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TMI Blog2009 (9) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... paid when evidence not produced by person concerned on duty payment - The object with which the Customs Act has come into existence is to levy duty on goods as contemplated under the Act and also to ensure that those goods which are dutiable do not escape from payment of customs duty. - The said Act was brought about not only to check the smuggling but also to ensure that the goods that is imported into the territory of India to which the Customs Tariff Act are applicable suffers the duty in the hands of the importer. - Question Whether the Tribunal has committed an error in holding that the order of confiscation is not an “action-in-rem”?, is answered in affirmative – Question Whether the Tribunal has committed an error in holding that the smuggled goods cannot be confiscated wherever such goods are found?, is not answered as the matter is remanded to the Adjudicating Authority at Bangalore - 31 of 2005 - - - Dated:- 30-9-2009 - D.V. Shylendra Kumar and Aravind Kumar, JJ. Shri C. Shashikantha, Standing Counsel, for the Appellant. S/Shri G. Sampath, M.G. Varadarajan, S. Raghu, Smt. Vijaya Prakash and M.P. Chidananda Urs, Advocates, for the Respondent. [Judgment per: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign origin silk yarn in respect of LR No. 120900, dated 26-5-2000. The first respondent claiming to be the consignee had deposited the penalty on 28-5-2000 in the office of the Karnataka State Commercial Tax Department and had got the goods released. When the Directorate of Revenue Intelligence had seized the said goods at Bangalore and from the godown of 6th respondent it was found by the authorities that said goods contained labels which described the goods as blossoms, white steam filature, China National Silk Import Export Corporate Made in China and Jinding, China National Silk Imp Exp. Corp. Sichuan Branch. During the Course of investigation by the authorities statements of all the respondents under Section 108 of the Customs Act came to be recorded and some of the respondents have retracted the said statement subsequently. It was the admission of the respondents in the said statement that they are only recipients of the goods and they had not imported the goods to the territorial waters of India and as such they are not liable to pay the Customs Duty. They further stated that the goods were being supplied by Ashok Kumar Shroff and Subrata Mondal of Kolkota. Notice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (vii) the amount of Rs. 11 lakhs deposited vide TR 6 Challen dated 8-6-2000 should not be adjusted towards customs duties, fines, penalties and interest if any which would become payable on adjudication, and (viii) penalty shall not be imposed on Shri Vikram Jain, Shri Lalit Jain, Shri Bheemraj Jain, Shri Ashok Kumar Shroff, Shri S. Muralidhara, Shri Rahul. K. Dharamshi all of Bangalore and Shri Vikas and Shri Ashok of Calcutta, on each one of them, under Section 112 of the Customs Act, 1962, for their roles in smuggling and subsequent disposal of the subject goods. by calling upon the respondents to show cause to the notice for proceeding further in the matter. The respondents herein submitted their written reply and after consideration of the same the adjudicating authority namely the Commissioner of Customs, Bangalore region by an order dated 5-12-2001 in O-I-O No. 35/2001 COMMR/CUS ADJN confirmed the demand made in the show-cause notice. This order came to be set aside by the Tribunal by holding that the place of importation is at Calcutta and hence the adjudication has to take place at Calcutta and accordingly remanded the matter on the said issue namely regarding confis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mproper. (v) When confiscation is held to be improper consequently levy of penalty has to go. Learned counsel relies on the following decisions: (i) Collector of Customs, Madras and others v. D. Bhoormull reported in 1983 (13) E.L.T. 1546 (S.C.) (ii) 2006 (205) E.L.T. 23 (Bom). Commissioner of Customs (Preventive), Mumbai v. Aakash Enterprises. (iii) 997(96) E.L.T. 224. Union of India v. Ram Narain Bishwanath. Smt. Vijaya Prakash appearing for respondents 1, 3 and 5 contends that the order of the Tribunal is just and proper and in support of the same she relies upon the decision in the case of Commissioner of Customs (Preventive) West Bengal, Kolkata v. Ritu Kumar, 2006 (202) E.L.T. 754 (Cal.). 6. We have heard the learned counsel for the parties and perused the records as well as orders of Adjudicating Authority, Tribunal and the authorities cited at the bar and have given our anxious consideration to the rival contentions raised by the parties to the lis. At the time of the admission the substantial question of law as referred to in paragraph No. 2 supra had been formulated for being adjudicated. 7. In order to appreciate the contentions raised herein above, it wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or the exporter or the agent or employee of the importer or exporter, the provisions of this sub-section shall have effect as if for the words "one year" and "six months", the words "five years" were substituted: "111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation: (a) any goods imported by sea or air which are unloaded or attempted to be unloaded at any place other than a customs port or customs airport appointed under clause (a) of Section 7 for the unloading of such goods; (b) any goods imported by land or inland water through any route other than a route specified in a notification issued under clause (c) of Section 7 for the import of such goods; (c) any dutiable or prohibited goods brought into any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port; (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; (e) any dutiable or prohibited g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty for improper importation of goods, etc. - Any person,- (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111. shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees], whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty [not exceeding the duty sought to be evaded on such goods or five thousand rupees], whichever is the greater; (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under Section 77 (in either case hereafter in this se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold [and manufactures thereof] watches, and any other class of goods which the Central Govt. may by notification in the Official Gazette specify. 8. A preliminary objection has been raised as to the maintainability of the appeal on the ground that the Department has not challenged the original order i.e. dated 29-8-2003 and in fact the department itself had moved a rectification of mistake petition/application with a prayer to the Tribunal to clearly specify the proper officer as to who has got the jurisdiction to adjudicate and this petition/application had been rejected by the CESTAT on 6-1-2005 [2005 (184) E.L.T. 305 (Tri.-Bang.)]