2009 (9) TMI 179 - HC - Customs

Customs Appeal: Burden of Proof on Goods Seized

COMMISSIONER OF CUSTOMS, BANGALORE Versus VIKRAM JAIN

The High Court allowed the appeal in part, affirming the jurisdiction of the Commissioner of Customs, Bangalore, and justifying the confiscation of goods. ... Confiscation – territorial jurisdiction of officers for adjudication - Tribunal order holding goods imported at Kolkata and adjudication by authority at Bangalore, without jurisdiction – (i) Whether the Tribunal has committed an error in holding that the Department cannot confiscate the smuggled goods without establishing the point where the customs barrier is breached? – Held that authorities are not bound in all cases to unearch the place at which such breach occurred – Proceedings for confiscation being action in rem, proper officer having jurisdiction over situs of goods, had authority to initiate proceedings – First question answered in affirmative - situs of the seizure being Bangalore and goods having been seized from persons viz. respondents who are residents of Bangalore, and duty paid nature not having been proved by respondent, Customs Authorities at Bangalore to adjudicate the matter – Once goods considered as of foreign origin, duty cast on person from whom goods were seized, to prove goods were duty paid – Goods to be presumed as non-duty paid when evidence not produced by person concerned on duty payment - The object with which the Customs Act has come into existence is to levy duty on goods as contemplated under the Act and also to ensure that those goods which are dutiable do not escape from payment of customs duty. - The said Act was brought about not only to check the smuggling but also to ensure that the goods that is imported into the territory of India to which the Customs Tariff Act are applicable suffers the duty in the hands of the importer. - Question Whether the Tribunal has committed an error in holding that the order of confiscation is not an “action-in-rem”?, is answered in affirmative – Question Whether the Tribunal has committed an error in holding that the smuggled goods cannot be confiscated wherever such goods are found?, is not answered as the matter is remanded to the Adjudicating Authority at Bangalore Issues Involved:1. Jurisdiction of the Adjudicating Authority.2. Confiscation of smuggled goods.3. Action-in-rem and its implications.4. Remand to the competent authority.Detailed Analysis:1. Jurisdiction of the Adjudicating Authority:The primary issue was whether the Commissioner of Customs, Bangalore, had jurisdiction to adjudicate the matter. The Tribunal had previously held that the place of importation was Calcutta, and thus, the adjudication should occur there. The High Court, however, found that since the goods were seized at Bangalore, the Commissioner of Customs, Bangalore, had the authority to initiate proceedings. The Court noted that the goods were found in Bangalore, and the consignor and consignee were fictitious, making it impractical to trace the exact point of customs barrier breach. The Court concluded that the situs of the goods' seizure granted jurisdiction to the Bangalore authorities.2. Confiscation of Smuggled Goods:The Tribunal had set aside the confiscation of goods on the grounds that the Department failed to establish the point where the customs barrier was breached. The High Court disagreed, emphasizing that the burden of proof lies on the person from whom the goods are seized to demonstrate that the goods have suffered customs duty. The Court held that the Department is not required to prove with absolute certainty that the goods were smuggled but must act on reasonable suspicion to prevent revenue leakage. The Court found the confiscation justified based on the evidence collected, including statements under Section 108 of the Customs Act.3. Action-in-Rem and Its Implications:The Tribunal had held that the order of confiscation was not an 'action-in-rem'. The High Court clarified that confiscation pertains to the goods themselves and is an action-in-rem. The Court stated that the proper officer having jurisdiction over the situs of the goods has the authority to initiate proceedings. This interpretation aligns with the objective of the Customs Act to prevent evasion of duty and ensure that dutiable goods do not escape taxation.4. Remand to the Competent Authority:The Tribunal had remanded the matter without specifying the details of the authority to decide the matter. The High Court found this approach improper. The Court held that the competent authority for adjudication should be the Commissioner of Customs, Bangalore, given the seizure location and the impracticality of tracing the customs barrier breach point. The Court directed that the matter be adjudicated by the Bangalore authorities, ensuring a practical and effective resolution.Conclusion:The High Court allowed the appeal in part, affirming that the Commissioner of Customs, Bangalore, had jurisdiction, and the confiscation of goods was justified. The Court emphasized that the burden of proof lies on the person from whom goods are seized to show that they have suffered customs duty. The matter was remanded to the Adjudicating Authority at Bangalore for further proceedings, ensuring that the objectives of the Customs Act are upheld.