2014 (3) TMI 717 - AT - Customs

Misdeclaration of goods - Smuggling of goods - Difference between mark on goods and description on documents - Confiscation of goods - whether Commissioner (Appeals) is right in concluding that the department has failed to prove that the imported Betel Nuts are smuggled one - Held that - in view of the fact that the betel nuts are non-notified items, the onus to prove that the goods are smuggled lies heavily upon the Revenue and which required to be discharged by production of positive evidences - Revenue cannot first show laxity in investigation and then seek to shift the burden to prove that the goods are not smuggled especially when there is not even any evidence produced to show illegal importation of seized non-notified goods - Actually availability of bill of entry and transfer of Betel nuts from torn bags to new bags could not prove that possession was illegal. Thus onus did not shift to the respondent - Accordingly the Department could not discharge the burden cast upon them. Furthermore, the department has no evidence to prove that goods were imported in violation of Section 111(b) of the Customs Act, 1962 - Decided against Revenue.

Summary

Issues Involved:
1. Legality of the seizure of betel nuts and truck.
2. Validity of the evidence presented by the department.
3. Burden of proof regarding the smuggled nature of the goods.
4. Compliance with the National Litigation Policy.

Issue-wise Detailed Analysis:

1. Legality of the Seizure of Betel Nuts and Truck:
The Customs officers intercepted a truck carrying betel nuts claimed to be imported from Bangladesh. The driver presented various documents, including a transit declaration form, lorry challans, a bill of entry, and an invoice. However, discrepancies were found between the markings on the bags and the documents. The department seized the goods, suspecting them to be smuggled. The original adjudicating authority confiscated the goods and imposed penalties. However, the Commissioner (Appeals) set aside this order, concluding that the department failed to prove the contraband nature of the goods.

2. Validity of the Evidence Presented by the Department:
The department's appeal argued that the place of loading was disputed, the markings on the bags differed, and the documents were fabricated. They relied on circumstantial evidence and the statement of the CHA's representative, who suggested the goods were from Bangladesh. The Commissioner (Appeals) found that the investigation did not conclusively prove the goods were smuggled and that the evidence provided was insufficient. The Tribunal upheld this view, noting that the department failed to provide tangible evidence of illegal importation.

3. Burden of Proof Regarding the Smuggled Nature of the Goods:
The department argued that the burden of proof lies on the importer to show the legal importation of goods when they are not covered under Section 123 of the Customs Act, 1962. The Commissioner (Appeals) and the Tribunal held that the burden to prove the goods were smuggled lies on the department, especially for non-notified items like betel nuts. The department's reliance on the driver's statement and discrepancies in documents was deemed insufficient to shift the burden of proof to the importer.

4. Compliance with the National Litigation Policy:
The respondent's counsel argued that the appeal was against the National Litigation Policy as the duty involved was less than Rs. 5 lakhs. Although the Tribunal agreed with this point, it noted that the decision was taken on merit, rendering this argument irrelevant to the final outcome.

Conclusion:
The Tribunal concluded that the department failed to provide conclusive evidence of smuggling. The discrepancies in documents and the driver's statement were insufficient to prove the goods were smuggled. The burden of proof remained with the department, which it failed to discharge. Consequently, the appeals filed by the department were set aside, and the order of the Commissioner (Appeals) was upheld, confirming that the seized betel nuts were not smuggled. The issue of compliance with the National Litigation Policy was acknowledged but deemed irrelevant to the decision on merit.