S.K. Bhatnagar, Member (T)

1. The learned counsel stated that this is an appeal against the order of Addl. Collector of Customs, New Delhi.

2. The DRI officers have searched their residential premises and recovered inter alia 19600 watches.

3. Subsequently 18540 watches were released even before the issue of show cause notice and the impugned show cause notice was issued in respect of 793 watches on the alleged ground that they had been acquired in violation of law.

4. During adjudication, the learned Addl. Collector himself ordered release of all the rest of the watches except 13. He confiscated these 13 watches on the ground that these HMT watches contained watch movements of foreign origin and were not genuine HMT watches.

5. During the course of adjudication the appellant inter alia brought it to the notice of the adjudicating authority that the seizure had not been properly effected and the seized goods had not been sealed and even when they were brought before the adjudicating authority the seal did not bear, the counter-signature of the appellant was not there. As such these 13 watches which were of HMT brand could not be related to the appellant beyond doubt.

It was also their submission that the learned Addl. Collector had not dealt with this point squarely and merely brushed it by saying that he has no reason to doubt the motives of DRI.

6. It was their submission that since 19600 watches in all had been seized and out of these, 18540 had been released before show cause notice, therefore the department was required to examine the position and record a verdict with reference to 1060 watches but even the show cause notice was issued for only 793 watches and no orders have been passed with reference to 264 watches which although seized, have thus far remains unaccounted for. Therefore there was every reason to believe that some thing has gone wrong somewhere.

7. They had also complained against the officers of the DRI before the Director General of Revenue Intelligence and the CBI had also conducted an enquiry and the concerned officers are being prosecuted, in the Court of law in connection with the watches alleged to have been found short. (This figure do not include the 13 watches in dispute in these proceedings now). However even in respect of these 13 watches there was nothing on record to indicate that the same were imported ones. Apparently all these had been assembled in India and even if the movements were proved to be of foreign origin, it could not be held that watches themselves were of foreign origin, and hence these watches were not liable to confiscation.

8. The department has also not shown any evidence which would indicate that the watches had been smuggled into India.

9. That apart even as regards, the movements, the HMT experts had only stated that they were not of the type normally used in HMT watches. The department has also relied on the HMT experts' observation that watch movements are not manufactured by any other firm in India. The learned Addl. Collector has therefore concluded that these movements were imported ones. It was however their contention that even if it is presumed that they were of foreign origin and were imported ones, that by itself does not show that they were imported illegally, and were liable to confiscation.

10. From the circumstances of the seizure itself it would be seen that seizure itself was not valid or proper and it could not be said that the officers had reason to believe that the goods were smuggled ones.

11. It was their contention that since they were HMT brand watches, and the department has not been able to show that they were of foreign origin, therefore neither Section 123 nor Chapter 4 applies.

12. As regards the watch movements also although watch movements are notified items and they were merely not found to be of the type normally used by HMT. As such Chapter 4 was not attracted.

13. The learned counsel asserts that the HMT experts has nowhere stated that the movem