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TMI Blog2002 (8) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 16-10-90 of M/s. R.R. Corporation, Navsari for Rs. 20,95,808/-. Another Bill No. 010/90, dt. 22-10-90 of M/s. Vespa Trading Co., Bombay for Rs. 8,57,792/- towards purchase. He opined that the goods were of foreign origin (Japanese). On further enquiry, it was learnt they had received another consignment of 5075 sets of Citizen Calibre 3200 components of watch movements from Lakshmi Watches Pvt Ltd., vide material inwards Slip No. 902891, dt. 30-8-90 and these were issued for production. Out of the components of watch movements supplied by Lakshmi Watches Pvt. Ltd., M/s. HMT had already manufactured 713 Nos. of watches which were pending strapping, another 82 Nos. were under sampling and testing and 4101 were in the assembly line and were semi-finished. In addition about 15 parts were found as such in specified quantities. The value of goods supplied by Lakshmi Watches Pvt. Ltd., was estimated at Rs. 28,63,660/- based on the sale price of watches supplied by R. R. Corporation and M/s. Vespa Trading Co. were arrived at Rs. 20,15,200/- and Rs. 8,16,050/- respectively based on supplier bills. (b) (i) As the components of watch movements in CKD condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 27,49,710/- manufactured out of the wrist watch movement supplied by M/s. Lakshmi Watches Pvt. Ltd., Bangalore should not be confiscated under Section 120(1)/120(2) of the Customs Act, 1962. (v) the plastic/polythene covers and the other packing materials such as cardboard boxes used for keeping/concealing the goods under seizure, should not be confiscated under Section 118/119 of the Customs Act, 1962. (vi) penalty should not be imposed on them under Section 112 (a) and (b), (i) and (ii) of the Customs Act, 1962. (vii) The show cause further alleges that the watch movement being notified goods under Section 123 of the Customs Act, 1962 and the same were seized from the possession of M/s. HMT Ltd., in the reasonable belief that they were smuggled goods, the said M/s. HMT Ltd., were also called upon to prove as required under the said section that the goods under seizure were not smuggled into India. (d) The adjudicator after hearing the parties passed the following orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of a redemption fine of Rs. 1,50,000/- (Rupees one lakh and fifty thousand only) under the provisions of Section 125 of the Customs Act, 1962, which has to be exercised by M/s. HMT Ltd., Watch Factory I & II, Bangalore within a period of 30 days from the date of receipt of this order. (v) I order confiscation of the plastic/polythene covers and the cardboard boxes used for keeping/concealing the goods under seizure, under the provisions of Section 118/119 of the Customs Act, 1962. (vi) I order that no separate duties of Customs be collected while releasing the goods upon realisation of redemption fine, in respect of the goods cited at paras (i) and (iv) above. (vii) I further impose the following penalties in the order mentioned companies/firms under the provisions of Section 112(b)(ii) and 112(a)(ii) of the Customs Act, 1962, respectively :- (1) M/s. HMT Ltd. Watch Factory I & II, Bangalore. Rs. 5,00,000/- (Rupees five lakhs only) (2) M/s Lakshmi Watches (Pvt.) Ltd., Bangalore. Rs. 1,00,000/- (Rupees one lakh only) 3. We have heard both sides and considered the matter and find - (a) (i) Whether the goods under seizure viz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion/words are neither explained nor defined within the body of the notification. After the words "Watch movements" the word "including" is prefixed to the words "partly assembled movements". The said word "include" is generally used to enlarge the ordinary meaning of words or phrases and can be deducted by reference to dictionaries, trade/common parlance, and to the context of its use. In para 56, the Collector refers to the dictionary meanings of the words "Watch movements" as the mechanism of a clock not including the case or dial; movement is a device which produces recurring phenomenon and is capable of counting time : Thus the Collector held that the expression "Watch movement" does not in the ordinary meaning indicate completely assembled movement. It is silent on the state of assembly. We have no reason to conclude accordingly as, one cannot read into the notification the un-assumed words or status simply because the said term does not bear such a reading. In net effect the said expression could only be understood by us as watch movements in completely disassembled condition are not covered by the notification. (ii)&em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 345 (Gau.) (Paras 10 and 11) - Arunachal Forest Products Ltd. (iii) Now in this case one supplier namely M/s. Lakshmi Watches was found by the department and who has also been penalised by the department from whom differential duty has also been demanded. With regard to Shri Sunil Kothari, the department had also contacted him and recorded his statement. A demand draft taken by Shri Sunil Kothari from M/s. HMT's Watch Factory-IV, Tumkur was got encashed through M/s. R. R. Corporation and the money given