S.L. Peeran, Member (J)

1. In this appeal, the appellants have challenged the validity and correctness of the order-in-original No. 16/87 dated 31.3.1987 passed by the Additional Collector of Customs, New Delhi and has sought for setting aside the imposition of fine of Rs. 1 lakh and penalty of Rs. 25,000/- under Section 112 of the Customs Act, 1962 hereinafter referred to as the Act.

2. The facts of the case as narrated in the order-in-original are that on the basis of specific information, officers of the Directorate of Revenue Intelligence (Nepal Division) New Delhi searched the business premises of the appellants in the presence of the partners of the firm. As a result, a huge stock of Zip fasteners of foreign origin was recovered. On questioning one partner Shri Som Nath Malik produced the documents of importation and payment of duty. But however, the officers found wide variation between the balance of zip fasteners as shown in the stock register and the balance of a stock as found on physical verification. Another partner Shri Girdhari Lal Malik, informed the officers that they had not made the necessary entries in respect of Gate passes Nos. 426 to 429 all dated 18.1.1986 and one bill No. JM 642/643/644 dated 28.10.1985 of Yoshida Kogyo KK. The officers on verification still found wide difference between the actual stock and recorded balance. The said calculation was brought out in the show cause notice. In brief they found excess in stock of 70,819 metallic and non-metallic zip fasteners against book balance of the Notified Register and of 166362 pieces of zip fasteners of various sizes which were alleged to have been sold without issue of any bill/ voucher in contravention of the provisions of Section 11 of the Act As Shri Somnath Malik could not give any satisfactory explanation for the variations between actual stock and the stock register, zip fasteners of foreign origin were seized on the reasonable belief that the same were liable for confiscation under the Act. The relevant documents were seized.

3. The statements of Shri Somnath Malik, Shri Girdharilal Malik and Arun Malik were recorded on 24.1.1986, 19.2.1986, 13.3.1986, 18.3.1986 and 21.4.1986 respectively.

4. A show cause notice dated 19.6.1986 was issued to M/s Malik Brothers, Delhi, Shri Girdhari Lal Malik, Shri Somnath Malik and Shri Arun Malik under Section 111(d) and (h) of the Act to explain as to why the following confiscation should not be done of (i) 70,819 pieces of zip fasteners of foreign origin (ii) 3,36,688 pieces of zip fasteners of foreign origin They were also asked to explain regarding 1,66,362 pieces of zip fasteners of foreign origin not physically available with them and also to explain why personal penalty should not be imposed. In the show cause notice, they were also informed that under Section 123 of the act the onus to prove that 70,819 pieces of zip fasteners of foreign origin of various sizes found excess in their stock register were not smuggled one, lien on the person(s) from whose possession such goods were recovered.

5. The appellants submitted their written reply dated 11.7.1986 They submitted inter alia that they were dealing both in foreign made zip fasteners and Indian zip fasteners, that both types of zip fasteners have similar type of marking. They admitted that Shri Girdharilal had informed the DRI officers that no entries had been made in the Register by the negligence of the clerk of Gate Passes Nos. 426 to 429 all dated 18.1.1986 and Bill No. JM-642/643/644 dated 28.10.1985; that on checking of the complete Bill wise receipts of the foreign made zip fasteners, it was found that the quantity received and not entered far ex ceded the excess found over the book balance; that as such it was not correct that 70,819 pieces were lying in excess of the quantity actually received or 1,66,362 pieces had been sold out without issuing the bills/invoices-that there were clerical errors in maintaining the accounts only; that all