2017 (7) TMI 632 - AT - Customs

Smuggling - import of betel nuts - whether of Indian origin or Foreign origin? - correctness of statements recorded under Section 108 of Customs Act, 1962 - confiscation - Held that - the Original Authority has taken into consideration the statements dated 14 January, 2013 of two drivers who stated that goods were brought from Nepal and the markings on the packing materials but did not take into consideration the retractions filed by the said two drivers retracting their statements dated 14.01.2013. We find that the Original Authority has not examined the evidence before him objectively and therefore, his finding that the goods were of third country origin and they were brought from Nepal and they were brought through a route which was not specified, are all imaginary - the confiscation of 40 MT of Betel Nuts ordered through the impugned Order-in-Original is not sustainable and also for the reason that onus to prove that the goods were of smuggled nature has not been established by Revenue in the entire course of proceedings. Since the smuggled nature of the goods is not established, the confiscation of trucks and penalty on all the appellants under Section 112 of Customs Act, 1962 automatically needs to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Seizure and confiscation of 40 MT of Betel Nuts brought from Nepal
- Retraction of statements by drivers and evidence of goods' origin
- Violation of Principles of Natural Justice in the adjudication process

Seizure and Confiscation of Betel Nuts:
The case involved the interception of two trucks carrying 40,000 kgs of SPLIT Betel Nuts near Itonja on Sitapur-Lucknow highway. The officers found documents indicating the origin of the goods and recorded statements of the drivers. The seized Betel Nuts were examined by local traders who opined that they were likely of foreign origin, possibly from Indonesia. A show cause notice was issued alleging contravention of customs provisions, leading to the confiscation of the goods and imposition of penalties under the Customs Act, 1962.

Retraction of Statements and Evidence of Goods' Origin:
The drivers of the trucks retracted their statements recorded under Section 108 of the Customs Act, 1962, claiming they were obtained under pressure. The appellants argued that the Revenue failed to prove the goods were smuggled, as the evidence was based on the drivers' statements and opinions of trade experts without providing their qualifications. The Original Authority concluded the goods were of foreign origin without considering the retractions or conducting a thorough investigation into the goods' actual origin.

Violation of Principles of Natural Justice:
The appellants contended that the Principles of Natural Justice were violated as they were not allowed to cross-examine the trade experts or provided with necessary documents to assess their competence. The lack of objective examination of evidence by the Original Authority was highlighted, leading to a finding based on presumptions rather than concrete proof. The Tribunal found the confiscation of the Betel Nuts unsustainable due to the failure of the Revenue to establish the goods' smuggled nature, leading to the setting aside of the entire impugned Order-in-Original.

This detailed analysis of the legal judgment highlights the key issues involved, the arguments presented by both parties, and the Tribunal's decision to set aside the confiscation of the Betel Nuts and penalties imposed, emphasizing the lack of conclusive evidence and procedural irregularities in the adjudication process.