2010 (4) TMI 442 - AT - Customs

Penalty Foreign origin goods Department failed to discharge the burden of proof cast upon it to show that seized goods were of foreign origin. The goods were tested and it was found that they were made out a material supplied by M/s. S.R.F. Ltd. Viralimalai who are leading manufacturers of tarpaulins and as per the test report the material on both sides was PVC coated plain woven spun polyester/texturised polyester (base material) fabric which are used for manufacture of tarpaulin in India. Held that - set aside the penalty imposed on the appellant herein and allow the appeal. However as regards fine of Rs. 30, 000/- the appellant does not have any locus standi to claim setting aside of the same as this claim can be made only by Shri Roshan the purchaser of the goods. Thus the appeal is allowed by setting aside the penalty.

Summary

Issues:
Confiscation of tarpaulins of foreign origin and penalty imposition.

Analysis:
The appellant challenged the confiscation of 8 tarpaulins claimed to be of foreign origin and the penalty imposed on him. The search of the appellant's godown revealed the tarpaulins, allegedly sold to Shri Roshan. However, the department failed to prove the foreign origin of the goods. Test results indicated the tarpaulins were made of materials commonly used in India for tarpaulin manufacturing. The tarpaulins were old, used, and torn, with no evidence supporting their foreign origin. The authorities relied on statements, but no admission of smuggling was found. The tribunal found no contravention of Section 111 of the Customs Act, as the foreign origin of the goods remained unproven. Consequently, the penalty on the appellant was set aside, and the appeal was allowed. However, the appellant could not contest the fine as it was the purchaser, Shri Roshan, who had the right to challenge it.

This judgment highlights the importance of proving the foreign origin of seized goods in customs cases. The burden of proof lies with the department, and in this case, the evidence did not support the claim of illicit importation. The tribunal emphasized the need for concrete evidence to establish violations under the Customs Act. The decision underscores the significance of thorough investigations and reliance on factual evidence rather than assumptions or statements. The distinction between penalty and fine rights based on involvement in the transaction was also clarified, ensuring proper parties have the standing to contest specific aspects of the case.