ORDER
S.S. Sekhon, Member (T)
1. This appeal has been filed by one Shri Dega Janardhana Reddy. On 6.9.1996 at about 1000 hours the officers visited the shop i.e. M/s. Satya’s Customs Notified shop, Trunk Road, Nellore (hereinafter referred to as “the shop”) on a reasonable belief on the basis of the intelligence gathered that illicitly imported goods of foreign origin are stored, openly displaced (sic-displayed) and are being offered for sale therein and conducted operation and seized the goods of foreign origin referred to in the mahazar valued at Rs. 91,215/-. The matter was enquired into and thereafter show cause notice was issued to the appellant, viz. Dega Janardhana Reddy, who was the proprietor of the shop. The matter was heard and thereafter adjudicated by the Dy. Commissioner, Central Excise & Customs, Guntur who ordered confiscation of the seized goods valued at Rs. 91,215/- under Section 111(d) of the Customs Act, 1962 and gave an option to redeem the same on payment of fine of Rs, 15,000/-and on payment of duty liable to be paid on the seized goods within a month of the receipt of the order. He also imposed penalty of Rs. 5,000/- on the appellant.
2. In appeal, the Commissioner (Appeals) found no force in the argument advanced by the appellant and was inclined to agree with the findings of the Deputy Commissioner which according to him are quite detailed, elaborate and reasonable. He did not find any infirmity in the order passed by the Deputy Commissioner which was correct both on facts and in law and he held that the various case laws cited by the appellant have got no relevance as the facts are distinguishable. He sustained the order of the lower authority and rejected the appeal.
3. The present appeal has been filed on the following grounds:
(a) The order of the Commissioner (Appeals) has been passed ignoring the guidelines of the Central Board of Excise and Customs, and the decision cited before him regarding requirement to prove first that Section 123 of the Customs Act, 1962 cannot be invoked except in cases where the goods have been seized on a reasonable belief that the same have been smuggled. In the present case the goods were not seized on a reasonable belief that they were smuggled goods as can be seen from the seized documents.
(b) The findings of the Dy. Commissioner that the officers entertained a reasonable belief that the goods were smuggled and this fact has not been reflected in the mahazar.
(c) As regards Baggage receipts produced for proving the acquisition of the goods on payment of duty and brought through Green Channel, the adjudicating authority chose to compare the value of the goods as made out in the seizure documents and concluded that there was no nexus and the goods are smuggled and liable for confiscation. The department had to prove the smuggled nature of the goods before order of confiscation which has not been done so.
(d) Commissioner (Appeals) has approved order of the lower authority. Since the department did not prove the smuggled nature of the goods, the goods were permitted to be imported under the Baggage Regulations and the genuineness of the baggage receipts produced by the appellant has not been disputed by the department.
(e) The goods of the type seized when brought into the country by passengers returning from abroad within their free allowance limitation will get cleared in green Channel area and there will be no customs documents for such goods and they will not become illegitimate goods in the absence of such documents.
(f) Even in respect of the goods covered under Section 123 of the Customs Act, 1962 such goods become liable to confiscation only when they are seized on reasonable belief that they are smuggled goods and liable to confiscation. In the present case the department has not produced any evidence that they are smuggled. The appellant relied upon the ruling in the case of Anil Kumar Pandey v. CC as which held that burden of proof in case of non-notified item is on the department that the goods are smuggled ones and merely because the garments in question carried foreign mark stickers by itself will not shift the burden to the appellant to prove that the goods are smuggled.
(g) Appellant claims relief that the order of the Commissioner (Appeals) may be set aside and the goods seized should be restored to the appellant’s possession and if the goods have been disposed of, the ma-hazar value should be paid to the appellant.
4. We have heard Shri R. Kesavan, learned Consultant for the appellant and Shri Section Sudarsan, learned DR for the department and after considering the submissions we find that:
(a) out of the goods under seizure only 62 pieces of calculators and 45 pieces of watches are covered under Section 123 of the Customs Act, 1962. The remaining goods viz. Radio Cassette Recorder, Cigarettes, Alarm Clock etc. are not covered by Section 123 of the Customs Act.
