TMI Blog2005 (6) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, dated 13-10-2003, Bill of Lading, Invoice of M/s. Al-Manohar Trading Co., P.O., Weighment Slip, Octroi Slip, Consignment Note, and copy of I.E.C. Certificate of M/s. Navneet Trading Co. The driver also informed that the said goods were to be offloaded at 113, Umerkhadi Road, Mumbai - 400 009. The officers searched the said premises where some fabrics of foreign origin were also found lying. Thereafter, fabrics lying in the said vehicle were also off-loaded in the said godown. Shri Idris Y. Porbunderwala (hereinafter referred to as the applicant), owner of the said godown, and who was present at the time, could not produce any (import) duty paying documents for the fabrics of foreign origin lying in the said premises. Therefore, the officers of the Marine Preventive Wing of Customs (Preventive) Commissionerate, Mumbai, detained the fabrics of foreign origin unloaded from the said vehicle, measuring 38816 yards valued at Rs. 18,35,500/- (L.M.V.) and the fabrics of foreign origin lying in the said godown premises, measuring 67028 yards valued at Rs. 30,96,025/- (L.M.V.) vide Panchanama dated 20/22-10-2003 for further verification. 2. The applicant in his statement dated 22-10-2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, inter alia, disclosing and accepting as payable customs duty amounting to Rs. 3,74,485/-. 6. The Additional Bench, Mumbai after hearing the case for admission observed that in the case of M/s. Arihant Time Products, vide Interim Order No. 12/2003-Cus., dated 25-2-2003, the Bench had admitted the case in respect of the goods covered by Section 123 of the Act, holding that the third proviso to Section 127B(1) of the Act is not meant for goods which are intercepted at the place of regular importation and that too when the importer files regular documents for clearance of such goods. 7. Again the Additional Bench, Mumbai in the case of M/s. Namaskar Rayon, vide Final Order No. 32/CUS/2004, dated 5-8-2004 had held that since the goods involved in the case were covered under Section 123 of the Act and that section has been invoked in the Show Cause Notice, the application cannot be allowed to be proceeded with and the same was rejected in terms of Section 127C(1) of the Act. 8. Further, in the case of M/s. Arfat Yarn Corporation, vide Final Order No. 44/CUS/2004, dated 5-10-2004, the Additional Bench, Mumbai had held that the application cannot be allowed to be proceeded under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red under a Bill of Entry the aforesaid bar would come into play on subsequent seizure of such goods? (d) Whether for applications in respect of such goods the aforesaid bar would come into play only when Section 123 has been invoked in the Show Cause Notice? 12. The Special Bench met at Mumbai on 7-4-2005. The Secretariat of the Additional Bench, Mumbai had sent communications to leading Advocates and Counsels to assist the Bench as amicus curiae to take correct legal decisions relating to the issues referred to above. In pursuance of the said communication, the following Counsels appeared before the Special Bench and made their submissions on the above referred issues :- (i) Shri V.M. Doiphode, Advocate, (ii) Shri C. Hari Shankar, Advocate, (iii) Shri T. Viswanathan, Advocate, (iv) Shri Vipin Jain, Chartered Accountant, (v) Shri K.M. Mondal, Consultant. 13. In the course of the hearing following cases were cited and referred in support of the contentions and submissions made :- (i) Shantilal Mehta v. Union of India and Others reported in 1983 (14) E.L.T. 1715 (Del.) (ii) S.K. Chains v. CC(P) reported in 2001 (127) E.L.T. 415 (Tri. - Mum.) (iii) Shivaji v. State of Karnataka repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude the goods which are notified under Section 123(2), the third proviso to Section 127B(1) would have read as under, provided also that no application under this sub-section shall be made in relation to goods which are notified under Section 123 (emphasis provided). He referred to the provisions of Section 11C of the Act stating that whenever such intention is there, the word Notified goods is specifically mentioned as in the said Section 11C which inter alia provides that Every person who owns, possesses or controls any notified goods, shall, within 7 days from...... . Thus, he submitted that merely because the goods are notified under Section 123 that by itself cannot bar an application in respect of notified goods from the jurisdiction of the Commission. 14.3 He further submitted that even if the Show Cause Notice indicates that all the ingredients are present and specifically invokes Section 123 provisions, it is for the adjudicator, Appellate Tribunal or Settlement Commission to judge on the basis of evidence as to whether the ingredients of Section 123 are satisfied and whether the provisions of Section 123 would be applicable. If such authority holds that the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the Revenue to the person from whose possession the goods are seized, or who claims to be the owner thereof, in the following circumstances :- (a) There must be a seizure of goods. (b) The goods seized must be goods to which Section 123 applies. (c) The seizure must be in the reasonable belief that the goods are smuggled. The applicability of Section 123 in the facts of the case is, therefore, something, which has necessarily to be borne in mind even while determining whether the goods in issue are covered by it. In other words, if, in the facts of a particular case, no issue of burden of proof arises, Section 123 would not apply at all to the goods involved in the said case, and the invocability of its provisions would stand ruled out altogether. 15.3 He drew attention of the Bench to the fact that the expression which finds place both in Section 123 as well as in the third proviso to Section 127B(1) is goods to which this section (or Section 123) applies , and not goods notified under Section 123 . The applicability of Section 123, to the facts of the case at hand has, therefore, necessarily to be examined at the threshold. 15.4 The Counsel elaborated that two conceivable situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that the same position would obtain where the applicant does not contest the smuggled nature of the goods before this Commission, even though he may have contested it at, or prior to, the stage of adjudication. If the applicant makes a clean breast of his liability, admitting the factum of smuggling, so that no controversy on this score remains before this Commission, an opportunity of having the case settled has necessarily to be afforded to the applicant. 