TMI Blog2022 (11) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... tes that in relation to goods considered by the State as warranting such recourse. The scope for invoking of section 123 of Customs Act, 1962 must now be turned to. Section 123 of Customs Act, 1962 is all about responsibility for discharging onus of licit possession and, in terms of the law as it stands today, it is cast on the person from whom the suspectedly smuggled goods were seized and, in the event of any such assertion, on the person claiming ownership. It is on record that the impugned goods were neither seized from any, or all, of the appellants and nor have any of them claimed to be the owner; the first is incontrovertible fact and the second is not one that can be foisted for reason of an established past, or probability of a future, incident of offence - the goods, nonetheless, are studded jewellery which is a description, in common parlance, of precious stones set in articles of precious metals, most commonly gold, and to those not familiar with the chronological mutation of section 123(2) of Customs Act, 1962 coverage of the impugned goods therein may even be acceptable. In the absence of recourse to section 123 of Customs Act, 1962, the linkage of the severa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were unaccounted in the stock of M/s Vihari Jewels at the Grand Hyatt, Mumbai. The uncle also manufactures and trades in loose diamonds and jewellery under the name and style of Rajesh Brothers and Tisya Jewels. 2. After these revelations, and not surprisingly, the lady passenger is arrested with release on bail taking a while. The uncle, in the meanwhile, retracts the initial admission of lack of explanation for the unaccounted stock and furnished four invoices, for total amount of ₹ 1,75,00,000, purporting to record supply of these precious articles. Under questioning by officials of the investigating agency, the suppliers deny all commercial relationship and admit that they had, out of their personal and professional equation, provided the said invoices against four post-dated cheques that would, instead of being presented for collection on due dates, be returned to issuer. Everything seems to be tightly sewn up for the denouement and for the good guys to take a bow. 3. Here reality intrudes and the narrative turns to the mundane; the provision for settlement under section 127C of Customs Act, 1962 was resorted to for termination of proceedings in show cause not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Ms Vinita and Ms Devki Jaipuria and Dr Sujata Jetley, came to light during the painstaking assembly of useful material in the red diary and mobile phone seized from the person of Ms Vihari Sheth and from some of the distinctly labelled files recovered during the search at M/s Vihari Jewels on 7th August 2013 and 8th August 2013. Four invoices of January 2013 (3 nos) and of May 2013 (1 nos) for sale of jewellery to Ms Bhakti Modi, one invoice of May 2012 for sale of diamond studded jewellery to Mr Manoj Modi and one of December 2012 for sale of diamond studded jewellery to Ms Smita Modi were furnished on their behalf to investigators along with the said articles and these were seized on 15th July 2014 as they appeared to match the details and descriptions in the diary of Ms Sheth. Likewise, the details in the same diary were opined by the investigators as matching articles covered in five invoices of June July 2013 evidencing sale to Ms Rina Jain leading to seizure thereof on the same day. The articles covered by two invoices issued to Ms Aditi Kothari in March 2013 were similarly subjected to seizure on 4th August 2014 as were also the articles in the two invoices of April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Customs Act, 1962. The outcome in the adjudication order was left undisturbed in the matter of penalties imposed under section 112 of Customs Act, 1962 which is now under challenge in these proceedings. 8. Consequently, the value determined by the approved valuer' is no longer of consequence as far as the show cause notice is concerned with only the value in the tax invoice of relevance for any purpose whatsoever under Customs Act, 1962. The other aspect of the opinion of the 'approved valuer , i.e., of the goods being of foreign origin is not, if we may permit ourselves to say so, deserving of oracular sanctity, usually accorded to professional expertise, as gold and diamonds are most likely to have originated at same stage or the other from abroad. Under the customs law of the country, geographical provenance of any good is obliterated after legal import into the country and it is moot if even the most experienced approved valuer is able to determine such origin of such goods in the form presented for appraisal. Trade in such goods is not under regulatory control that could walk back the cat to the import in that, or some other, form; it is also common knowle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by their spouses/authorized person that it was Ms Vihari Sheth who discussed the design of goods and other aspects of their requirements while the money transactions were with Mr Jiten Sheth from whom the goods were collected or who arranged for delivery to them. While Ms Sheth denied having smuggled any jewellery in the past, she did depose that she had discussed designs and requirements with persons known to her through her kin and that she had no further role in the transactions after introducing them to her uncle. Furthermore, she agreed that the designs in the red diary were of her making but did not elaborate on their significance. Mr Jiten Sheth had, in his very statement, claimed that his niece had, on three occasions since May 2013, brought in diamond studded jewellery for sale at the outlet in Grand Hyatt but did not furnish any explanation on the contents of the files seized there. 