TaxTMI 
TaxTMI 
2024 (5) TMI 574
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....erein mere non-declaration, or misdeclaration suffices, to require the importer or passenger to defend themselves against one or more of the contingencies enumerated in section 111 of Customs Act, 1962. A seizure outside the 'customs area' within the territorial frontiers of the country places the onus of establishing charge of seized goods having been smuggled on customs authorities save for the sole exception of goods enumerated in section 123 of Customs Act, 1962 for which the onus for proving the goods to be not smuggled rests on the person from whom it was seized. 2. Before proceeding to consider the facts and circumstances in the appeal, and considering the narrow compass in which the appeal lies, a recollection of the statutory provision invoked against impugned goods may be worthwhile. According to 'Section 123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a) in a case where such seizure is made from the possession of any person, - (i) on the person ....
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....and 8th August 2013 were found to tally with entries in the 'red diary' and 'mobile phone' seized from the person of Ms Vihari Sheth and, thus, afforded the reasonable belief that these had been smuggled into India. The articles in the possession of the appellant, covered by two invoices for Rs.76,83,169 issued in March 2013 by M/s Vihari Jewels and valued at Rs. 76,71,080, were subjected to seizure on 4th August 2014 under section 110 of Customs Act, 1962. The records do indicate that the articles seized from the nine individuals had been licitly purchased inasmuch as tax having been discharged on the transaction was documented and the payments thereof effected through banking channels. 4. The impugned goods were confiscated under section 111 of Customs Act, 1962 by the original authority but offered for redemption solely to Ms Vihari Sheth under section 125 of Customs Act, 1962 on payment of fine of Rs. 2,50,00,000 along with applicable duty. The purchasers, aggrieved by the offering of option to redeem to a person other than themselves and who had not preferred claim to those either, sought appellate remedy. Revenue was also in appeal against the offer of redemption and plead....
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....s merely issued the job work invoices for labour charges without actually manufacturing the jewellery mentioned therein and that he issued invoices on request of and as per details given by Jiten Sheth; the bills were all issued in the name of M/s.Vihari Jewels and payments received from Jiten Sheth. It was observed that the payments for the so called job charges bills were not made immediately but completed only in last week of August 2013 i.e. after detection of the case. Further Ms.Vihari Sheth in her statement dtd.31.08.2013 divulged that the entries in the red coloured diary with names of certain persons with description of jewellery and amount (in USD) were made by her and are true and correct but she refused to explain the entries and also it was observed that whose images were found in her I-pad/mobile phone were sold through M/s.Vihari Jewels. 3.1 During the course of investigation, summons were issued to the persons, whose names were found mentioned in the red coloured diary of Ms. Vihari Rajesh Sheth or in the data recovered from her mobile phone or in other records taken over during investigation. In response to the summons, the concerned persons submitted thei....
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....onds and diamond studded gold jewellery in the past. It is also revealed from the statements recorded under the Customs Act, 1962, evidences from the forensic examination and other documents that her uncle, Jiten Sheth was using M/s. Vihari Jewels, Mumbai as a front to market and sell the jewellery smuggled in the past. From the records in the red colour diary and the voluntary statements of various persons recorded under section 108 of the Customs Act, 1962, it is evident that Mrs. Vihari Rajesh Sheth was personally canvassing the sale of the smuggled diamond jewellery with most of the buyers of the smuggled jewellery whose goods were seized by the investigation. Also, Ms.Vihari in her statement recorded on 08.10.2013 stated that she has not personally purchased any jewellery in India at any time. Again, Mr. Jiten Sheth submitted fabricated and false back dated documents showing the licit acquisition of the jewellery which was unearthed by the investigation. The Government-approved Valuer also told in his report that the subject goods appear to be imported. I find A/Authority has rightly held the goods liable for confiscation. Thus, there is no merit in the contentions raised by t....
