2004 (4) TMI 222 - AT - Customs

Summary

Issues Involved:
1. Confiscation of ball bearings under Section 111(d) of the Customs Act.
2. Imposition of redemption fine under Section 125 of the Customs Act.
3. Imposition of penalties under Section 112 of the Customs Act.

Detailed Analysis:

Issue 1: Confiscation of Ball Bearings under Section 111(d) of the Customs Act
The officers of Customs conducted a search of the shop and godown premises of M/s. Beer Auto Store, resulting in the seizure of 18,716 ball bearings of foreign origin valued at Rs. 30,84,100/-. Shri Taranjeet Singh, who identified himself as the Proprietor, could not produce any documentary evidence of legal acquisition. The goods were seized under Section 110 of the Customs Act on the belief that they were smuggled and thus liable to confiscation under Section 111(d). Shri Taranjeet Singh admitted in his statement that he purchased the ball bearings from one Shri Sanjay without any bill, knowing they were smuggled. The appellants contended that the statements were obtained under duress and retracted, and that the burden of proof lay on the department as the ball bearings were not notified goods. However, the tribunal found no evidence of retraction and upheld the confiscation, stating the department successfully proved the illegal acquisition and smuggled nature of the goods.

Issue 2: Imposition of Redemption Fine under Section 125 of the Customs Act
The Commissioner imposed a fine of Rs. 10 lakhs under Section 125, which the appellants argued was arbitrary and based on market enquiries conducted without their knowledge. The tribunal noted that the determination of redemption fine without giving the appellants an opportunity to contest the market enquiry results violated principles of natural justice. Consequently, the tribunal set aside the redemption fine and directed the Commissioner to redetermine the quantum of fine after providing the market enquiry report to the appellants and allowing them to contest it.

Issue 3: Imposition of Penalties under Section 112 of the Customs Act
The Commissioner imposed penalties of Rs. 3 lakhs each on M/s. Beer Auto Store and Shri Taranjeet Singh. The tribunal upheld the penalty on M/s. Beer Auto Store but reduced it to Rs. 1 lakh, considering it too high in relation to the offence. The penalty on Shri Taranjeet Singh was set aside, as there cannot be a separate penalty on the proprietor of the business.

Conclusion:
1. The confiscation of the seized goods is upheld.
2. The redemption fine of Rs. 10 lakhs is set aside, and the Commissioner is directed to redetermine the quantum of fine.
3. The penalty on M/s. Beer Auto Store is reduced to Rs. 1 lakh.
4. The penalty on Shri Taranjeet Singh is set aside.
5. Appeal No. 580/2001 is disposed of in terms of the above points.
6. Appeal No. 581/2001 is allowed in terms of the penalty on Shri Taranjeet Singh being set aside.