12. The link of the furnished invoices with the recovered documents was sought to be established through the descriptions conforming to the sketches in the diary that were admitted to be of Ms Sheth s and in the mobile phone. The details of trips undertaken as ascertained from the recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjournment, the hearing was re-scheduled for 6 th April 2022 when maintainability of appeal before the Tribunal was raised for the first time and, to enable further submissions, hearing was adjourned to 23rd May 2022 and, thereafter, to 16th August 2022. As none had entered appearance for respondent-Commissioner and Tribunal had not been made aware of any re-deployment of representation on behalf of Revenue, the bench was, and justifiably, prompted to make critical observations on the inability of Revenue to participate in proceedings that had been considered fit to be heard out of turn and in which maintainability was insinuated almost as an afterthought. Learned Special Counsel, and after appearance on 17thAugust 2022 to argue the case of Revenue to its conclusion, filed a submission explaining his absence; while we may have sympathy with the circumstances, it is necessary for him to take note that it is for him, along with others for whom courts are their workplace, to maintain the dignity of judicial functioning. It was his hesitancy in harnessing the not inconsiderable establishment of the Principal Commissioner (AR) assigned to represent the formations of the Central Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Furthermore, the impugned order has rectified a perceived flaw in the order of adjudicating authority which adopted the appraisal by the approved valuer as not being in conformity with provisions for valuation in section 14 of Customs Act, 1962. For assessment and clearance, the essence of baggage is classification against the omnibus description corresponding to heading 98 03 of First Schedule to Customs Tariff Act, 1975 despite being set of products of differing descriptions, that may, otherwise, individually find conformity with varying descriptions corresponding to other tariff items in the First Schedule to Customs Tariff Act, 1975, owing to common attribute of the same ownership before and after import. Though first proviso to section 14 of Customs Act, 1962 does envisage inclusion of manner of determination of value in the event of no sale under the empowerment to make rules, recourse has not been had to it; it is questionable if rule 12 of Customs (Determination of Value of Imported Goods), 2007 can be invoked for baggage to enable recourse to these sequentially described methods of valuation and, by reason thereof, for an appellate authority to sit in judgement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the evidence has been marshalled and confiscation ordered by recourse to section 111 (d), (j), (l) and (m) of Customs Act, 1962 by noting that 65 I find that M/s Vihari Jewellers didn t have any documents to prove licit import and possession of the said goods before sale. Further, the present owners of these jewellery also do not have any evidence/proof of licit import of these articles of jewellery ' before adverting to decisions such as Collector of Customs, Madras and others v. D Bhoormull [1983 (13) ELT 1546 (SC)] and Sailesh Amulakh Jogani v. Union of India [2009 (241) ELT 348 (Bom)] and the turn adopted by appellate authority on redemption of the goods, it is abundantly clear that adverse presumption sanctified by section 123 of Customs Act, 1962 is the bedrock of the proceedings. We are, therefore, obliged to recall the scheme of Customs Act, 1962 and, more so, in the light of the submissions made by Learned Special Counsel designed to persuade us to adopt his proposition on the justifiability of penalty imposed on the appellant. 18. Customs Act, 1962 is not merely a legislated enactment for furtherance of Article 265 of the Constitution in conjunction with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exts. Two of the three such relate to goods that are visibly offending: goods brought near land frontier, coast and bay, gulf, creek or tidal river which is rendered liable for confiscation under section 113(c) of Customs Act, 1962 as presumed to be intended for smuggling out and that enumerated in section 123 of Customs Act, 1962 with the presumption of having been smuggled in unless proved otherwise. A third, with inbuilt detriment, presumes, under section 116 of Customs Act, 1962, that goods not landed after despatch from place of loading are in breach of the procedure prescribed in Customs Act, 1962. It is the second of the former that we are concerned with here for that has been cited in the show cause notice though the adjudicating authority tried to distance himself from it and as Learned Special Counsel has placed emphasis thereon in his submissions. 21. The particular presumption that this dispute is concerned with, viz., section 123 of Customs Act, 1962, has an interesting genealogy. It has a forebear in Sea Customs Act, 1878 albeit not in its original design; after the Republic came into being and, on the basis of (1) to make smuggling a criminal offence, and (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al scope and by section 2 of Act 40 of 1989, with effect from 26th October 1989, diamonds, manufactures of gold or diamonds were substituted for in the special provision to now read as 123. Burden of proof in certain cases . (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be (a)in a case where such seizure is made from the possession of any person, - (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; (b) in any other case, on the person, if any, who claims to be the owner of the goods so seized. (2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify. 23. The significance of legislative will, evident on the occasion of enactment of the special provision in Sea Customs Act, 1878, cannot be overemphasized while reflecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Act, (3) that the preliminary requirement of s. 178 A that the seizing officer should entertain a reasonable belief that the goods