Onus To Prove The Goods Were Smuggled Lies On The Department: CESTAT

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the department bears the burden of proving that the goods are smuggled.

The bench of Anil Choudhary (a judicial member) has observed that the show cause notice is vague as the valuation of the goods has been done by the Revenue without any relied-upon documents, i.e., copy of any retrieved documents from the mobile/CPU of the appellant/assessee.

A search was conducted on the premises of the appellant, and certain documents/mobile phones, and one CPU (Make Odyssey) were seized for investigation. The stock found in the godown was also detained, alleging non-production of a register at the time of the search. The statement was recorded, stating that the appellant was engaged in the trading of optical frames, glasses, and optical accessories and was registered with sales tax.

Another search was conducted in the premises of the appellant under Panchnama for stock verification of the goods. A statement of the appellant was recorded in which he was confronted with the price of the different sizes of the CR lens, which were found from the data retrieved from his CPU/mobile.

A show-cause notice was issued demanding customs duty on the allegation that the appellant is the "beneficial importer" and has willfully suppressed the actual import value with the intent to evade duty. As such, the duty was recoverable by invoking the extended period of limitation.

The assessee contended that duty has been wrongly demanded as the appellant is not the importer but only a trader who buys or procures the goods from the local market as well as from the importer, who had imported the said goods. The appellant has not filed the bill of entry, placed any orders with the foreign buyer, or made any payments to any overseas supplier. The duty demand is based wholly on assumptions and presumptions, treating the appellant as an importer, which is not sustainable.

The issue raised was whether the appellant is the importer and whether the duty and penalty have been rightfully demanded from him.

According to the CESTAT, goods discovered or available on the open market are presumed to be duty-paid unless the Department proves otherwise.The department has not brought any evidence to record that the goods seized from the shop/godown premises of the appellant were not duty-paid.

The tribunal found that all the suppliers, whose bills the appellants have produced in support of the goods lying in his godown, have confirmed the supply of goods against those invoices, although there are minor distortions in the statements.

"In view of the documentary evidence, oral evidence has got less weight, and documentary evidence being more reliable cannot be ignored. As the appellant admittedly is not the importer, as defined under the provisions of the Customs Act, the impugned order confiscating the goods and demanding duty is bad in law and on facts," the tribunal said.

Case Title: Atul Dhawan Versus Commissioner of Customs

Citation: Customs Appeal No.51059 of 2022-SM

Date: 24.11.2022

Counsel For Appellant: Advocates G.K. Sarkar, Shri Prashant Srivastava & Shri Deepak Mahajan

Counsel For Respondent: Authorised Representative Ishwar Charan

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