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TMI Blog2005 (6) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... d adjudged before concluding whether the mischief of third proviso to sub-section (1) of Section 127B of the Act would come into play. The Hon ble Supreme Court has held in British Airways PLC v. UOI [ 2001 (11) TMI 81 - SUPREME COURT] , that while interpreting a statute, the court should try to sustain it and give such meaning to the provisions which advance the object sought to be achieved by the enactment. A court cannot approach the enactment with a view to dig holes or to search for defects of drafting which makes its working impossible. It is a cardinal principle of construction of a statute that efforts should be made in construing the different provisions so that each provision will have its play and in the event of any conflict a harmonious construction should be given. The well known principle of harmonious constructions is that effect shall be given to all the provisions and further any provision of the statute should be construed with reference to the other provisions so as to make it workable. A particular provision cannot be picked up and interpreted to defeat another provision made in that behalf under the statute. It is the duty of the court to make such constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taken only as referring to the list of goods covered by Section 123, whose provisions can be invoked in respect of such goods subject to the satisfaction of the other conditions laid down in sub-section (1) thereof. Hence, as already stated, I agree with the above order. - SHRI K.P. SRIDHARA RAMAN, CHAIRMAN, M.V.S. PRASAD, VICE-CHAIRMAN, V.K. SHARMA, VICE-CHAIRMAN, B.N. DAS AND SUJOY ROY, MEMBERS Shri V.M. Doiphode, C. Hari Shankar, T. Viswanathan, Advocates, Vipin Jain, CA K.M. Mondal, Consultant, for the Appellant. ORDER On the basis of specific information that M/s. Navneet Trading Company, Bhiwandi, has mis-declared the imported fabrics as Polyester Non-Texturised woven fabrics instead of Texturised Fabrics at Tuticorin Customs, and evaded customs duty and that part quantity of the said consignment would be off-loaded at a private godown on 20-10-2003, the officers of the Marine Preventive Wing of Customs (Preventive) Commissionerate, Mumbai, intercepted a vehicle on 20-10-2003. The said vehicle was loaded with rolls of fabrics of foreign origin. On enquiry, the driver of said vehicle, produced a set of documents containing Bill of Entry No. 329659, dated 13-10-2003, Bill o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notified commodity under Notification No. 204-Cus., dated 20-7-1984 as amended from time to time, issued under sub-section (2) to Section 123 of the Customs Act, 1962 (in short the Act). Sl. No. 5 of the said Notification covers fabrics made wholly or mainly of synthetic yarn. The detained fabrics of foreign origin totally valued at Rs. 9,09,249/- (L.M.V.) were, therefore, seized and later on provisionally released, after obtaining requisite Bond and Bank Guarantee. 4. After investigation Show Cause Notice dated 15-4-2004 was issued under Section 124 of the Act to the applicant inter alia proposing confiscation of the seized goods, and recovery of Customs duty amounting to Rs. 5,21,641/- due on the seized goods, besides invoking penal and interest provisions. As the goods were covered under Notification No. 204-Cus., dated 20-7-1984 (supra), the burden of proof to show that the above fabrics were not smuggled was fastened on the applicant in the Show Cause Notice. 5. The applicant filed an application dated 6-8-2004 under Section 127B of the Act before the Additional Bench, Customs and Central Excise, Settlement Commission, Mumbai for settlement of his case, inter alia, disclosing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute a Special Bench to examine specific aspects of the third proviso to Section 127B(1) of the Act which reads as under :- Provided that no application under this sub-section shall be made in relation to the goods to which Section 123 applies. [emphasis supplied] 11. The Chairman, Customs Central Excise Settlement Commission, Principal Bench, New Delhi vide order dated 19-1-2005 issued under F. No. C-18/Tech/02-SC(PB) constituted a Special Bench in terms of sub-section (7) of Section 32A of the Central Excise Act, 1944, which provisions are applicable to the proceedings under the Customs Act, 1962 in terms of Section 127N of the Act. The following issues are referred to the Special Bench for determination : (a) Whether applications, per se, are barred in relation to goods which are listed under sub-section (2) of Section 123 or are notified under the said sub-section? (b) Whether applications are barred in respect of the above cited goods, only when the said goods are seized on reasonable belief that they are smuggled goods, in terms of sub-section (1) of aforesaid Section 123? (c) Whether for applications in respect of such goods which have been cleared under a Bill of Entry t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, to apply Section 123 to any goods the following ingredients must be satisfied :- (i) The goods should be notified under sub-section (2) of Section 123 of the Act. (ii) The seizure of the goods should be under the Customs Act. (iii) The seizure should be under reasonable belief that the goods are smuggled. It was contended that if the above ingredients are satisfied in a case then the burden of proof that the goods are not smuggled will be either on the person from whose possession the goods were seized, or on the person who claims to be the owner thereof. Thus, essentially Section 123 is a procedural provision and though ordinarily the burden of proof is on a person/agency who makes allegation or who wants to prove a charge against others, by virtue of this Section 123, the burden of proof is cast on the person from whose possession the goods are seized or on the owner thereof. 