2021 (12) TMI 918 - AT - Customs

Smuggling - Betel Nuts of foreign origin - goods notified under Section 123 of the Customs Act - adverse presumption against the appellants could be made about the said goods being smuggled or being of a foreign origin? - retraction of statements - HELD THAT - In the case of COMMR. OF CUS. (PREV.), WB., KOLKATA VERSUS SUDHIR SAHA, 2004 (7) TMI 95 - HIGH COURT AT CALCUTTA , the Division Bench of the Calcutta High Court while holding that betel nuts not being a notified goods under Section 123 of the Customs Act, 1962, further held that the burden to prove the smuggled nature of the said goods was on the Department and the same could not be shifted to person from whom such goods were seized - The facts of the instant case are also similar. Herein also the alleged confessional statements were retracted at the earliest opportunity by the concerned persons. Consequently, the burden of proof to establish smuggled nature of the seized goods was on the Department which it has completely failed to discharge. The conclusion arrived at as regards the foreign origin of the said goods and the smuggled nature by the adjudicating authority is based on surmises and conjectures. The goods were seized far away from the international border in the interior of North Bengal from trucks/warehouses. It is an undisputed fact that betel nuts are sold in the adjoining State of Assam, Monipur as well as the said North District of West Bengal and their adjacent area. In such circumstances, in the absence of any evidence to the contrary disclosed it has to be concluded that the Revenue has been unable to establish the smuggled nature of the seized goods and thus discharged the burden of proof cast upon the Revenue in this respect. In the instant case, it is found that documents on record show that the said goods were purchased from the local markets and/or haat and/or mandi located in Jalpaiguri district of West Bengal; the sale/purchase of agricultural produce, such as Betel Nuts, are regulated by the respective District Regulated Market Committees and their sub-Divisional Offices in terms of the West Bengal Agricultural Produce Marketing (Regulation) Act, 1972 - In the instant case from copies of the receipts on record evidencing the market fee paid by the appellant it is evident that the seized consignments of the said goods had been purchased on payment of such cess under the APM Regulation Act. In the instant case, there is no discussion on the retraction of statements made on oath by the Appellants. Moreover in the present case the witnesses who implicated the Appellant were not produced for cross-examination, inspite of specific request made on behalf of the Appellant - the Department has failed to establish that the said goods are smuggled goods. The documents produced by the said Appellant are in his favour. Therefore Md. Tashin Shah is to be regarded as owner of the said goods. The said goods are thus required to be returned to the said Appellant, Md. Tashin Shah - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Delay in filing Cross Objections by the Respondent Department.
2. Confiscation of Betel Nuts under Section 111(b) of the Customs Act, 1962.
3. Confiscation of carrier trucks under Section 115(2) of the Customs Act, 1962.
4. Imposition of penalties under Section 112(a) and/or 112(b) of the Customs Act, 1962.
5. Determination of the foreign origin and smuggled nature of the Betel Nuts.
6. Denial of cross-examination of witnesses.
7. Burden of proof on the Department to establish the foreign origin of the Betel Nuts.
8. Claim of ownership of the seized goods by Md. Tashin Shah.

Detailed Analysis:

1. Delay in Filing Cross Objections:
The Respondent Department filed Miscellaneous Applications (COD for Cross Objection) to condone the delay in filing Cross Objections. The Tribunal allowed the applications based on the submissions and reasons provided by the Department, and with the consent of both parties, proceeded to hear the appeals.

2. Confiscation of Betel Nuts:
The Commissioner of Customs, Central Excise & Service Tax, Siliguri Commissionerate, confiscated 82.92 MT of Betel Nuts under Section 111(b) of the Customs Act, 1962, on the grounds that they were of foreign origin and smuggled from Myanmar. The Tribunal examined whether the Betel Nuts were indeed smuggled and found that the Department failed to establish the foreign origin of the goods.

3. Confiscation of Carrier Trucks:
Four carrier trucks were confiscated under Section 115(2) of the Customs Act, but the Commissioner allowed redemption upon payment of fines. The Tribunal's decision on the smuggled nature of the Betel Nuts directly impacted the validity of the truck confiscations.

4. Imposition of Penalties:
Penalties were imposed on various individuals under Section 112(a) and/or 112(b) of the Customs Act. The Tribunal scrutinized the basis for these penalties, particularly the reliance on witness statements and the denial of cross-examination.

5. Foreign Origin and Smuggled Nature of Betel Nuts:
The Tribunal noted that Betel Nuts are not notified goods under Section 123 of the Customs Act, meaning the burden of proof lay with the Department. The Department's evidence, primarily based on witness statements, was found insufficient. The Tribunal highlighted that the seized goods were found far from the international border and were accompanied by market receipts indicating local purchase.

6. Denial of Cross-Examination:
The Tribunal criticized the denial of cross-examination of witnesses whose statements were pivotal to the Department's case. Citing precedents, the Tribunal emphasized that such denial violated principles of natural justice.

7. Burden of Proof:
The Tribunal reiterated that the burden of proving the foreign origin of the Betel Nuts rested with the Department. The Department's failure to provide conclusive evidence meant that the confiscation and penalties could not be sustained.

8. Ownership Claim by Md. Tashin Shah:
Md. Tashin Shah claimed ownership of the seized goods, supported by documents of sale and purchase, money receipts, and consignment notes. The Tribunal found no objections to his claim and directed the return of the goods to him.

Conclusion:
The Tribunal set aside the impugned order, allowing all appeals with consequential relief to the appellants. The Department's Cross Objections were also disposed of. The judgment underscored the importance of adhering to procedural fairness and the burden of proof in cases involving alleged smuggling.