2016 (11) TMI 759 - AT - Customs

Onus of proving smuggled character of goods - import of cut betel nuts - proving the contraband or smuggled nature of the seized goods being notified u/s 123 of the Customs Act by the Department - Held that - the betel nut imported by the respondents herein is a non-notified item and as such, the burden of proof is on the appellant-department to substantiate the allegation of illegal import with evidences. I find that there is no evidence to show that the goods are of foreign origin and had been imported illegally - reliance placed on the decision of the case of Commr. of Customs (Preventive) Vs. Dungarmal Mohata 2006 (5) TMI 92 - HIGH COURT AT CALCUTTA where it was held that when at the time of inventory if the markings of the names of the foreign countries are not found, then the Revenue had failed to establish a case that the betel nuts are of foreign origin and smuggled into India. The allegation of findings of the presence of the Third Country Origin Mark is not found in the panchanama and also in the SCN or in the Order-in-Original. The Department has failed to establish that the said goods are of foreign origin - impugned order warrants no interference - appeals dismissed - decided against appellant-Department.

Summary

Issues:
1. Confiscation of goods imported without valid documents
2. Penalty under Section 112 (a) of the Customs Act, 1962
3. Burden of proof on the appellant-department for illegal import
4. Requirement to prove goods are of foreign origin and illegally imported
5. Trade opinion as evidence
6. Failure to establish Third Country Origin Mark

Analysis:

1. The case involved the import of cut betel nuts without valid documents, leading to the goods being liable for confiscation and the respondents for penalty under Section 112 (a) of the Customs Act, 1962. A show cause notice (SCN) was issued proposing confiscation and penalty. The adjudicating authority confirmed the proposal, but the lower Appellate Authority set it aside, stating the Department failed to prove the goods' contraband nature under Section 123 of the Customs Act and the illegal import into India.

2. The lower Appellate Authority held that the Department did not discharge the responsibility to prove the goods were illegally imported. The burden of proof was on the appellant-department to substantiate the allegation of illegal import with evidence. The absence of evidence to show the goods were of foreign origin and illegally imported was noted. The judgment of the Hon'ble High Court of Calcutta in a related case emphasized the need for concrete evidence to establish foreign origin and smuggling.

3. The trade opinion was considered insufficient to establish the smuggled nature of the goods. The court highlighted the unreliability of statements from alleged traders when their existence was in question. The judgment emphasized the importance of concrete evidence over trade opinion, especially in cases involving non-notified items like betel nuts.

4. The failure to establish the presence of the Third Country Origin Mark was noted as a crucial point. The absence of this crucial evidence in the panchanama, SCN, or Order-in-Original weakened the Department's case in proving the goods' foreign origin. This lack of evidence further supported the decision to dismiss the appeals and uphold the lower Appellate Authority's decision.

5. Ultimately, the Tribunal found no illegality in the lower Appellate Authority's decision. The failure to establish the smuggled character and foreign origin of the goods led to the dismissal of the appeals. The Department's inability to provide concrete evidence to support their claims resulted in the rejection of their appeal, thus upholding the decision of the lower Appellate Authority.