TaxTMI 
TaxTMI 
2009 (9) TMI 179
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.... invoking the powers of Section 28 of the Customs Act, 1962 has also been set aside. It is this order which is under challenge before this Court by the revenue. 2. This matter has been admitted on 28-2-2007. Following substantial questions of law are framed for consideration and decision of this Court: (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? (ii) Whether the Tribunal has committed an error in holding that the order of confiscation is not an "action-in-rem"? (iii) Whether the Tribunal has committed an error in holding that the smuggled goods cannot be confiscated wherever such goods are found? (iv) Whether the Tribunal has committed an error in remanding the matter to the competent authority without specifying the details of the authority as to who should decide the matter? 3. The following facts would be of necessity to traverse the contentions raised in the appeal memorandum which are not disputed by the respondents. On 30-5-2000, 25 bales of Mulberry raw-silk yarn of Chinese origin valued at Rs. 23,54,100/- which had been de....
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....les. The said statement was also endorsed by another delivery clerk by name Sri. Neelappa Gowda. Department issued a show-cause notice dated 24-11-2000 as to why: (i) the seized 1569.40 Kgs. of raw silk/silk yarn contained in 25 bales valued at Rs. 23,54,100/- should not be confiscated under Section 111(d) of the Customs Act, 1962. (ii) the packing material namely the gunny bags and the cloth bags in which the seized goods were packed should not be confiscated under Section 118 of the Customs Act, 1962. (iii) customs duty of Rs. 4,58,122/- along with interest due, if any, payable on 17 bales (1067.19 Kgs.) of smuggled silk yarn seized should not be demanded from Shri. Vikram Jain under Section 28(1) read with 28AB of the Customs Act, 1962. (iv) customs duty of Rs. 2,15,584/- along with interest due, if any, payable on 8 bales (502.20 Kgs.) of smuggled silk yarn seized should not be demanded from Shri. Ashok Kumar Shroff under Section 28(1) read with Section 28AB of the Customs Act, 1962. (v) the customs duty of Rs. 27,13,548/- is liable to be paid along with interest due on the 111 bales of smuggled silk yarn, valued at Rs. 93,24,000/- received by Shri. Vikram Jain and s....
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....that the Commissioner of Customs, Bangalore had no jurisdiction to pass the adjudicating order since the goods have been seized at Bangalore and smuggled silk yarn was recovered at Bangalore. (ii) Since both the name of consignors and consignees were fictitious the respondents were unable to produce documents to indicate importation of goods and there was mis-declaration as old waste cloth. (iii) The Tribunal was in error in holding that Department is bound to trace out the place where the customs barrier is breached since the goods are found to be smuggled goods, the place where the goods enter is immaterial. (iv) The Tribunal was in error in holding that original importers have not been traced and hence the Commissioner of customs, Bangalore was incompetent to adjudicate the goods. In support of these contentions the learned counsel relies upon the decision in the case of Collector of Customs, Madras and others v. D. Bhoormull reported in 1983 (13) E.L.T. 1546 (S.C.) at paragraphs 30, 31, and 40. 5. Per contra Sri. Chidananda Urs appearing for respondent No. 2 contends as follows: (i) when once any goods has crossed the customs barrier, the said goods gets merged with the g....
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....tions and limitations as the Board may impose, an officer of customs may exercise the powers and discharge the duties conferred or imposed on him under this Act. (2) An officer of customs may exercise the powers and discharge the duties conferred or imposed under this Act on any other officer of customs who is subordinate to him. (3) Notwithstanding anything contained in this section, [a Commissioner (Appeals)] shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV and Section 108. 28. Notice for payment of duties, interest, etc. - (1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may, (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six months, from the relevant date serve notice on the person chargeable with the duty or interest which has not been levied or charged or which has been short....
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....nbsp; removed from a customs area or a warehouse without the permission of the proper officer or contrary to the terms of such permission; (k) any dutiable or prohibited goods imported by land in respect of which the order permitting clearance of the goods required to be produced under Section 109 is not produced or which do not correspond in any material particular with the specification contained therein; (l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under Section 77; (m) [any goods which do not correspond in respect of value or in any other particular] with the entry made under this Act or in the case of baggage with the declaration made under Section 77 [in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of Section 54;] (n) any dutiable or prohibited goods transited with or without transhipment or attempted to be so transited in contravention of the provisions of Chapter VIII; (o) any goods exempted, subject to any condition, from duty or any proh....
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.... this Chapter in which anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged,- (a) without limit, by a [Commissioner of Customs] or a [Joint Commissioner of Customs]; (b) where the value of the goods liable to confiscation does not exceed [two lakh] rupees, by an [Assistant Commissioner of Customs or Deputy Commissioner of Customs]: (c) where the value of the goods liable to confiscation does not exceed [ten thousand] rupees, by a Gazetted Officer of Customs lower in rank than an Assistant Commissioner of Customs. 122A. Adjudication Procedure. - (1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires. (2) The adjudicating authority may, if sufficient cause is shown at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing: PROVIDED that no such adjournment shall be granted more than three times to a party during the proceeding.] 123. Burden of proof i....
