TaxTMI 
TaxTMI 
2003 (8) TMI 347
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....obile phones No. 98310-39005 and 98310-89073 proposing, 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 ....
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....41,550/- to the Karnataka Sales Tax Department and also a release order dated 28-5-2000 of Commercial Tax Officer, Nelamangala check post for the release of the lorry and the goods in respect of the said lorry receipt which was covering the GC notes in this case. During the course of examination, the officers noted in the Mahazar the contents on two types of labels found inside the bales, which read as follows :- (i) BLOSSOMS, white steam filature, China National Silk Import & Export Corp., Made in China, (ii) JINGING, China National Silk Imp. & Exp. Corp., Sichuan Branch. Since the custodian of the goods at the premises of M/s. Deluxe Roadlines could not show licit import for the silk yarn of foreign origin, the said goods were seized by the officers, after drawing mahazars thereof. Enquiries were thereafter made at Bombay, Calcutta and other places and statements of the truck movement clerk-in-charge, Shri Muralidharan of M/s. Deluxe Roadlines, various other employees of the transport company were recorded and it transpired that noticees, Shri Vikram Jain, Shri Lalit Jain, ....
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....r Shroff. (v) Duty demand of Rs. 27,13,548/- along with interest on earlier receipts of 111 bales of smuggled silk yarn valued at Rs. 93,24,000/- under Section 28(1) read with Section 28AB of the Customs Act, 1962 from Shri Vikram Jain. (vi) Duty demand of Rs. 19,55,710/- along with interest on earlier receipts of 80 bales of smuggled silk yarn valued at Rs. 67,20,000/- under Section 28(1) read with Section 28AB of the Customs Act, 1962 from Shri Ashok Kumar Shroff. (vii) Amount of Rs. 11 lakhs deposited vide TR 6 challan dated 8-6-2000 paid by Shri Vikram Jain was appropriated towards duty, interest and penalty. (viii) Penalty of Rs. 3,00,000/- each on Shri Vikram Jain & Shri Lalit Jain and Rs. 1,00,000/- on Shri Bheemraj Jain, Rs. 2,00,000/ on Shri Ashok Kumar Shroff and Rs. 1,50,000/- on Shri Muralidhar, Rs. 75,000/- on Shri Rahul Dharmashi, Rs. 3,00,000/- on Shri Vikas of Calcutta and Rs. 3,00,000/- on Shri Ashok of Calcutta was imposed under Section 112(b) of the Customs Act, 1962. Hence these appeals. 3. After hearing both ....
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....ly, i.e., from 1-4-2000 onwards it requires an SIL for import. Silk yarn of foreign origin requires this SIL, in the absence of which it is prohibited for import under Import Trade Control Order 17/55, dated 7-12-55 issued under Section (2) of Foreign Trade (Development & Regulation) Act, 1992 and by virtue of Section 3(3) of Foreign Trade (Development & Regulation) Act, 1992 it deemed to have been prohibited under Section 11 of the Customs Act, 1962, thereby rendering illegally imported raw silk yarn liable for confiscation under Section 111(d) of the Customs Act, 1962. In view of the above, the 25 bales of raw silk yarn seized under Mahazars dated 30-5-2000 and 1-6-2000 totally valued at Rs. 23,54,100/- are liable to confiscation under Section 111(d) of the Customs Act, 1962. The customs duty evaded on these 25 bales works out to be Rs. 6,73,706/- at the rate of Rs. 973.20 per Kg. of silk yarn (CIF value) and at the cumulative duty rate (35% customs duty, 10% surcharge, 4% SAD and 0.05% cess) of 44.11%. The amount of Rs. 11 lakhs paid vide TR6 Challan dated 8-6-2000 stands to be adjusted towards customs duty, fine, penalties and adjudication levies." (iii) It can therefor....
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....were being attempted to be brought in the guise of old chindi cloth. Had the goods been licitly imported then there would not have been any necessity to misdeclare it as chindis/waste cloth." Thereafter, he concluded that the burden cast on the Department to prove that the goods had been illicitly imported, had been discharged in the facts and circumstances of this case. He held : - "all that a quasi-judicial proceedings requires is the establishment of such a degree of probability that a prudent man, may on its basis believe in the existence of the fact in issue. Further, the Hon'ble High Court of Gujarat in the case of Maganlal Gulabchand Shah reported in 1992 (5) E.L.T. 235 Gujarat has held that in cases of smuggling, many facts relating to the illicit business remain in the special or peculiar knowledge of the person concerned and the burden to establish or explain those facts is cast on him." and therefore, concluded that the goods were smuggled goods. (v) As regards the MRS yarn being not notified under Section 123 of the Customs Act, he concluded as follows :- "264. I have also considered the submission made by the noticee that silk yarn being not no....
