JUDGMENT
S.S. Sekhon, Member (T)
1. This appeal is against the Order of Penalty consequent to confiscation of following goods of foreign
origin valued at Rs. 2,00,37,350/- :-
(a) 39 bales of Dupion silk yarn weighing 1215.2 Kgs. (b) 111 bales of Mulberry silk yarn weighing around 6916.7 Kgs. (c) 25 cartons of white mulberry crepe silk fabrics measuring around 16272 meters. (d) 38 cartons of ball bearing totalling 46160 nos. (e) 23 gunny bags, containing 315 Nos. of rechargeable lanterns. (f) 2 silk bales weighing about 123 kgs of Mulberry raw Silk Yarn loaded into the Grey Colour Tata Sumo Vehicle bearing Regn. No. KA-03N-5951, and (g) 195 Bales of Dupion silk yarn weighing 6101 kgs.
They were held liable for confiscation under the provision of Section 111(d) of the Customs Act, 1962. The said goods had been disposed off after taking necessary permission, as required under Section 110 of the Customs Act, 1962 and the sale proceeds amounting to Rs. 1,47,55,415/- were ordered to be appropriated to the Government account towards its value. A penalty of Rs. 50,00,000/- (Rupees Fifty Lakhs only) on Shri Syed Saleem, Rs. 20,00,000/- (Rupees Twenty Lakhs only) on Shri Asadullah Khan, and Rs. 5,00,000/- (Rupees Five Lakhs only) on Shri Prashant Kumar Jain under Section 112(b) of the Customs Act, 1962 were also ordered along with confiscation of TATA Sumo vehicle bearing Registration No. KA-03-N-5951 under Section 115(2) of the Customs Act, 1962. However the said vehicle was allowed to be redeemed by owner Shri S. Muralidharan on payment of Rs. 50,000/- (Rupees Fifty thousand only) under Section 125 of the Customs Act, 1962. Being aggrieved by this impugned order, Shri Syed Saleem, the appellant, has filed this appeal before us. There is no other appeal listed before us today. After hearing both sides with reference to the stay petition for waiver of pre-deposit of penalty, the appeal was taken up for disposal of by this order.
2. The brief facts leading to issuance of the Show Cause Notice in this case are –
(i) The Officers of Customs Hqrs. Prev., received credible information that goods of foreign origin smuggled from Nepal have been received and stored at No. 483, Sultanpalya Main Road, Bhuvaneshwari Nagar, Bangalore – 560 032. While keeping surveillance on 1-7-99 based on the above information, the Officers noticed at about 8:00 hours, one grey coloured Tata Sumo vehicle bearing Regn. No. KA03 N 5951 parked in front of the said premises and two persons were loading some goods covered with gunny cloth; that two such bags/bundles had already been loaded into the said vehicle. The Officers immediately proceeded along with Mahazar witnesses to the above said premises along with search authorization. On enquiry about the contents of the bag, one of the persons loading the goods introduced himself as Asadulla Khan and informed that the said gunny bags contain silk yarn of foreign origin. On being asked to produce valid documents for the possession of the said silk yarn, Asadulla Khan told that he did not possess any valid documents. The said Officer asked Asadulla Khan about the ownership of the said goods and valid documents for which Asadulla Khan replied that the goods belong to Saleem of Channapatna, who had employed him as well as Sheikh Abbas alias Babu, loader, for receiving and delivery of the said goods to various persons as and when instructed by Saleem. Asadulla Khan also stated that he did not know Saleem’s address and instead gave Saleem’s Mobile Phone Nos. 98440 58826 and 98440 57235. A small strip/slip of paper was available in Asadulla Khan’s pocket which was indicating the vehicle’s registration No.WB-73-6076. On being questioned, Asadulla Khan informed that all the goods presently available in the godown were brought in the truck bearing Registration No. WB-73-6076 which was unloaded at about 22.00 hours on 30-6-99. Asadulla Khan further informed that the said goods were received from Nepal. The officers along with the mahazar witnesses conducted a search of the said premises and on enquiry about the contents of the gunny bags, Asadulla Khan informed that they contained silk yarn, ball bearings, rechargeable lanterns, and silk fabrics (crepe .silk) of foreign origin and that he was not aware of the exact quantity of all goods stored in the said premises. On opening one of the gunny bags, it was found to contain mulberry raw silk yarn packed in brown paper, weighing 5 kgs. (approx.) each, and a label having the markings “Blossoms White Steam filature China National Silk Import and Export Corporation, Made in China”. 