2005 (1) TMI 263 - AT - Customs

Summary

Issues Involved:
1. Determination of the foreign origin of confiscated goods.
2. Burden of proof regarding the foreign origin and smuggled nature of goods.
3. Applicability of relevant sections of the Customs Act, 1962.
4. Validity of the Commissioner's reliance on previous judgments.
5. Legality of the seizure and subsequent confiscation of goods.
6. Impact of liberalized Import/Export Policy on the case.
7. Examination of the grounds of Revenue's appeal.

Detailed Analysis:

1. Determination of the Foreign Origin of Confiscated Goods:
The Commissioner (Appeals) concluded that the confiscated goods were not proven to be of foreign origin. The examination was restricted to the relied-upon documents as the goods were not available for physical inspection. The Inventory Memo described the goods as 'F/O,' likely indicating 'of Foreign Origin.' However, the Commissioner found that the Department failed to discharge the burden of proving the foreign origin of the goods. The records did not disclose the country of origin, nor were the goods notified under Sections 11B or 123 of the Customs Act, 1962.

2. Burden of Proof Regarding the Foreign Origin and Smuggled Nature of Goods:
The Commissioner (Appeals) referenced the case of Jain Enterprises & Shri Richand v. Collector of Customs, Madras, which held that the burden of proof shifts to the person challenging the seizure even if the goods are not notified under Section 123 of the Customs Act, 1962. However, he relied on the Supreme Court judgment in Amba Lal v. Union of India, stating that the onus of proof does not shift from the Customs Authorities to the appellants in cases of smuggled goods. Therefore, the Department's failure to prove the foreign origin and smuggled nature of the goods led to the setting aside of the Adjudicating Authority's order.

3. Applicability of Relevant Sections of the Customs Act, 1962:
The Commissioner (Appeals) found that the confiscated goods were neither notified under Section 11B nor under Section 123 of the Customs Act, 1962. The absence of notification meant that the provisions of the Customs Act could not be invoked based on mere suspicion. The Tribunal agreed that the provisions of Section 111(d) must be read with the relevant EXIM policy, and mere suspicion is insufficient to prove the foreign and smuggled origin of the goods.

4. Validity of the Commissioner's Reliance on Previous Judgments:
The Commissioner (Appeals) relied on the Supreme Court judgment in Amba Lal v. Union of India, which was deemed appropriate in this context. The Tribunal found no reason to consider the other points raised by the appellants, as the primary issue of the foreign origin and smuggled nature of the goods was not established. The Tribunal also noted that the decision in ABC Roadways v. Commissioner of Customs, New Delhi, and other cited cases did not apply to the instant case.

5. Legality of the Seizure and Subsequent Confiscation of Goods:
The Tribunal found that the seizure and subsequent confiscation of goods were not justified. The show cause notice mentioned a violation of Import Control No. 17/55, dated 7-12-1955, which was not applicable after the enactment of the new Foreign Trade (Development and Regulation) Act, 1992. The goods bore certain names on the labels, but there was no clear finding in the Order-in-Original regarding the foreign brand names. The Tribunal concluded that the goods could not be considered of foreign origin based on mere suspicion.

6. Impact of Liberalized Import/Export Policy on the Case:
The Tribunal noted that the liberalized Import/Export Policy adopted by the Government since 1992 allowed many items to be freely importable. Garments, being freely importable, could not be seized or confiscated without concrete evidence of their smuggled nature. The Tribunal emphasized that mere visual appearances and suspicions were insufficient to prove the foreign origin and smuggled nature of the goods.

7. Examination of the Grounds of Revenue's Appeal:
The Tribunal found that the Revenue's appeal lacked merit. The grounds of appeal, including the efforts of Customs officers to prevent smuggling and the dubious character of the appellant, were not sufficient to establish the foreign origin and smuggled nature of the goods. The Tribunal reiterated that the absence of documents did not prove the goods to be of foreign origin and smuggled. The appeal was found to be motivated by a desire to justify the seizure rather than based on legal grounds.

Conclusion:
The Tribunal upheld the findings of the Commissioner (Appeals) and rejected the Revenue's appeal. The confiscated goods were not proven to be of foreign origin or smuggled, and the provisions of the Customs Act, 1962, could not be invoked based on mere suspicion. The appeal was found to be without merit and was dismissed.