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....ts Final Order Nos. 750-751/2001, dated 12-4-2001 in the case of similar goods i.e. MRS yarn of Chinese origin, seized at Bangalore, had held as follows :- "3a. Mulberry Raw Silk Yarn or Silk Yarn mentioned in the impugned notice are not goods covered by Section 123 of the Customs Act, 1962. Therefore, the burden to prove that they were not smuggled goods, does not lie or does not shift to the person from whose possession they were seized i.e. A-2; who is claiming/ found to be the owner i.e. A-l. We find the provisions of Section 123 are very clear viz., i.e., (i) The goods must be one to which Section 123 applies (ii) The goods are seized under the Act (iii) The goods must be seized on the reasonable belief that they are smuggled As pointed by the Supreme Court in J.K. Bardoline Mills [1994 (72) E.L.T. 813 (S.C.) = (1994) 5 SCC 332] in the case of Gian Chand & Others [1983 (13) E.L.T. 1365 = 1984 ECR 105 SC] the Supreme Court held that if the seizure was not under Section 178A of the Sea Customs Act, (predecessor ....
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....n in the case of C.C., Madras v. D. Bhoormul [1983 (13) E.L.T. 1546 (S.C.) = 1985 ECR (22) 84 SC], wherein Paras 30 and 31 of the reported decision are almost verbatim, appear to have been extracted as found above, by the ld. Adjudicator, without even mentioning this decision. However, the Adjudicator failed to notice, that in the facts of that case, there was not only a declaimer of ownership, but also all knowledge about the contents. (Para 36 of the reported decision refers) and other facts and conduct subsequent to the proceedings before the Collector. In the case before us there is no shadow of figure as 'D. Bhoormul' talking through Solicitors A-1 and A-2, are very much present and producing documents of possession and duty payments as made over to them in the course of normal trade in the goods. While applying the law as in 'D. Bhoormul's case, the ld. Adjudicator not only overlooked these important facts but also what the Supreme Court in D. Bhoormul's case stipulated, before adverting to the contentions raised in that case. In Para 26 of the reported decision, the Hon'ble Supreme Court has laid down :- "...... But with regard to any other goods, the rule in sub-se....
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....udence, or basic canons of jurisprudence, the phrase used in D. Bhoormul's case (supra) which the Adjudicator is relying upon." Following the same, it has to be held that the onus cast on the Department to prove and trace out the place where the customs barrier has been breached and or violated was imperative on the part of the DRI. The premier Anti-smuggling Intelligence Agency, had launched enquiries through Mumbai and Calcutta offices. They have questioned various persons and have obtained lot of statements. When the appellants are making a submission that the goods were imported and were cleared through Calcutta port. Then, it was imperative on part of the DRI authorities, the august investigating body under the CBEC, to have located the persons concerned at Calcutta and questioned them. In fact, they have located and questioned one person namely Shri Subrota Mondal in Calcutta. However, they have been found to be enthusiastic in their pursuit to locate the premises of the owners of the mobile phones which Shri Subrota Mondal was volunteering and informed that one of the mobile phones in his use, calls on to, which are material relied was under use, by a tenant, one Shri Raj....
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....remitted the matter back to the appropriate authority. Following this law, as laid down by the Apex Court, in this case also the confiscation by Commissioner, Bangalore cannot be upheld under the theory of 'action in rem'. The order confiscating the 25 bales under seizure is required to be set aside and matter remanded back for adjudication by the competent authority after due investigation of the facts. (b) The MRS yarn in about 190 bales, alleged to have been taken charge of by the appellants herein and demand of duties from them by the territorial Commissioner at Bangalore by invoking the powers under Section 28 of the Customs Act, 1962 cannot be upheld. The duties under Section 28 are to be determined by a 'proper officer' on the persons chargeable with duty. These goods, if at dutiable, have been proved at the best to have transmitted through Bangalore, where they were allegedly taken charge of for subsequent disposal by Vikram Jain and or Ashok Shroff. The Commissioner's order in demanding duty on these persons handling the goods in Transit, who have alleged to have transmitted them further, cannot be accepted under Customs law. Duty under Customs Act, 1962 is fixed b....