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.... prove that the goods were smuggled with concrete and substantive evidence. As discussed supra, the investigations and evidences gathered clearly indicated smuggled nature of the goods. Further, with regard to burden of proof as required under Section 123 of the Customs Act, 1962, I find that "department is not required to prove its case with mathematical precision, but what is required is the establishment of such a degree of probability that a prudent man may on its basis believe in the existence of facts in the issue......" as held by the Apex court in case of CC v. D Bhoormull 1983 (13) ELT 1546 (SC) = 1985 ECR 2284 = 1974 (2) SCC 544 - 1974 (3) SCR 833 = AIR 1974 SC 859 as discussed in para 14.2 above. 12.7 The Appellants have contended that Ms.Vihari Sheth was neither the owner of the goods nor the person in whose possession the goods were found and hence the appellants were legally entitled to be given an option of redeeming the goods on payment of fine determined under the impugned order passed, but erroneously the option has been extended to Ms.Vihari and hence the impugned order is erroneous on said ground. I find that the said issue of redempti....
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.... before adverting to decisions such as Collector of Customs, Madras and others v. D Bhoormull [1983 (13) ELT 1546 (SC)] and Sailesh Amulakh Jogani v. Union of India [2009 (241) ELT 348 (Bom)] and the turn adopted by appellate authority on redemption of the goods, it is abundantly clear that adverse presumption sanctified by section 123 of Customs Act, 1962 is the bedrock of the proceedings. We are, therefore, obliged to recall the scheme of Customs Act, 1962 and, more so, in the light of the submissions made by Learned Special Counsel designed to persuade us to adopt his proposition on the justifiability of penalty imposed on the appellant. 18. Customs Act, 1962 is not merely a legislated enactment for furtherance of Article 265 of the Constitution in conjunction with the enablement of levy in the Seventh Schedule of the Constitution - for that the charging provision of section 12 and the valuation standard in section 14 would have sufficed along with recoveries empowered by section 28 and facilitation of refund in section 27 of Customs Act, 1962; it is also not merely a legislated enactment for ensuring that only permissible goods are imported into or exported out of the ....
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....ise. A third, with inbuilt detriment, presumes, under section 116 of Customs Act, 1962, that goods not landed after despatch from place of loading are in breach of the procedure prescribed in Customs Act, 1962. It is the second of the former that we are concerned with here for that has been cited in the show cause notice though the adjudicating authority tried to distance himself from it and as Learned Special Counsel has placed emphasis thereon in his submissions. 21. The particular presumption that this dispute is concerned with, viz., section 123 of Customs Act, 1962, has an interesting genealogy. It has a forebear in Sea Customs Act, 1878 albeit not in its original design; after the Republic came into being and, on the basis of '(1) to make smuggling a criminal offence, and (2) to transfer the onus of proof in respect of offences relating to smuggling to the person in whose possession any dutiable, restricted or prohibited goods are found.' in the recommendations in the report of the Taxation Enquiry Commission in 1954, by Sea Customs (Amendment) Act, 1955 (Act 21 of 1955) '178A. Burden of proof . - (1) Where any goods to which this section a....
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....t they are smuggled goods, the burden of proving that they are not smuggled goods shall be - (a)in a case where such seizure is made from the possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.' 23. The significance of legislative will, evident on the occasion of enactment of the special provision in Sea Customs Act, 1878, cannot be overemphasized while reflecting upon the scope of an intendment that runs counter to the general principle of customs authorities having to introduce sufficient evidence, other than presumption, to enable shifting the burden of response to the recipient of notice for invoking detriment of confiscation and penalty under Customs Act, 1962. I....
