2013 (5) TMI 216 - AT - Customs

Illicit Import of goods Confiscation/seizure - Issue involved relates to seizure of brass metal scrap on the ground that they were of foreign origin and same were imported in contravention of provisions of Section 3(1) & 3(2) of Foreign Trade (Development & Regulation) Act, 1992 as amended under Section 110 of the Customs Act, 1962 illicitly brought into India. The adjudicating authority had directed under Section 111(b) & (d) of the Customs Act, 1962 absolutely confiscation. Held that - Needless to mention that the said brass metal scrap is not a notified item under Section 123 of the Customs Act, 1962 during the relevant time. It is the case of the appellant that since if it is not notified goods, burden lies on the Revenue to establish that the said brass metal scrap were of foreign origin and smuggled into India. It is their claim that on both these counts, the Revenue has miserably failed to establish the same and hence the goods are not liable to confiscation. The Tribunal in its earlier proceeding, allowed the appeal filed by the appellant on the ground that the Revenue has failed to discharge the burden in establishing that these goods were of foreign origin and smuggled into India. However, on appeal filed by the Revenue, the Hon ble High Court has remanded the matter to consider the statements of various persons and retractions made by these persons in deciding the issue afresh. In the present case, except the statement of the persons referred to above, there is no other corroborative evidence indicating that the impugned goods were of foreign ship breaking scrap and illicitly imported into India. In these circumstances, Tribunal find that the Revenue has failed to discharge its burden in establishing that the goods were of foreign origin and smuggled one particularly when the impugned goods were not notified under Section 123 of the Customs Act, 1962. - Decided in favor of assessee.

Summary

Issues Involved:
1. Validity of statements recorded under duress and their subsequent retraction.
2. Burden of proof regarding the foreign origin and smuggling of goods.
3. Legality of the confiscation of goods and imposition of penalties.

Issue-wise Detailed Analysis:

1. Validity of Statements Recorded Under Duress and Their Subsequent Retraction:
The case involved statements from various individuals recorded on 19-9-2004, which were later retracted on grounds of being made under coercion. The retractions were supported by affidavits and medical prescriptions indicating torture. The Tribunal noted that retractions were made promptly and were supported by medical evidence, thus they could not be ignored. The Tribunal emphasized that retracted statements need corroboration from other independent evidence to be reliable, as established in legal precedents like *Ahmed Abdul Karim* and *Vinod Solanki*. The Tribunal concluded that the statements alone, without corroboration, were insufficient to prove the goods were of foreign origin and smuggled.

2. Burden of Proof Regarding the Foreign Origin and Smuggling of Goods:
The brass metal scrap was not a notified item under Section 123 of the Customs Act, 1962, at the relevant time, placing the burden on the Revenue to prove the goods were of foreign origin and smuggled. The Tribunal found that the Revenue failed to provide corroborative evidence beyond the retracted statements. The Tribunal referenced the *Raj Kumar Jaiswal* case, highlighting that the initial onus is on the Revenue to prove foreign origin and subsequent smuggling. The Tribunal observed that general observations about the smuggling-prone area were not sufficient as evidence.

3. Legality of the Confiscation of Goods and Imposition of Penalties:
The adjudicating authority had ordered the confiscation of the metal scrap and the vehicle, along with imposing penalties on various individuals. The Tribunal found that the Revenue did not meet the burden of proof to establish the foreign origin and smuggling of the goods. The Tribunal noted that the appellant provided substantial documentary evidence supporting ownership of the goods, which was not effectively contradicted by the Revenue. Consequently, the Tribunal set aside the orders of confiscation and penalties, allowing the appeal and granting consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the need for corroborative evidence when relying on retracted statements and the failure of the Revenue to meet its burden of proof regarding the foreign origin and smuggling of the goods.