to him in respect of supplies made to them. Every such fact was well within the knowledge of the department at all times but even then the department does not follow up with an enquiry. They did not issue show cause notice to Sunil Kothari nor did they call him for cross-examination, nor does the department question him about the bona fide nature of his goods. No trade/expert opinion was taken to opine the seized goods to be of Japanese origin. There is no comparison with the goods supplied by M/s. Lakshmi Watches (Pvt.) Ltd. No labels/markings were found on the consignment seized; the fact of that the seized goods did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms, Shillong. Wherein it has been held, that even when suppliers are not found or purchase documents are fictitious the burden remain to the Department to prove smuggled nature, therefore, we cannot uphold the liability of confiscation of the goods supplied by M/s. Vespa Trading Company and M/s. R. R. Corporation as the burden cast on the department to prove the smuggled nature of the parts which are not notified under Section 11B or 123 of the Customs Act, 1962 is not discharged. (c) (i) As regards the receipt of goods from M/s. R. R. Corporation and M/s. Vespa Trading Company, the contention of HMT are recorded in para 45 (vi) at page 47 of the order. In para 66 the Collector held that HMT have not adduced any proof of licit importation of the goods supplied by R. R. Corporation and Vespa Trading Co. and seized under Mahazar and thus have failed to discharge the onus of proof cast on them. In support thereof, in para 67, the Collector has referred to the circumstantial evidence that would raise presumption against HMT. Relying upon the decision of the Supreme Court in the case of Collector of Customs v. Bhoomal, that the law does not require th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal held that the Customs had not been able to discharge the burden cast upon them. This judgment is also reported in 2000 (117) E.L.T. 182. In making the judgment the Tribunal had relied upon an earlier judgment in the case of Hindustan Bearing Corporation, 1990 (50) E.L.T. 91. Even where the Department had shown that the firm from whom the offender had claimed to have purchased the goods was fictitious and did not exist, the Tribunal held that the suspicion created by this fact could not be a substitute for evidence to be held by the Department." Thereafter they held that watch parts were sold by various manufacturers and other repairers. Some of the goods available are those seized by the Customs, which were ultimately sold by the Customs Department in auction, which could be readily re-sold without any further restrictions. Such watch parts, imported and cleared under the Bills of Entry were stock and sale items and could be sold openly. Considering these different source in the market of watch parts and that as established by the Tribunal, application of Section 123 is only to watch movements, dials and cases and not all parts, the Tribunal held that burden of proof was cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of watches in the course of his normal activity and on payment/vouchers and the department has failed to prove its case. The confiscation held and ordered under Section 111(p) is not upheld. (d) The law on the issues that onus is on the department to prove its case is well settled. One cannot rely on Bhoomal's case (supra) to claim that revealing each link in the chain was not necessary. The existence of a chain, has to be established, before links are to be considered when relying on Bhoomal's decision. In the case before us, no material to shift the onus on the Public Sector Undertaking has been placed. (e) We find from the impugned order that the confiscation have also been considered under Section 111(o) in case of goods imported and supplied by the M/s. Lakshmi Watches. These goods were cleared under the provisions of Notification No. 43/85-Cus. dated 28-2-85. This Notification exempts components of wrist watches excluding SKD packs and CKD packs and items specified in the table annexed. This indicates that if the goods have been permitted to be cleared under the provisions of Notification No 43/85-Cus., dated 28-2-85, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been enforced. Since M/s. Lakshmi Watches are not in appeal before us, we do not proceed further to examine the validity of these findings of the Commissioner. However, we find that Section 111(o) of the Customs Act reads as follows :- "(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer;" (underline supplied). from the underlined portion of this provision of the law, we find that when goods are no longer exempted, inasmuch as the duty demand to the extent it was exempted at the time of import has been made, then such goods cannot be said to be exempted any longer. Once they are not exempted they will not come under the purview of the Section 111(o). Therefore, we find, that once duty has been charged and benefit of Notification No. 43/85-Cus. is no longer available on the subject imported goods, there could ..... X X X X Extracts X X X X X X X X Extracts X X X X
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