2018 (8) TMI 1944 - AT - Customs

Smuggling - silver jewellary and ornaments of foreign origin - prohibited goods or not - onus to prove illegal import - confiscation of seized goods - HELD THAT - The SCN was completely based on erroneous allegation but the adjudicating officer, despite of that confiscated the goods and imposed penalty either u/s 112(a) or 112(b) of the Customs Act. If an adjudicating officer is not certain as to which of the provision of penalty is applicable, he cannot be presumed to have examined the allegation and its gravity candidly in a quasi judicial manner as expected of. The appellant has stated the truth that he had purchased some old ornaments from Nepali citizens unaware of their citizenship then it could be only due to unawareness and only a meagre portion of the seized lot could be so, because in majority of the cases the customers are the local ladies of Jogbani. The confiscation of entire lot and imposition of redemption fine of ₹ 1,90,000/- with penalty of ₹ 30,000/- is not justified. There was no material to hold that the seized silver jewellary and ornaments were of foreign origin and there is nothing to show that they are smuggled into India - Onus is on the Department to prove illegal import. Mentioning the amount in a particular currency is not sufficient to establish illegal import from that country. The redemption fine and penalty imposed under Section 112(a)/112(b) of the Customs Act, 1962 is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of seized silver jewellery under Section 111(b) of the Customs Act, 1962.
2. Imposition of penalty under Section 112(a)/112(b) of the Customs Act, 1962.
3. Allegations of violating various sections of the Customs Act and FT(DR) Act, 1992.
4. Adjudication process and appeal before the Tribunal.

Confiscation under Section 111(b) and Imposition of Penalty:
The appellant, a Jewellery Shop proprietor, faced confiscation of seized silver jewellery under Section 111(b) of the Customs Act, 1962, valued at approximately &8377; 3,11,797, with an option to redeem on payment of &8377; 1,90,000 and a penalty of &8377; 30,000 under Section 112(a)/112(b). The Ld. Commissioner (Appeals) upheld the decision, leading to the appeal before the Tribunal. The appellant argued that the Department failed to prove beyond doubt the origin of goods sold by Nepalese citizens and highlighted discrepancies in the case presentation regarding currency usage and customer origins.

Allegations of Violating Customs Act and FT(DR) Act:
The adjudicating authority alleged violations of Sections 7, 11, 46, and 47 of the Customs Act, along with Section 3(2) of the FT(DR) Act, 1992, and related notifications. However, it was found that the allegations were not substantiated adequately. The appellant's counsel emphasized the lack of evidence supporting the alleged contraventions and pointed out flaws in the adjudication process. The Tribunal noted that the adjudication was done mechanically without proper justification, leading to the conclusion that the allegations were erroneous.

Adjudication Process and Tribunal Appeal:
The Tribunal scrutinized the appeal records and observed that the adjudication and the Commissioner (A)'s decision were perfunctory. It was highlighted that the adjudicating officer failed to establish the applicability of penalties under Sections 112(a) or 112(b) conclusively. The Tribunal emphasized that the burden of proof for illegal import lies with the Department and merely mentioning amounts in a specific currency is insufficient to prove illegal importation. Consequently, the Tribunal set aside the redemption fine and penalty imposed, granting the appeal in favor of the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the lack of evidence to support the allegations of foreign origin or smuggling of the seized silver jewellery. The judgment underscored the importance of a thorough adjudication process and the necessity for the Department to substantiate claims of illegal importation convincingly.