1. This is a Revision Application which has been transferred to the Tribunal for disposal as an appeal in terms of the provisions of Section 131B(2) of the Customs Act, 1962.
2. On 11-3-79, at 05.30 hrs. a police party of Jodhpur apprehended a truck carrying bush shirts, shirts and pants of foreign origin, being brought from village Tinwar to Jodhpur for disposal by Shri Jeth Mal, accompanied by Shri Mana Ram and driver Lal Dass. As no documents to show legal acquisition/possession of the foreign bush shirts etc. was produced, the goods, the persons and the truck were detained. The 5164 bush shirts, shirts and 356 pants were then handed over to the Jodhpur Customs who seized them under Section 110 of the Customs Act, 1962. The truck was also seized and the three persons were arrested by the Customs officers but allowed bail on 12-3-79.
3. Shri Jeth Mal stated that he had purchased the goods under proper bills and vouchers and Shri Mana Ram, labourer, was assisting him. The latter confirmed loading the truck, and being on board. Shri Lal Dass stated that the truck was engaged by Shri Jeth Mal on a hire of Rs. 100/-. The owner of the truck, Shri Moolaram, stated that he pays Rs. 300/- p.m. to the driver who had taken the truck to Tinwari of his own accord. The truck was released provisionally against a cash security of Rs. 1000/- and a bond for Rs. 18,000/-.
4. Under a letter dated 13-3-79 Shri Jeth Mal produced the bills and receipts in respect of the seized bush shirts/shirts. However, as against 2543 cotton bush shirts seized, the records relating to the auction by the department cited by Shri Jeth Mal showed that only terylene and tericot bush shirts were sold and the bills/TR 5 receipts produced do not cover the goods seized.
5. After issue of a show cause notice and grant of a personal hearing on 28-3-80, the Deputy Collector, Jaipur did not accept the contention that the goods were covered by the TR 5 produced as no cotton bush shirts were auctioned by the department. He was convinced that the goods had been illegally imported through an unauthorised route and the TR 5s were being used to give legal cover. He found no weight in the argument that the police record showed that the bush shirts were of "terry cotton" whereas the show cause notice mentions as many as 2543 bush shirts/shirts were of cotton, since the notice was issued after examination by the seizing (Customs) Officers. Though Section 123 was not applicable, the owner had "to produce minimum evidence relating to acquisition of goods in normal course to absolve himself of the charges", according to the Deputy Collector. The TR 5's were only being used as legal cover and such goods not having been auctioned, the logical conclusion is that they have been imported through an unauthorised route. No involvement of Shri Mana Ram, the labourer, Shri Moola Ram, the truck owner or Shri Lal Dass, the driver, in the dealing of smuggled goods was, however, found.
6. The goods, valued at Rs. 30,488/-, were ordered to be confiscated under Section 111 and a penalty of Rs. 2000/- was imposed on Shri Jeth Mal under Section 112. The truck used was confiscated under Section 115 and ordered to be released on payment of Rs. 1000/-as fine in lieu. No penalty was imposed on any of the other three persons.
7. An appeal was filed before the Appellate Collector, who supported the Deputy Collector's finding that the auction receipt (TR5) could not be taken to cover the goods under confiscation and the appellant had failed to show that they could form a part of what was covered by the auction receipt in number as well as description. He rejected the appeal with the modification that the confiscated goods could be released on payment of a fine of Rs. 15,000/-within three months or such extended period as may be allowed.
