2004 (12) TMI 193 - AT - Customs

Smuggling - Burden of proof - Confiscation - Penalty - Marking of foreign origin on goods - HELD THAT - The Commissioner has taken a view that the department has discharged their burden of showing the goods having a foreign marking on the goods. On this point also we find that the Tribunal has held that mere marking of foreign origin does not by itself render the goods to be smuggled ones as noted. The Statements of the appellants that they were not directly involved in the smuggle but they have purchased the goods from the shops located opposite to the Customs Office Madras have not been contradicted by the Revenue and there is no finding in OIO that the appellants statements are incorrect and that they have directly smuggled the goods from abroad. Therefore the fact of the appellants having purchased from open market has been established by the appellants. The fact that they did not carry the licit documents were not a ground to hold that the goods are smuggled ones. No doubt the goods carried the foreign marking but that by itself cannot be a ground to hold the goods to be smuggled ones as noted. It is not the finding of the authorities below that the goods were not purchased by them from the local market and they are notified goods. All are non-notified goods and non-notified goods cannot be ordered for absolute confiscation. Therefore we are of the view that in view of the large number of judgments cited on this very point the appellants succeed in these appeals. The impugned order is set aside and the appeals are allowed with consequential relief. The appellants are entitled to receive the value of the goods as seized and noted in the Mahazar in terms of the judgments already cited and noted supra.

Summary

Issues Involved:
1. Confiscation of goods and burden of proof.
2. Marking of foreign origin on goods.
3. Seizure by police.
4. Mahazar value of goods to be returned.
5. Confiscation of conveyance.

Summary:

1. Confiscation of Goods and Burden of Proof:
The central issue was whether the confiscated goods (58 Mobile Phones, 2 Cordless Phones, 3 Digital Diaries, and 57 Chargers) were smuggled. The appellants argued that these were non-notified goods purchased from the open market near the Customs Office in Madras. The Tribunal noted that the burden of proof lies with the Revenue to establish that the goods are smuggled, as per Section 123 of the Customs Act, 1962. The Tribunal cited multiple case laws, including *NIPA Traders v. Commissioner of Customs* and *Commissioner of Customs v. Kiran Electronics*, which emphasize that the burden to prove the smuggled nature of goods lies with the Revenue when the goods are non-notified.

2. Marking of Foreign Origin on Goods:
The Tribunal held that mere marking of foreign origin on goods does not automatically render them smuggled. This position was supported by case laws such as *Commissioner of Customs v. Monoranjan Bainik* and *Godari Rai v. Commissioner of Customs*, which state that the smuggled nature of goods must be proved by affirmative and tangible evidence.

3. Seizure by Police:
The goods were initially seized by the police and then handed over to the Customs Department. The Tribunal referred to judgments like *Jitender Pawar v. Commissioner of Customs* and *State of Maharashtra v. P.P. Jain*, which establish that Section 123 of the Customs Act is not applicable when goods are seized by the police. Therefore, the burden of proving the smuggled nature of the goods remains with the Revenue.

4. Mahazar Value of Goods to be Returned:
The appellants requested the return of the Mahazar value of the goods. The Tribunal agreed, citing judgments such as *Bhogilal Mehta v. Union of India* and *Shilp Impex v. Union of India*, which mandate that the value of the goods as shown in the seizure memo should be returned to the petitioner if the confiscation is not upheld.

5. Confiscation of Conveyance:
The Maruti Van used to transport the goods was also confiscated but released on a fine. The Tribunal noted that the confiscation of conveyance is not justified if the goods are not proven to be smuggled, as supported by case laws like *Shamim Akhtar Warshi v. Commissioner of Customs* and *Harshad Shah v. Commissioner of Customs*.

Conclusion:
The Tribunal concluded that the Revenue failed to prove that the goods were smuggled. The appellants' statements about purchasing the goods from the open market were not contradicted by the Revenue. Therefore, the confiscation of the goods and the Maruti Van was not justified. The appeals were allowed, and the appellants were entitled to receive the Mahazar value of the goods.