12 such brown papers wrapped packets of Mulberry raw silk yarn were found in each gunny bag. They also noticed certain bales weighing 30 kgs. On enquiry, Asadulla Khan informed that the silk bales weighing 60 kgs. contains (Mulberry Silk Yarn), and silk bales weighing 30 kgs contained dupion silk yarn. 4 skeins were drawn as samples from a bale weighing 60 kgs and a bale weighing 30 kgs. In all, the Officers noticed that there were 111 Bales of silk yarn of 60 kgs. and 39 bales of silk yarn weighing 30 kgs. (approx.). Each bag/bale was weighed as detailed in Annexure ‘A’ to the Mahazar. Further, the Officers also noticed some gunny bags in the said premises and on opening one of the gunny bags, it was found to contain long cardboard carton containing 14 rolls of white crepe silk fabrics packed in plastic polythene cover, with both ends strapped with maroon and blue coloured paper straps bearing the markings “China National Silk Import and Export Corpn. Sichuan Branch, Made in China” and also a label for identification with the inscription “100% silk made in the Peoples Republic of China” and on the other side, Colour, Test No., Quality No., Article, Design, Length, Width and Sichuan Silk Import and Export Corporation written on it. A sample piece measuring 2 meters (approx.) was drawn for the purpose of testing. The Officers noticed 25 Nos. of gunny bags containing white crepe silk fabrics. Thereafter, the Officers noticed smaller cartons covered with gunny bags with marking ‘BB’ and ‘AA’ written on it and Asadulla Khan informed that they contained ball bearings. On opening a carton marked BB, it was found to contain ‘4’ boxes strapped together having markings ‘KBC bearing PAG HANWHA bearing Corporation’, containing 280 Nos. of Ball Bearings having markings 6202 Z KBC KOREA, on both sides of the said Ball Bearings and on opening a carton marked AA it was found to contain 380 Nos. of Ball Bearings having markings ‘KBC bearing PAG HANWHA BEARING MACHINERY CO. LTD’. In all, there were 29 smaller cartons covered with gunny bags having markings ‘BB’ and 9 smaller cartons covered with gunny bags having markings ‘AA’. Further, they also noticed some gunny cloth covered boxes bearing markings ‘BB-88’, and on opening a gunny cloth covered box bearing markings ‘BB-88’, it was noticed that there were three cartons each containing 5 re-chargeable lanterns having the markings “SP-288B-SUNCA Emergency Lamps AM/EM Radio Cassettes Player”. In all, 23 such gunny bags containing 315 nos. of Rechargeable Lanterns were found. Further, the Officers also weighed the 2 silk bales loaded in Tata Sumo bearing Regn. No. KA 03 N 5951 and found to weigh 61.8 kgs. and 61.2 kgs. (approx.).
Since, Asadulla Khan failed to produce licit documents for receipt/import of the above said goods, the Customs Officers seized the said goods on the reasonable belief that the goods are smuggled into India and are liable for seizure including the Tata Sumo vehicle bearing Regn. No. KA03 N 5951 used for transport of smuggled goods under the provisions of the Customs Act, 1962. Accordingly, all the goods as detailed below were seized under a Mahazar dated 1-7-99 and taken to his custody for further investigation.
Sl. No.
Description
Weight
Value (Rs.)
1.
39 bales of Dupion yarn silk yarn
1215.2 kgs
11,54,440.00
2.
111 bales of Mulberry raw silk yarn
6916.7 kgs
96,82,400.00
3.
25 cartons of white silk fabrics measuring ‘2’ different sizes
16272 mts
13,01,760.00
4.
38 cartons of
ball bearings numbering
46160Nos.
16,15,600.00
5.
23 gunny bags containing of rechargeable lanterns numbering
315 Nos.
3,15,000.00
6.
2 silk bales packed in gunny bags
123 kgs
1,72,200.00
7.