. It is contended by the respondent that after dismissal of this petition/application on 6-1-2005 department has filed the present appeal on 2-12-2005 along with an application for condonation of delay and in the said application seeking condonation of delay the reasons assigned for delay they only speak about order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on the goods imported into or exported from India. Section 28 provides for levy of duty on goods where it had not been levied or had been short levied or erroneously refunded. Section 111 empowers the authorities to confiscate all improperly imported goods. Section 112 empowers the authorities to levy penalty for improper importation of goods etc. The Act itself provides for casting the burden of proof in certain cases as enumerated under Section 123 of the Customs Act. Section 125 provides for paying fine in lieu of confiscation of the goods namely the option is given to the person from whose possession or custody said goods have been seized. There might be instances that person from whom goods are seized may dis-own the goods itself and it would not be possible for the authorities to ascertain as to the person who brought the same into territory of India and in this background we have to look into Section 111 of the Customs Act. Section 111 provides for confiscation of improperly imported goods brought from a place outside India. In the instant case a show-cause notice came to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. Sri Shashikantha learned counsel appearing for the revenue has contended that the Commissioner of Customs has held in paragraph 234 and 235 of the Order-In-Original as to how the jurisdiction of the Commissioner of Customs, Bangalore has got powers to adjudicate and accordingly has given a finding and supports the said finding and further contends that order of Tribunal is erroneous and liable to be set aside. 15. Per contra Sri. Chidananda Urs along with Smt. Vijaya Prakash would contend that the authorities have invoked under Section 111(d) of the Customs Act which implies that it is an authority where the goods have entered Indian Territory who would get the jurisdiction and not any other authorities inasmuch as for attracting Section 111(d), the place of breach is the place where the jurisdiction vests. Sri.Shashikantha also relies upon the decision in the matter of Collector of Customs Madras and Others v. D. Bhoormull, reported in 1983 (13) E.L.T. 1546 (S.C.). 16. Section 111 of the Act empowers the authority to confiscate the goods brought from a place outside India. The heading of the said Section reads: 'Confiscation of improperly imported goods etc.' The various c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ggled or has not suffered the Customs duty since it is on the basis of suspicion that authorities act in order to prevent the leakage of the revenue. When the action of the authorities are viewed from this angle it is to be examined as to whether the authorities have given full opportunity to the person from whom the goods are attempted to be confiscated and if it is found in positive then the authorities would pass this test and the only one inference that can be drawn is that the onus of proving it to be otherwise, automatically shifts to the person from whom the goods are attempted to be confiscated or recovered/seized. 18. In the absence of any cogent evidence from the said person to establish that goods have suffered duty it is to be presumed otherwise and the said person or persons are liable to be proceeded with under the provisions of the Customs Act. Hence, the contention of the respondent that the burden of proving that the goods had been smuggled or brought into the territory of India without payment of duty, lies on the authorities would facilitate the mischief since all human affairs require absolute certainty, is a myth and 'all exactness is a fake' and absolute pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute. It is only during the course of investigation that the authorities tumbled upon the fact that persons in Calcutta were suppliers of the goods. On investigation it was found that such persons were not traceable and hence the persons from whom the goods were seized were proceeded with and as such when the goods were seized at Bangalore the proceedings for confiscation of the seized goods being an action in rem, pertains to the sale of goods per se the proper officer having jurisdiction over the situs of the goods had the authority to initiate proceedings, which admittedly has been done in the instant case namely by issuance of the show-cause notice dated 24-11-2000 by the Additional Director General, DRI to show-cause to the Commissioner of Customs, CR Building, Queen's Road, Bangalore which is in consonance with the notifications issued under Section 4 of the Customs Act which has been succinctly examined and explained by the adjudicating authority at paragraph 236 of the adjudication order. Hence, we do not accept the contention that the action initiated by the authorities at Bangalore would be contrary to the provisions of the Customs Act, particularly Section 111. 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them to be fictitious. Hence, in such a situation it cannot be said that the adjudication proceedings itself ought to fail, and such visualisation ought not to be eschewed since the scheme of the Customs Act when examined on the touchstone of collection of Custom duty on the goods and checking the evasion of levy of Customs duty is examined it becomes fallacy in drawing logical conclusion. 25. In this factual matrix when we examine the contention of the respondent that adjudication has to fail on account of non location of the actual breach of customs barrier by the authorities, we find that only conclusion that can be drawn in all such situation is that the consignor/recipient of the goods himself/itself could have booked the goods as consignor in fictitious names in order to evade payment of Customs duty and hence it cannot be held even in a situation as we are faced with to direct the authorities to first ascertain the place of breach of customs barrier and only thereafter the authorities should proceed. This would result in driving the authorities to wall and lead to a incongruous situation. Hence it would be proper to interpret Section 111 as a whole in its true perspectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would be appropriate to direct the authorities at Bangalore to adjudicate inasmuch as the theory of "action in rem" is squarely applicable to the facts of the case since the confiscation of goods have taken place at Bangalore. In the instant case the goods were seized at Bangalore by DRI authorities which goods were admittedly dutiable and prohibited goods which were found concealed and described in the Lorry receipts used for transportation as "five bundles of old chindi bales" or as "five bundles of old waste cloth" but on verification by authorities at the time of examination of goods, it was found to contain labels describing the goods as Blanons white Steam Filature, China Silk Import and Export Corporation, made in china and JINDING, China National Silk Import and Export-Corporation Sichuan Branch. In view of this factual matrix it would be unsafe to call upon the authorities to Kolkota to adjudicate the matter. On the other hand it would be just and proper for the Customs Authorities at Bangalore to adjudicate the matter particularly in the circumstances of the case and also due to the situs of the seizure being Bangalore and goods having been seized from persons viz. res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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