1. This appeal against Order-in-Appeal No. APPL/DLH/Raj/164/80 (Order No. 145-RAJ/83) dated 21-3-1983, passed by the Collector of Customs (Appeals), New Delhi, confirming the Order No. 33/50 dated 3-10-1980 passed by the Assistant Collector of Central Excise & Customs, Ajmer, arises in the following circumstances.
2. On information, the Preventive Officers of Central Excise & Customs, Ajmer, searched the residential premises of the appellant on 28-1-1980 and seized the miscellaneous goods valued at Rs. 3,675/- and clothes & hosiery goods valued at Rs. 4,874/- alleged to be of foreign origin.
Consequently, a show cause notice dated 4-3-1980 was issued to the appellant asking him to show cause and explain as to why the seized goods should not be confiscated under Section 111 of the Customs Act and why further penalty should not be imposed on him under Section 112, ibid for alleged contravention of Sections 11-C, 11-D and 11-E of the Customs Act, 1962, read with Clause 3 of Import & Export Order, 1955, issued under Section 3(i) of the Import & Export Control Act, 1947. To which the appellant replied inter alia contending that he had not contravened the provisions of any of the sections of the Customs Act, 1962, inasmuch as that he had received all goods as gift; that Sections 11F to 11G were not contravened in the instant case; that there was no need to produce any evidence showing clearance of goods by Customs Authorities as he personally had not imported any of the seized goods.
He further added that the seized articles were gifted to him/his family members by (i) Shri Arjundass Kewalramani; (ii) Shri Nanik Chandwani; (iii) Shri Lilo and (iv) Shri Ashok, who are his friends. The appellant also submitted the photostacopies of Customs Baggages Receipts and affidavits of the said five persons along with photostat copies of parcel Nos. 1575 and 1527 received from Shri Prakash & No. 9540 from Shri Raman Lal from Singapore. During the personal hearing, the appellant submitted that most of the items were covered by the said affidavits and the remaining items were received from his brothers/ friends residing abroad from time to time at different occasions. He specifically pointed out that Items at Sl. Nos. 63, 71, 32. 33, 35, 37, 38 and 39 of Annexure 'A'-Recovery Memo Annexed to Panchnama prepared on the spot-were sample and Item No. 5 of Annexure 'B' was shirting cloth and not suiting cloth.
3. After the usual enquiry, the Adjudicating Authority, believing the affidavits and photostat copy of parcel filed by the appellant and also the statement of the appellant, ordered for the release of most of the goods holding that the same were legally acquired/possessed by the appellant. Regarding the remaining seized goods of S. No. 2, 3, 4, 6, 7, 9, 10 11, 12, 14, 16 to 19, 24 to 30, 36, 40 to 42, 45 to 49. 57, 58, 61, 62, 65, 67. 69, 71, 73 to 78, 82 to 86 of Annexure A and items at S. No. 3 to 7, 9 to 12, 15 to 17, 19 and 20 of Annexure B of the recovery memos annexured to panchnama dated 28-1-1980, the Adjudicating Authority ordered for confiscation absolutely under sections 111(d)and 118 of the Customs Act, 1962, holding that since these articles were not covered by affidavits of five persons, the same is liable to be confiscated. The Adjudicating Authority also imposed a personal penalty of Rs. 2.000/- under Section 112 of the Customs Act, 1962. The appellant, however, chased the matter in appeal before the Collector of Customs (Appeals), New Delhi, but without success except that the personal penalty was reduced from Rs. 2.000/- to Rs. l.000/-.
4. Shri Harbans Singh, learned counsel for the appellant, has contended before me that the impugned goods were kept in the residential premises of the appellant and there is no evidence on record to show that the appellant had engaged in any commercial activities. On the contrary, the nature and quantity of the goods confiscated was such that it cannot be stated to be commercial goods. According to him, the provisions of Section 11-D are not applicable to the goods meant for personal use by virtue of Section 11-G of the Customs Act. No authority in support of the said contention was cited by the learned Counsel even though asked for. In my opinion, the argument of the learned Counsel is misconceived. On a bare perusal of Section 11-G of the Customs Act, 1962, it is clear that it speaks of Sections 11-C, 11-E and 11-F only, and not of Section 11-D.5. The learned Counsel for the appellant also argued that from the nature and quantity of the goods seized, it is clear that they cannot be said to be commercial goods, and since the appellant's explanation regarding certain goods seized was accepted by the adjudicating authority and upheld by the appellate authority, there is no reason to doubt or to disbelieve the same explanation of the appellant with respect to the remaining goods. After perusing the record and the plea advanced by the appellant, and considering the nature and quantity of the goods seized, I am of the view that the appeal deserves to be allowed and there is no reason to disbelieve the version given by the appellant with respect to the goods ordered to be seized, and both the authorities below erred in holding that the explanation of the appellant with respect to the goods ordered to be confiscated was after thought.
6. Before parting with the case, I would also like to point out that the impugned order-in-original, as confirmed by the appellate court, suffers from the patent infirmities, that is to say- (i) that from a combined reading of Section 11-D and Section 111(p) ibid, it is clear that only the notified goods can be the subject-matter of seizure, enquiry/or offence under Section 11-D ibid, but to my great surprise, I observe from the record that before ordering the confiscation of the part of the goods seized from the appellant, the adjudicating authority has not recorded any finding to the fact as to whether the goods, ordered to be seized, were notified goods under Section 11. In paragraph 8 of the order-in-original, the adjudicating authority simply states :- This does not satisfy the mandatory requirements of Section 11-D of the Act. From the order-in-appeal, it is also clear that the appellate court has also not applied its mind to this aspect of the case.
(ii) that in paragraph 8 of the order-in-appeal, the adjudicating authority has very clearly stated that the reasons to belief which led the seizure were not disclosed during the proceedings of the case. Section 123 of the Customs Act deals with the burden of proof and provides that "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 on the person from whose possession the goods were seized, etc., etc." To my mind, at the first blush, the reason to believe that the goods are I smuggled goods is a precondition for seizure of the goods and the reason to 1 believe must relate to the period of time when the seizure was made.
But in the instant case, I am relieved of this onerous task of deciding the legal impact of the said infirmities. Firstly because these points were not taken up by the learned Counsel for the appellant at the time of arguments and, secondly, because I am allowing the appeal on other grounds as stated above. On the point clarity, it may be stated that the same would be decided as and when the suitable occasion would arise.
7. In the light of the foregoing discussion, I allow this appeal and set aside the order-in-original, passed by the adjudicating authority and confirmed by the appellate authority, and direct that the personal penalty, if paid by the appellant, be refunded to him forthwith and the seized goods be also returned to him immediately.