1. Shri Tarlochane Singh Surie, Prop. M/s. Gurbachans Radios, Church Road, Dimapur, Nagland, has filed an appeal being aggrieved from Order No. COL/CUS/8/84, dated 16th May, 1984 passed by the Additional Collector of Customs, Central Excise, Shillong.
2. Briefly the facts of the case are that on an information, the Customs Officers of Dimapur, on the strength of search warrant, searched the premises of M/s. Gurbachans Radios, Dimapur on 29-9-83. As a result of search, 151 Nos. of vedio cassettes of foreign origin were recovered in presence of independent witnesses and wife of the proprietor and other employees of the shop. The appellant was not present at the time of search and his wife had stated that her husband had gone to Bombay on business trip. Therefore, she could not produce any papers in connection with the aforesaid cassettes. On some of the cassettes, there were markings as "Made in Japan" and on some Cassettes, there were also markings "Made in India", but were found on close examination to be "Made in Japan" by removing the original labels as alleged by the revenue authorities. The appellant's statement was recorded on 29th November, 1983 and in his statement he had stated that these cassettes were received by him on rental basis from M/s. Bambino, 47/49, Veer Nariman Road, Bombay in the name of Avineet, Dimapur and many of the cassettes were given by his friends on loan basis and they were now pressing hard for returning the same to them. Some cassettes were purchased from Vinit Electronics, Calcutta and Mira Electronics, Bombay and the said cassettes were not for sale.
A show cause notice vide letter C. No. VIII (10) 35/Cus/83, dated 15-2-84 was issued to the appellant to show cause why the goods should not be confiscated and why a penalty should not be imposed upon him as provided under Customs Act and other allied Acts.
In reply to the show cause notice dated 15th February, 1984, the appellant had stated that all the cassettes were of Indian origin and he had received them on rental basis for keeping them in his shop. The appellant stated that he was not aware of the legal implication and that they were supplied to him as "Made in India and not for sale". He had prayed for the return of the seized goods and assured that he would not run a circulation library and that no cassettes are being sold by him. The learned Additional Collector of Customs did not accept the contention of the appellant and had observed that the goods under seizure were of foreign origin as was evident from the markings and the appellant could not file any valid documents for legal purchase of the same and had held that the seized items were smuggled into India in violation of the provisions of the Customs Act and other allied Acts.
The learned Additional Collector had confiscated the seized cassettes under Section 11 l(d) of the Customs Act, 1962 and had also imposed a penalty of Rs. 500/- under Section 112 of the Customs Act, 1962. Being aggrieved from the aforesaid order, the appellant has come in appeal before this Court.
3. Shri J.N. Roy, the learned advocate has appeared on behalf of the appellant. He has reiterated the facts. He has pleaded that the seizure was effected on 29th September, 1983. He has pleaded that 151 cassettes of Indian films were confiscated and the list of the same was duly attached along with the memorandum of appeal. The learned Advocate has pleaded that the seizure had taken place much before the issue of Notification No. 205/84, dated 20th July, 1984. He has pleaded that this Notification was issued under Chapter IV A of the Customs Act and after the issue of the notification, the onus of proof stands shifted to the person from whom these cassettes are recovered. He has pleaded that but before the issue of this Notification, the onus was on the re venue to establish that the seized cassettes are smuggled cassettes.
The learned Advocate has pleaded that in Notification. No. 205/84, dated 20th July, 1984, these item appears at sl. no. 13. He has further stated that the order has been passed on the basis of surmises and conjecture. He has also referred to the Import Policy for April 1982 to March 83 and has referred to the item at Sl. No. 5, sub-serial No. (2) in Appendix 3. He has also referred to para 40 of the Import Policy appearing at page 10, He has also pleaded that the video cassettes are baggage items and are duly dubbed with Hindi version. The learned Advocate has referred to a judgment of the Hon'ble Allahabad High Court in the case of Ashok Kumar and Anr., v. Collector of Central Excise & Customs reported in 1984 E.L.T. 400 (All.) wherein it was held that "Under Section 110 of the Customs Act, 1962, before proceeding to seize the goods, the Customs Officer must have material before him on the basis of which he can entertain reasonable belief that the goods are smuggled goods or imported in contravention of the licences or the Rules." The Hon'ble High Court held that "Merely because a person is found in possession of an article of foreign origin, it cannot be presumed that he has imported the goods in contravention of the relevant provisions unless the presumption under Section 123 of the Customs Act will apply." Since Section 123(2) of the Customs Act, 1962 would apply only to gold, diamonds, manufactures of gold or diamonds, watches and any other class of goods which are notified and not to video cassettes, therefore, no presumption can be drawn nor any reasonable belief can be formed that the video cassettes were smuggled goods and were imported in contravention of the provisions of the Act and the Hon'ble Allahabad High Court had ordered to release of the video cassette under seizure under Section 110 of the Customs Act, 1962 and were not liable to confiscation under Section 11 l(d) of the Customs Act, 1962. The learned Advocate has pleaded that the facts of the present case are similar to the facts of Allahabad High Court's case. The revenue, in the present case, has not been able to discharge the initial onus and as such, the seized 151 cassettes should be released and the penalty of Rs. 500/- should also be quashed.
