1. Miscellaneous Application and appeal under Section 129A of the Customs Act, 1962 praying that in the circumstances stated therein, the Tribunal will be pleased to restore the appeal to file and set aside the order of the Collector of Central Excise, Guntur, dated 23-10-1982 in No. VIII/1011/82.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri G. Kameswara Rao, Advocate for the appellant and upon hearing the arguments of Shri A. Vijayaraghavan, Departmental Representative for the respondent, the Tribunal makes the following Order :- 4. This is an appeal against the order of the Collector of Central Excise, Guntur, referred to supra confiscating YKK zip fasteners of Japanese origin and 53.5 mtrs. of Indian cloth under Section 111(d) read with Section 119 of the Customs Act, 1962.
5. The brief facts of the case are as follows : On 5-1-1982, the Superintendent, Gold and Customs Preventive Unit, Guntur Collectorate, along with his Inspectors, visited the godown of M/s. A.P.T. Co., Vijayawada and found a gunny covered package under lorry receipt No.36030. dated 29-12-1981. The lorry receipt contained the following particulars : An invoice bearing No. 594 issued in the name of M/s. Aiankar Tailoring Material Stores, 31-2-8 Mochi Street, Rajahmundry, was also attached to the lorry receipt. The description given in the invoice was "1.
Capston-112 Ms. cotton cloth" with particulars of rate and amount. On information that the gunny bag contained contraband goods, the Customs Officers opened the same in the presence of witnesses and Shri A.V.B.Sarma, the person in-charge of M/s. A.P.T. Co. and found inside the package the following items :---------------------------------------------------S.No. Description Quantity Value--------------------------------------------------- 1. Black dyed pocketing One piece 108.00 cloth flash II Indian3. YKK Zip fasteners of 6000 plus 18,000.00 Japanese origin, 60 25 pieces4. YKK Zip fasteners of 3850 10,550.00 Japanese origin 775. Olive green superior 20.5 mts.
120.00 quality Royal touch M/s. A.P.T. Co. totally disclaimed ownership of the said goods and stated that they knew neither the consigner nor the consignee. In the above circumstances, the goods were seized under a cover of mahazar dated 5-1-82, attested by witnesses and proceedings were initiated under the Customs Act. The investigation by the Customs officers revealed that the firm named M/s. Kothari Trading Co., 10-A, Kasichetty Street, Madras, was fictitious and non-existent. The appellant, Betha Pydiraju, proprietor of Alankar Tailoring Material Stores, gave a statement to the Superintendent of Central Excise on 5-2-82 to the effect that he had been to Madras on 28-12-81 to purchase articles for his shop and some unknown persons came and showed him zips. As zips were necessary for his shop, he asked that unknown person to purchase zips for him and accordingly that person purchased for him 825 dozens of YKK zips at the rate of Rs. 15/-per dozen, besides lining cloth worth Rs. 600. The appellant further admitted that ke paid Rs. 600 towards the cloth and Rs. 12,375 towards the zips and after asking that unknown person to send these articles by lorry, he returned to Rajahmundry. The articles were booked by a lorry on 29-12-81 and the lorry receipt No. 36030 dated 29-12-81 was also given to the appellant.
The appellant also further confessed to the fact that he did not have any purchase receipts for the zips and cloth purchased at Madras and that he gave money to the mediator there who purchased these articles and sent them by parcel.
6. The appellant in spite of his being the consignee of the said goods did not make any claim either at the earliest opportunity or within a reasonable time and a show cause notice dated 21-6-82 was issued to the appellant calling upon him to show cause as to why the goods should not be confiscated to which the appellant sent a reply dated 12-7-82 contending, inter alia, that he was the owner of the goods covered by lorry receipt No. 36030 dated 29-12-81 seized from M/s. A.P.T. Co. and that he purchased the said goods through a broker at Madras without the knowledge that they were smuggled goods or goods of foreign origin and that he was a bonafide purchaser of the goods for value and consideration from Kothari Trading Co., Madras, through an unknown broker and that he was not responsible for any wrong declaration made either by the consignor or the broker in the invoice. After due enquiry, the Collector of Central Excise, Guntur passed the impugned order appealed against.
7. The learned counsel appearing for the appellant urged the following points : (i) When the Collector has not chosen to place reliance on Section 123 of the Act and at the relevant time zips were not notified goods under the Customs Act, the burden is on the Department to prove and establish that the goods, viz., zips, were smuggled goods. Till the Department is able to establish by satisfactory legal evidence that the zips in question are smuggled ones, no onus is cast on the appellant to prove how he acquired the same.
