The main legal point established in the judgment is that the adjudication of confiscated goods should take place at the place of seizure, and the burden of proving payment of customs duty lies on the person from whom the goods were seized.

Aravind Kumar, J.— The Commissioner of Customs has preferred this appeal questioning the order dated 29-8-2003 passed by the Customs, Exercise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore in Appeal No. C/40, 48, 49, 57, 65 and 66/2002 whereunder the Tribunal has allowed the appeals filed by the appellants and has set aside the order of the Adjudicating Authority dated 5-12-2001 passed in Order-in-Original No. 35/2001 and remanded the matter back for adjudication by the competent jurisdictional authority after due investigation of the facts by holding that Adjudicating Authority at Bangalore had no jurisdiction. Further, the order of the adjudicating authority passed by invoking the powers of Section 28 of the Customs Act, 1962 has also been set aside. It is this order which is under challenge before this. Court by the revenue.

2. This matter has been admitted on 28-2-2007. Following substantial questions of law are framed for consideration and decision of this Court:

(i) Whether the Tribunal has committed an error in holding That the Department cannot confiscate the smuggled goods without establishing the point where the customs barrier is breached?

(ii) Whether the Tribunal has committed an error in holding that the order of confiscation is not an "action-in-rem"?

(iii) Whether the Tribunal has committed an error in holding that the smuggled goods cannot be confiscated wherever such goods are found?

(iv) Whether the Tribunal has committed an error in remanding the matter to the competent authority without specifying the details of the authority as to who should decide the matter?

3. The following facts would be of necessity to traverse the contentions raised in the appeal memorandum which are not disputed by the respondents. On 30-5-2000, 25 bales of Mulberry raw-silk yarn of Chinese origin valued at Rs. 23,54,100/- which had been described as waste cloth/old chindi cotton/old waste doth (as described in the goods consignment notes) were seized from godown of M/s Deluxe Roadlines No. 79, 4th cross, Narasimharaja Road, Bangalore-560002 by the Directorate of Revenue Intelligence, Bangalore. Four days prior to that, the very same goods had been intercepted by the Karnataka State Commercial Department at the check-post demanding penalty of Rs. 49,140/- for non-declaration of 300 K.Gs foreign origin silk yarn in respect of LR No. 120900 dated 26-5-2000- The first respondent claiming to be the consignee had deposited the penalty on 28-5-2000 in the office of the Karnataka State Commercial Tax Department and had got the goods released. When the Directorate of Revenue Intelligence had seized the said goods at Bangalore and from the godown of 6th respondent it was found by the authorities that said goods contained labels which described the goods as blossoms, white steam filature, China National Silk Import & Export Corporate Made in China and JINDING, China National Silk Imp & Exp. Corp. Sichuan Branch. During the Course of investigation by the authorities statements of all the respondents under Section 108 of the Customs Act came to be recorded and some of the respondents have retracted the said statement subsequently. It was the admission of the respondents in the said statement that they are only recipients of the goods and they had not imported the goods to the territorial waters of India and as such they are not liable to pay the Customs Duty. They further stated, that the goods were being supplied by Ashok Kumar Shroff and Subrata Mondal of Kolkata. Notice issued to these persons did not yield any result inasmuch as they were all fictitious persons. It is to be noted that the clerk of M/s Deluxe Roadlines, Private Limited, Bangalore, from which godown the goods came to be seized through its Manager Sri. Manjegowda, the delivery clerk had given a statement under Section 108 of the Act admitting there under that apart from the required routine work he was also asked the delivery parcels against slips issued fr