2020 (2) TMI 438 - AT - Customs

Confiscation/seizure of imported goods - misdeclaration of description of the goods - goods mis-declared as being procured as waste/ condemned goods of coastal run vessels whereas actually they had been procured as condemned goods/ ship stores of foreign going vessel - HELD THAT - Undisputedly the goods have been seized, from the godown/premises which are not located in the customs area. Also on the goods seized there are no markings etc., to establish that these goods were of foreign origin. It is also not disputed that these goods were not amongst the notified goods under Section 123 of Customs Act, 1962. In absence of the notification, notifying the goods under Section 123, the burden to prove that the impugned goods were of foreign origin and were imported/ cleared from the customs area illicitly without payment of duty, is on the revenue. From the facts recorded though Commissioner has recorded the existence of such documents he has brushed asides the same stating that the documents could not be co-related with the goods under seizure, without specifying anything further. The department has failed to discharge the initial burden cast on them to prove that the goods were illicitly cleared by the appellants. Confiscation do not sustain - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Demand of duty under Section 28(1) of the Customs Act, 1962.
2. Confiscation of goods under Sections 111(h), 111(j), and 111(m) of the Customs Act, 1962.
3. Imposition of penalties under Section 114A of the Customs Act, 1962.
4. Imposition of penalties under Section 112(a) of the Customs Act, 1962.
5. Enforcement of Bonds backed by Bank Guarantees.

Issue-wise Detailed Analysis:

1. Demand of Duty under Section 28(1) of the Customs Act, 1962:
The Commissioner confirmed the demand of duty totaling ?11,67,231/- against M/s. Noble Marine Works, M/s. M.A. Traders, M/s. Shree Durga Traders, and M/s. Jubilee Traders. The appellants contested the demand on the grounds of merits and limitation, arguing that the goods were of "Indian Origin" as indicated in the delivery orders issued by the Shipping Corporation of India (SCI). The tribunal noted that the Commissioner overlooked the appellants' contention that they had not suppressed any material facts with the intent to evade duty. The tribunal found that the Commissioner had failed to adequately address the issue of whether the extended period of limitation was applicable.

2. Confiscation of Goods under Sections 111(h), 111(j), and 111(m) of the Customs Act, 1962:
The Commissioner ordered the confiscation of goods valued at ?3,22,374/-, ?3,22,314/-, ?1,89,091/-, and ?4,65,564/- seized from the appellants. The tribunal observed that the goods were seized from premises not located in the customs area and lacked markings to establish their foreign origin. The tribunal emphasized that the burden of proof to show that the goods were of foreign origin and illicitly cleared without payment of duty lay with the revenue, as the goods were not notified under Section 123 of the Customs Act. The tribunal found that the revenue had failed to discharge this burden.

3. Imposition of Penalties under Section 114A of the Customs Act, 1962:
Penalties equal to the duty amount were imposed on the appellants under Section 114A. The appellants argued that Section 114A, introduced on 28.09.1996, could not be applied retrospectively to clearances made during 1994-95. The tribunal agreed, citing precedents where penalties under Section 114A were deemed unjustified for actions predating its enactment.

4. Imposition of Penalties under Section 112(a) of the Customs Act, 1962:
Penalties of ?20,000/- each were imposed on Shri D.K. Mukhopadhyay and Shri Y.B. Sawant under Section 112(a). The tribunal noted that these individuals had admitted to mistakenly indicating "Indian Origin" on the delivery orders without verifying the actual origin. The tribunal found that the penalties were imposed without sufficient evidence to prove that the goods were illicitly imported.

5. Enforcement of Bonds Backed by Bank Guarantees:
The Commissioner ordered the enforcement and encashment of bonds backed by bank guarantees executed by the appellants. The tribunal found that the Commissioner had overstepped the scope of the remand order by imposing redemption fines and penalties not originally contested by the revenue. The tribunal cited precedents where actions beyond the scope of remand orders were deemed contrary to legal principles.

Conclusion:
The tribunal set aside the impugned order, finding that the revenue failed to prove that the goods were illicitly imported and that the penalties and confiscations were unjustified. The appeals filed by the appellants were allowed, and the tribunal directed the Commissioner to take a fresh decision on all issues after giving the parties a reasonable opportunity to be heard. The tribunal emphasized the need for the revenue to produce positive evidence to substantiate claims of illicit importation, in line with established legal principles.

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