2023 (1) TMI 749 - AT - Customs

Smuggling - Seizure of mobile handsets of Chinese origin - bogus or fake invoices submitted by the truck Driver and transport company in respect of the mobile handsets - It further appeared to the Customs Department that the owner of the mobile handsets was the appellant in view of the no objection certificate issued by the transporter in his favour - HELD THAT - Admittedly the goods under dispute, Chinese mobile phones have been purchased by the appellant from open market in Delhi. Such contention is also supported by the statement and evidence led by the transporter. Appellant have also produced documents of transport before the Tribunal as well as the bilties that the goods were being transported from Delhi to Ahmedabad. Further, appellant had appeared before the Customs Department and had claimed the goods. Admittedly, no other person has claimed the goods in question. In view of admitted town seizure, it was the onus on the Customs Department to lead evidence in support of allegation as to the smuggled nature of goods. It is also found from the record that no evidence has been brought on record in support of its allegation. Further, sale-purchase of goods in India is supported by the levy of Sales Tax by the Sales Tax Department of Rajasthan. Accordingly, the order of Court below is vitiated in law and on facts. The respondent Revenue is directed to release the goods forthwith to the appellant within a period of 15 days from the date of receipt of copy of this order - appeal allowed.

Issues:
1. Seizure and detention of goods by Sales Tax and Customs Departments.
2. Confiscation of mobile phones under Customs Act.
3. Ownership claim and evidence presented by the appellant.
4. Adjudication by Customs Department and imposition of penalty.
5. Appeal before Commissioner (Appeals) and subsequent appeal before CESTAT.

Issue 1: Seizure and detention of goods by Sales Tax and Customs Departments

The appellant, a trader of electronic goods, had goods intercepted by the Sales Tax Department in July 2014 in Jaipur. The goods, including electronic items like LCDs, LED TVs, and Chinese mobile phones, were detained for lack of proper documentation. The Sales Tax Department assessed the goods and imposed tax liability and penalty. Subsequently, the Customs Department also detained the goods, suspecting them to be imported. The Customs Department issued a show cause notice and seized the mobile handsets of Chinese origin valued at Rs. 22,76,743. The Customs Department considered the goods as unclaimed and potentially smuggled, leading to the initiation of confiscation proceedings.

Issue 2: Confiscation of mobile phones under Customs Act

The Customs Department alleged that the appellant failed to prove the legal import of the seized mobile phones. Despite the appellant's claim of ownership supported by a 'No Objection Certificate' from the transporter, the Customs Department proceeded with the confiscation under Section 111(b) and (d) of the Customs Act. The mobile phones were confiscated, and a penalty was imposed on the appellant and transporter employees. The appellant's request for provisional release was rejected, leading to further legal proceedings.

Issue 3: Ownership claim and evidence presented by the appellant

The appellant contended that the mobile phones were purchased in cash from the open market in Delhi and presented a 'No Objection Certificate' from the transporter as evidence of ownership. However, the Customs Department found the appellant's evidence insufficient to prove legitimate ownership, leading to the confiscation of the mobile phones and imposition of penalties under relevant sections of the Customs Act.

Issue 4: Adjudication by Customs Department and imposition of penalty

The Customs Department, after assessing the evidence and statements from involved parties, including the transporter and appellant, concluded that the mobile phones were liable for confiscation due to suspected smuggling. The department imposed penalties on the appellant and transporter employees for their involvement in the transportation of the goods. The appellant's appeal before the Commissioner (Appeals) was rejected, prompting further appeal before the CESTAT for review of the confiscation and penalties imposed.

Issue 5: Appeal before CESTAT

The appellant appealed before the CESTAT, challenging the confiscation and penalties imposed by the Customs Department. The appellant's counsel argued that sufficient evidence was presented to prove the lawful purchase of the mobile phones in the domestic market. The CESTAT, after considering the evidence and lack of proof of smuggling, found the Customs Department's actions lacking in supporting evidence. The CESTAT set aside the impugned order, directing the Revenue to release the goods to the appellant and absolving the appellant from additional charges.

In conclusion, the CESTAT overturned the confiscation and penalties imposed by the Customs Department, citing insufficient evidence of smuggling and supporting the appellant's claim of lawful ownership of the seized goods.

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