ORDER
N.K. Bajpai, Member (T)
1. These three appeals have been filed against a common order passed by the Additional Collector of Customs, New Delhi by which he has ordered confiscation of 11 drums of Nickel of foreign origin valued at Rs. 6,89,830/- under Section 111(d) of the Customs Act, 1962 and imposed penalty of Rs. 1/-lakh each on appellants No. (2) & (3) under Section 112 ibid. The goods were allowed to be cleared on payment of a fine of Rs. 3/- lakhs in lieu of confiscation. All the appeals were heard together and are being disposed of by the common order.
2. M/s Popular Industries, appellant No. (1) had move an application to the Tribunal in which they had submitted that although they had been allowed to intervene in the proceedings before the adjudicating authority, their title to the goods had not been accepted. By order No. Misc/374/91-NRB, dated 18.12.1991, the Tribunal had passed the following order:
12. We observe that once the applicant in this case is considered an aggrieved person, a peculiar situation arose in terms of impugned order inasmuch as the goods which had been confiscated were allowed to be redeemed on payment of Rs. 3/-lakhs but a practical problem is likely to arise as to who was entitled to get the goods redeemed.
13. Looking to the totality of facts and circumstances and noting this aspect in particular, we grant the request.
14. The matter is therefore posted for hearing on 6.4.1992.
3. M/s Popular Industries, appellant No. (1) had purchased the subject goods from one M/s Silbans International, New Delhi, who, in turn, had imported them against import licences. The goods were stored in the godown of M/s Bac Cables [appellant No. (2)] for the purpose of facilitating their sale. M/s Bac Cables are a sister concern of appellant No. (1) and Shri Rakesh Kumar Agarwal is the Power of Attorney holder of both the concerns. The brief facts are M/s Bac Cables is a proprietorship concern of Shri Suresh Chand Agarwal.
4. Acting on specific information that nickel smuggled by M/s Bac Cables was secreted in their office-cum-godown premises, Officers of the Central Economic Intelligence Bureau, searched the premises on 19.12.1989 and seized 11 drums containing nickel ingots of foreign origin on which the following markings were found:
NICKEL HPR
Nickel pur electrolytique
SLN
Eramet SLN
TOUR MAINE MONTPARNASSE 22 AVENUE DU MAINE
75755 PARIS CEDEX 15 FRANCE
5. The goods were seized because no documents evidencing licit importation were available at the time. In his letter, dated 22nd March 1990, Shri Rakesh Kumar Agarwal stated that the goods had been imported by M/s Silbans International under a valid import licence and furnished photocopy of the bill of entry and other documents. The latter confirmed in their letter dated 14.6.1990 that they had imported the goods and sold them to M/s Popular Industries on high seas sale basis.
6. In the proceedings instituted against M/s Bac Cables and Shri Rakesh Kumar Agarwal, Power of Attorney holder of the former, the allegation in the show cause notice was as under:
It is not the case of the Department whether M/s Silbans International, New Delhi have legally imported the nickel as per details given in the photocopy of the bill of entry and other relevant documents furnished by M/s Bac Cables and M/s Silbans International. Without going into the merits or demerits of the import by M/s Silbans International, Delhi, the precise question to be answered by M/s Bac Cables Delhi is whether they have acquired the nickel ingots of foreign origin recovered and seized from their office-cum-godown premises on 19th December 1989 by the Bureau either from M/s Silbans International or any other legal source. The documents furnished by M/s Bac Cables which were obtained by them from M/s Silbans International Delhi reveal that the goods imported by them vide import documents furnished by M/s Bac Cables were sold to some M/s Popular Industries, 29/20 Shakti Nagar, New Delhi 7 for a consideration of Rs. 23.5 lacs on 22.11.1989 and not to M/s Bac Cables as claimed by the party. Even M/s Silbans International also do not say that they have ever sold any imported nickel ingots to M/s Bac Cables. The contention of M/s Bac Cables is therefore nothing but a fig of imagination, totally untenable, and cannot be accepted.
The import of nickel is allowed to Actual Users (Industrial) through M/s Minerals & Metals Trading Corporation, a designated canalising agency by the Central Government as contained in the ITC Policy April-March 1988-91 and also directly in special cases against a specific ITC licence issued by the licensing authority on the basis of “No Objection Certificate” from the canalising agency as stipulated in para 51(1) Chapter IV ITC Policy. The import is also allowed under the flexibility in the utilisation of REP licences as contained in para 177(i) of the said policy period. Since M/s Bac Cables have failed to produce any evidence regarding licit importation or lawful acquisition/possession of 11 drums of nickel ingots of foreign origin an offence under Section 111(d) of Customs Act, 1962 is prima facie revealed. The goods are, therefore, liable to-confiscation and also penal action under Section 112 of the Customs Act.