15.8 Recalling the historical perspective, the ld. Counsel submitted that Section 123 is a reincarnation of Section 178A of the Sea Customs Act, 1878, which came in for detailed examination by the Hon ble Supreme Court in a number of cases, notably CC v. Nathella Sampathu Chetty reported in 1999 (110) E.L.T. 157 (S.C.) wherein the object of enacting Section 178A is identified as prevention of the smuggling of the goods in relation to which, by their very nature, or otherwise, it may be difficult to establish their smuggled nature. The sequitur would be that Section 178A of the Sea Customs Act, 1878, and later, Section 123 of the Act - were never intended to apply to cases where the smuggled nature of the goods was not in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion in relation to goods to which Section 123 applies , which appears in the third proviso to Section 127B(1). 17.3 The Counsel canvassed that as would be evident from the title of Section 123 burden of proof in certain cases , the said Section 123 is a rule of evidence which becomes applicable only if the following three conditions are cumulatively satisfied :- (a) The goods in question are goods specified in sub-section (2) of the said Section 123 (hereinafter referred to as specified goods ), i.e. gold and manufactures thereof, watches and any other class of goods which the Central Government may by notification in the Official Gazette specify; (b) Such goods have been seized under the provisions of the Act; and (c) Such seizure has been made in the reasonable belief that they are smuggled goods. The ld. Chartered Accountant referred to the cases of Commissioner of Customs, Madras v. Nathella Sampathu Chetty reported in 1999 (110) E.L.T. 157 (S.C.) and J.K. Bardolia Mills v. M.L. Khunger, Deputy Collector reported in 1994 (72) E.L.T. 813 (S.C.). 17.4 It was advanced that Section 123 of the Act applies only if all the three conditions referred to above are satisfied. As such, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Act. The point which needs consideration is whether the said expression apply would also include the applicability or application of the conditions laid down in the provisions of Section 123 thereby implying that the invocability of these conditions is to be gone into, examined and adjudged before concluding whether the mischief of third proviso to sub-section (1) of Section 127B of the Act would come into play. 21. The Hon ble High Court of Andhra Pradesh in the case of Rasheed Abdullah v. State of Andhra Pradesh reported in 1999 (109) E.L.T. 154 (A.P.) have, inter alia, held that what is contained in Section 123 relates, to proof and is, therefore, a procedural matter. 22. The Hon ble Supreme Court in the case of J.K. Bardolia Mills v. M.L. Khunger, Deputy Collector reported in 1994 (72) E.L.T. 813 (S.C.) have inter alia held thus :- The conditions to be satisfied for application of the provisions of Section 123 of the Act are (a) the goods must be one to which Section 123 applies; (b) the goods are seized under the Act and (c) the goods must be seized in the reasonable belief that they are smuggled. 23. Again the Hon ble Delhi High Court in the case of Shanti Lal Mehta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities cannot proceed mechanically to cast the onus upon the person from whom the goods are seized inasmuch as in so doing the authorities would invoke Section 178A without deciding whether the requirements thereof had been duly fulfilled or not...... 25. Again the Hon ble Supreme Court have made observations to the same effect in the case of Budhan Chaudhury v. The State of Bihar reported in 1995 (1) SCR 1045, 1048-1049 which has been extracted in the case of Collector of Customs v. Nathela Sampathu Chetty reported in 1999 (110) E.L.T. 157 as below :- A cursory perusal of Section 178A will at once disclose the well defined classification of goods bases on an intelligible differentia. It applies only to certain goods described in sub-section (2) which are or can be easily smuggled. The section applies only to those goods of the specified kind which have been seized under the Act and in the reasonable belief that they are smuggled goods. It is only those goods which answer the threefold description that come under the operation of the section. The object of the Act is to prevent smuggling. The differentia on the basis of which the goods have been classified and the presumption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s perception is further fortified by the fact that Section 123 in the Customs Act was primarily brought in to take care of seizures of goods specified under that section at places other than the places of importation because in such cases points of entry of such goods is not reachable. This section is not meant for such goods when they are intercepted at the place of regular importation and that too where importer files regular documents for clearance of such goods. In such cases, there is no need to shift the burden of proof. Interception itself proves what Section 123 helps us to prove. In view of our this interpretation of proviso 3 to Section 127B(1) of the Act, we hold that this is not a case where Section 123 of the Act has been invoked by the Revenue and in absence of invocation of that section, the said proviso will not bar the admission of this case.] 27. The Hon ble Supreme Court has held in British Airways PLC v. UOI reported in 2002 (139) E.L.T. 6 (S.C.), that while interpreting a statute, the court should try to sustain it and give such meaning to the provisions which advance the object sought to be achieved by the enactment. A court cannot approach the enactment with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d goods under sub-section (1) of Section 123 of the Act. The Commission itself can also determine, whether there was justifiable ground for reasonable belief in the facts and circumstances of the case and whether the provisions of the said section are rightly invoked in the Show Cause Notice. Similarly, even if provisions of Section 123 are not invoked in a Show Cause Notice, the Commission can come to its own conclusion on the invocability of the Section to the instant case. (c) Whether for applications in respect of such goods which have been cleared under a Bill of Entry the aforesaid bar would come into play on subsequent seizure of such goods? Answer : The bar laid down in the third proviso to sub-section (1) of Section 127B of the Act could come into play in respect of the specified goods which have been cleared under a Bill of Entry but are subsequently seized under the provisions of the Act on the reasonable belief that they are smuggled goods, if the Revenue holds that goods do not tally with the particulars contained in such Bill of Entry, on which the said goods had been admittedly got, cleared. (d) Whether for applications in respect of such goods the aforesaid bar woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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