1997 (12) TMI 386 - AT - Customs

Summary

Issues:
1. Seizure of goods by Customs Department on suspicion of smuggling
2. Burden of proof regarding smuggled goods under Section 123 of the Customs Act, 1962
3. Confiscation of goods without proper evidence of importation or legal acquisition
4. Appellant's contention on burden of proof not shifted
5. Comparison with Supreme Court decision in Kanungo and Company v. Collector of Customs
6. Appellant's statement regarding goods supplied by D.P. Khandelwal
7. Legal importation of goods and burden of proof on the Department
8. Decision on the sustainability of the Collector (Appeals) order

Analysis:
The judgment revolves around the seizure of goods by the Customs Department in 1991 on suspicion of smuggling. The appellant failed to provide evidence of legal acquisition or importation of the goods, leading to a notice proposing confiscation. The Additional Collector, affirmed by the Collector (Appeals), confiscated the goods with an option for redemption and imposed a penalty, prompting the appellant's appeal.

The appellant argued that the burden of proof regarding the smuggled nature of the goods, not notified under Section 123 of the Customs Act, had not been discharged by the Department. Citing tribunal decisions, the appellant contended that the absence of evidence regarding the supplier, D.P. Khandelwal, did not establish the goods as smuggled.

Conversely, the Departmental Representative asserted that by undertaking to produce Khandelwal, the burden of proof shifted to the appellant, which he failed to discharge. Referring to the Collector (Appeals) order and the Supreme Court decision in Kanungo and Company v. Collector of Customs, the Department argued that the goods required a license for importation.

The judgment clarified that the burden of proof for non-notified goods lies with the Department unless proven otherwise. It distinguished the present case from Kanungo and Company, emphasizing that the burden does not shift unless false evidence is produced. The appellant's statement regarding goods supplied by Khandelwal did not indicate an acceptance of the burden of proof.

Ultimately, the judgment held that the burden of proof had not shifted to the appellant, and the Department failed to establish the goods as smuggled. The order of the Collector (Appeals) was deemed unsustainable, leading to the allowance of the appeal, setting aside the impugned order, and granting consequential relief.