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....his contrarian principle emplaced in the customs law of the land. With the constitutional vires of the provision having been upheld, it is but natural that most of the disputes thereafter have almost entirely been about the pre-requisite of 'reasonable belief' of the goods being smuggled having been apparent at the time of seizure. This is a critical aspect of exercise of this extraordinary power vested in officers of customs by the statute: the onus devolves on the person from whom it was seized along with coordinate onus on person, if any, claiming ownership of the said goods and it merely requires inability to establish provenance, which may well be less than sinister, for the consequence of confiscation under section 111 of Customs Act, 1962. Judgements have examined the state of 'reasonable belief' on such pleadings by referring to facts and circumstances that were considered by adjudicating authorities and appellate bodies including the Tribunal. The decision of the Hon'ble Supreme Court in Indru Ramchand Bharvani and ors v. Union of India [(1988) SC 247], relied upon by Learned Special Counsel, did, in the light of challenge by the appellants, examine conformity with the pre....
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.... High Court held it properly that the petitioners had not discharged the onus to prove that the goods were not smuggled. In this case there was no denial of opportunity, the proceedings followed excluded the possibility of denial of opportunity. The proceedings taken were in order and in consonance with natural justice. The High Court was right in answering the first question by saying that the Tribunal was justified in holding that the seizing Customs had adequate material to form a reasonable belief as contemplated under Section 110 read with Section 123 of the Act and it rightly held that the appellants had failed to discharge the onus. The High Court answered the second question in the negative. In our opinion, the High Court was right. There is, however, one aspect of the matter which was emphasised before us, i.e. that the conclusions of the fact-finding body or statutory authority must be arrived at after giving a fair opportunity to the party to be effected by the order to be passed. As has been reiterated by a Bench decision of the Calcutta High Court in Bal Kissen Kejriwal v. Collector of Customs, Calcutta & ors., AIR 1962 Cal 460 a fair hearing has two ....
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.... it would be necessary to present evidence, even if not necessarily direct, of the impugned goods having been in the baggage of Mrs Vihari Sheth during one or more of her inbound travels to invoke the penal provisions against the three appellants; section 123 of Customs Act, 1962 obviates that in relation to goods considered by the State as warranting such recourse. The scope for invoking of section 123 of Customs Act, 1962 must now be turned to. 29. Section 123 of Customs Act, 1962 is all about responsibility for discharging onus of licit possession and, in terms of the law as it stands today, it is cast on the person from whom the suspectedly smuggled goods were seized and, in the event of any such assertion, on the person claiming ownership. It is on record that the impugned goods were neither seized from any, or all, of the appellants and nor have any of them claimed to be the owner; the first is incontrovertible fact and the second is not one that can be foisted for reason of an established past, or probability of a future, incident of offence. The statute does not acknowledge putative ownership. At least, it cannot be under a law for punitive detriment that the custo....
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....For these reasons, the imposition of penalties on the appellant must find justification in the evidence that were set out in the show cause notice to be sustained. 31. Admittedly, there are no markings on the impugned goods that would attribute provenance outside India. The sole link of the goods with foreign sourcing is frequency of travel of Ms Vihari Sheth, an admission of shared imputation in unidentifiable jewellery dealt with in the past through Vihari Jewels by Mr Jiten Sheth, that was construed upon by the customs authorities as relating to all, and any, jewellery available and dealt with in the past, complementary statements of two job-workers - one as mere source of documents and the other as supplier operating under the radar - which advances no proof of the impugned goods not having been produced in India and the conformity of designs in a workbook of Ms Vihari Sheth, purportedly valued in foreign currency, with the goods recovered from customers to whom 'studded jewellery' had been sold by Mr Jiten Sheth. Each of these is not objectionable on its own but taken together these contain as many rents and gaps as to detract from being fabric entire of itself. There....
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....partment has to prove further that the person was proceeded against was concerned in the smuggling. .... "........This also disposes of the first point. As we have said, the burden was on the Customs Authorities which they discharged by falsifying in many particulars the story put forward by the appellant.... It cannot be disputed that a false denial could be relied upon by the Customs Authorities for the purpose of coming to the conclusion that the goods had been illegally imported." In the case before us, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector. There was no violation of the rules of natural justice. The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoormull. He was simply giving him the fair opportunity of first rebutting the first and foremost presumption that arose out of the tell-tale circumstances in which the goods w....