2006 (3) TMI 171 - HC - Customs

High Court overturns Tribunal's decision, holds transporter liable for negligence in verifying goods.

COMMR. OF CUS. (PREV.) WB., KOLKATA Versus SURESH KUMAR NYOLLYWALLA

COMMR. OF CUS. (PREV.) WB., KOLKATA Versus SURESH KUMAR NYOLLYWALLA - 2006 (204) E.L.T. 525 (Cal.) Issues Involved:1. Legality of setting aside the imposition of penalty and confiscation by the Tribunal.2. Burden of proof regarding the smuggled nature of the goods.3. Responsibilities of the transporter in verifying consignor details and goods.4. Applicability of legal precedents cited by the respondents.Detailed Analysis:1. Legality of Setting Aside the Imposition of Penalty and Confiscation by the Tribunal:The appeal challenges the Tribunal's decision to set aside the penalty of Rs. 1.50 lakh on Messers Planters Airways Limited and Rs. 15,000 on Shri Suresh Kumar Nyollywalla under Section 112(b) of the Customs Act, 1962. The Tribunal had also directed the return of the confiscated goods and truck to the transporter. The High Court found that the Tribunal erred in law by not holding the transporter accountable when the consignors did not claim the goods, thus failing to prove that the goods were not smuggled.2. Burden of Proof Regarding the Smuggled Nature of the Goods:The High Court emphasized that the burden of proving that the goods were smuggled lies with the Revenue. However, it noted that the Revenue had discharged this burden by demonstrating that the goods were of foreign origin and that the named consignors were either fictitious or denied their liability. The absence of any claim of ownership further supported the conclusion that the goods were smuggled.3. Responsibilities of the Transporter in Verifying Consignor Details and Goods:The Court held that a transporter has a primary duty to verify the items being transported and the identity of the consignor. This can be done by demanding recognized identity cards or accepting payment through account payee cheques. The failure of the transporter to verify the consignor's identity and the contents of the packages led to the conclusion that the transporter was complicit in the smuggling activity. The Court rejected the argument that the transporter had no liability in verifying the goods, even if they were non-notified items under Section 123 of the Act.4. Applicability of Legal Precedents Cited by the Respondents:The Court examined various precedents cited by the respondents but found them inapplicable to the present case. For instance:- Commissioner of Cus. (Prev.), W.B., Kolkata v. Sudhir Saha: The Court noted that the principle that the burden of proof lies with the Revenue was not disputed, but in this case, the burden was discharged when the goods were found to be of foreign origin and no one claimed ownership.- Rajeev Kumar Aggarwal v. CEGAT: This case was distinguished as it dealt with the Railway Authorities and there was no allegation of connivance. In contrast, the present case involved a transporter who failed to verify the consignors and the goods.- Santosh Gupta v. Union of India: The Court found this case inapplicable as it involved a situation where the possessor of the goods produced receipts, whereas in the present case, no one claimed ownership.- Shanti Lal Mehta v. Union of India: This case was distinguished as it dealt with the burden of proof wrongly placed on the possessor, whereas in the present case, the transporter failed to verify the consignors and the goods.- Anil Kumar Pandey v. Commissioner of Customs, Shillong: The Court did not approve the principle that the transporter had a legal right to challenge the confiscation when the consignors did not come forward.- Hindustan Bearing Corporation v. Collector of Customs: The Court noted that in this case, the owner of the goods disputed the smuggled nature, unlike the present case where no one claimed ownership.- J.P. Bearing Co. v. Commissioner of Customs, Lucknow: The Court disagreed with the principle that goods should be returned to the transporter when no one claimed ownership, emphasizing the transporter's failure to verify the consignors.- Jupiter Exports v. Commissioner of Customs, Chennai: This case was found irrelevant as it dealt with classification under OGL, whereas the present case involved smuggled goods.- State of Maharashtra v. Prithviraj Prokhraj Jain: The Court reiterated that the burden of proof lies with the Revenue, but in this case, the absence of any claim of ownership supported the conclusion that the goods were smuggled.- Mazda Chemicals v. Commissioner of Customs (Prev.), Ahmedabad: The Court distinguished this case as it involved the use of Indian goods to conceal smuggled goods, whereas in the present case, the transporter failed to verify the consignors and the goods.- Hindustan Wires Ltd. v. Commissioner of Customs (Prev.), Lucknow: The Court found this case inapplicable as it involved the absence of a nexus between the owners of the goods and the smuggled goods, whereas in the present case, no one claimed ownership.- Extrusion v. Collector of Customs, Calcutta: The Court found this case irrelevant as it dealt with the imposition of fines and penalties, whereas the present case involved the transporter's failure to verify the consignors and the goods.Conclusion:The High Court set aside the Tribunal's order, directing the confiscation of the goods and the truck, and imposed a personal penalty on the transporter. The Court emphasized the transporter's duty to verify the consignors and the goods, and found that the Revenue had discharged its burden of proving that the goods were smuggled. The appeal was allowed, and the Tribunal's order was set aside to the extent indicated.