(b) It is a fact that baggage receipt for the item were issued at Chennai Air Customs along with baggage receipt in the name of one Shan-mugam which has been produced to cover 90 pieces of the Calculators in question, which has been rejected on the only ground that the values shown in the duty paying documents are at variance which is lesser than the value shown in the mahazar. This however, cannot be a cause for rejecting the baggage receipt since value in the mahazar is market value, the value shown on the duty paying receipts would be different, as applicable to import of baggage goods. The two values are not comparable. Therefore, the rejection of the baggage receipts on this ground is not correct.
(c) The learned Consultant fairly conceded before us that 45 pieces of watches have been procured from one Market known as Burma Bazar in Chennai which is a known place for procurement of foreign goods and for this purpose, he has got no bills/vouchers/invoice to support the purchase.
(d) As regards the other goods under seizure he submits that they are not in large numbers and are freely allowed to be imported under free allowance as baggage and the findings of the Dy. Commissioner that these are smuggled goods and as they are found in the negative list these goods are required to be imported under special import license, is not acceptable since no import license is required for goods allowed under baggage rules imported free of duty, and for goods which are allowed under duty free allowance can be imported on payment of duty under the baggage rules and Import control Regulations did not require production of license for goods especially when they are brought as baggage goods under the Baggage Rules. Therefore, we cannot find any reason to reject the claim of the appellant that the said goods are not smuggled into the Country. These are non-notified goods. The appellant also relied upon the decision in the case of Jatin Mehta v. CC, reported in 2000 (120) 108 (Tribunal) wherein it has been held that for the purpose of burden of proof, fact of the goods being purchased and being sold to anonymous persons and also sold without any bills rises a question about the legal nature of the goods and that alone is not enough to establish preponderance of evidence that the goods had been smuggled into the country and the burden should be held to be not discharged by the department as far as goods not covered by Section 123 are concerned. Therefore, we find no reason to sustain the order of confiscation of the goods which are not covered by Section 123 of the Customs Act.
(e) As regards the goods covered by Section 123, i.e. 62 pieces of calculators, we find that two receipts showing payment of duty for total number of nine items have been produced. But these baggage receipts have been rejected on a reason which we do not uphold. Therefore, we find that the appellant has discharged the burden cast on him so far as this item is concerned.
(f) As regards 45 pieces of watches seized, they are covered by Section 123 and we find from the mahaz.ar that the goods are mentioned therein which have been seized “as the goods are of foreign origin were illicitly imported into India and have not suffered customs duty. It was indicated that the seizing officers entertained reasonable belief at the time of seizure of the goods that they were smuggled. The learned Consultant on a question from the Bench admitted that the seizing officers were not cross-examined by the appellant for production of record and in the absence of this there was reasonable belief. Therefore, we would find that the onus to prove that they are licitly imported has been shifted under Section 123 to the person from whose possession they have been seized. Viz. Shri Dega Janardhana Reddy, the appellant herein. He has to discharge the onus cast on him in this regard that they are not smuggled into the country. This the learned Consultant explained only that this item was purchased from a market known as Burma Bazar in Chennai where goods of foreign origin are brought and sold in open, according to him. This explanation is not sufficient to discharge the burden cast on him under Section 123 on the person from whose possession the goods have been seized.
(g) We find that lower authority’s order has very clearly indicated that the seizure was made after specific intelligence was gathered regarding sale, display of the foreign marked items at the shop. Therefore when goods are notified under Section 123, the onus to prove that these are not smuggled into the country is on the person concerned i.e. the present appellant and since he has not discharged the burden, the goods are liable for confiscation. At this stage, the learned Consultant submitted that valuation of the goods under seizure has not been properly done. We find that the mahazar values are much higher than the market value as indicated in the baggage receipts and therefore as regards the watches we accept his plea that the watches under seizure needs to be re-valued.
5. In view of our findings, we set aside the order of confiscation and penalty on the goods and order that all the goods need to be returned to the appellant except 45 pieces of watches which are under seizure. We direct the lower authority to re-value the watches as per law and after giving due notice to the appellant and thereafter the matter may be decided in de novo proceedings. The penalty and redemption fine should depend on the revalue determined. In the result, confiscation of all the goods except 45 watches is set aside and as far as watches are concerned, the value should be determined and readjudicated. The appeal is thus partially allowed in the above terms.
(Dictated and pronounced in open Court).
