ORDER
K. Gopal Hegde, Member (J)
1. Both these appeals arise out of and are directed against the Order No. S/l4-4-233/81 Pint, dated 17.11.1982 passed by the Additional Collector of Customs (P), Bombay.
1. As these appeals involve common questions of law and facts, they are clubbed together; heard together; hence this common order.
2. During the pendency of the appeal CD(BOM)536 of 83 the appellant had died and the legal representatives were brought on record.
3. The appellant in CD(BOM)537 of 83 is a partnership firm and the original appellant in CD(BOM)536 of 83 was the managing partner of the said firm.
4. The brief facts necessary for the disposal of these appeals are :
On information that Shri Kishan Shamdas Bhatia was dealing in smuggled cameras and photo-graphie materials, through his firm M/s. Shah & Sons Photo Store and M/s. Jaikishen & Brothers, the godown premises, “the shop premises and the residence of Kishan Shamdas Bhatia were searched on 13.2.1981. From the residential premises goods worth Rs. 17,130/- CIF market value Rs. 51,390/-; from the godown premises goods worth Rs. 24,396/- CIF, market value Rs. 73,188/- and from the shop premises goods worth Rs. 2,025/-CIF, market value Rs. 6,075/-, were seized in the reasonable belief that they were smuggled into India and were liable to confiscation. The statement of Kishan Bhatia was recorded on the same day. In his statement he had stated that M/s. Sham & Sons was a partnership firm. .He and his two brothers were the partners. As regards the goods seized from the premises, he stated that he would produce the bills and other documents to prove the legal acquisition and importation. As regards the camera seized from the premises, he stated that they were given to him for repairs by different customers and the customers did not turn up to take delivery of the same and as such they were lying in the premises. He admitted that he does not have any repair facility. He gives them to different repairers for repairing on job basis He also admitted that he had not maintained any register or account of the cameras received from the customers. He further stated that he had issued some bills for some; but these bills were not readily traceable, and he would require some time to produce the bills. He also admitted that he had not notified to the customs the premises where the goods were found. When questioned whether he could furnish the names and addresses of the persons who had given cameras for repairs Shri Bhatia replied in the negative. In his further statement recorded on 25.2.1981 tie stated that they do not deal in notified goods and he had not kept any repairers for repair work of cameras.
The Additional Collector of Customs after considering the reply to the show cause notice and after affording personal hearings to the party, ordered confiscation of the goods valued at Rs. 20,046 cif and Rs. 60,138 market value under Section lll(d), (p) and (o) of the Customs Act; but released goods valued at Rs. 23,505/- cif and Rs. 70,515 market value. He, however, imposed personal penalty of Rs. 10,000/- on Shri Kishan Shamdas Bhatia and Rs. 5,000/- on the firm M/s. Sham & Sons Photos. The appeals are against the order of absolute confiscation of the goods Valued at Rs. 20,046/-cif and the personal penalties.
5. Appearing for the appellants Shri Raichandani submitted that according to the records prepared by the customs authorities, namely, the seizure panchnama, the appellant was present during the search of all the 3 premises. The search took place simultaneously. The premises are not adjacent to each other. One of them is far away and, therefore, the statement contained in the panchnama that the search took place in the presence of the appellant Kishan Bhatia cannot be believed. Shri Raichandani further submitted that the searches were effected under search warrants; but the warrants themselves did not bear consecutive numbers. This also indicates that the search could not have been simultaneous. Having regard to the above infirmities, Shri Raichandani contended that no reliance can be placed on the customs documents. He urged that even during the search the appellant sought to produce documents; but the officers were not willing to look into those documents. In support of his above contention Shri Raichandani relied on the letter dated 21.2.1981 written to the Additional Collector by the appellant, Shri Kishan Bhatia. It was further contended by Shri Raichandani that excepting the cameras the others were non-notified goods. They were not covered either by Chapter IV(a) or by Section 123. Therefore the burden is on the Department to establish that they were the smuggled goods and that burden had not been discharged. Shri Raichandani further contended that the appellant had produced bills and other documents to support legal acquisition. The Additional Collector had not properly considered the documents produced by the appellant Bhatia. It was also contended by Shri Raichandani that the appellant was detained under COFEPOSA on the ground that he had not accounted for the seized goods; but the said detention order had been set aside by the High Court. Having regard to the order of the High Court, the order passed by the Additional Collector without considering the order of the High Court is also vitiated. The further submission of Shri Raichandani was that the most of the goods were old and torn and therefore the appellant disputed the value mentioned in the panchnama the customs officers revalued the goods. Even the revaluation has not been properly done. It was then submitted by Shri Raichandani that in his order the Additional Collector stated that no reply have been received from M/s. Sham & Sons and M/s. 3aikishen & Brothers. This is totally a wrong statement. The reply filed by Kishan Bhatia was on his own behalf and also on behalf of M/s. Sham & Sons and M/s. 3aikishen & Brothers. In that connection Shri Raichandani placed reliance on the photostat copy of the replies sent by Kishan Bhatia.
