1987 (7) TMI 302 - AT - Customs

Issues Involved:
1. Presumption of attempted export under Section 11(M) of the Customs Act.
2. Liability of silver chorses sale within India under Section 114.
3. Evidence of illegal export or attempted export.
4. Practicality and enforceability of Rule 5.
5. Appropriateness and amount of penalties imposed.

Issue-wise Detailed Analysis:

1. Presumption of Attempted Export under Section 11(M) of the Customs Act:
The appellants contended that the authorities were not justified in drawing the presumption of attempted export as provided under Section 11(M) of the Customs Act. They argued that the silver was neither received nor sold by the firm, and hence, Section 11(M) should not be invoked. They also claimed that the return of summons undelivered did not prove the fictitious nature of the purchasers. However, the Tribunal found that the admission by the main partner, Kantilal, that the purchasers were fictitious, along with other evidence, justified the presumption under Section 11(M). The Tribunal concluded that the sales were to fictitious persons, thus raising the presumption of illegal export.

2. Liability of Silver Chorses Sale within India under Section 114:
The appellants argued that the sale of silver chorses within India did not amount to an attempt to export, and therefore, the goods were not liable to confiscation under Section 114. The Tribunal rejected this argument, stating that Section 11(M) was introduced to address the difficulty of proving actual or attempted export. The unrebutted presumption of illegal export, along with evidence of violations of Section 11L and Rule 5, justified the application of Section 114 and the imposition of penalties.

3. Evidence of Illegal Export or Attempted Export:
The appellants claimed there was no evidence of illegal export or attempted export of silver, and thus no basis for penalties under Section 114. The Tribunal disagreed, noting that the presumption under Section 11(M) was sufficient to establish illegal export. The clear admission by Kantilal and other circumstantial evidence supported the conclusion that the purchasers were fictitious, thus justifying the penalties.

4. Practicality and Enforceability of Rule 5:
The appellants contended that the steps specified in Rule 5 were impracticable and could not be enforced. The Tribunal rejected this contention, emphasizing the necessity of stringent restrictions to prevent illegal export. The Tribunal also noted that it lacked the jurisdiction to declare the rule as ultra vires or inoperative. The Tribunal upheld the enforceability of Rule 5, considering it essential for achieving the objectives of the Act.

5. Appropriateness and Amount of Penalties Imposed:
The appellants argued that the penalties imposed were harsh and unreasonable, especially given that similar cases had resulted in much lower penalties. They also contended that imposing penalties on both the firm and the partners was unjustified. The Tribunal found that the purchase of 114.540 kgs of silver was genuine, but the subsequent sales were fictitious. The Tribunal did not find evidence of leniency in similar cases and noted that the penalties imposed were proportionate to the scale of transactions amounting to Rs. 86 lakhs. However, the Tribunal agreed that imposing penalties on both the firm and the partners was excessive. Consequently, the penalty on the firm was set aside, while the penalties on the main partner and the manager were upheld.

Conclusion:
The Tribunal upheld the presumption of attempted export under Section 11(M) and the applicability of Section 114 for the sale of silver chorses. The evidence supported the conclusion of illegal export, and the enforceability of Rule 5 was affirmed. The penalties on the firm were set aside, but the penalties on the main partner and the manager were confirmed. The firm was granted consequential relief by way of refund of the penalty amount deposited.

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