TaxTMI 
TaxTMI 
2005 (6) TMI 302
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.... Bill of Entry No. 329659, dated 13-10-2003, Bill of Lading, Invoice of M/s. Al-Manohar Trading Co., P.O., Weighment Slip, Octroi Slip, Consignment Note, and copy of I.E.C. Certificate of M/s. Navneet Trading Co. The driver also informed that the said goods were to be offloaded at 113, Umerkhadi Road, Mumbai - 400 009. The officers searched the said premises where some fabrics of foreign origin were also found lying. Thereafter, fabrics lying in the said vehicle were also off-loaded in the said godown. Shri Idris Y. Porbunderwala (hereinafter referred to as the applicant), owner of the said godown, and who was present at the time, could not produce any (import) duty paying documents for the fabrics of foreign origin lying in the said premises. Therefore, the officers of the Marine & Preventive Wing of Customs (Preventive) Commissionerate, Mumbai, detained the fabrics of foreign origin unloaded from the said vehicle, measuring 38816 yards valued at Rs. 18,35,500/- (L.M.V.) and the fabrics of foreign origin lying in the said godown premises, measuring 67028 yards valued at Rs. 30,96,025/- (L.M.V.) vide Panchanama dated 20/22-10-2003 for further verification. 2. The applicant in hi....
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....mission, Mumbai for settlement of his case, inter alia, disclosing and accepting as payable customs duty amounting to Rs. 3,74,485/-. 6. The Additional Bench, Mumbai after hearing the case for admission observed that in the case of M/s. Arihant Time Products, vide Interim Order No. 12/2003-Cus., dated 25-2-2003, the Bench had admitted the case in respect of the goods covered by Section 123 of the Act, holding that the third proviso to Section 127B(1) of the Act is not meant for goods which are intercepted at the place of regular importation and that too when the importer files regular documents for clearance of such goods. 7. Again the Additional Bench, Mumbai in the case of M/s. Namaskar Rayon, vide Final Order No. 32/CUS/2004, dated 5-8-2004 had held that since the goods involved in the case were covered under Section 123 of the Act and that section has been invoked in the Show Cause Notice, the application cannot be allowed to be proceeded with and the same was rejected in terms of Section 127C(1) of the Act. 8. Further, in the case of M/s. Arfat Yarn Corporation, vide Final Order No. 44/CUS/2004, dated 5-10-2004, the Additional Bench, Mumbai had held that the applicati....
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....section (1) of aforesaid Section 123? (c) Whether for applications in respect of such goods which have been cleared under a Bill of Entry the aforesaid bar would come into play on subsequent seizure of such goods? (d) Whether for applications in respect of such goods the aforesaid bar would come into play only when Section 123 has been invoked in the Show Cause Notice? 12. The Special Bench met at Mumbai on 7-4-2005. The Secretariat of the Additional Bench, Mumbai had sent communications to leading Advocates and Counsels to assist the Bench as amicus curiae to take correct legal decisions relating to the issues referred to above. In pursuance of the said communication, the following Counsels appeared before the Special Bench and made their submissions on the above referred issues :- (i) Shri V.M. Doiphode, Advocate, (ii) Shri C. Hari Shankar, Advocate, (iii) Shri T. Viswanathan, Advocate, (iv) Shri Vipin Jain, Chartered Accountant, (v) Shri K.M. Mondal, Consultant. 13. In the course of the hearing following cases were cited and referred in su....
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....ho makes allegation or who wants to prove a charge against others, by virtue of this Section 123, the burden of proof is cast on the person from whose possession the goods are seized or on the owner thereof. 14.2 He further submitted that only when the above ingredients are completely satisfied, one can say that the provisions of Section 123 will be applicable to those goods and not to any goods which are notified under Section 123. If the intention of the legislature was to exclude the goods which are notified under Section 123(2), the third proviso to Section 127B(1) would have read as under, provided also that no application under this sub-section shall be made in relation to goods which are notified under Section 123 (emphasis provided). He referred to the provisions of Section 11C of the Act stating that whenever such intention is there, the word "Notified" goods is specifically mentioned as in the said Section 11C which inter alia provides that "Every person who owns, possesses or controls any notified goods, shall, within 7 days from......". Thus, he submitted that merely because the goods are notified under Section 123 that by itself cannot bar an application in respect ....
