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2026 Supreme(Online)(CESTAT) 236
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Dilip Gupta, President, C.J. Mathew, Member (Technical)
M/s. Kapoor Watch Co. Pvt. Ltd. – Appellant
Versus
Principal Commissioner of Customs (Preventive) – Respondent
CUSTOMS APPEAL NO. 50706 OF 2020|CUSTOMS APPEAL NO. 50707 OF 2020|CUSTOMS APPEAL NO. 50708 OF 2020|CUSTOMS APPEAL NO. 50709 OF 2020|CUSTOMS APPEAL NO. 50710 OF 2020|CUSTOMS APPEAL NO. 50728 OF 2020
For the Appellants/Petitioners: Shri Piyush Kumar, Shri Sharad Chandra Srivastava, Ms. Gunjan Tanwar
For the Respondents: Shri Devesh Tripathi, Shri Ajay Kumar, Shri Nikhil Mohan Goyal
The burden of proving smuggling lies with the department once the appellant provides evidence of lawful possession, and issuance of the show cause notice after five years is invalid.
Headnote:(A) Customs Act, 1962 - Sections 111, 112, 114A and 28(4) - Appeal against order confiscating 837 watches and imposing penalties for alleged smuggling - Burden of proof with appellant to establish lawful possession per Section 123. (Para 40)
(B) Limitation - Issuance of notice after five years contravenes section 28(1) of the Customs Act, thus invalid. (Para 37)
(C) Evidence - Compliance with section 138B regarding admissibility of statements was not followed, rendering findings unsubstantiated. (Para 46)
Facts of the case:
Appellants contested the confiscation of 837 watches by the Principal Commissioner, claiming lawful import, with searches revealing discrepancies in documentation without any explicit evidence of smuggling. (Paras 7-9, 10-12)
Findings of Court:
The court found errors in the Principal Commissioner's order regarding proof of smuggling due to presumption of possession and improper invocation of extended limitation period. (Paras 40-42)
Issues: Key questions involved the burden of proof for smuggling under section 123, validity of evidence, and the legality of the show cause notice based on elapsed time. (Para 35)
Ratio Decidendi: Court noted that the burden to prove legal import lies with the department once the appellant shows credible evidence of lawful possession, invalidating the penalties imposed. (Para 41)
Result: Appeals allowed.
| Table of Content |
|---|
| 1. conflicts over penalties imposed on directors. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. details of customs seizure and initial findings. (Para 7 , 8 , 9 , 10) |
| 3. show cause notice specifics regarding limited watches. (Para 11 , 12 , 13 , 14) |
| 4. appellant's arguments about procedural errors. (Para 15 , 16 , 17 , 18 , 19) |
| 5. court's observations on the legal burden of proof. (Para 20 , 21 , 22) |
| 6. legal standards for smuggling allegations. (Para 23 , 30 , 39 , 42) |
| 7. analysis of evidence related to seizures. (Para 24 , 28 , 33 , 46) |
| 8. final verdict on the appeals. (Para 47) |
JUSTICE DILIP GUPTA:
Customs Appeal No. 50706 of 2020 has been filed by M/s. Kapoor Watch Co. Pvt. Ltd., the appellant to assail that portion of the order dated 12.12.2019 passed by the Principal Commissioner (Preventive), New Customs House, New Delhi, the Principal Commissioner that confiscates 837 watches under section 111 of the Customs Act, 1962 , the Customs Act with option to release the same on payment of redemption fine; confirms the customs duty under section 28(4) of the Customs Act; and imposes a penalty upon the appellant under section 114A of the Customs Act.
2. Customs Appeal No. 50707 of 2020 has been filed by Raunaq Kapoor, Director of the appellant, to assail that part of the order dated 12.12.2019 passed by the Principal Commissioner that imposes a penalty upon him under section 112 of the Customs Act.
3. Customs Appeal No. 50708 of 2020 has been filed by Amarjeet Kapoor, Director of the appellant, and Partner of M/s. Kapoor N Company, Kapoor N Company to assail that part of the order dated 12.12.2019 passed by the Principal Commissioner that imposes penalties upon him under section 112 of the Customs Act.
4. Customs Appeal No. 50709 of 2020 has been filed by Sandeep Kapoor, Director of the appellant, and Partner of Kapoor N Company to assail that part of the order dated 12.12.2019 passed by the Principal Commissioner that imposes penalties upon him under section 112 of the Customs Act.
5. Customs Appeal No. 50710 of 2020 has been filed by Kapoor N Company to assail that portion of the order dated 12.12.2019 passed by the Principal Commissioner that confiscates the smuggled watch under section 111 of the Customs Act with an option to release the same on payment of redemption fine; confirms the demand of customs duty under section 28(4) of the Customs Act; and imposes a penalty under section 114A of the Customs Act.
6. Customs Appeal No. 50728 of 2020 has been filed by Amit Kumar to assail that portion of the order dated 12.12.2019 passed by the Principal Commissioner that imposes a penalty upon him under section 112 of the Customs Act.
7. It transpires from the record that on the basis of information, the Directorate Revenue of Intelligence, DRI officers intercepted a foreign national Nigel Nicholas Bright on 08.10.2012 outside the arrival hall of the Terminal-3 of the IGI Airport while handing over a small package to Amit Kumar. On examination, the said package was found to contain 2 high end Frank Muller watches and on being asked Nigel Nicholas Bright stated that he had brought the said watches illicitly without declaration to customs to hand those over to Amit Kumar.
8. Amit Kumar, in his statement dated 08/09.10.2012, stated that he was an employee of the appellant and he had taken the delivery of the said watches on behalf of Sandeep Kapoor, Director of the appellant. In the follow up search at the residence of Amit Kumar, DRI officers recovered 8 new Frank Muller watches, 4 old watches and cash amounting to Rs. 63,00,000/-.
9. On the basis of statement made by Amit Kumar, DRI searched 7 showrooms of the appellant, a showroom of Kapoor N Company, service centre of sister concern of the appellant, Kapoor Time Crafter and residences of Directors/Partners/Employees of the appellant. In these searches, the officers detained 4424 watches and 428 other merchandises of foreign origin. After search, the officers handed over the detained goods to re