7. The contention of M/s Bac Cables that in the face of the evidence that the subject goods were imported against valid import licences and cleared on payment of the requisite Customs duty by M/s Silbans International they were not liable to confiscation under Section 111(d) Customs Act was rejected by the adjudicating authority; they had also contested that since the goods were not notified under Section 123 Customs Act nor were they notified under Chapter IVA Customs Act, the burden of proof that they were smuggled was not on the appellants. The Additional Collector held that the Department had not discredited that some goods were imported by M/s Silbans International and the same were sold to M/s Popular Industries but it had not been established by any statement or document on record nor by any statement at the time of seizure that the same goods were transferred to the premises of M/s Bac Cables. He has also finally recorded a finding that M/s Bac Cables have failed to establish the bona fide import of the goods; that Shri Rakesh Kumar Agarwal has by virtue of being the power of attorney holder of both the parties endeavoured to take shelter of this fact and built up the case subsequently to justify the possession of the goods by M/s Bac Cables.
8. Arguing for all the three appellants, Shri L.P. Asthana, the learned Counsel submitted that since the goods in question were not notified under Section 123 nor under Chapter IVA of the Customs Act the burden of proving that they were smuggled was squarely on the Department and this had not been discharged by them. He also submitted that the goods were licensable under the relevant import policy and all the documents of import as well as payment of Customs duty by M/s Silbans International had been produced before the authorities at the stage of investigation itself. The goods belonged to M/s Popular Industries who had purchased them from the importers; they had merely stored them in the premises of M/s Bac Cables. Shri Rakesh Kumar Agarwal, in his statement dated 12.6.1990 explained that he had forwarded all the documents of licit f importation to the Customs with his letter, dated 22.3.1990 and that, in view of this, the goods may be released. A Debit Note dated 27.11.1989 for Rs. 23.50 lakhs being the sale price of 10.000 Kgs. of nickel issued by M/s Silbans International to M/s Popular Industries had also been produced in support of their having purchased the goods. Neither in his statement nor in his letter dated 22.3.1990 had Shri Rakesh Kumar Agarwal stated that the goods had been purchased by M/s Bac Cables and the case was not of unauthorised possession. The allegation of unauthorised importation had not been established by the authorities because of the documents of valid importation having been produced.
9. Shri Asthana submitted photocopies of a set of documents consisting of the invoice dated 23.10.1989 for supply of SLN Brand nickel of French origin, a certificate of Marine Insurance, the Bill of Lading and catalogue of KOMPASS in support of the claim that the goods seized were the same which were imported by M/s Silbans International. He explained the position with reference to the marks and numbers that the goods were the same. He also submitted that in the absence of any one responsible being present at the time of seizure, no documents of licit importation were available and there was no illegality in keeping the goods of a sister concern. As regards the liability to confiscation under Section 111(d), Shri Asthana cited the Full Bench judgment of the Supreme Court in the case of Ambalal v. Union of India 1983 ELT 1321 : 1983 ECR 1935 (SC) : ECR C Cus 118 SC in which it was held that the burden of proof in the case of goods which were not notified under Section 123 was on the Customs Authorities. He also referred to another judgment of the Supreme Court in the case of Collector of Customs, Madras v. D. Bhoormull 1983 ELT 1546 : 1985 ECR 2284 (SC) : ECR C Cus 908 SC which followed the principles laid down in Ambalal’s case (supra).
10. Shri Ashok Mehta, the learned SDR reiterated the grounds taken by the adjudicating authority for passing the order of confiscation of goods and imposition of penalty.
11. We have carefully considered the appeal and the submissions made at the hearing. Documents showing legal importation of the goods had been produced by Shri Rakesh Kumar Agarwal before the Customs authorities and the Additional Collector, without examining them, has recorded a finding that they are not the same. The ground on which proceedings were initiated against M/s Bac Cables was that they had not lawfully Acquired the goods from M/s Silbans International or any other legal source. It is significant that while making this allegation, the show cause notice proceeds to ask M/s Bac Cables to show cause why the goods should not be confiscated under Section 111(d) because they had “failed to produce any evidence regarding licit importation or lawful acquisition/possession of 11 drums of nickel ingots of foreign origin”. It is evident that the provisions of law invoked for showing cause why the goods should not be confiscated did not match with the allegation of unlawful acquisition. On the other hand, the notice also proceeds to accept that the documents furnished by M/s Bac Cables reveal that the goods imported by M/s Silbans International were sold to M/s Popular Industries and not to M/s Bac Cables. And yet, when M/s Popular Industries laid a claim to the goods, the authorities did not question them or investigate whether or not their claim for title to the goods was acceptable. Once it is established that the goods were lawfully imported into India, there could be no liability to confiscation under Section 111(d) even if there was any irregularity in their transfer/purchase to another party, because the scope of Section 111(d) does not extend to such a transaction and no other provision of law was invoked in the show cause notice seeking to confiscate the goods.
12. We observe that there is a reference to the provisions of the ITC policy relating to import of nickel but there is no reference to any provision of the policy which prohibits sale of the goods by the person authorised to import them. According to Shri Asthana, the import of the goods was permitted against a Replenishment Licences and this fact has been accepted by the adjudicating authority. Shri Asthana had submitted that goods imported against such licences are freely transferable. We do not find any illegality having been committed in such transfer; nor is there any allegation to that effect in the show cause notice.
13. In view of the foregoing, the confiscation of the goods under Section 111(d) of the Customs Act was not warranted; consequently, imposition of penalty under Section 112 was also not permissible. The orders of confiscation and penalty are therefore set aside and the appeals are allowed.
14. Operative part of the order was pronounced in the open court after the hearing.