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TMI Blog2003 (3) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... atements were recorded. The details of the above-mentioned shipments were revealed to the investigating authorities. The officers of the SIIB then recalled the said container which arrived in March, 1998. On examination the goods were valued at Rs. 11,91,705/-. M/s. SGS India Ltd., a reputed investigation agency were also consulted. SGS after examination opined that the various items of clothing would fetch between US$ 3.52 to US$ 6.25 respectively. In the investigation the assistance of one Punjabi was also taken who had supplied some of the goods to the exporters. The valuation given by him was adopted by the department for the valuation. 3. The container along with the contents were seized by the officers of the Customs on 10-3-1998 under the powers vested in them vide Section 110 of the Customs Act, 1962. The ground for seizure as given in the Panchnama was that whereas the declared was approximately Rs. 80 lacs, the ascertained value was Rs. 13,54,250/-. 4. Show Cause Notice was issued on 8-9-1998 seeking to confiscate the goods, impose penalty under Section 114(iii) of the Customs Act and for recovery of drawback of Rs. 13,95,466/- already paid to them. Where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that the goods were liable to seizure arose in their mind. The Court examined the previous case law including the case of Pukhraj v. D.R. Kohili [1983 (13) E.L.T. 1360 (S.C.)] and M.G. Abroland Anr. v. Amichand Vallamji and Ors. [2002 (149) E.L.T. 32 (Bom) = AIR 1961 Bombay 227] as also in the case of Bapalal Khushaldas Gosalia v. R. Prasad [AIR 1965 Gujarat 135]. The Court observed that there cannot be constant measure for determining as to whether or not at the time of seizing the goods the seizure had been made under a reasonable belief that the goods were liable to confiscation. It all depended upon the facts and circumstances of the case. The Court in para 11 of the Judgment after quoting the provision of Section 110 of the Customs Act observed as under :- "The seizure of the goods must follow only if the proper officer has reason to believe that the goods were liable to confiscation, not otherwise. The view expressed by the Bombay High Court in M.G. Abrol's case is a salubrious view. A reasonable belief must exist in the mind of the officer seizing the goods at the time of the seizure itself, and only then the seizure would be valid." 9. The Court further observed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the decision of the Bombay case in M.G. Abrol and Another's case in which it has been held - "That reasonable belief must exist in the mind of the officer seizing the goods at the time of the seizure itself. Subsequent acquisition of such belief could be of no avail". In the instant case if transfer of the goods from the petitioners' car to the jeep is taken as the seizure of the goods, clearly the respondents did not have the reasonable belief at that time that the goods which they were transferring into their jeep was liable to confiscation and when they handed over the seizure list to the petitioners, they had no further materials before them. Even at that time, as the facts discussed above indicate, they did not have the reasonable belief.' 13. The judgment was concurred with by the second Judge. 14. The adequacy of belief before making a seizure came before the Patna High Court in another case, namely Angou Golmei v. Vizovolie & Chakha Sang [1996 (81) E.L.T. 440 (Pat.)]. In this case on receipt of information of smuggling of cloves, Customs detained cloves in two wagons at a railway yard on 30-3-93. Traders opined the cloves to be of Zanzibar origin, on 16-4-93 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises of Ram Avtar Mittal. Ram Avtar Mittal's statement was recorded on 2-12-1997. In this statement he claimed to be associated with both units. Their job was to buy garments in stock lots, subject these to ironing etc. processes and to export them. He claimed to have done exports for over 8 years. He admitted to buying clothes from Punjabi. In this statement he gave the reference to the shipment exported in these proceedings. There is no admission in his statement of over-invoicing for sake of getting extra drawback. In fact there is a clear admission to the effect that he has no knowledge of drawback procedures at all. Para 3 of the Show Cause Notice reproduces the reference to 30 shipping bills. He referred to one Manisha who was the go-between the buyers and the sellers. There is no admission in the statement of Ram Avtar Mittal to sustain the intelligence referred to by the Customs, nor is the statement capable of arousing reason to believe in the minds of the officers of Customs. 20. Manoj Mittal's statements were recorded. The extract in para 4 of the Show Cause Notice states that he admitted to have forged and fabricated Bills of Lading to show bogus exports w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gist of the statement of Ram Avtar Mittal disclosed in para 3 of the Show Cause Notice, contains no such admission. He was not on the present exports consignment but was narrating how his office used to acquire garments. As per para 5 of the Show Cause Notice, Punjabi had supplied 10,000 pieces of garments at the value of Rs. 2.5 lacs. If he was right in his first statement then there is no reason why later at the time of physical inspection he should give a much higher valuation of about Rs. 12 lacs. 27. The Panchnama reveals one more curious fact. Page 2 thereof shows that Punjabi identified 16 cartons as containing goods supplied by him. These 16 cartons contained 718 pieces of garments. The total cartons numbered 468 and the total garments were 17,054/- and yet the Customs have relied upon the statement of Punjabi who initially had stated that he had given 10,000 pieces. In fact on the the revelation that the goods claimed to have been supplied by Punjabi earlier were not even found in the consignment, even the suspicion, if any in the minds of Customs should have ceased to exist, let alone become the reason to believe that the goods were contraband. 28. The Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r adopts an entirely different valuation, recalculate the drawback from Rs. 13,95,466/- and directs recovery of Rs. 8,37,795/-. 35. Para 8 of the Show Cause Notice is required to be reproduced here: "In the light of what has been stated above, it clearly appears that the correct market value of the goods under reference is Rs. 11,91,705/- as against declared value of Rs. 78,05,851/-. It is observed that the exporters have claimed drawback to the tune of Rs. 13,95,466/-. Thus, it is evident that the drawback claimed by the importer is more than the market price of the goods in terms of Section 76(1)(b) of the Customs Act 1962, no drawback is payable in respect of any goods, the market price of which is less than the amount of drawback due thereon. Having called back the goods, there is no export in respect of these goods taking place and therefore in terms of proviso to Section 75 of the Customs Act 1962, no drawback is admissible where in respect of goods of which sale proceeds are not received by and on behalf of the exporter in India." 36. The first part of the charge is negated by the Commissioner in his Order when he finds and accepts that the export value was inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llibility of the buyer. 39. What is the effect of the over-valuation? The Government on one hand may have to give a higher quantum of drawback but at the same time the country is getting a significant amount of foreign exchange. Where the exports are suggestive of being intended for the purpose of hawala transactions, where the goods are not physically present or in cases where the sales proceeds are not realized penal action on the exporter would be justifiable. But merely by turning a blind eye on the capacity of the exporters in generating high profits on exports, it is the Government which is ultimately going to lose. 40. On the face of the above analysis we make the following order: - (1) That the seizure made by officers of Customs without having a reason to believe that the goods were liable to seizure is invalid and untenable and therefore the orders of confiscation of the goods are set aside; (2) The Orders of imposition of fines and penalties are set aside; (3) The Orders of repayment of excess drawback amount are set aside; (4) Appropria ..... X X X X Extracts X X X X X X X X Extracts X X X X
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