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....he Commission cases relating to goods to which Section 123 applies. The applicability of Section 123 in the facts of a particular case has, therefore, to be necessarily determined. 15.2 The Counsel submitted that Section 123 is a provision dealing with burden of proof and has been held to be procedural in Shivaji v. State of Karnataka, 1995 (76) E.L.T. 262 (Kar.) and Rasheed Abdullah v. State of A.P., 1999 (109) E.L.T. 154 (A.P.). It shifts the onus to prove that the seized goods are smuggled, from the Revenue to the person from whose possession the goods are seized, or who claims to be the owner thereof, in the following circumstances :- (a) There must be a seizure of goods. (b) The goods seized must be goods to which Section 123 applies. (c) The seizure must be in the reasonable belief that the goods are smuggled. The applicability of Section 123 in the facts of the case is, therefore, something, which has necessarily to be borne in mind even while determining whether the goods in issue are covered by it. In other words, if, in the facts of a particular case, no issue of....
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....ll within the ambit of Section 123. In Narayan Bhagwantrao Gosavi Balajiwala v. Gopal Vinayak Gosavi - 1960 SCR 773, it has been definitively laid down that, in a situation where the liability is admitted, the issue of burden of proof becomes academic. In such a situation, too, therefore this Commission would possess jurisdiction to proceed with the matter. 15.7 It was, therefore, concluded that where Section 123 does not apply in the facts of a case, or is not invoked in the Show Cause Notice, it would be totally erroneous to assume that the jurisdiction of this Commission would stand ousted merely because the goods find a place in the Notification issued under Section 123(2). It is submitted that the same position would obtain where the applicant does not contest the smuggled nature of the goods before this Commission, even though he may have contested it at, or prior to, the stage of adjudication. If the applicant makes a clean breast of his liability, admitting the factum of smuggling, so that no controversy on this score remains before this Commission, an opportunity of having the case settled has necessarily to be afforded to the applicant. 15.8 Recalling the historical....
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....ther words, specified goods legally imported into India, will not come within its purview. 17.1 Shri Vipin Kumar Jain, ld. Chartered Accountant stated that the question which arises for consideration is whether the bar provided in the above proviso will apply to all cases relating to the goods, which are specified in sub-section (2) of Section 123 of the Act or would apply only to cases where a question relating to burden of proof becomes relevant, i.e., when the goods specified in sub-section (2) of Section 123 are seized under the Act in the reasonable belief that they are smuggled goods. 17.2 He pleaded that the key expression that needs to be interpreted for examining the above issue is the expression "in relation to goods to which Section 123 applies", which appears in the third proviso to Section 127B(1). 17.3 The Counsel canvassed that as would be evident from the title of Section 123 "burden of proof in certain cases", the said Section 123 is a rule of evidence which becomes applicable only if the following three conditions are cumulatively satisfied :- (a) The goods in question are goods specified in sub-section (2) of the said Sec....
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....ection 123 is a rule of evidence and being a procedural rule is not required to be expressly invoked in the Show Cause Notice. The conditions necessary for invocation of the said Section 123 are spelt out in the said Section itself and, therefore, its non-mention in the Show Cause Notice is of no consequence or relevance. 18. Shri T. Viswanathan, ld. Advocate, more or less reiterated the submissions made by the other ld. Counsels who preceded him. 19. We have gone through the submissions made on the issues raised before the Special Bench. We have also gone through the various cases cited during the course of the submissions made by the ld. speakers. 20. The fundamental issue which needs to be examined and decided is the interpretation of the expression "apply" which appears in the third proviso to sub-section (1) of Section 127B and also in Section 123 of the Act. The point which needs consideration is whether the said expression "apply" would also include the applicability or application of the conditions laid down in the provisions of Section 123 thereby implying that the invocability of these conditions is to be gone into, examined and adjudged before concluding whether....
