2017 (11) TMI 844 - AT - Customs

Confiscation - penalty - sale and purchase of pulses - case of Revenue is that it was bogus sale and all the pulses were supplied in contravention of provision, imposed on export of pulses - Held that - there is no seizure of the pulses, even in small quantity. It is nowhere on record that either the Dal Mill owner or the broker or the said Sushil Kumar Agarwal, Siliguri have indulged in activity amounting to smuggling - none of these persons have carried the pulses for the purpose of smuggling in any Customs area or near the border proximity thereof. It is admitted fact on record that the pulses have been dispatched to a place in India and the same ultimately reached a place in India. There is no allegation that post delivery of Dal to a dealer located near the Indo Nepal Border, within India, was in violation of the provisions of the Customs Act or the respondents herein were involved in the presumed smuggling. The whole case of the revenue is based on presumptions and assumptions and lacking any corroboration and moreover suspicious how so ever strong cannot take place of legal proof - appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Legality of the export of pulses/lentils to Nepal.
2. Penalty imposition under Section 114(i) of the Customs Act, 1962.
3. Confiscation of goods under Section 113(d) of the Customs Act, 1962.
4. Validity of redemption fine imposition.
5. Role and liability of Dal Mills and other involved parties.

Detailed Analysis:

1. Legality of the Export of Pulses/Lentils to Nepal:
The export of pulses/lentils from India is prohibited as per DGFT Notification No.15 (RE 2006)/2004-09 dated 27/06/2006. Intelligence indicated illegal exports to Nepal via tractor trolleys and trucks through off routes at the Indo-Nepal border. Investigations revealed that a commission agent, identified as Shri Ajay Gupta, facilitated these exports, working with Dal Mills in Kanpur and Siliguri-based traders. Documents and statements indicated that pulses were dispatched under invoices to VAT-registered dealers in Siliguri, but were actually unloaded at the Indo-Nepal border.

2. Penalty Imposition under Section 114(i) of the Customs Act, 1962:
Show cause notices proposed penalties on Dal Mills and individuals involved under Section 114(i) of the Customs Act for their role in the alleged smuggling activities. However, the Commissioner (Appeals) held that penalties were not sustainable as the Dal Mill owners were not proven to be engaged in smuggling or making monetary gains from such activities. The penalties on Ajay Gupta and Sushil Kumar Agarwal were also reduced based on their limited financial gain from the transactions.

3. Confiscation of Goods under Section 113(d) of the Customs Act, 1962:
The revenue proposed confiscation of the pulses under Section 113(d) of the Customs Act, asserting that the goods were smuggled to Nepal. However, the Commissioner (Appeals) noted that the goods were never seized and thus could not be confiscated. The Dal Mill owners and other respondents were not found to have physically transported the pulses for smuggling, nor was there evidence of their involvement in such activities.

4. Validity of Redemption Fine Imposition:
The Commissioner (Appeals) held that the imposition of a redemption fine was not sustainable since the goods were never seized. Without seizure, the department could not return the confiscated quantity of pulses upon payment of the fine. This position was upheld, as the goods were not available for confiscation.

5. Role and Liability of Dal Mills and Other Involved Parties:
The investigation revealed that the Dal Mills issued invoices to VAT-registered dealers in Siliguri, but the pulses were actually delivered to the Indo-Nepal border. Statements from transporters and brokers indicated that they facilitated the movement of goods but did not participate in smuggling. The Commissioner (Appeals) found that the Dal Mill owners were not engaged in smuggling and had no monetary gains from the alleged activities. Ajay Gupta and Sushil Kumar Agarwal's involvement was limited to brokerage and commission activities, with no direct attempt to smuggle goods.

Conclusion:
The appeals by the revenue were dismissed, and the impugned Orders-in-Appeal were upheld. The Commissioner (Appeals) found no evidence of smuggling by the Dal Mill owners or other respondents. The penalties and fines imposed were deemed unsustainable due to the lack of seizure and proof of involvement in smuggling. The respondents were entitled to consequential benefits, including the return of pre-deposits with interest.