonable belief" at the time of seizure, as mandated by Section 110 of the Customs Act, 1962. The absence of "reasonable belief" in the Panchnama, Seizure Memo, Show Cause Notice, and the impugned order is a significant issue. The judgment refers to precedents, stating, "The preliminary requirement of Section 110 of the Customs Act, 1962 is that the officer seizing the goods should entertain a reasonable belief that the goods seized were smuggled."

3. Burden of Proof under Section 123 of the Customs Act, 1962:
The judgment discusses the burden of proof, noting that without a reasonable belief, the presumption under Section 123 of the Customs Act cannot be invoked. It states, "If the adjudicating authority is not satisfied that the goods were seized on a reasonable belief, Section 123 cannot be invoked and in that event, it would be for the customs authorities to prove that the goods were smuggled." The judgment concludes that the burden of proof was wrongly cast on the Appellant, vitiating the entire proceedings.

4. Investigation Adequacy Regarding the Origin of the Seized Goods:
The judgment criticizes the investigation's adequacy, noting that reliance was placed on statements rather than concrete evidence to determine the origin of the goods. It states, "The investigating officer ought to have got the 'Vanaspati Ghee' subjected to appropriate test at an accredited laboratory to determine the characteristic composition of the ingredients and their distinguishing properties." The failure to conduct such tests and the reliance on the absence of batch numbers, manufacturing dates, and MRP to conclude that the goods were of Nepali origin were deemed insufficient.

Conclusion:
The judgment concludes that the exercise of power of seizure is liable to be struck down unless 'reasons to believe' are duly recorded before action is taken. The investigations were found to be inconclusive regarding the nature and identity of the goods. The Panchnama and Seizure Memo were drawn after a month, indicating that due process was not followed. Consequently, the benefit of doubt was extended to the Appellants, and the appeals were allowed. The impugned order was set aside, and the Appellants were entitled to consequential benefits.

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