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TMI Blog2024 (5) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... give a different treatment to the goods already impugned before the Tribunal. The impugned order is, thus, in ignorance of essential facts that impinge upon the options available to the first appellate authority at the time deciding the appeal impugned now. Thus, it would be appropriate to set aside the impugned order and restore the dispute to the first appellate authority to decide the appeal afresh in the light of law as legislated and judicially determined after affording fresh opportunity to the appellant herein to make written and oral submissions. The appeal is, thus, disposed off by remand to Commissioner of Customs (Appeals), Mumbai. X X X X Extracts X X X X X X X X Extracts X X X X ..... ry led to investigations against the impugned goods owned by the appellant herein and that the strict regimen intended by section 123 of Customs Act, 1962 had been set out in the decision [final order no. A/86062-86064/2022 dated 10th November 2022] of the Tribunal in Vihari Jewels and others v. Commissioner of Customs, Mumbai-III in appeal [customs appeal no. 86888-86890 of 2021] against order [[order-in-appeal no. MUM-CUSTM-AMP-APP-397-405/2021-22 dated 23rd July 2021] of the Commissioner of Customs (Appeals), Mumbai-III at which stage the proceedings of the appellant, among others, and the principal noticees had got disengaged. Learned Authorized Representative contended that the order of the Tribunal is under challenge before the Hon'ble High Court of Bombay as is the outcome of proceedings in the Settlement Commission resorted for closure of the case pertaining to seizure from Ms Vihari Sheth. 3. The goods impugned here are 'diamond studded jewellery' seized from the possession of Ms Aditi Hemachandra Kothari in follow-up action consequent upon interception of the said Ms Vihari Sheth at Chatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai upon arrival from Singap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heth for sale through M/s Vihari Jewels. 5. The case of the appellant herein is that there was no justification for invoking of section 111 of Customs Act, 1962 in view of proper discharge of onus placed on her having been duly concluded and, therefore, the first appellate authority acted in excess of jurisdiction to uphold the confiscation even while concurring with her plea for right to the goods as the owner. 6. The impugned order has set out the backdrop of the proceedings thus '3. Investigations done of smuggled gold studded diamond jewellery sold in the past to the noticees No.4 to 12 in the present case (SCN No.2) namely Mr.Manoj Modi, Ms.Bhakti Modi, Ms.Smita Modi, Ms.Rina Jain, Ms.Aditi Hemendra Kothari (appellant no 3), Mrs.Vinita Jaipuria (appellant no 1), Mrs.Devki Jaipuria (appellant no 2), Dr.Sujata Jetley (appellant no 4) and Mr.Risabh Poddar was found to be have been sold through various invoices generated in the records of M/s.Vihari Jewels. The traces of concoted generation of these invoices was supported by evidences viz. in the Red Coloured Diary recovered from Ms.Vihari Sheth on 30/31.07.2013; from forensic analysis of electronic devices (I-pad and Mobile p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noticees in the adjudication proceedings having purchased diamond jewellery from Ms.Vihari Sheth (Noticee No.l) apparently being illegally imported by her without declaration to Customs and non-payment of legitimate customs duty and sold to the appellant. I find that there is no link established against the appellants in the smuggling case of diamond studded gold jewellery seized from Ms.Vihari Rajesh Sheth on her arrival at CSMI Airport. Further, investigation by DRI has not proved that the appellants had purchased or acquired the goods with guilty-knowledge of their illicit importation and hence no penalties have been imposed on the appellant by the A/Authority vide the impugned order. Thus, as declared in the Form CA-1 no amount is required to be deposited by the appellant in terms of Section 129E of the Customs Act, 1962. Accordingly, I proceed further to decide the case on merits.', proceeded to hold that '12.2 It has been contended by the appellants that the authorities assumed that since Ms.Vihari was a frequent traveller, the jewellery purchased by her was also smuggled into India. In this regard, I find that the department has proved the smuggled nature of goods thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d received those goods knowing them to be stolen. If his possession was innocent and lacked the requisite incriminating knowledge, then, it is for him to explain or establish those facts within his peculiar knowledge, failing which the prosecution will be entitled to take advantage of the presumption of facts arising against him, in discharging its burden of proof. Department would be deemed to have discharged its burden (of proof) if it adduces so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of fact sought to be proved." 