2023 (8) TMI 416 - AT - Customs

Confiscation of Vehicle - redemption fine - penalty - Smuggling - Betel Nuts - Foreign Origin goods - goods notified under Section 123 of the Customs Act - place of origin of betel nuts can be determined through test in laboratory or not - HELD THAT - On going through the impugned order of Commissioner (Appeals), it is noted that he has primarily gone by the fact that betel nuts are not notified under Section 123 of the Customs Act and the onus to prove that the same are smuggled is on the Revenue as held by the Tribunal in the case of BABOO BANIK VERSUS COMMISSIONER OF C. EX. CUS., LUCKNOW 2004 (7) TMI 482 - CESTAT, KOLKATA . Further, the Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA 2005 (11) TMI 306 - CESTAT, KOLKATA has held that the local trade opinion cannot take the place of the legal evidence. The reliance on the opinion of Arecanut Research Development Foundation (ARDF), Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory. As such, the Appellate Authority agreed upon that the said report can only be treated as an opinion and not as scientific test report regarding the country of origin. Further, even if the betel nuts are held to be of foreign origin, the same can be confiscated only when it is proved that betel nuts have been illegally smuggled into the country. Revenue has not produced any evidence to show that the betel nuts in question were smuggled into India. The respondent had also brought on record a survey report on the cultivation of areca nuts in India issued by the Directorate of Arecanut and Spices Development, Ministry of Agriculture, Government of India which shows substantial production of betel nuts in West Bengal, Assam and North Eastern State. In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country, their confiscation is neither warranted nor justified. There are no infirmity in the impugned order of the Commissioner (Appeals) - Appeal of Revenue dismissed.

Summary

Issues:
- Determination of the origin of betel nuts
- Confiscation of betel nuts under Customs Act, 1962
- Imposition of penalty under section 112(b)

Issue 1: Determination of the origin of betel nuts

The case involved the interception of a truck loaded with betel nuts, suspected to be of Bangladesh origin. Various opinions were sought from market representatives and a sample was sent to Arecanut Research and Development Foundation (ARDF) in Mangalore, which confirmed the goods were of Bangladesh origin. The appellant argued that the ARDF report was not reliable as there is no standard laboratory test for determining the origin of betel nuts. The Commissioner (Appeals) noted that betel nuts are not notified under section 123 of the Customs Act, placing the burden of proof on the department to show improper importation. The appellate authority emphasized that trade opinions alone cannot lead to confiscation without corroborative evidence.

Issue 2: Confiscation of betel nuts under Customs Act, 1962

The Original Adjudicating Authority confiscated the betel nuts valued at Rs.28,80,150 under section 111(b) and 111(d) of the Customs Act, alleging smuggling from Bangladesh. However, the Commissioner (Appeals) set aside this order, citing previous tribunal decisions that emphasized the need for tangible evidence to prove smuggling of betel nuts into the country. The reliance on the ARDF report was deemed insufficient as it was considered an opinion rather than a scientific test report. The appellate authority highlighted the lack of evidence to establish improper importation of the betel nuts, leading to the rejection of the confiscation and penalty imposition.

Issue 3: Imposition of penalty under section 112(b)

The adjudicating authority imposed a penalty of Rs.1.50 lakhs under section 112(b) on the appellant, which was challenged in the appeal. The appellate authority found that without concrete evidence of improper importation, the penalty imposition was not justified. Citing tribunal precedents, it emphasized that local trade opinions cannot substitute legal evidence in cases of alleged smuggling. As betel nuts were freely imported and traded in the country, the burden of proving illegal importation rested with the department, which was not met in this case. Consequently, the penalty imposition was deemed unwarranted and the appeal was allowed.

[Separate Judgement delivered by Commissioner (Appeals)]