14.2 He further submitted that only when the above ingredients are completely satisfied, one can say that the provisions of Section 123 will be applicable to those goods and not to any goods which are notified under Section 123. If the intention of the legislature was to exclude the goods which are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not have been any reasonable belief in the mind of the seizing officer that the goods were smuggled. However, if a claim is made that the goods are imported under a Bill of Entry, but the seized goods do not tally with particulars given in the said Bill of Entry in such a case bar can come into play for the impugned goods are not covered by a Bill of Entry and also the goods are such to which Section 123 applies. He referred to the Tribunal decision in the case of S.K. Chains v. CC(P) reported in 2001 (127) E.L.T. 415 (Tri. - Mum.). 15.1 Shri C. Harishankar, ld. Advocate submitted that the third proviso to Section 127B(1) excludes from the jurisdiction of the Commission cases relating to goods to which Section 123 applies. The applicability of Section 123 in the facts of a particular case has, therefore, to be necessarily determined. 15.2 The Counsel submitted that Section 123 is a provision dealing with burden of proof and has been held to be procedural in Shivaji v. State of Karnataka, 1995 (76) E.L.T. 262 (Kar.) and Rasheed Abdullah v. State of A.P., 1999 (109) E.L.T. 154 (A.P.). It shifts the onus to prove that the seized goods are smuggled, from the Revenue to the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 123 is absent, the goods would stand excluded from the purview of Section 123. The ld. Advocate referred here to the case of Shamlal Sen v. UOI reported in 2000 (126) E.L.T. 228 (Cal.). 15.6 Situation (b) above contemplates a case where, though the essential ingredients of Section 123 are satisfied, there is no dispute regarding smuggled nature of the goods, whether due to the admission by the party, or otherwise. In such a situation, too, the goods would not fall within the ambit of Section 123. In Narayan Bhagwantrao Gosavi Balajiwala v. Gopal Vinayak Gosavi - 1960 SCR 773, it has been definitively laid down that, in a situation where the liability is admitted, the issue of burden of proof becomes academic. In such a situation, too, therefore this Commission would possess jurisdiction to proceed with the matter. 15.7 It was, therefore, concluded that where Section 123 does not apply in the facts of a case, or is not invoked in the Show Cause Notice, it would be totally erroneous to assume that the jurisdiction of this Commission would stand ousted merely because the goods find a place in the Notification issued under Section 123(2). It is submitted that the same positio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this section will not apply to those specified goods, which have been legally imported into India on payment of Customs duty after filing a proper Bill of Entry as required under Section 46(1) of the Act. 16.2 It was, therefore, pleaded that there cannot be any manner of doubt that the scope of the said third proviso to Section 127B(1) is limited only to those specified goods which have been smuggled into India in contravention of the provisions of law. In other words, specified goods legally imported into India, will not come within its purview. 17.1 Shri Vipin Kumar Jain, ld. Chartered Accountant stated that the question which arises for consideration is whether the bar provided in the above proviso will apply to all cases relating to the goods, which are specified in sub-section (2) of Section 123 of the Act or would apply only to cases where a question relating to burden of proof becomes relevant, i.e., when the goods specified in sub-section (2) of Section 123 are seized under the Act in the reasonable belief that they are smuggled goods. 17.2 He pleaded that the key expression that needs to be interpreted for examining the above issue is the expression in relation to goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder such goods liable to confiscation under Section 111 or Section 113. The term smuggled goods is, therefore, wide enough to cover goods which have been imported under a Bill of Entry but have become liable for confiscation under the provisions of Section 111 of the Act. 17.7 The Counsel also submitted that Section 123 is a rule of evidence and being a procedural rule is not required to be expressly invoked in the Show Cause Notice. The conditions necessary for invocation of the said Section 123 are spelt out in the said Section itself and, therefore, its non-mention in the Show Cause Notice is of no consequence or relevance. 18. Shri T. Viswanathan, ld. Advocate, more or less reiterated the submissions made by the other ld. Counsels who preceded him. 19. We have gone through the submissions made on the issues raised before the Special Bench. We have also gone through the various cases cited during the course of the submissions made by the ld. speakers. 