(ii) It was further contended that some mis-description of the goods in the invoice was not a circumstance against the appellant and the Department would not be justified in drawing an adverse inference against the appellant on that score. Indeed, he sought to explain away the mis-description in the invoice by submitting that it was only with a view to avoid mischief or pilferage by the transport company that a wrong description was given in the invoice.
(iii) It was further submitted that the Collector is in error to have assumed that merely because the zips bore a marking 'YKK', which is a well-known brand of zip fasteners made in Japan, the consignments in question should ipso facto be of foreign origin.
(iv) The appellant has established his title to the goods and is entitled to the return of the property. The lorry receipt No. 36030 is addressed to the appellant and the invoice also clearly indicates that the consignment was meant for Alankar Tailoring Material Stores which is owned by the appellant. Once the appellant establishes his title to the goods and proves as the owner thereof, he is entitled to the return of the property, particularly when the Department has not discharged the initial burden cast on it in proving that the zips were smuggled goods.
8. The learned Departmental Representative contended that the Collector had not held in this case that Sec. 123 was applicable but had merely found that since the ownership of the appellant had not been established, the onus of proof under Section 123 of the Act would not at all be relevant. He urged that the admission of the appellant in his statement that he was new to Madras and met an unknown person through whom he purchased YKK mark zips for a substantial amount and arranged for the despatch of the same by him through lorry under a mis-description coupled with the fictitious name of the consignor are circumstances that clearly establish that the appellant had purchased the zips knowing them to be smuggled ones and had transported the same under a false and fictitious invoice.
9. A careful scrutiny of the materials available on record reveals the following factors. The appellant; on his own admission as a person new to Madras, chooses to purchase YKK zips from an unknown person and arrange to despatch the same by a lorry under an invoice containing deliberately false description of the goods. The very name of the consignor-company itself has been found to be fictitious and non-existent by the Customs officers. It is relevant to note in this context that the appellant had never come forward to prove or establish anything to the contrary. The explanation of the appellant that the mis-description of the goods in the invoice is only with a view to avert a possible tampering or mischief by the transport company is too artificial and puerile to merit any acceptance. The fact that the appellant did not make an early claim of ownership of the consignments in question is also a circumstance that militates very much against the appellant.
10. The learned counsel for the appellant referred us to the ruling reported in 1974 Law Weekly, p. 406-Public Prosecutor v. H.T. Moni-and submitted that no presumption or adverse inference can be drawn against a person merely because one has not produced either the bills or satisfactory account for possession, particularly when the Department has not discharged its legal burden in proving that the confiscated goods are smuggled ones and are of foreign origin. Reliance was also placed on a ruling reported in AIR 1963, Madras (337), to stress the point as to how goods are to be dealt with when the presumption under Section 123 is not available. The learned counsel also relied upon the ruling reported in AIR 1965, Kerala (13) and contended that it is for the Department to prove that the articles are of foreign origin or smuggled goods when the statutory presumption under Sec. 123 of the Act is not available. Placing reliance on a Division Bench ruling of the Gujarat High Court reported in 1970, Criminal Law Journal 1305 (Asstt.
Collector, Baroda v. Mahboob Ibrahim) it was contended by the learned counsel that mere markings on an article would not ipso facto prove that the same is smuggled or of foreign origin. The learned counsel, relying upon ILR 38, Madras 6604, submitted that railway receipt is a mercantile document of proof and lawful possession of such a document enables a party to get possession of the articles covered by such receipt. Our attention was also invited to the ruling of the Supreme Court in AIR 1965 S.C. 1954 by the learned counsel for the appellant to drive home the point that railway receipt is a document of title and an endorsement or transfer of it constitutes delivery of goods.
11. On a careful analysis of the various rulings cited by the learned counsel for the appellant we find that they are not at all relevant to the facts of this appeal and the issues arising for consideration before us. Nobody disputes the proposition of law that when the statutory presumption under Section 123 of the Customs Act is not available to the Department, the burden is on the Department to prove, before confiscating the articles, that the articles are contraband ones or smuggled goods. In the instant case, for the reasons stated in para 6 of the impugned order, the Collector has found "that there is no evidence to establish the ownership of the seized goods in question by Shri Pydiraju. This being so the arguments about the onus of proof under Section .123 of the Customs Act, 1962 was on the Department and also the argument that in the case of zip fasteners which was not a prohibited item, where proof of licit origin was not forthcoming an inference could not be drawn that by mere possession of such zip fasteners must, have been illegally imported, are not relevant." The Supreme Court, in AIR 74 S.C. 859-Collector of Customs, Madras and Ors.
