2016 (5) TMI 600 - AT - Customs

Tribunal overturns confiscation and penalties, revenue failed to prove smuggling, appellants provided valid documents.

Commr. of Customs (Preventive), Lucknow Versus Shri Naeem Ahmad, Director of Naeem & Sons Electronics Pvt. Ltd. And Shri Arshad, Director of Naeem & Sons Electronics Pvt. Ltd.

The Tribunal upheld the Commissioner (Appeals)'s order, setting aside the confiscation and penalties imposed on the firm and its directors. The revenue ... Confiscation of goods and imposition of penalty - Section 112 of the Act - Import of mobile phones of different brands, both Indian and Chinese - Mobile phones detained from the shop premises of appellant are smuggled and not legally imported as per revenue. Held that:- it is found that this is a new case being made out by the revenue at this stage, that the revenue had verified the documents, like bill of entry produced by the sellers of the respondents, wherein the import documents verified by the revenue and found to be correct. In absence of any adverse observation in the show cause notice that the goods in question do not relate to the import documents produced in the course of investigation, no new case can be made out before the Tribunal in the second appeal. Further, it is also found that the ld. Commissioner (Appeals) has dealt with the issue in detail and recorded the findings. Therefore, there is no error in the findings of the ld. Commissioner (Appeals)and accordingly, the impugned order is upheld. - Decided against the revenue Issues Involved:1. Legality of the confiscation of mobile phones.2. Imposition of penalties on the firm and its directors.3. Burden of proof regarding the smuggled nature of goods.Detailed Analysis:1. Legality of the confiscation of mobile phones:The preventive officer intercepted a vehicle on 23.07.11, transporting mobile phones of different brands without valid documents. Subsequent searches at the premises of the respondent firm and Vodafone on 25.07.11 led to the detention of various models of G-FIVE and Tintel brand Chinese mobile phones. The investigation revealed that these phones were purchased from M/s Praneet Electronics, New Delhi, and M/s R. V. Solutions, Lucknow. The documents, including invoices and bills of entry, were verified and found genuine. Despite this, the revenue issued a show cause notice alleging the goods were smuggled and not legally imported, leading to the confiscation order. However, the Commissioner (Appeals) concluded that the appellants had sufficiently explained the source of purchase/acquisition, and the bills of entry were verified and found genuine. The Tribunal upheld this finding, noting that the revenue failed to prove the goods were smuggled.2. Imposition of penalties on the firm and its directors:The adjudicating authority initially imposed a redemption fine of Rs. 3,57,958/- and penalties of Rs. 2,50,000/- each on the directors and Rs. 5,00,000/- on the firm. However, the Commissioner (Appeals) set aside these penalties, stating that the appellants had discharged their onus by providing valid documents for the goods. The Tribunal supported this decision, emphasizing that the revenue did not provide tangible evidence to support the penalties. The Tribunal noted that the mere assumption that the dates on the bills of entry and invoices did not match was insufficient to sustain the penalties.3. Burden of proof regarding the smuggled nature of goods:The Commissioner (Appeals) and the Tribunal highlighted that under Section 123 of the Customs Act, the burden of proof that the goods are smuggled lies on the revenue. The Tribunal found that the revenue did not discharge this burden, as there was no evidence proving the goods were smuggled. The Tribunal cited previous decisions, stating that in the absence of a notification under Section 123, there is no presumption that foreign-marked goods are smuggled. The Tribunal concluded that the revenue's failure to prove the smuggled nature of the goods rendered the confiscation and penalties unsustainable.Conclusion:The Tribunal upheld the Commissioner (Appeals)'s order, setting aside the confiscation and penalties imposed on the firm and its directors. The Tribunal emphasized that the revenue failed to prove the goods were smuggled and that the appellants had sufficiently explained the source of the goods with valid documents. The appeals of the revenue were dismissed, and the respondents were entitled to consequential benefits in accordance with the law.