2018 (11) TMI 1947 - AT - Customs

Smuggling - betel Nuts - country of origin - notified goods under Section 123 of the Customs Act and onus to prove - HELD THAT - It is noted that the reliance on the opinion of Arecanut Research Development Foundation (ARDF) Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory - even if the betel nuts are held to be of foreign origin the same can be confiscated only when it is proved that betel nuts has been illegally smuggled into the country. Revenue has not produced any evidence to show that the betel nuts in question were smuggled into India. In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country the Appellate Authority is agreed upon that their confiscation is neither warranted nor justified. As such there are no infirmity in the impugned order of the Commissioner (Appeals). Accordingly Revenue s appeal is rejected.

Summary

Issues:
1. Confiscation of betel nuts alleged to be of foreign origin.
2. Confiscation of the vehicle used for transportation.
3. Reliance on the opinion of Arecanut Research & Development Foundation (ARDF) regarding the country of origin.
4. Burden of proof on Revenue to establish smuggling of goods.
5. Consideration of local trade opinion in determining origin of goods.

Analysis:
1. The case involved the confiscation of betel nuts alleged to be of foreign origin. The truck carrying the betel nuts was intercepted, and statements from the driver and the proprietor of the trading company were recorded. The Commissioner (Appeals) had set aside the order of confiscation passed by the Original Adjudicating Authority, leading to the Revenue filing the present appeal.

2. The proceedings also included the proposed confiscation of the vehicle used for transportation under Section 115(2) of the Customs Act. The Original Adjudicating Authority had ordered the confiscation of the seized betel nuts and the vehicle, with an option for redemption on payment of a fine. However, the Commissioner (Appeals) overturned this decision.

3. The reliance on the opinion of the Arecanut Research & Development Foundation (ARDF) regarding the country of origin of the betel nuts was a crucial aspect of the case. The Original Adjudicating Authority had considered the ARDF report, which indicated Indonesian origin, as a basis for confiscation. However, the Appellate Tribunal found this reliance improper, noting that the ARDF report was merely an opinion and not a conclusive scientific test report on the origin of the goods.

4. The judgment emphasized the burden of proof on the Revenue to establish that the betel nuts were illegally smuggled into India if they were indeed of foreign origin. Despite the ARDF report suggesting foreign origin, the Revenue failed to provide concrete evidence demonstrating smuggling, leading the Tribunal to agree with the Appellate Authority's decision to reject confiscation.

5. The consideration of local trade opinion in determining the origin of the goods was another significant aspect. The Tribunal cited precedents where it was held that local trade opinion cannot substitute legal evidence. The respondent had presented a survey report on the cultivation of areca nuts in India, indicating substantial production in certain regions. In the absence of conclusive evidence proving foreign origin and illegal smuggling, the confiscation of the betel nuts was deemed unwarranted and unjustified by the Tribunal, upholding the decision of the Commissioner (Appeals).