1999 (6) TMI 177 - AT - Customs

Tribunal overturns order, rules in favor of appellants citing lack of evidence and unjust penalties.

NEW BANIK METAL STORES Versus COMMISSIONER OF CUS. (PREV.), W. BENGAL

NEW BANIK METAL STORES Versus COMMISSIONER OF CUS. (PREV.), W. BENGAL - 1999 (114) E.L.T. 493 (Tribunal) Issues Involved:1. Legality of the seizure of metal scrap and its classification as smuggled goods.2. Validity of the confiscation of the truck used for transporting the goods.3. Imposition of penalties on the appellants and the driver.Issue-wise Detailed Analysis:1. Legality of the Seizure of Metal Scrap and its Classification as Smuggled Goods:The facts of the case reveal that on 18-5-1994, a truck carrying various types of metal scrap was intercepted and searched. The items were seized on suspicion of being smuggled. Show cause notices were issued, proposing confiscation and penalties. The Additional Commissioner confiscated the scrap and imposed penalties, which was upheld by the Commissioner (Appeals).The appellants argued that the presence of foreign markings on some of the scrap did not prove it was smuggled. They contended that the scrap was not notified under Section 123 or Chapter IV-A of the Customs Act, 1962, thus the burden of proof was on the Department. The appellants provided bills from Customs Auctions and Krishi Samiti, which were rejected by the adjudicating authority on flimsy grounds. They explained the foreign markings as originating from machinery used in local Tea and Fruit Processing Units. The appellants also argued that discrepancies in consignment notes were not indicative of smuggling.The Department relied on the Tribunal's decision in Manoj Metal Industries, where goods with fictitious consignors and consignees were confiscated. The Department argued that the presence of foreign markings, discrepancies in documents, and prior involvement of the vehicle in smuggling were sufficient evidence.The Tribunal observed that the burden of proof was on the Department. The presence of foreign markings on some pieces and discrepancies in documents were not sufficient to prove smuggling. The Tribunal noted that the area around Siliguri had several Tea and Fruit Processing Units, which could explain the origin of the scrap. The Tribunal concluded that the Department failed to discharge the initial burden of proof, and the circumstantial evidence only raised suspicion, not legal proof.2. Validity of the Confiscation of the Truck:The appellants argued that the truck was not liable for confiscation as the goods were of Indian origin. They cited Tribunal decisions where penalties on transporters were set aside in the absence of knowledge about the contraband nature of the goods.The Department argued that the truck was previously involved in smuggling, and the driver's actions (using a false number plate) indicated smuggling. The Tribunal noted that the driver's explanation for the false number plate was plausible and not sufficient to prove smuggling. The Tribunal found no evidence linking the appellants to the driver's actions.3. Imposition of Penalties on the Appellants and the Driver:The appellants argued that penalties were not justified as there was no evidence of smuggling. They cited several decisions where penalties were set aside in the absence of proof of smuggling.The Department argued that the circumstances and discrepancies were sufficient to impose penalties. The Tribunal found that the Department failed to provide direct or sufficient circumstantial evidence to prove smuggling. The Tribunal concluded that the penalties were not warranted.Conclusion:The Tribunal set aside the impugned order, allowing the appeals and providing consequential reliefs to the appellants. The Tribunal emphasized that the burden of proof was on the Department, which failed to provide sufficient evidence to prove the smuggled nature of the goods. The circumstantial evidence raised only suspicion, not legal proof, and the penalties and confiscation were not justified.