ORDER
K. Gopal Hegde, Member (J)
1. This appeal arises out of and is directed against the order-in original bearing No. VIII(Cus)10-27/Adj/83 dated 11-9-1984 passed by the Addl. Collector of Customs & Central Excise, Pune.
2. The brief facts necessary for the disposal of this appeal are:-
On information that the applicant Mrs. Mohini A. Mansukhani had possessed and was selling contraband goods at her residence the officer of the Customs visited the said premises and carried out the search. The search yielded in the recovery of the contraband goods valued at Rs. 41,450/. After the seizure the appellant appeared to have stated that she was not keeping well and she would give her statement after 2 days. On 24.9.1983, the Suptd. of Central Excise(Prev.)Hdqrs. Pune recorded the appellant’s statement. Among other things, she had stated that all the seized goods of foreign origin were imported by her and her family members on payment of duty and under free allowance as personal baggage from time to time and when they visited Singapore between 1979 to 1983. She had also produced xerox copy of eight customs receipts regarding payment of customs duty and showing free allowance to each of the family members. She further stated that her married daughter who has been staying at Singapore for the last 10 years, during her visit to India was leaving behind her sarees and other cloths which she had brought for her use. She further stated that all the seized goods meant for the personal use and she had not sold any goods.
3. After completion of the investigations show cause notice was issued to the appellant as to why the seized goods should not be confiscated and why penalty should not be imposed.
4. The Addl. Collector of Customs & Central Excise, Pune who held the inquiry, after consideration of reply to the show cause notice and after affording personal hearing, released the goods worth Rs. 21,740/- but ordered absolute confiscation of goods worth-Rs. 19,710. He also imposed a penalty of Rs. 3000/- on the appellant. Hence this appeal.
3. During the hearing Shri Rohira, appearing for the applicant, submitted that except stating that the department had information as to the alleged sale of contraband goods, there was no evidence whatsoever that the appellant was indulging in sale transaction of any goods. All the seized goods were in the residential premises. They were all meant for the personal use. Among the seized goods, there were number of sarees of foreign origin. But then, these were either imported as baggage items under free allowance or on payment of customs duty and some of the sarees were left behind by her married daughter who had been living at Singapore for over 10 years. Shri Rohira submitted that 8 baggage receipts were produced. The cif value of the baggage receipts was Rs. 12.300/. Besides, the persons who travelled between Singapore and India were entitled to free allowance. For the purpose of market value the Customs adopted a rule of them viz. multiplied the cif value into 3 and arrived at the market value. The market value arrived at was Rs. 41,450/-. If the cif value and full allowance were to be the market value of the goods comes to more than Rs. 45,000/-. Therefore, the Addl. Collector was wholly unjustified in ordering confiscation. Shri Rohira complained that the Addl. Collector’s observation that the goods would not have been kept for Three and half years un-used, is totally irrelevant. The goods were kept as one of the daughters was to be married. Further, the Addl. Collector had only referred to the baggage Receipts of 1979-80 and did not make any reference to the subsequent baggage receipts of 1983 whereunder considerable quantity of goods were brought either on payment of Customs duty or under free allowance. Shri Rohira also contended that the Addl. Collector’s observation that the goods were in trade quantity, is totally unfounded. He, therefore, prayed that the order of the Addl. Collector may be set aside and there may be a direction to release the seized goods and refund the penalty paid.
4. Shri Prabhu, appearing for the Collector, however contended that the Addl. Collector had examined all the baggage receipts. He had given full allowances on the value of the goods found in the baggage receipts. He had ordered confiscation of these goods if the value in excess of the goods covered by the baggage receipts. Shri Prabhu further submitted that it was on the information the house was visited and large trade quantities of cosmetics and sarees were found. In the said circumstances, Shri Prahbu submitted that the Addl. Collector was justified in ordering confiscation as well as imposing penalty.
Shri Prabhu further submitted that the penalty imposed was only Rs. 3,000/- which compared to the value of the goods is very reasonable. He, therefore, prayed that the appeal may be rejected.