Grey colour Tata Sumo bearing Regn. No. KA 03 N 5951
1 No.
2,50,000.00
Total
1,44,91,400.00
iii. On further persistent questioning, Asadulla Khan informed that some more consignments of silk yarn have been stored at No. 456, 4th Cross, Bhuvaneshwari Nagar, R.T. Nagar Post, Bangalore – 32. The Customs Officers along with Asadulla Khan and Mahazar witnesses rushed to the said premises wherein silk yarn bales covered with gunny cloth were stored inside the hall and room. On conducting a search, it was found that there were 195 silk bales covered with gunny cloth. On opening one of the bales bearing a Mark “117”, it was found to contain Dupion silk yarn covered with plastic which weighed 31.4 kgs (approx.). All the 195 bales were weighed and the details are as per Annexure ‘E’ enclosed to the Mahazar. Asadulla Khan did not possess any valid documents even in respect of this consignment as the same was also received from Nepal and belonged to the Appellant. As such the said Customs Officer informed Asadulla Khan and Mahazar witnesses that in the absence of any valid documents, the said goods appeared to have been smuggled into India and were liable for seizure/confiscation under the provisions of Customs Act, 1962, and accordingly, seized all the 195 bales of Dupion Silk Yarn weighing 6101 kgs valued at Rs. 57,95,950/-(approx.) under the said Mahazar dated 1-7-99 and took the same into custody for further investigation.
iv. On the basis of the addresses furnished by Asadulla Khan wherein he had delivered goods (silk yarn/silk fabrics) to Prashanth Kumar, the Customs Officers attached to Preventive Unit, conducted a search of the residential premises on 1-7-99 situated at No. 5, 4th Cross, Laxmi Road, Shanthinagar, Bangaore-27. Neither any contraband goods nor any incriminating documents were found in the said premises.
v. On gathering information about the residential address of the Appellant, a team of Customs Officers attached to Hqrs. Preventive Unit, visited the residential premises of Syed Saleem located at No. 336 A, Murthy Mahal Road, Pathanwadi, Channapama -571501 on 6-7-99 and conducted a search of the said premises. Neither any contraband goods nor any incriminating documents were found. The Appellant was not available, but Syed Aleem, brother of the Appellant was available, who pleaded innocence about these activities and informed that his brother had gone out of station.
vi. During the course of investigation, statements of the following persons were recorded :
Asadulla Khan, Gangenahalli, Bangalore dated 2-7-99.
Sheikn Abbas alias Babu, Srinivasa Pura post, dated 2-7-99.
Prashanth Kumar Jain, Shantinagar, Bangalore - 27 dated
2-7-99.
Syed Aleem, brother of Syed Saleem, Channapatna, dated
6-7-99.
vii. The Director, Central Silk Technological Research Institute, Central Silk Board, Bangalore, have confirmed that the silk yarn sample marked 'A' as Mulberry raw silk yarn, sample marked 'M' as Tassar Silk yarn and sample marked, 'C' as Mulberry silk medium weight crepe fabric and the country of origin of the silk yarn/fabrics cannot be ascertained, however on detailed examination of the yarn and fabric on the fabric scanner, it appeared that the silk yarn and yarn in the fabric is of 'foreign origin' vide their test reports bearing Nos. TR No. ECO-1/PT422 (RS) dated 15-7-99, ECO-1/PT/481 (NM) dated 15-7-99 and TR No. ECO-1/PT/501 KFS dated 15-7-99, respectively".
3. After considering the statements and material on record and going through the statements it is found -
(a) Shri Syed Saleem has not claimed the goods which are under order of confiscation and has categorically stated in his reply to the Show Cause Notice, that he was not in any way concerned with the alleged activities and the Department can take any action on the goods as deemed fit. The Adjudicator after relying upon the Test Reports of the Central Silk Board, Bangalore, confirming that the Silk Yarn and Fabrics under seizure are of foreign origin, as well as relying on the marking on the goods, has concluded that the goods seized were of foreign origin. These conclusions arrived along with the statements of Shri Asadulla Khan, the person who was found in the Godown at 483, Sultanpalya Main Road, Bhuvaneshwari Nagar, Bangalore – 560032 confirmed the goods were of smuggled nature from Nepal. The Officers on information had kept surveillance at the said Godown and had observed that some gunny bundles from the said godown premises were being removed and loaded on a TATA Sumo vehicle, bearing Registration No. KA03 N 5951. The Officers intercepted the same and in the said premises and the tempo found foreign marked goods. Shri Asadulla Khan and Shri Sheikh Abbas alias Babu, a loader, found in the premises failed to produce the documents for receipt and duty paid import of the said goods. The Customs Officers thereafter seized the same along with the TATA Sumo. After questioning Shri Asadulla Khan he informed that some more consignments viz. of Silk Yarn, were stored at No 456, 4th Cross, Bhuvaneshwari Nagar, R.T. Nagar Post, Bangalore. The officers proceeded along with Shri Asadulla Khan to this second godown and recovered the Silk Yarn bales, covered with gunny cloth, stored inside the hall and room. There were total 195 bales containing Silk Yarn covered with gunny cloth. They were also seized. Further searches and enquiries were made. The Adjudicator has relied upon the statement of Shri Asadulla Khan dated 2-7-99 stating that he was asked by his employer Shri Seyed Saleem to proceed to Mekhri Circle and to locate Truck No WB-73-6076; the driver should be escorted and the said Truck be brought from Mekhri Circle, Bangalore to Sultanpalaya godown and goods unloaded. Hammels were organised for this purpose. Thereafter certain bales were to be delivered for which the Tata Sumo was engaged. During this escort of the Truck No WB-73-6076 from Mekhri circle to Sultanpalaya Godown, while casual talking to the Driver, he learnt that the said Truck had come from Nepal. Even though this statement that ‘the goods of foreign origin seized were smuggled from Nepal’ would Hearsay evidence yet when it is examined in the context of other related incidence and recovery of large quantity of foreign marked goods which have not been claimed by any one lead to the conclusion, that the third country goods imported from Nepal to Bangalore cannot be but smuggled. The learned SDR has pointed out the prohibition of Import of Third Country Goods from Nepal vide Notification No. 9/96-Cus., dated 22-1-96. Therefore the goods are liable for confiscation under Section 111(d) of the Customs Act, 1962.
