2016 (11) TMI 760 - AT - Customs

Confiscation of seized goods - 103 bags of zinc residue and 94 bags of iron scrap - non-production of documents for production of goods - Held that - The expression any goods and smuggled goods in Section 123 (1) of the Customs Act, 1962, would indicate that it is required to be established that the seized goods are smuggled goods. In the present case, I do not find any material that the seized goods are smuggled goods except that the packing material are bearing the name of the factories of Nepal. Even, the Chemical Examiner s report would not indicate that the seized goods are smuggled goods. The findings of the lower authorities that the seized goods are smuggled goods merely on the basis of the packing material, cannot be accepted. The appellant categorically stated that he had purchased the material locally and the goods are freely available in the open market which was not disputed by the Revenue. The scrap being non-notified goods, smuggled nature of goods, are to be proved by the Revenue by producing affirmative and tangible evidence. The lower authorities proceeded on the basis of assumption and presumption that the goods were seized from Raxaul, which is near to Nepal cannot be basis for the confiscation of the goods. I find that the Tribunal in the case of Commr. of Customs (Prev.), Kolkata Vs. Manoranjan Banik 2003 (11) TMI 428 - CESTAT, kolkata on an identical situation rejected the appeal filed by the Revenue. In that case, the seized goods were wrapped by foreign papers. The Hon ble Supreme Court in the case of Collector of C.Ex., Vs. Decent Dyeing Company 1989 (12) TMI 164 - SUPREME COURT OF INDIA in the context of Central Excise Law observed that burden to prove duty paid character of the goods is not on the purchaser or job worker but Department to prove non-payment of duty so as to deny concessional duty. Similarly, in the present case, the appellant purchased the non-notified goods locally, but Department to prove smuggled goods. Confiscation of the seized goods and imposition of penalty on the appellant cannot be sustained - appeal allowed.

Summary

Issues:
Confiscation of seized goods under Section 111(b) of the Customs Act, 1962, imposition of redemption fine and penalty under Section 112, burden of proof on the Department to establish goods as smuggled, relevance of Chemical Examiner's report, legality of confiscation based on packing material, applicability of Section 123 regarding burden of proof, comparison with previous case laws, and burden of proof on Department in case of non-notified goods.

Analysis:
The appellant appealed against the confiscation of seized goods, 103 bags of zinc residue and 94 bags of iron scrap, under Section 111(b) of the Customs Act, 1962, along with the imposition of a redemption fine and penalty under Section 112. The DRI officers intercepted a truck loaded with these goods, suspected to be smuggled, leading to the seizure under Section 110. The appellant claimed ownership of the goods, stating they were purchased locally and were not smuggled. The Chemical Examiner's report identified the seized material as residue from processing industrial zinc, not zinc dross. The Department argued the goods were smuggled due to the packaging bearing Nepalese factory markings.

The appellant's advocate contended that the goods were freely available in India, purchased locally, and transported within Indian territory, challenging the Department's burden to prove smuggling. The Department highlighted the Nepalese factory markings on the packaging, suggesting a foreign origin. The Tribunal analyzed the statements and evidence, emphasizing the need for the Department to prove the goods were smuggled, especially for non-notified items like the seized goods.

Referring to Section 123 of the Customs Act, the Tribunal stressed the Department's obligation to establish seized goods as smuggled. The Tribunal rejected the presumption of smuggling based solely on packaging origin, emphasizing the lack of concrete evidence. Citing previous case laws, including judgments from the Tribunal and the Calcutta High Court, the Tribunal emphasized the importance of proving foreign origin and smuggling beyond conjecture.

Drawing parallels with Central Excise Law, the Tribunal reiterated that the burden of proof lies on the Department to establish goods as smuggled, even for locally purchased non-notified items. Considering the facts, case laws, and burden of proof principles, the Tribunal concluded that the confiscation and penalties imposed on the appellant were unjustified. Consequently, the Tribunal allowed the appeal, setting aside the confiscation and penalties.

In conclusion, the Tribunal's detailed analysis focused on the burden of proof on the Department to establish seized goods as smuggled, emphasizing the need for concrete evidence beyond mere assumptions or packaging origins. The comparison with previous case laws and the application of legal principles regarding burden of proof in cases involving non-notified goods provided a strong foundation for the Tribunal's decision to overturn the confiscation and penalties imposed on the appellant.