6. Shri Raichandani further submitted that even though the Additional Collector had agreed for inspection of the goods and also fixed date for holding inspection no personal inspection was done and after the date fixed for personal inspection no further date was fixed for personal hearing and the Additional Collector without affording an opportunity of personal hearing passed an ex-parte order. Shri Raichandani further submitted that according to the revised value the market value of seized goods came to Rs. 92,283/- as against Rs. 1,30,653/- stated in the panchnama. But in spite ‘of the revised value in the final order the Additional Collector held that goods valued at Rs. 70,515/- market value were released and goods valued at Rs. 60,138/- were absolutely confiscated and the total value of the two items comes to Rs. 1,30,653/-and this itself indicates non-applicability of the mind of the Additional Collector. The further contention of Shri Raichandani was that excepting the camera the others are non-notified goods and, therefore, compliance of Chapter IV(a) would not be required in respect of non-notified goods and also in respect of cameras because under Notification No. 93 of 71 the appellants who are the repairers are exempted from the provisions of Chapter IV(a). Therefore, the order of confiscation under Section lll(p) and (o) are bad in law. Shri Raichandani further submitted that reasons given by the Collector for ordering confiscation are not at all valid and opposed to the documentary evidence produced by the appellant. Shri Raichandani contended that many of the documents produced by the appellant were rejected on the flimsy ground that the description or some other particulars did not tally. Finally, Shri Raichandani submitted that in spite of the documentary evidence, the Additonal Collector based his findings on the allegations contained in the show cause notice and totally ignored the documentary evidence and he, therefore, prayed that the order of absolute confiscation of the goods as well as personal penalties on the two appellants be set aside. It was also contended by Shri Raichandani that the appellant Kishan Bhatia was the managing partner of the firm. He alone was looking after the affairs of the firm and, therefore, the penalty imposed on the firm without issuing a show cause notice to other partners is bad in law. The penalty on Shri Bhatia is also excessive.
7. Shri Pattekar appearing for the Collector, however, urged that it is not merely cameras that were notified, even flash guns and colour films were also notified goods. The restriction regarding notified goods provided under Section 11(C), (D), (E) and (F) are attracted. The appellants have not complied with any of those provisions and, therefore, the order of confiscation passed by the Additional Collector is legal and proper. Shri Pattekar submitted that Additional Collector had given good reasons for ordering confiscation and, therefore, his order may not be interfered with. It was also submitted by Shri Pattekar that the photostat copy of the reply produced by the appellant is not the true photostat copy of the reply. The original reply filed by Shri Bhatia was not for and on behalf of M/s. Sham & Sons or M/s. Jaikishen & Brothers. It was also submitted by Shri Pattekar that search warrants were given to different parties and, therefore, they did not bear consecutive numbers. Finally, Shri Pattekar submitted that there is no infirmity in the order passed by the Additional Collector.
8. In reply Shri Raichandani contended that the colour films which were originally notified were subsequently denotified and at the time of the alleged offence they were not the notified goods.