(b) The involvement of Shri Syed Saleem, the appellant herein, is based only on the statements of Shri Asadulla Khan and Shri Sheikh Abbas alias Babu, who is only a loader, found at the premises and one Shri Prashanth Kumar. No enquiry regarding the ownership of the two godowns has been made by the investigating officer and or the adjudicator have not arrived at any finding as to who was the actual owner/tenant of the two godown premises where such large quantity of goods were stored. If Shri Syed Saleem was the owner of such a large quantity/value of goods, he should be/could be linked with the godown. Enquiries and findings of this effect could have led to a determination and fixation of vital fact about the ownership of the goods. Similarly no enquiry has been made regarding the Truck No. WB-73-6076 or its ownership. No enquiry has also been made regarding the Mobile Phone Nos. 98440 58826 and 98440 57235 alleged to have been in use by Shri Syed Saleem. This could have indicated and revealed if he was in touch with any party, outside Bangalore, which could establish his connection with the goods under seizure. The statement of Shri Asadulla Khan being an employee and the ownership of Shri Syed Saleem, is a statement of co-accused, which cannot be accepted, without vital corroborative material as indicated herein above to associate/implicate Shri Syed Saleem with the ownership/tenancy of the godown and his alleged link with West Bengal Truck No WB-73-6076 coming from Nepal or links outside Bangalore or Nepal or other third Countries. The Statement of Shri Sheikh Abbas alias Babu only indicates description of Shri Syed Saleem in a very vague fashion and also Shri Syed Saleem being present and seen by him at the said godown. Since the alleged presence of Shri Syed Saleem at the said godown as evidenced by Shri Sheikh Abbas alias Babu, is not corroborated beyond doubt by the statements of Shri Asadulla Khan, or any other persons, or material. Therefore the presence of Shri Syed Saleem at the godown when the goods arrived remains doubtful. The statement of Shri Prashanth Kumar Jain only indicates the receipt of certain Chinese Silk much before 30-6-99 and or 1-7-99, the date of receipt of smuggled goods at Sultanpalaya Godowns. There is no evidence from the records that the goods which allegedly supplied and were received by Shri Prashanth Kumar Jain were also imported from Nepal. Therefore, the statement of Shri Prashanth Kumar Jain does not corroborate and implicate Shri Syed Saleem with the present consignment of goods seized at second godown at No. 456, 4th Cross, Bhuvaneshwari Nagar, R.T. Nagar Post, Bangalore has not been clearly linked with any import legally/illegally made from Nepal. Therefore, it cannot be conclusively concluded that Shri Syed Saleem is concerned with the present goods which were found by adjudicator as smuggled from Nepal. Section 112 (b) of the Customs Act, 1962 reads as follows :-
“112. Penalty for improper importation of goods, etc, – Any person-
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111, shall be liable,”
Since there is no evidence of Shri Syed Saleem of having acquired possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with the goods under seizure and which have been held liable for confiscation under Section 111 by the adjudicator, therefore, a visit of penalty on Shri Syed Saleem as arrived at by the adjudicator cannot be upheld. Hence the same is to be set aside.
(c) The other persons are not in appeal before us. Shri Syed Saleem has also not claimed the seized goods. Therefore, we are not passing any orders as regards the penalty on others arrived at by the impugned order. 4. In view of our findings, the penalty imposed on Shri Syed Saleem is set aside and the appeal disposed in the above terms.