5. I have considered the submissions made on both the sides and perused the available records. From the impugned order it is seen that the show cause notice was issued alleging illegal import of the seized goods and for the failure to file a declaration as required under Sec. 11C of the Customs Act. The appellant was called upon to show cause as to why penalty should not be imposed on her under Sec. 112(b) and why the goods should not be confiscated under 111(d) and 111(p) of the said Act. In the whole of his order the Addl. Collector did not consider as to whether there had been any violation of Chpt. IVA of the Customs Act and there was not even an indication in his order as to which of the seized goods were notified goods. But strangely he ordered confiscation under Sec. 111 (p). Thus, his order indicates the total non-applicability of his mind. The goods were admittedly found in the residential premises. The allegation made in the show cause notice was they were stored in the house without making a declaration and thereby contravened Sec. 11C. When the appellant had taken a contention that the goods were for their personal use and the provisions of Chapter IVA are inapplicable, the Addl. Collector ought to have examined her defence and recorded a specific finding as to whether there had been any violation of Chapter IVA before he could order confiscation under Sec.111 (p). The Addl. Collector, totally failed in his duty. He did not care to examine the defence of the appellant nor did he state in his order which of the goods were notified goods and which Section of Chpt. IVA had been violated by the applicant. Therefore, I un-hestitatingly set aside the confiscation made under Sec.111 (p)
6. The Addl.Collector had also ordered confiscation under Sec.111(d). In the-whole of his order he did not record a specific finding that which goods out of the goods he ordered absolute confiscation were illicitly imported into India. In the absence of such a finding, confiscation under Sec.111(d) is impermissible. The Customs Act does not authorise confiscation of goods of foreign origin only on the ground that they are of foreign origin. Confiscation is permissible only if there had been violation of the provisions of the Customs Act in relation to the goods of foriegn origin. All that the Addl. Collector did in this case was an arthemetic exercise. He added the market price of all the seized goods. He also added the market price of the all goods mentioned in the baggage receipts. Since the market price of seized goods exceeded the market price of the goods covered by the baggage receipts, he concluded that the goods in excess to the market price of the baggage receipts should be confiscated and therefore he ordered confiscation. As stated earlier, the Customs Act authorises confiscation of the goods illegally imported into India. Therefore there is a duty cast on the Addl. Collector to ascertain which out of the seized goods were illegally imported into India. The Addl. Collector did not make any such attempt. He also did not ask the party to point out which among the seized goods were covered by the baggage receipts and which were not covered by the baggage receipts.
7. While ordering confiscation, the Addl. Collector had observed that some of the goods are in trade quantities and therefore he is ordering confiscation. A strange reasoning and a strange logic, it is not the quantity of the goods that authorises the Addl. Collector to order confiscation. The Addl. Collector was required to ascertain whether any offence was committed in relation to the seized goods. The defence of the appellant was that large number of seized goods were cleared under various baggage receipts. If, as baggage, trade quantities were brought and if they were cleared on payment of duty and on free allowance the adjudicating authority cannot order confiscation solely on the ground that in the residential premises trade quantities were found.
8. In his order, the Addl. Collector had referred to the various baggae receipts. He did not doubt the genuineness of those baggage receipts. Further, the appellant’s explanation that during their visits free allowances were allowed was also not doubted. The Addl. Collector did not try to find out which items under seizure were allowed on free allowances and which were covered by baggage receipts. The appellant has also taken a plea that her married daughter settled a Singapore was making visits to India and she was leaving behind her personal effects including sarees. That defence was also not disbelieved.
9. It is common knowledge that for the prupose of determining the market price in respect of consumer goods, the Customs authorities were taken the margin of profits as 300%. Apparently that yardstick must have been applied while giving the value of the seized goods in the panchanama. The value of the seized goods given in the panchanama was Rs. 41,450/-. The Addl. Collector had acepeted all the baggage receipts. The cif value of the baggage receipts alone comes to Rs. 12,300/-. If the same is multiplied by 3 the market price comes to Rs. 36.900/-. Thus the difference between panchanama value and baggage receipts value is less than Rs. 5000/-. On this ground also no confiscation should have been ordered of the goods found in the residential premises. The Department did not try to varify the information received by them that the appellant was indulging in sales of contraband goods.
10. On consideration of all the aspects, I hold that the Addl. Collector had committed a grave error in ordering confiscation and imposing penalty on the appellant. I, therefore, set aside the entire order.
11. In the result this appeal is allowed. The absolute confiscation of the goods as well as the penalty of Rs. 3.000/- imposed on the appellant are set aside. The goods ordered to be confiscated shall be released to the appellant. The penalty, if paid, shall be refunded to her.
