2013 (1) TMI 727 - AT - Customs

Mumbai Customs jurisdiction upheld, burden of proof on appellants, penalties overturned

SHANKESHWAR METAL CORPORATION Versus COMMR. OF CUS. (IMPORTS), MUMBAI

SHANKESHWAR METAL CORPORATION Versus COMMR. OF CUS. (IMPORTS), MUMBAI - 2014 (312) E.L.T. 344 (Tri. - Mumbai) Issues Involved:1. Jurisdiction of Customs Authorities2. Burden of Proof for Non-Notified Goods3. Sufficiency of Evidence for Establishing Smuggling4. Imposition of Penalties Under Section 112(b) of the Customs ActIssue-Wise Detailed Analysis:1. Jurisdiction of Customs Authorities:The appellants contested the jurisdiction of the Mumbai Customs authorities to adjudicate the case. The Tribunal held that the customs authorities have the power to investigate and adjudicate cases irrespective of whether the goods are notified or non-notified. The cause of action arose in Mumbai where the goods were seized. Citing the case of K.P. Abdul Majeed v. Collector of Customs & Central Excise, Cochin, and other relevant decisions, it was established that the jurisdictional Commissioner can investigate and adjudicate matters if the cause of action arises within their territorial jurisdiction. The Tribunal rejected the appellants' contention, affirming that the Mumbai Customs authorities had the jurisdiction to adjudicate the case.2. Burden of Proof for Non-Notified Goods:The appellants argued that since the goods were not notified under Section 123 of the Customs Act, the burden of proof to show that the goods were smuggled lay on the department. The Tribunal noted that the foreign origin of the goods was evident from the markings and the appellants' own admissions. The appellants failed to provide satisfactory explanations or evidence of the licit procurement of the goods. Thus, the onus of proof shifted from the Revenue to the appellants, which they did not discharge. The Tribunal referenced the case of Phoenix Mills Ltd. v. Union of India to explain the distinction between burden of proof and onus of proof, concluding that the department had discharged its burden.3. Sufficiency of Evidence for Establishing Smuggling:The Tribunal considered whether the evidence provided by the department was sufficient to establish that the goods were smuggled. The department had conducted investigations, verified the appellants' claims, and found them to be false. The Tribunal cited the case of D. Bhoormull, where the Supreme Court held that the department is deemed to have discharged its burden if it provides enough evidence to raise a presumption in its favor. The Tribunal concluded that the department had provided sufficient circumstantial evidence to establish that the goods were smuggled, thereby discharging its burden of proof.4. Imposition of Penalties Under Section 112(b) of the Customs Act:The Commissioner had imposed penalties on the persons from whose possession the goods were seized under Section 112(b) of the Customs Act. The Tribunal noted that mens rea (guilty mind) is an important ingredient for imposing penalties under this section. The evidence did not suggest that the appellants were aware that the goods were smuggled. Consequently, the Tribunal set aside the penalties imposed on the appellants while upholding the confiscation of the goods and the imposition of redemption fines.Conclusion:The Tribunal confirmed the duty demands, upheld the confiscation of the goods, and imposed redemption fines in lieu thereof. However, it set aside the penalties imposed on the appellants due to the lack of evidence of mens rea. The operative part of the order was pronounced in court.