9. The short question for consideration is whether the order passed by the Additional Collector requires to be interfered with. As has been contended by Shri Raichandani the Additional Collector in his order, ordered confiscation of both notified as well as non-notified goods. According to Shri Raichandani excepting the cameras all other goods ordered to be confiscated are non-notified goods, whereas Shri Pattekar contended that colour films were also notified for the purpose of Chapter IV(a) of the Customs Act. Shri Raichandani conceded that colour films were notified but he urged that subsequently they were denotified. But then he had not chosen to produce a copy of the notification under which colour films were denotified. In the absence of such a notification we accept Shri Pattekar’s contention that colour films were also notified goods. On verification, we found that it was only in the year 1984 the colour films came to be denotified; but the seizure in this case is prior to the said notification. In the case of notified goods the allegation against the appellants are that they had violated the provisions of Section 11C, D, E and F. Shri Raichandani’s contention was that the appellant is a repairer and therefore repairer is exempted from complying with the provisions of Section 11C, D, E and F. The contention of the appellant that they are the repairers and that therefore they are exempted from complying with the above sections is factually incorrect. The statement of the appellant Kishan Shamdas Bhatia was recorded under Section 108 of the Customs Act. In this statement he has clearly admitted that he does not have any repairs facility. He gives to different repairers for repairing on job basis. He does not maintain any register or account for the articles received for repairs. He had issued some bills; but then they were not readily traceable. He is also not in a position to produce the persons who had given the cameras for repairs. From the statement of the appellant Bhatia, it is clear that he himself is not the repairer. His shop is not a repair shop because he had not employed any repairers in the .shop. It looks that he was carrying on the business of getting goods repaired. As a matter of fact, the person to whom he entrusts for repairs are also not his employees. They are not even under his control. The exemption from the operation of the above sections can be availed of by the actual repairers and not by a. person like appellant who does not either repair himself or employed any persons to repair the goods. In these circumstances the contention of Shri Raichandani that the appellant is not required to comply with the provisions of Section 11C, D, E and F of the Customs Act has no merit. Admittedly, the appellant did not comply with those provisions in respect of admitted notified goods. In the circumstances if the Additional Collector had ordered confiscation of the notified goods the same cannot be successfully challenged.
10. As regards the non-notified goods, there is considerable force in the contention of Shri Raichandani that the initial burden lies on the department to establish that those goods are smuggled goods. The department had not discharged that burden by satisfactory evidence.
11. From the order of the Additional Collector it is seen that he had released Items 10 and 15 of Annexure A, Items 1 and 10 of Annexure B and Item 6 in the panchnama of shop premises and Items 3, 6, 7 and 8 of panchnama of residential premises. All other items he had ordered to be confiscated absolutely. From the perusal of Annexure A, it is seen that the items 8, 12 to 15, 17 to 23 are non-notified goods. Similarly, Items 1 to 7 of Annexure B are non-notified goods. Further, Items 1, 3 to 7 of the shop premises are non-notified goods. Items 8 to 11 of the panchnama of the shop premises are notified goods. Further, all the items of Annexure A to panchnama of the residential premises are non-notified goods. As stated earlier the Additional Collector had allowed release of Items 3, 6, 7 and 8 of the panchnama of the residential premises, Item 6 of panchnama of shop premises, Items 1 and 10 of Annexure B and Items 10 and 15 of Annexure A. In the case of non-notified goods, the initial burden is on the department to establish that they were illicitly imported into India. Mere possession of goods of foreign origin would not by itself be sufficient to hold that they are smuggled goods. There is also no burden cast on the possessor of the foreign goods to establish that they were licitly imported into India. It is only when the department discharges its burden by satisfactory evidence that the non-notified goods were smuggled goods, the burden shifts to the possessor or the owner to establish that they were licitly imported. In the instant case, the Additional Collector appears to have looked into certain documents produced by the appellant and because of certain discrepancies rejected those documents and held that those documents do not relate to the seized goods. It is not sufficient if the Additional Collector records a finding that the bills or other documents produced by the appellant do not relate to the non-notified goods seized from the premises of the appellants. The Additional Collector is further required to hold that they were smuggled goods. SuC.h a finding is not forthcoming. As a matter of fact, the department did not lead any evidence either direct or circumstantial to establish the smuggled nature of the non-notified goods. In the circumstances the order of absolute confiscation of the non-notified goods is legally not sustainable.
12. The learned advocate for the appellants had submitted that in his order the Additional Collector had wrongly mentioned that no reply to the show cause notice had been submitted by M/s. Jaikishen & Brothers and M/s. Sham & Sons. Shri Raichandani submitted that the reply sent by Kishan S. Bhatia was on behalf of all the 3. In that connection Shri Raichandani referred to a copy of the reply dated 5.8.1981 sent by Krishan S. Bhatia. Shri Pattekar had disputed the correctness of the copy. We verified the original reply. We found that the statement made by the learned advocate is an irresponsible statement because the original reply discloses that it was made only on behalf of Kishan S. Bhatia and not on behalf of Sham & Sons, 3aikishen & Brothers and K.S. Bhatia as has been argued. It is unfortunate that a fabricated copy of the reply should have been filed and arguments should have been based on such a fabricated document. It may be pointed out here that the original reply was signed by the very same advocate and, therefore, it cannot be said that he was unaware as to on whose behalf the reply was sent.
