Gudiseva Vasuki v. Commr. of C. Ex. & S.T., Hyderabad-III

[Order]. - This appeal is directed against Order-in-Original No. HYD-EXCUS-003-COM-34-14-15, dated 3-11-2014.

2. Heard both sides and perused records.

3. The appeal is directed against the appellant herein on whom, penalty of Rs. 10.00 lakhs has been imposed under the provisions of Section 114(i) of Customs Act, 1962.

4. The relevant facts that arise for consideration in this appeal reveal there is an allegation that appellant had brought ivory idols to Hyderabad and was in the process of attempt to export or sale the same for urgent financial needs. Statement of the appellant was recorded under Section 108 of Customs Act, 1962 in which the appellant had stated that he had brought these idols from Mysore from his father-in-law’s place to Hyderabad. A show cause notice was issued to appellant for confiscation of these idols on an allegation that availability of ivory idols at his residence without any valid documents/permission and without any prescribed intimation indicates that there was conspiracy and the said ivory idols could have been illegally exported. The show cause notice was contested by the appellant on merits. The adjudicating authority, after following due process of law, came to a conclusion that there was an attempt to export the goods on the part of the appellant in form of preparation to export the goods in contravention of the provision of Section 113(d) of Customs Act, 1962. Coming to such a conclusion, the adjudicating authority confiscated the ivory idols and imposed penalty of Rs. 10.00 lakhs on appellant.

5. Ld. Counsel draws my attention to the facts that appellant has been penalised without bringing on record the attempt to export of such ivory idols. It is his submission that there was no preparation or attempt for export of goods, there was IEC code applied for, there was no time to contact any individuals for such items and the searches and e-mails recovered from the computer of appellant did not show any such attempt made nor any past record of any illegal activity by the appellant. It is his further submission that the impugned order passed on mere presumption without appreciating provisions of Section 114(i) of Customs Act, 1962 and submit that the said penal provisions would be applicable only if the goods are attempted to be improperly exported. He would submit that the law on the subject is settled by the Tribunal in the following cases :

(a)     Chanreswar Prasad v. CC, Patna - (Tri.-Kolkata).

(b)     Md. Raju Hussain v. CC, Guwahati - (Tri.-Kolkata).

(c)     K.C. Knitwear v. CC - (Tri.-Mumbai) as approved by High Court in CC v. K.C. Knitwear - (Bom.).

(d)    S.P. Bhl v. CC, Mumbai - (Tri.-Mumbai).

(e)     T. Muthukumar v. CC, Chennai - (Tri.-Chennai).

(f)      Pradeep Dhond v. CC, Mumbai - (Tri.-Mumbai).

(g)     Dalimi Hong Kong Ltd. v. CC, Mumbai - (Tri.-Kolkata) (sic)

(h)    Abdus Sabur Molla v. CC, Kolkata - (Tri.-Kolkata).

6. Ld. DR, on the other hand would submit that the adjudicating authority has clearly recorded the findings as to the fact that the goods of ivory idols were of antiques in nature which is confirmed by the Regional Director (South) of Archaeological Survey of India. It is also his further submission that since the idols are made of ivory, they are prohibited goods as per Wild Life (Protection) Act, 1972 and cannot be retained by the appellant. He would then draw my attention to the export policy as to how these goods are prohibited.

7. On careful consideration of the submissions made by both sides and perusal of records, I find that undisputed facts are, that the ivory idols which were recovered during the proceedings by DRI were recovered from the residential premises of the appellant, the idols were originally in possession of the father-in-law of appellant; they have been brought from Mysore to Hyderabad by the wife of appellant; that the goods are of ivory and are antiques. It is also an admitted fact that the goods i.e. ivory idols were recovered in the town and not in the customs area. I find that the adjudicating authority has held that appellant had every reason to export the goods without any cogent and acceptable evidence. The adjudicating authority has held that the appellant had every reason to sell these goods for tiding over his financial crisis and these items could have been attempted to be exported, is totally based on conjectures. I find that there is nothing available on record to indicate that appellant had attempted to export these goods by either moving the goods to the customs area or getting into any negotiations with someone else for attempting to sell the said goods. There is also no evidence brought on record to show that the said goods were illegally procured by the father-in-law of appellant. The fact that the goods were moved from Mysore to Hyderabad is being an admitted fact, the entire case seems to be a fall out due to some family dispute between appellant and his father-in-law, cannot by itself be the reason for slapping the appellant with an allegation of attempted export of antique idols. Any action to be taken against appellant for being in possession of such antique idols may arise under other acts, but definitely not under Customs Act, 1962.

8. I find that ld. Counsel is correct in bringing to my notice the judgment of the Tribunal in the case of Mohd. Raju Hussain (supra); which is directly on the issue and I reproduce the ratio which is in para 4.2.

“In the present case also the goods are not seized in a customs area. There is no inculpatory statement, no valid visa/ticket with the Revenue suggesting intended visit of the appellant to Bangkok. The seized goods are also neither notified goods nor specified goods under the Customs Act, 1962. Prohibitions under the Export policy will come into operation if the goods are brought into the Customs area. In view of the above observation and the ratio of the relied upon case laws decided by this Bench, it has to be held that investigation is not able to prove that Agarwood seized from the appellant was attempted to be exported out of India. Interaction/preparation cannot be considered as an attempt to export in the absence of any positive evidence to that aspect. Any other law imposing prohibition/restriction on the movement of any category of goods within India, cannot be made the ground for confiscation of such goods under the Customs Act, 1962. Accordingly, confiscation of the seized goods and the penalty imposed upon the appellant, under Sections 113 and 114 respectively of the Customs Act, 1962, are required to be set aside.”

9. I also find that in the case of Pradeep Dhond v. CCE, Mumbai (supra), the Division Bench of the Tribunal was considering a similar issue and held that there was an attempt to export does not stand in the light of the fact that there was no communication between appellant therein and the foreign buyer, hence confiscation and penalty was set aside which was upheld by Hon’ble High Court of Bombay - (Tri.-Mumbai). I find that similar views have been expressed by the Division Bench of the Tribunal in the case of S.P. Bahl v. CC, Mumbai (supra).

10. In view of the foregoing and the decisions and orders of the Tribunal on the issue, confiscation of the said ivory idols in this case is unsustainable and liable to be set aside and I do so.

11. Since the confiscation is set aside, consequent penalty imposed under Section 114(i) is also unsustainable and is set aside.

12. In view of foregoing, appeal is allowed.

(Order pronounced in open Court on 31-8-2017)