4. In reply, Shri A.K. Chatterjee, learned Junior Departmental Representative has pleaded that the Baggage Rule does not help the appellant in any way. He has referred to Rule 2 of the Baggage (Conditions of Exemption) Rules, 1975. The learned J.D.R. has stated that the Baggage Rule has to be read with Section 11 l(o) of the Customs Act, 1962. He has pleaded that the video cassettes is a consumable item and the import of the same is banned. He has also pleaded that there is no correlation of the films with the seized cassettes. He has pleaded for the dimissal of appeal.
5. In reply, Shri Roy, the learned Advocate has pleaded that the revenue has invoked Section 11 l(d) and Section 11 l(o) has not been invoked. He has pleaded for the acceptance of the appeal.
6. After hearing both the sides and going through the facts and circumstances of the case, I would like to observe that under Section 123 of the Customs Act, 1962, the burden of proof was on the revenue to establish that the seized 151 cassettes are smuggled cassettes. Section 123 of the Customs Act, 1962 is reproduced as under : "123. Burden of proof in certain cases.-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,- (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, diamonds, manufactures of gold or diamonds, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify." A simple reading of the aforesaid section shows that the cassettes are not covered under Section 123 of the Customs Act, 1962 and the revenue has not discharged its initial onus. The search was effected on 29th September, 1983 whereas the Notification No. 205/84 is dated 20th July, 1984. As such, the revenue does not get help from the said notification. In reply to the show cause notice, the appellant had filed documentary evidence in respect of the cassettes and has stated that the source was from M/s. Bombino, Mira Electronics, Bombay and Vinit Electronics, Calcutta and the appellant was also getting the video cassettes on rental basis. The appellant had also attached photostat copies of the applications from S/Shri Ghanshyam Dass Jain, H.S. Sethi and Daniel Lotha. It is also contended by the appellant that some of the cassettes were belonging to the friends who were pressing hard for the return of the cassettes. On the other hand, the revenue has not been able to place any evidence which show that the video cassettes were smuggled cassettes. Para Nos. 12 and 13 of the Allahabad High Court judgment in the case of Ashok Kumar and Anr. v. Collector of Central Excise & Customs reported in 1984 (15) E.L.T. 400 (All.) are reproduced as tinder : "12. Accordingly the presumption of the nature mentioned above can be raised only in respect of the goods to which Section 123 applies.
According to Sub-section (2) of Section 123, the section would apply to gold, diamonds, manufacture of gold or diamonds, watches and any other class of goods which the Central Government may by notification in Official Gazette specify. Video cassettes do not fall in the category of gold, diamonds, manufactures of gold or diamonds and watches. Learned Standing Counsel could not bring to our notice any notification by the Central Government which has made the provisions of Section 123 applicable in respect of video cassettes. The respondents therefore were clearly in error in thinking that burden of proving that the cassettes seized from petitioners business premises were not smuggled lay on the petitioners and in entertaining a belief that they were smuggled goods merely because the petitioners had failed to discharge such a burden. Learned Counsel for the respondents also could not place any material before us to show that legally it was not possible for any one to obtain licence for importing video cassettes for purposes other than for use by actual users. Reference to Import Policy formulated and published by Government of India for the year 1983-84, made by the respondents does not appear to be conclusive in this regard. In the result, we find that there neither is any positive material before the respondents nor is the presumption under Section 123 available to them for entertaining the belief that the video cassettes found in possession of the petitioners are smuggled goods, liable to confiscation under the Customs Act. Even if it be that the video cassettes imported under a licence granted by the appropriate authority have, after being properly imported, dealt with in a manner which contravenes the provisions of the licence or any other provision of law, it would not mean that the cassettes have been imported contrary to the prohibition imposed under the Customs Act or any other law for the time being in force.
Such cassettes would not be liable to confiscation under Section 111(d) and the respondents will have no jurisdiction to seize them under Section 110 of the Act.
13. In this view of the matter, we are of opinion that there was material on the basis of which the respondents could reasonably believe that the 115 video cassettes found in petitioner's business premises had been imported in contravention of the provisions of the Import Control Order issued under the Import and Export Control Act, 1947 and were liable to confiscation. Seizure of the video cassettes effected by the respondents therefore, is without jurisdiction." The facts of the present appeal are similar to the facts of the aforementioned case and there is no reason as to why the appellant should be denied the benefit of the Allahabad High Court judgment. The revenue has not been able to cite any judgment in its favour.
Accordingly, I accept the appeal filed by the appellant and order the release of seized 151 cassettes within three months from the date of this order. I also order the cancellation of penalty of Rs. 500/-(Rupees five hundred only) and direct the revenue authority to refund the same within three months from the date of this order. In the result, the appeal is accepted.