2023 (3) TMI 703 - HC - Customs

Smuggling - Betel nuts (foreign Origin goods) - goods notified under Section 123 of the Customs Act or not - burden to prove - reliability on statements which were subsequently retracted - HELD THAT - Based on presumptions and assumptions, it cannot be held that the goods were smuggled goods and in the absence of any evidence produced by the revenue to discharge the burden cast upon them, the Tribunal noting the facts of the case had rightly granted the relief in favour of the respondents. Furthermore, there was no testing of the seized goods through any accredited Agency for determining any constituent property or characteristic that would indicate or establish foreign origin of the said goods. The Tribunal noted that the only evidence on the basis of which the proceedings were initiated and the order of adjudication was passed against the nine respondents is based on a statement recorded from the respondent in CUSTA 22 of 2022. All the respondents were arrested and produced before the learned Chief Judicial Magistrate, Siliguri before whom the so-called voluntary statements were retracted. Furthermore, the Tribunal noted that there was no discussion on the retraction of statements made on oath by the respondents and the witnesses who implicated the respondents were not produced for cross-examination in spite of a specific request made by the concerned respondent and this request was rejected on the ground that the occupants of the trucks had allegedly described the true facts in course of the statements recorded under Section 108 of the Act which were affirmed by the respondent. Whether the request of cross-examination could have been rejected? - HELD THAT - On a thorough factual analysis and noting the legal position, the Tribunal came to the conclusion that the department has failed to establish that the said goods are smuggled goods. The respondent in claimed ownership of the seized goods and prayed for a direction to return the goods to him and the Tribunal analysed the documents and directed return of the goods - The entire case is fully factual and, no substantial question of law arises for consideration Return of the goods - HELD THAT - Admittedly, the goods are perishable in nature and the goods were seized on 1st march, 2016 and the question of returning the goods to the respondent in CUSTA 22 of 2022 at this juncture does not arise as the goods would be unfit for human consumption and it will be against the public interest to direct return of the goods. Therefore, to that extent, the order passed by the Tribunal stands modified giving liberty to the respondent, namely, Md. Tashin Shah to seek for payment of the value of the goods by making an application before the concerned authority and if such application is made within a period of thirty days from the date of receipt of server copy of this order, the said application shall be processed in accordance with law. Appeal dismissed.

Summary

Issues involved:
The judgment involves the following substantial legal questions:
I. Whether the order of the Learned Tribunal wrongly held that the case does not fulfill the requirement of "smuggling" under the Customs Act, 1962 and invoked Section 111 of the Act?
II. Whether the Tribunal's order violated principles of natural justice and acted erroneously in comparison to the adjudication order?
III. Whether the respondent had full knowledge of smuggling and deliberately involved himself in the activity, rendering the goods liable for confiscation and penalty?
IV. Whether the order was illegal as the goods were improperly imported through an unauthorized route, falling under the definition of smuggled goods?
V. Whether the Tribunal erred in not considering the voluntary statements recorded under Section 108 of the Customs Act as evidence of the goods being of smuggled nature?
VI. Whether statements made under section 108 of the Customs Act are admissible for cross-examination?
VII. Whether the Tribunal erred in releasing the goods to the respondent without proper evidence of non-smuggling?

Detailed Judgment:
The Tribunal rightly placed the burden of proof on the department to establish the smuggled nature of the goods, as betel nuts were not notified goods under Section 123 of the Customs Act. The Tribunal's decision was supported by previous court judgments, emphasizing the requirement for evidence of foreign origin to prove smuggling.

The Tribunal found that the department failed to discharge the burden of proof, as no incriminatory evidence was obtained during the investigation. The seized goods were purchased locally, regulated by Market Committees, and lacked foreign markings. The absence of evidence indicating foreign origin led the Tribunal to grant relief to the respondents.

Regarding the retracted statements, the Tribunal noted discrepancies and lack of independent evidence supporting the smuggling charge. The denial of cross-examination further weakened the department's case, as highlighted in a Supreme Court decision.

Ultimately, the Tribunal found no substantial legal question and affirmed its decision to dismiss the appeals filed by the department. However, considering the perishable nature of the goods seized, the Tribunal modified the order to allow the respondent to seek payment for the value of the goods instead of their return.

In conclusion, the judgment upheld the Tribunal's decision due to the lack of evidence supporting the smuggling charge and modified the order regarding the return of perishable goods.