12.3 Further, it is contended that A/Authority has referred to forensic analysis of electronic devices but has failed to appreciate that there was no tangible evidence against the appellants As discussed supra, neither Ms.Vihari Sheth nor her uncle Shri Jiten Sheth could produce any documentary evidence to prove licit procurement/manufacture of impugned items which were sold to the appellant and infact Shri Jiten Sheth was fabricating documents to show on record its licit procurement. Hence, I don't find any merit in the above contention of the appellant.' and dealt with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only be given to the bona-fide purchasers/appellants.' 7. Thus, a number of contradictions emerge. The goods could not have originally been 'believed' by the investigators to be without any provenance whatsoever; these were billed on purchase in a valid transaction. In the absence of discountenancing of title of M/s Vihari Jewels, the sale and tax paid on sale do, prima facie, validate the title and possession save for the proceedings enabled by section 123 of Customs Act, 1962 and section 111 of Customs Act, 1962 which does not vitiate ownership even while attaching taint to the goods for consequential detriment available in law. The proceedings before the original authority placed onus on Ms Vihari Sheth, and not on the owner-appellant before the first appellate authority, for discharge of onus envisaged in section 123 of Customs Act, 1962 and can only be perceived as 'vicarious' burden that, in the light of '17. Considering that goods had not been seized upon entry into India, the manner in which the evidence has been marshalled and confiscation ordered by recourse to section 111 (d), (j), (l) and (m) of Customs Act, 1962 by noting that '65……I find that M/s V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of arrangement therein reflects the progression of goods through the statutory barriers with recourse to later enumerations only upon non-recourse to the preceding cause for confiscation. We do not dwell on this aspect of confiscating power for the nonce. 20. These statutory norms are obligatory prescriptions devolving on person-in-charge of conveyances, custodians and keepers and importers and exporters; the contours of control leave no gap for slippage through the net. The trail on failure to comply is, thus, not difficult to establish and it is intended that only by breach in the normative dimension emplaced on inanimate goods are these to be rendered as offending in the eyes of law; the onus of proving that goods are, in consequence, smuggled lies upon the 'proper officer' proximate to the funnel. Owing to the frailty of systems and ingenuity of human behavior, provision however, must be had for 'presumptive smuggling' that shifts the onus for establishing otherwise - not as a general rule but in specified contexts. Two of the three such relate to goods that are visibly offending: goods brought near land frontier, coast and bay, gulf, creek or tidal river which is rendered li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction shall apply to gold, diamonds, manufactures of gold or diamonds, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.' though with the intendment, manifested in sub-section (2) and (3) of section 178A of the predecessor statute, severely restricted from that contemplated in Bill no. 48 of 1954, as introduced and explained thus 'Clause 14. - At present when action is taken against persons who are in possession of smuggled goods, it is not always easy for customs authorities to prove that the goods are smuggled goods. this clause places the burden of proof in such cases on persons, from whose possession suspected smuggled goods are seized. Such a provision is necessary in order to safeguard the revenues of the State.' in the Notes appended thereto. 22. By section 4 of Act 36 of 1973, with effect from 1st September 1973, any person who claimed to be the owner of seized goods was also bought within the operational scope and by section 2 of Act 40 of 1989, with effect from 26th October 1989, 'diamonds, manufactures of gold or diamonds' were substituted for in the special provision to now read as '123. Bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - in which the functional essentiality of the first two was, by evolution, elevated to a thing beauteous by the third, the interests of the larger good are sufficed by discharge of the legislated onus in a restricted sphere while retaining the integrity of rule of law for all others generally. 25. From as far back as 1955, several disputes on the constitutional validity, the scope of enforcement reach and the consequences of resort to the special provision had surfaced before the constitutional courts. These, by and large, were considered by the Hon'ble Supreme Court in rendering judgment in Collector of Customs, Madras v. Nathella Sampathu Chetty [1962 SCR (3) 786] in which it was held that '(1) …that s. 178A was constitutionally valid, (2) that the rule as to burden of proof enacted by that section applies to a contravention of a notification under s. 8(1) of the Foreign Exchange Regulation Act, 1947, by way of a notification under s. 19 of the Sea Customs Act, (3) that the preliminary requirement of s. 178 A that the seizing officer should entertain "a reasonable belief that the goods were smuggled" was satisfied in the present case….' and, thereby in the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... render such goods liable to confiscation under section 111 or section 113;' This facet of the reversal of onus and to establish absence of offence is also parked for the nonce to be reverted if