were smuggled was satisfied in the present case . and, thereby in the second and third supra, enunciating the test of legal sanction for invoking this contrarian principle emplaced in the customs law of the land. With the constitutional vires of the provision having been upheld, it is but natural that most of the disputes thereafter have almost entirely been about the pre-requisite of reasonable belief of the goods being smuggled having been apparent at the time of seizure. This is a critical aspect of exercise of this extraordinary power vested in officers of customs by the statute: the onus devolves on the person from whom it was seized along with coordinate onus on person, if any, claiming ownership of the said goods and it merely requires inability to establish provenance, which may well be less than sinister, for the consequence of confiscation under section 111 of Customs Act, 1962. Judgements have examined the state of reasonable belief on such pleadings by referring to facts and circumstances that were considered by adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This court . held that the Evidence Act does not contemplate that the accused should prove the case with same strictness and rigour. But in this case the nature of the evidence on which the reliance could not be placed was rightly rejected by the Customs and the High Court held it properly that the petitioners had not discharged the onus to prove that the goods were not smuggled. In this case there was no denial of opportunity, the proceedings followed excluded the possibility of denial of opportunity. The proceedings taken were in order and in consonance with natural justice. The High Court was right in answering the first question by saying that the Tribunal was justified in holding that the seizing Customs had adequate material to form a reasonable belief as contemplated under Section 110 read with Section 123 of the Act and it rightly held that the appellants had failed to discharge the onus. The High Court answered the second question in the negative. In our opinion, the High Court was right. There is, however, one aspect of the matter which was emphasised before us, i.e. that the conclusions of the factfinding body or statutory authority must be arrived at after giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal before us were not intercepted in a customs area; it is also not in doubt that it was not an interruption of a transaction of the appellants that commenced these proceedings. Under the normal procedure of confiscation under the statute, it would be necessary to present evidence, even if not necessarily direct, of the impugned goods having been in the baggage of Mrs Vihari Sheth during one or more of her inbound travels to invoke the penal provisions against the three appellants; section 123 of Customs Act, 1962 obviates that in relation to goods considered by the State as warranting such recourse. The scope for invoking of section 123 of Customs Act, 1962 must now be turned to. 29. Section 123 of Customs Act, 1962 is all about responsibility for discharging onus of licit possession and, in terms of the law as it stands today, it is cast on the person from whom the suspectedly smuggled goods were seized and, in the event of any such assertion, on the person claiming ownership. It is on record that the impugned goods were neither seized from any, or all, of the appellants and nor have any of them claimed to be the owner; the first is incontrovertible fact and the second is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and is not for mere display in a vacuum or to exemplify sterile existence. The amendment brought about in 1989 has had the effect of alienating the presumption in section 123 of Customs Act, 1962 from the goods impugned here. For these reasons, the imposition of penalties on the appellant must find justification in the evidence that were set out in the show cause notice to be sustained. 31. Admittedly, there are no markings on the impugned goods that would attribute provenance outside India. The sole link of the goods with foreign sourcing is frequency of travel of Ms Vihari Sheth, an admission of shared imputation in unidentifiable jewellery dealt with in the past through Vihari Jewels by Mr Jiten Sheth, that was construed upon by the customs authorities as relating to all, and any, jewellery available and dealt with in the past, complementary statements of two job-workers one as mere source of documents and the other as supplier operating under the radar which advances no proof of the impugned goods not having been produced in India and the conformity of designs in a workbook of Ms Vihari Sheth, purportedly valued in foreign currency, with the goods recovered from custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th their licit importation or exportation. It is enough if the Department furnishes prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, the Department has to prove further that the person was proceeded against was concerned in the smuggling. . ..This also disposes of the first point. As we have said, the burden was on the Customs Authorities which they discharged by falsifying in many particulars the story put forward by the appellant . It cannot be disputed that a false denial could be relied upon by the Customs Authorities for the purpose of coming to the conclusion that the goods had been illegally imported. In the case before us, the circumstantial evidence suggesting the inference that the goods were illicitly imported into India, was similar and reasonably pointed towards the conclusion drawn by the Collector. There was no violation of the rules of natural justice. The Collector had given the fullest opportunity to Bhoormull to establish the alleged acquisition of the goods in the normal course of business. In doing so, he was not throwing the burden of proving what the Department had to establish, on Bhoormull. He was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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