(ii) no reason has been given to disbelieve the bills produced and it is not the case of the appellant that all the goods were covered by the customs receipts ; (iii) the onus to prove the smuggled nature of the goods is on the department and there is not an iota of evidence on record to substantiate this, yet the Appellate Collector has erred in law in coming to such a conclusion and giving the option to redeem the goods on payment of Rs. 15,000/- ; (iv) the law regarding burden of proof, principles of natural justice and various cases decided by customs authorities in similar cases, has been ignored ; (v) the police had no information before seizing the goods, hence they had no jurisdiction to seize and there is no reasonable apprehension that the goods were imported through an authorised route in contravention of any prohibition and the order is without jurisdiction ; (vi) apart from the allegations being false, no case is made out even on these facts ; (vii) the case has to be adjudicated on its own merits and not on conjectures and prejudices of officers ; (viii) the seizure being patently illegal, the order imposing penalty and redemption fine is liable to be set aside ; (ix) the applicant Lal Dass also preferred an appeal before the Appellate Collector but he has not even considered it and hence the order is liable to be set aside on this count as well; and (x) that the penalty of Rs. 2000/- and the fine of Rs. 15,000/- was paid as the goods had deteriorated but this was not considered by the appellate authority.
10. Shri Urarao Chand, Advocate, reiterated what was stated in the written appeal. In particular, he stressed that the appellant was arrested on the 11th and produced photostat copies of bills etc. on the 13th. The departmental receipts (TR5) do not mention terylene or tericot but only "foreign bush shirts". The bills produced were for 920,940,815 and 815 bush shirts. Mehrafh Choudhury's two bills covered 1621 bush shirts and 39 pants and Onkar Singh's bill, 1860 bush shirts.
These were more than sufficient to cover all the goods. Jodhpur is 250 miles from the border and the onus to prove impdrt under Section 7 (c) is on the department since Section 123 does not apply. Moreover, enquiries regarding auction by the Assistant Collector were behind the back of the appellant. There is also nothing in the Order-in-Appeal to cover the appeal made by Shri Lal Dass, owner of the truck.
11. Shri S. Kampani, Junior Departmental Representative, stated that the goods were of foreign origin and valid bills could not be produced, as brought out in para 15 of the Order-in-original. He admitted that the TR5's only mention "foreign bush shirts without label" but the appellant sought to cover 5000 bush shirts, including over 2500 cotton ones, by these TR5's, when the Customs Malkhana records showed that no cotton but only terylene and tericot bush shirts were sold. He submitted that the show cause notice mentioned the facts of verification of departmental records and these could have been inspected by the appellant at the time of adjudication, so there was no ground on this score.
12. These contentions were not accepted by the Counsel, in rebuttal, as only 1100 bush shirts were claimed by the appellant as cotton. One of the bills produced clearly mentions cotton bush shirts but the department made no investigation to check the veracity. His client produced documents immediately and the department has to disprove them.
The report mentioned in para 16 of the Adjudication Order was not also shown to the appellant.
13. Chapter IVA of the Customs Act is designed to detect illegally imported goods and prevent their disposal. These provisions do not apply to foreign goods of the type with which this case is concerned, namely, terylene/ tericot/ cotton bush shirts, shirts and pants. It is also correct that the onus of proving that the impugned goods are smuggled lies on the department and not on the person from whom they were seized, since such goods are not covered by Section 123. In this case, the party took upon himself the onus of producing customs receipts and bills to show licit purchase. This cannot by itself shift the onus under Section 123 to him, though an adverse inference is possible if the documents are fabricated or otherwise not germane. In this case, the department has not proved conclusively that the goods could not possible have been covered by the documents produced. On the contrary, the defence has adduced a reasonable possibility of this being so. More importantly, it is due to the non-mention of the quality of the fabric of the shifts/bush shirts in the TR5, which provides an opportunity for cloaking smuggled goods. This omission ought not to be used against the appellant by the department. Having concluded that the documents produced did not cover the seized goods, it was for the department to investigate their origin and establish their contraband nature. The mere conclusion that they are not covered by the TR5's, being partly cotton bush shirts is insufficient to prove that they have been imported through an unauthorised route, that too unspecified in so far as even the land border is concerned i.e. Indo-Pak or Indo-Nepal.
Not an iota of evidence or reasoning which led to the conclusion of illicit import through an unauthorised route has been adduced by the department. There is also no discussion on this aspect in the Order-in-appeal. The department has also not controverted the Counsel's contention that the appellate order is silent regarding Shri Lal Dass's appeal.
14. For these reasons, the Tribunal accepts the appeal and sets aside the order relating to confiscation, imposition of penalty and redemption fine.