of relevance later in the proceedings. Suffice it to say that such onus is triggered upon valid seizure of goods enumerated in section 123 of Customs Act, 1962 and the proof of licit ownership is sufficient defense against proposal to confiscate such goods under section 111 of Customs Act, 1962. It is needless to state the obvious, and in the light of judicial exposition, that the presumption of such goods having been smuggled cannot, of itself, lead to confiscation but may, in circumstances of the person on whom the onus devolves having foregone sufficient opportunity of evidencing otherwise, be subjected to that detriment without interference from higher appellate authority. That is the culmination of the decision in re Indru Ramchand Bharvani which held that '................This court…. held that the Evidence Act does not contemplate that the accused should prove the case with same strictness and rigour. But in this case the nature of the evidence on which the reliance could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti-smuggling. To begin with, only a few, even if significant, goods are enumerated therein as to conjecture imminent threat to the State but for by latitude afforded to enforcement authorities to be subjected to less than rigid oversight. For another, in a vast country of teeming millions there are bound to be quite a few in possession of such goods and to subject them to criminal consequences merely for lack of diligence and meticulousness in maintaining personal records is to place a premium on an obligation that is not even contemplated by the law. The question that begs answer, therefore, is whether a person who was intercepted once with such goods for proceedings under the regular law and whose suggested facilitation of unaccounted stock of such goods at the premises of another is intended to be penalized by recourse to this special provision in relation to another set of such goods alleged to have been smuggled even earlier. 28. The 'studded jewellery' impugned in the appeal before us were not intercepted in a customs area; it is also not in doubt that it was not an interruption of a transaction of the appellants that commenced these proceedings. Under the normal procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... miliar with the chronological mutation of section 123(2) of Customs Act, 1962 coverage of the impugned goods therein may even be acceptable. But we have taken note supra that with effect from 26th October 1989, 'diamond and manufactures' included therein was legislatively rescinded to exclude 'diamonds and manufactures' thereof. It is, therefore, moot if the presumption in section 123 of Customs Act, 1962 can continue to apply to articles that have 'diamonds' embedded in them and it would appear that legislative intent was to restrict applicability to gold in primary form and articles made of gold. The alternative proposition of Revenue reduces the rescinding to the absurdity of not fastening the presumption to 'diamonds' of themselves but to 'diamonds set in gold' and leaves us puzzled about the policy imperative that may have prompted this very fine line of distinction that Learned Special Counsel urges us to accept as unquestionable. Law is intended to serve a working purpose and is not for mere display in a vacuum or to exemplify sterile existence. The amendment brought about in 1989 has had the effect of alienating the presumption in section 123 of Customs Act, 1962 from the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ip;' before going on to observe that '…One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs, absolute certainty is a myth…..The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's estimate as to the probabilities of the case. …..It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personem which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the Customs authorities to prove that any particular person is concerned with their licit importation or exportation. It is enough if the Department furnishes prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mestic transaction having been satisfactorily furnished, without being controverted by the lower authorities, on the part of owners of the impugned goods, the arbitrary arrogation of empowerment to subject the sellers to the presumption of having been in possession of 'smuggled goods' sans authority of law to do so deprives the finding of liability to penalty under section 112 of Customs Act, 1962 of legal sanctity. Without evincing illicit trafficking, in the form in which it was recovered from customers, from outside the country, even by the stretched framework of preponderance of probability, there is no onus on the appellants to establish that the conjectures entertained by customs authorities are incorrect.' as held by the Tribunal in re Vihari Jewels and others, is untenable. 8. In appellate proceedings of M/s Vihari Jewels, Ms Vihari Rajesh Sheth and Shri Jiten Sheth, the entirety of burden, as proposed in the show cause notice, was decided, in relation to the very same goods among others, without reference to the status of the appellant herein vis-à-vis the impugned goods. The consequences of the approval of the order of the original authority, which had kept the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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