v. D. Bhoormull, "...the prosecution of the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty is myth, and as Prof Brett felicitously puts it- "all exactness is a fake". El Dorado of absolute Proof being unattainable, the law accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it 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. Thus, legal proof is not necessarily perfect proof; often it is nothing more than a prudent man's estimate as to the probabilities of the case." "...Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned; and if he fails to establish or explain those facts, an adverse inference of facts may arise against him which coupled with the presumptive evidence adduced by the prosecution of the Department would rebut the initial presumption of innocence in favour of that person and in the result prove him guilty."State of Maharashtra v. Natwarlal Damodardas Soni (AIR "It is trite law that even in cases where Section 123(1) of the Customs Act is not attracted, the prosecution can discharge its burden by establishing circumstances from which a prudent man, acting prudently, may infer that in all probability the goods in question were smuggled goods and the accused had the requisite guilty knowledge in respect thereof. The leading case is : Issardas Daulat Ram v. Union of India-1962 Supp (1) SCR 358. In that case, in reaching the conclusion that the gold had been smuggled, the Collector of Customs considered the credibility of the story put forward by the appellant about the purchase of the gold and also the conduct of the appellant in trying to get the gold melted so as to reduce its fineness by mixing silver with it, in an attempt to approximate the resultant product to licit gold found in the market.
The ratio of this decision was followed by this Court in Labhchand Dhanpat Singh Jain v. State of Maharashtra, AIR 1975 S.C. 182. The appellant-accused therein was trying to enter the railway compartment at Bombay Station. Seeing his nervousness, the Railway Police questioned him and searched his person and recovered nine bars of gold with foreign markings. The accused put forward an incredible story with regard to the possession of the gold. This Court held, that in the circumstances of the case, an inference could very well be drawn that the gold must have been imported after the law passed in 1948, restricting its entry, that the burden of proving an innocent receipt of gold lay upon the appellant under Section 106, Evidence Act and that the totality of facts proved is enough to raise a presumption under Section 114, Evidence Act; that the gold had been illegally imported into the country, so as to be covered by Section 111(d) of the Customs Act.
It is to be noted that in Labhchand's case (ibid), Section 123 of the Customs Act was not applicable, as the seizure of the gold was by the police and not by the Customs Officer. The Courts in that case did not use this presumption under Section 123 of the Customs Act against the appellant. They relied upon the circumstantial evidence to raise the necessary inference with regard to the character of the gold seized and the possession of the requisite mens rea by the accused. The ratio of Labhchand's case (ibid) applies fortiori, to the facts of the case before us.In Balumal H. Jamnadas v. State of Maharashtra, AIR 1975 S.C. 2083; a Bench of this Court to which one of us (Sarkaria, J.) was a party, eleven boxes were seized by the Police from a Room No. 10 at Sheriff Deoji Street, Bombay. On opening the boxes, goods bearing foreign markings such as 'Made in Germany', were found. A rent receipt in the name of the accused in respect of Room No. 10, in the occupation of the accused was also recovered. It was held by this Court that even if the goods bearing foreign markings were not seized under the Customs Act, and as such Sec. 123(1) of the Act was not attracted, the afore-mentioned circumstances, under Sec. 114 read with Section 106 of the Evidence Act were sufficient to presume that the accused knew that the goods had been smuggled or imported in contravention of law." 13. In the instant case, the appellant as the owner of the goods is the competent person to prove as to from whom he purchased the zips. The fictitious name of the consignor-firm, the admitted fact of the appellant meeting an unknown person and purchasing all of a sudden YKK zips (of Japanese make) for a substantial sum, despatching of the same under a deliberate mis-description by a false invoice and not claiming the articles for a considerable length of time are strong circumstances which would cumulatively establish the fact that the appellant had purchased the YKK zips from Madras knowing them to be smuggled. If really the appellant were a bona fide purchaser and purchased the goods from a lawful source, one would naturally expect the appellant to point out the source from which he purchased and vindicate his innocence.
When the goods in question are clearly proved to be smuggled goods, even without applying the statutory presumption under Section 123 of the Act, the claim of the appellant that he is a bona fide purchaser for value without knowledge of the fact that the goods are smuggled and is therefore, legally unsustainable. In other words, even a bonafide purchaser will not be entitled under law to claim smuggled properties on the ground that he purchased the same without knowledge that those goods were smuggled.
14. The facts and circumstances of the case clearly point to the conclusion that the appellant had purchased YKK zips of foreign origin and had transported the same to his place under cover of a false and fictitious invoice. The order of confiscation in the circumstances is maintainable in law and we affirm the order of the Collector of Central Excise, Guntur, appealed against and dismiss the appeal.