2016 (9) TMI 1121 - AT - Customs

Confiscation of empty bags under Section 118(b) of the Customs Act, 1962 - huge quantities of sugar stored in the house of one Amal Mali for illegal export to Bangladesh - search of premises on seizure of sugar/ empty bags - restriction on sale/export of sugar came into operation only by a letter dated 10/5/2006 issued by Ministry of Consumer Affairs Food and Public Distribution - Held that - even intention to export and preparation alone are not sufficient to constitute an attempt and has to be associated with a positive penultimate commission/act, depending upon the circumstantial evidences available in each case. The decision in the case BABBAN KHAN Versus COLLECTOR OF CUSTOMS (PREVENTIVE) 1992 (9) TMI 208 - CEGAT, CALCUTTA followed. Any violation of a procedural requirement under Sugar (Control) Order 1966 that too for the period after 10.05.2006, for local movement/ control of sugar, cannot be made as the basis for confiscation of the sugar under Section 113 of the Customs Act, 1962. These provisions are applicable only when any prohibited goods are brought inside a customs area for export and not to local movement of goods in India, outside customs area or goods stored in a godown. Sugar is also not a notified/specified category of goods under the Customs Act, 1962 which cannot be brought near the international border - confiscation of sugar and imposition of penalties set aside. Confiscation of empty bags under Section 118(b) of the Customs Act, 1962 - Held that - goods, if brought in packed form into a customs area then such packages are liable to confiscation. Here, neither the seized goods are contained in packages nor brought into customs area for export. There is also no evidence to indicate that exported goods, if any, were once contained in the empty gunny bags seized by the department. Provisions of Section 118(b) of the Customs Act, 1962 are not applicable to the empty gunny bags confiscated by the Adjudicating Authority. Such confiscation of empty gunny bags is bad in law - confiscation of empty bag is set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Confiscation of sugar and empty bags.
2. Alleged intention for illegal export of sugar to Bangladesh.
3. Legality of penalties imposed on the appellants.
4. Applicability of Section 118(b) of the Customs Act, 1962 for confiscation of empty bags.

Detailed Analysis:

1. Confiscation of Sugar and Empty Bags:
The appellants challenged the Order-in-Original No. 26/Cus/CC(P)/WB/2007 dated 30.11.2007, which confiscated 1866 quintals of sugar and 279 empty bags. The sugar was valued at ?25,21,860/- and was allowed redemption upon payment of a ?20 lakh fine. The confiscation was under Sections 113(c), (d), and (f) of the Customs Act, 1962, read with Section 11 of the Customs Act, 1962 and Foreign Trade (Regulation) Rules, 1983. Penalties of ?5 lakh were imposed on M/s. Laxmi Narayan Udyog Pvt. Ltd. and ?2 lakh each on its director and another individual under Section 114 of the Customs Act, 1962.

2. Alleged Intention for Illegal Export of Sugar to Bangladesh:
The Revenue's case was based on the voluntary statement of Shri Yunus Mondal, who was apprehended by BSF in another case. However, no such statement was on record in this case. The adjudicating authority's decision relied on presumptions and hearsay evidence, which is not admissible as per established case laws, including:
- Oudh Sugar Mills Ltd. vs. UOI.
- State of Kerala vs. M.M. Mathew.
- A.K. Saba vs. Commissioner.

The appellants argued that the sugar was meant for legal export, and they had been seeking necessary permissions since April 2006, before the restrictions imposed by the Ministry of Consumer Affairs on 10.05.2006. The Tribunal found no evidence of an illegal export attempt, as the sugar was stored in godowns, and the appellants had documentary evidence of legal acquisition and efforts to obtain export permissions.

3. Legality of Penalties Imposed on the Appellants:
The Tribunal noted that the statements of the appellants did not indicate any intention for illegal export. The existence of a demand draft in favor of M/s. Balrampur Chini Mills Ltd. further supported the claim of legal acquisition. The Tribunal referred to the case of Babban Khan vs. Collector of Customs (Preventive), where it was held that mere preparation does not constitute an attempt to commit an offense. The Hon’ble Supreme Court in State of Maharashtra vs. Mohd. Yakub and Others clarified that an attempt requires a proximate act towards the commission of the offense, which was not present in this case.

4. Applicability of Section 118(b) of the Customs Act, 1962 for Confiscation of Empty Bags:
Section 118(b) pertains to the confiscation of packages and their contents brought within a customs area for export. In this case, the empty bags were neither in packages nor brought into a customs area for export. Therefore, the confiscation of empty bags under Section 118(b) was deemed inappropriate and set aside.

Conclusion:
The Tribunal found no merit in the confiscation of sugar and the imposition of penalties. The entire case of the Revenue was based on presumptions and lacked concrete evidence. The confiscation of empty bags was also found to be legally unsustainable. Consequently, the appeals were allowed, and the Order-in-Original dated 30.11.2007 was set aside with consequential relief to the appellants.