13. During the course of his arguments, Shri Raichandani tried to discredit the panchnama prepared in the case by arguing that the searches of all the 3 premises took place simultaneously and that in the panchnama it was stated that the appellant was present during the search. Shri Raichandani contended that since one of the premises is situated at a distance, the statement in the panchnama that the appellant was present cannot be believed and, therefore, no credence should be attached to such a panchnama. We have perused the panchnama and also the statement of the appellant recorded by the customs officers, on the date of search. In his statement the appellant stated that the customs officers came to his shop to search his shop. They questioned him about his storage place situated at 210, Raj Building, 3rd Floor, Fort, Bombay. Therefore, he entrusted the shop to his son Hansraj S. Bhatia who was present there and he went with few customs officers and 2 panch witnesses to the storage place. The panchnama have to be read with this statement recorded almost immediately after the panchnama and if read together, it would be clear that the contention now urged by the learned advocate has no substance. The appellant has clearly admitted that he left his son in the shop and proceeded to the place of storage. We, therefore, reject the learned advocate’s contention that no credence can be given to the panchnama.
14. The contention of the learned advocate that the cameras were given for repairs and the owners did not turn up; therefore, the cameras remained with the appellant, also cannot be accepted. Names and address of the owners have not been noted anywhere. It is highly improbable that the owners who had given for repairs would not come forward to take delivery. If the cameras were given for repairs and when they were seized by the customs officers the appellant would have informed the owners of the seizure. In that event the owners should have come forward and claimed ownership of the seized cameras. None came forward. This again strengthens our conclusion that the cameras could not have been given for repairs and this plea was taken just to get over the provisions of Chapter IV(a).
15. On consideration of all the aspects, we confirm the confiscation of all the notified goods; but, however, we set aside the confiscation of non-notified goods, since the department was not able to discharge the initial burden that the non-notified goods were smuggled goods.
16. Shri Raichandani had contended that in his final order the Additional Collector has taken into consideration the value as mentioned in the panchnama and not the revised value. It is true that the Additional Collector while ordering release as well as ordering confiscation had taken the value as set out in the panchnama. But then his order discloses that at the request of the appellant there was revaluation. But then, adopting of the old value or the revised value in no way affects the appellants. Specific items were allowed to be released and specific items were ordered to be confiscated. The valuation would have some bearing if the Additional Collector had allowed redemption on payment of fine in lieu of confiscation.
17. The only other aspect that remained for consideration is about the contention as to the penalty imposed on the appellants. The Additional Collector had imposed a penalty of Rs. 10,000/- on Kishan S. Bhatia and Rs. 5,000/- on the partnership firm M/s. Sham & Sons Photo. From the statement of K.S. Bhatia, it is clear that he was the managing partner and the affairs of the firm were looked after by him alone. The other partners were not looking after the affairs of the firm. The penalty on the firm will be a penalty on all the partners. Since the other partners were dormant partners, we are of the view that the Additional Collector was not justified in imposing a penalty of Rs. 5,000/- on the firm. We, therefore,, set aside that part of the penalty. So far as the penalty on the appellant is concerned, we see no justifiable reason to interfere with. He has deliberately taken a plea that the cameras were given to him for repairs and he could not even produce one single owner who had given the camera for repairs. Looking to the gravity of the offence, we do not consider that the penalty of Rs. 10,000/- on the appellant K.S. Bhatia is excessive or even unjust.
18. In the result we allow appeal No. CD(BOM)537/83 and set aside the penalty on the firm. The penalty, if paid, shall be refunded.
19. While rejecting the appeal No. CD (BOM)536/83 we, set aside the absolute confiscation of non-notified goods. We direct the customs authorities to return the non-notified goods to the appellant K.S. Bhatia. It the non-notified goods which are directed to be returned, were already sold, the sale proceeds after deducting the expenses connected with the sale, may be paid to the appellant, Kishan Shamdas Bhatai.