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....pondents to contend that appeal is not maintainable. Hence, this ground of non-maintainability of the appeal as contended by the respondents is liable to be rejected and we accordingly reject the same. 10. 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 object with which the Customs Act 1962, was introduced reads as follows: "The Sea Customs Act which lays down the basic law relating to customs was enacted more than 80 years ago. It has been amended from time to time and some important amendments were made by the Sea Customs (Amendment) Act, 1955. General and comprehensive revision of the Act has not so far been undertaken. Several provisions of the Act have become obsolete. Difficulties have also been experienced in the implementation of certain other provisions. The trade has been pressing for certain changes and facilities. Smuggling, consequent to controlled economy, has presented new problems. To meet these requirements, it has become necessary to revise the Act." 11. The said Act was brought about not o....
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.....00 and it was a restricted item. It is also to be noticed that during April 1997 to March 2002 the said goods were not freely importable. From 1-4-2000 it required an SIL for import and in the absence of the same it was a prohibited item. Search and seizure of the goods, sample of goods have been forwarded to SCTRI for verification on 21-6-2000 for being examined by the Deputy Director of Eco Testing Laboratory, Bangalore for ascertaining the nature of the goods seized. The said office has opined that the raw silk seized was of Chinese origin. It is on this premise the show-cause notice dated 24-11-2000 came to be issued to the respondents demanding from them a reply as to why the confiscation should not be done, duty should not be demanded and penalty should not be imposed. A personal hearing also seems to have been given to the respondents and on consideration of their reply adjudicating authorities have come to the conclusion that the demand made in the show cause notice requires to be confirmed. This order came to be reversed by the Tribunal on the short ground that it is the authority which has the jurisdiction to draw and adjudicate the same since the goods alleged to have e....
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....e not notified goods and the authorities were cast with the burden to prove and trace out the place where the custom barrier had been breached or violated particularly in the background of the contention by the respondent that the goods were imported and cleared from Calcutta port. It was also held by the Tribunal that it was imperative on the part of the Directorate of Revenue to have located the persons at Calcutta and proceeded at Calcutta where the breach of Custom barrier has taken place. It is on this premise the confiscation of the goods in question were held as improper. The Tribunal remanded the matter back for adjudication by the competent authority. 17. The scheme of the Customs Act is to ensure that the goods which are brought into the territory of India if susceptible to tax under the Act are to be paid by such persons who brings the goods and if the same is not brought under any valid documents were to be noticed by authorities then they would be liable for confiscation under Section 111 though not prohibited goods under Section 123 of the Act. It is not dutiable goods or prohibited goods found at any place which can be confiscated by the authorities but all such goo....
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....ant case the admitted fact is that the goods have been seized from the godown of M/s. Deluxe Roadlines, Bangalore and the authorities at Bangalore have initiated the proceedings after seizure of the goods and proceeded with the matter. During the course of investigation and in the statement recorded under Section 108 of the Customs Act, the first respondent admits to have used M/s. Deluxe Roadlines for clandestine transportation after mis-declaration of goods using fictitious consignors name as also consignees addresses by ingeniously setting up the bills without entering in the daily registers which all led to the irrefutable conclusion of the goods not having suffered the Customs duty. 21. One another aspect which requires to be noticed by us is that respondents 1 and 2 herein were detained in COFEPOSA vide Detention Orders No. 673/54/2000-Cus VIII, dated 19-9-2000 and No. 673/55/2000-Cus VIII, dated 18-9-2000 respectively, passed by the Joint Secretary to the Govt. of India, Ministry of Finance and were lodged in the Central Prison, Bangalore, as detenue No. 1410 and 1411 respectively. 22. The contention of the learned counsel Sri. Urs that invoking of Section 111(d) of the Ac....
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....om the goods are seized to prove otherwise the fact that it had suffered duty and that the goods has not been illicitly imported into the territory of India. 24. The question as to whether the Customs barrier is breached at a particular place or otherwise depends on facts and circumstances of each case and it cannot be said that the authorities are bound to unearth the place at which the breach of customs barrier had occurred as a universal application and to contend that even in a situation where the goods having been seized at a particular place, which in the instant case is at Bangalore and to drive the authorities to unearth the occurrence of breach and thereafterwards the adjudication has to be proceeded at the place where the breach is alleged to have occurred. This contention is fallacious inasmuch as a situation may crop up as it has occurred in the instant case where the consignor of the goods is a fictitious person and in such a situation it would never be possible to trace the person who despatched the goods. As seen from the adjudication proceedings of the instant case we find that the consignor was "M/s. Jhunjhunwala and Company" and consignee was "Samsuddin Bhai" and....
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....the Judgment which reads as follows: "It seems to us, having regard to the facts set out above, clear that it was for the Customs authorities at Paradip to initiate Proceedings against the respondents on the ground that the goods had been imported on fictitious licences and not for the Customs authorities in West Bengal to do so." The said judgment is distinguishable on facts inasmuch as that was a case where the licence which were fictitious in nature were produced as importation and cleared at Paradip Port (Orissa State) which came to be seized and adjudicated by Customs authorities in West Bengal. Hence in the facts of the said case as held by their Lordships it was in the facts set out therein the Hon'ble Supreme Court directed the authorities at Paradip to initiate proceedings as it was known as a fact that the breach had occurred at the customs port at Paradip. However, in the instant case, the goods were seized at Bangalore and hence to say that breach took place at Customs barrier at Calcutta port no documentary evidence has been produced except the statement made under Section 108 of the Customs Act and even on enquiry by authorities at Calcutta the enquiry having yielde....