20. The fundamental issue which needs to be examined and decided is the interpretation of the expression apply which appears in the third proviso to sub-section (1) of Section 127B and also in Section 123 of the Act. The point whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have no application. If, therefore, Section 123 is wrongly applied and the presumption thereunder is raised, without the condition precedent thereunder having been satisfied, the entire inquiry and the order passed therein would be vitiated. (emphasis laid) 24. In the case of Sham Lal Sen Company v. UOI reported in 2000 (126) E.L.T. 228 (Cal.) the Hon ble High Court of Calcutta in the context of onus under Section 178A of Sea Customs Act, 1878 (corresponding to Section 123 of the Customs Act, 1962) have inter alia held thus :- ......the adjudicating officer would have to satisfy himself that the requirements of Section 178A had been complied with before invoking the presumption laid down by that section. Thus it is clear on the provisions of the statute an obligation lies on the adjudicating authority as also the appellate and revisional authorities and therefrom to consider whether the seizure concerned was made on any reasonable belief as enjoined by Section 178A or not and for that purpose review the grounds including, if any, information on which the authority making the seizure proceeded. Without discharging the said obligation the adjudicating authorities cannot proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done because a lot of goods in respect of which some restrictions/prohibitions have been created under the NDPS Act, 1985 are also the goods which are used in some pharmaceutical/chemical industries. Thus, the legislature barred the settlement of cases involving such goods only if an offence in respect of such goods has been committed. Section 123 also applies to many goods, which are freely importable into India without any restrictions. A harmonious reading of the said proviso would be complete only if the goods in relation to which the application has been made, have been subjected to the provision of Section 123 of the Customs Act, 1962 particularly when legislature chose to create bar against settlement in this very proviso in respect of only those goods in relation to which any offence has been committed under the NDPS Act, 1985. In this liberal scenario of import regime to bar the application for settlement in respect of goods to which Section 123 applies and not the goods to which Section 123 has really been applied to, would amount to heavily narrowing down the areas of settling the disputes which legislature would have never intended to. Our this perception is further for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon it a construction which modifies the meaning of the words used in the Statute. 28. From the aforesaid discussions and the cases cited and discussed above, we conclude that invocability of the provisions of Section 123 is an essential ingredient to determine the applicability of the said section to the seized goods so as to decide whether the mischief of the third proviso to sub-section (1) of Section 127B of the Act would come into play. The issues referred to Special Bench for decision can be answered as below :- (a) Whether applications, per se, are barred in relation to goods which are listed under sub-section (2) of Section 123 or are notified under the said sub-section? Answer : The applications per se are not barred in relation to goods which are listed or notified under sub-section (2) of Section 123 of the Act. (b) Whether applications are barred in respect of the above cited goods, only when the said goods are seized on reasonable belief that they are smuggled goods, in terms of sub-section (1) of aforesaid Section 123? Answer : The applications may not get barred merely because the goods are seized on reasonable belief that they are smuggled goods under sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) that This Section shall apply to gold, and manufactures thereof, watches, and any other class of goods, the Central Government may by notification in the Official Gazette specified. [emphasis supplied]. Thus, going by the phraseology of the two provisions, using the same word apply , prima facie, Section 123 appeared to apply to the goods mentioned in sub-section (2) thereof, though for invoking its provision to shift burden of proof, the conditions cited therein have to be satisfied, and, therefore, appeared to attract the disqualification provided for under the third proviso to sub-section (1) of Section 127B. However, it is clear from the submissions during the hearing recorded above and the various case laws relied upon by the counsels/consultants, particularly the Apex Court decision in the following cases clarifying as to cases in which Section 123 would apply , that the application of Section 123 referred to under Section 127B is its invocation/invocability : J.K. Bardolia Mills v. M.L. Khunger, Deputy Collector [1994 (72) E.L.T. 813 (S.C.)]; Budhan Chaudhury v. The State of Bihar [1995 (1) SCR 1045 (S.C.)]; Collector of Customs v. Nathella Sampathu Chetty [1999 (110) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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