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....s laid) 24. In the case of Sham Lal Sen Company v. UOI reported in 2000 (126) E.L.T. 228 (Cal.) the Hon'ble High Court of Calcutta in the context of onus under Section 178A of Sea Customs Act, 1878 (corresponding to Section 123 of the Customs Act, 1962) have inter alia held thus :- "......the adjudicating officer would have to satisfy himself that the requirements of Section 178A had been complied with before invoking the presumption laid down by that section. Thus it is clear on the provisions of the statute an obligation lies on the adjudicating authority as also the appellate and revisional authorities and therefrom to consider whether the seizure concerned was made on any reasonable belief as enjoined by Section 178A or not and for that purpose review the grounds including, if any, information on which the authority making the seizure proceeded. Without discharging the said obligation the adjudicating authorities cannot proceed mechanically to cast the onus upon the person from whom the goods are seized inasmuch as in so doing the authorities would invoke Section 178A without deciding whether the requirements thereof had been duly fulfilled or not......" 25. Agai....
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....t, 1985 are also the goods which are used in some pharmaceutical/chemical industries. Thus, the legislature barred the settlement of cases involving such goods only if an offence in respect of such goods has been committed. Section 123 also applies to many goods, which are freely importable into India without any restrictions. A harmonious reading of the said proviso would be complete only if the goods in relation to which the application has been made, have been subjected to the provision of Section 123 of the Customs Act, 1962 particularly when legislature chose to create bar against settlement in this very proviso in respect of only those goods in relation to which any offence has been committed under the NDPS Act, 1985. In this liberal scenario of import regime to bar the application for settlement in respect of goods to which Section 123 applies and not the goods to which Section 123 has really been applied to, would amount to heavily narrowing down the areas of settling the disputes which legislature would have never intended to. Our this perception is further fortified by the fact that Section 123 in the Customs Act was primarily brought in to take care of seizures of goods ....
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....id discussions and the cases cited and discussed above, we conclude that invocability of the provisions of Section 123 is an essential ingredient to determine the applicability of the said section to the seized goods so as to decide whether the mischief of the third proviso to sub-section (1) of Section 127B of the Act would come into play. The issues referred to Special Bench for decision can be answered as below :- (a) Whether applications, per se, are barred in relation to goods which are listed under sub-section (2) of Section 123 or are notified under the said sub-section? Answer : The applications per se are not barred in relation to goods which are listed or notified under sub-section (2) of Section 123 of the Act. (b) Whether applications are barred in respect of the above cited goods, only when the said goods are seized on reasonable belief that they are smuggled goods, in terms of sub-section (1) of aforesaid Section 123? Answer : The applications may not get barred mer....
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.... of the Customs Act, 1962. The third proviso to sub-section (1) of Section 127B lays down that ".... no application under this sub-section shall be made in relation to goods to which Section 123 applies..." [emphasis supplied]. Section 123 dealing with 'burden of proof in certain cases' also mentions under its sub-section (2) that "This Section shall apply to gold, and manufactures thereof, watches, and any other class of goods, the Central Government may by notification in the Official Gazette specified." [emphasis supplied]. Thus, going by the phraseology of the two provisions, using the same word 'apply', prima facie, Section 123 appeared to 'apply' to the goods mentioned in sub-section (2) thereof, though for invoking its provision to shift burden of proof, the conditions cited therein have to be satisfied, and, therefore, appeared to attract the disqualification provided for under the third proviso to sub-section (1) of Section 127B. However, it is clear from the submissions during the hearing recorded above and the various case laws relied upon by the counsels/consultants, particularly the Apex Court decision in the following cases clarifying as to cases in which Section 123 ....