2023 (6) TMI 328 - HC - Customs

Confiscation - Detention and seizure of betel nuts - goods of foreign origin and unfit for human consumption - Discharge of burden of prove - standard of proof as envisaged under Section 123 of the Customs Act, 1962 is the best beyond reasonable doubt - seized goods were found to be unfit for human consumption as per test report of Export Inspection Agency, Kolkata, under Food and Standard (Food Products Standards and Food Additive) Regulations, 2022. HELD THAT - Section 123 of the Act, 1962 provides that where any goods included under Sub-section 2 of Section 123 are seized under the provision of the Act, 1962, on the basis of reasonable belief that the same are smuggled goods, then the burden of proving that they are not smuggled goods, shall lie upon the person from whose possession such goods have been seized and in a case, when another person claims to be owner thereof though such goods have not been seized from his possession, upon such claimant and in other cases on the person, who claims to be owner of the goods so seized - the condition precedent is that the revenue authority must have a reasonable belief that goods seized were smuggled goods and fall under the category of goods enumerated or notified under Subsection 2 of Section 123 of the Custom Act, 1962. In the case in hand it is undisputed that on the basis of a specific intelligence report the search was conducted in a Thermal Power godown at Bairabi but nothing was found. The In-charge of the godown in his recorded statement clearly declared that the godown belongs to the Thermal Power Department and no smuggled goods were stored therein - There is nothing on record to satisfy that the revenue officers had material before them to have satisfaction that the goods were of foreign origin and imported to India without due procedure. There is nothing on record, to even have a prima-facie view that the goods were of foreign origin, more particularly for the reason that the goods were seized within Indian Territory and there is nothing including any foreign markings on the bags to even remotely suggest that the goods seized were of foreign origin. There is also no credible expert opinion regarding the origin of the goods. Therefore, only on the ground that different authorities in Northeast had made seizures of betel nuts in large quantities, it cannot be concluded in every individual case that such betel nuts are also of the foreign origin, without any tangible material being available with the authorities - in the considered opinion of this court the learned Tribunal has rightly come to the conclusion based on apropos appreciation of material available on record. Therefore, the decision of the learned Tribunal cannot be treated as perverse. Accordingly, the substantial question of law framed as regards perversity is also answered against the appellant and in favour of the respondents. Quality of the seized betel nuts - HELD THAT - It is reflected from record that immediately after the seizure, on examination by scientific expert, the goods were found to be fit for human consumption. However, in the second test conducted after almost seven months, the same goods were found to be not fit for human consumption. If that be so, it cannot be a concern of the Customs Authority to assail the decision of the Tribunal on the ground that the Tribunal ought not to have set aside the order of confiscation inasmuch as from the record itself it is established that the goods seized became unfit for human consumption during the period they were under seizure. If the confiscated goods are used for human consumption after its release, the same will give a different cause of action for different authorities to take action against those persons in accordance with law and it cannot be within the jurisdiction and concern of the Customs authority. Accordingly, this substantial question of law is also answered against the appellant and in favour of the respondents - Appeal dismissed.

Summary

Issues Involved:
1. Standard of proof under Section 123 of the Customs Act, 1962.
2. Legality of the order of confiscation of goods deemed unfit for human consumption.
3. Alleged perversity of the findings by the CESTAT, Kolkata.

Summary:

Issue 1: Standard of Proof under Section 123 of the Customs Act, 1962
The court examined whether the CESTAT, Kolkata, erred in law by holding that the standard of proof under Section 123 of the Customs Act, 1962, is beyond reasonable doubt. The court clarified that Section 123 shifts the burden of proof to the person from whom the goods were seized only if the goods are notified under Section 123(2). In this case, betel nuts are not notified goods under Section 123(2). Therefore, the initial burden to prove that the goods were smuggled lies with the revenue authority. The court upheld the tribunal's view that the burden of proof under Section 123(1) does not apply here, answering the question of law against the appellant.

Issue 2: Legality of the Order of Confiscation
The court addressed whether the CESTAT, Kolkata, erred in setting aside the confiscation order when the seized goods were found unfit for human consumption. It was noted that the goods were initially found fit for human consumption but were deemed unfit after seven months. The court stated that it is not within the jurisdiction of the Customs Authority to challenge the tribunal's decision on this ground. If the released goods are used for human consumption, other authorities can take appropriate action. This question of law was also answered against the appellant.

Issue 3: Alleged Perversity of the Findings
The court examined the alleged perversity of the CESTAT's findings. It found that the revenue authority failed to provide sufficient evidence that the goods were of foreign origin and smuggled. The GST invoices and e-way bills produced by the respondents were not satisfactorily refuted by the revenue authority. The court noted the absence of any foreign markings or credible expert opinions suggesting that the goods were of foreign origin. It concluded that the tribunal's decision was based on a proper appreciation of the available material and was not perverse. This question of law was also answered against the appellant.

Conclusion:
The appeals were dismissed as devoid of merit, with each party bearing its own costs.