2024 (6) TMI 399 - AT - Customs

Absolute confiscation of goods with penalty - Cigarettes - Search and seizure of goods u/s 105 of Customs Act 1962 - Onus under section 123 of Customs Act 1962. Seizure of goods - HELD THAT - Scattered across the adjudicatory terrain are also liberal references to Cigarettes and Other Tobacco Products Act 2003 and to the extent of lack of compliance thereto having been alluded to for the purpose of inferring the goods as not having been licitly imported there can be no cause for cavil. However the statute is municipal law and therefore enforceable only by the designated authorities in the context of having been put up for sale in the domestic market which precludes confiscation under customs law for non-compliance thereof. That the seized cigarettes were of foreign origin is beyond the scope of controverting and that the packaging of the cigarettes were not in consonance with Cigarette and Other Tobacco Products Act 2003 as demonstrative of illicit cross-border movement sufficed for seizure under section 110 of Customs Act 1962 and also for operability of section 123 of Customs Act 1962. Onus under section 123 of Customs Act 1962 - HELD THAT - In so far as hand rolling tobacco rolling paper and filters are concerned too the onus under section 123 of Customs Act 1962 and non-compliance with Cigarette and Other Tobacco Products Act 2003 were applied but through indirect association for coverage therein as also to justify confiscation under section 111(d) of Customs Act 1962 for having been imported contrary to prohibition under other law. In the lack of any fact or evidence that hand rolling tobacco rolling paper and filters had been smuggled into the country the very proceedings stand voided ab initio. The confiscation under section 111 of Customs Act 1962 and imposition of penalty thereto on the appellant lacks authority of law and are set aside. The confiscation of 10, 200 sticks of cigarettes of foreign origin valued at Rs. 1, 53, 000 alone stands unaltered. It would therefore be inappropriate to uphold the penalty imposed under section 112 of Customs Act 1962 on the appellant in its entirety and the ends of justice will be served by reducing it to Rs. 50, 000 - Appeal disposed off.

Summary

Issues involved: Search and seizure of goods u/s 105 of Customs Act, 1962, absolute confiscation of goods, penalty imposition, compliance with Cigarettes and Other Tobacco Products Act, 2003, applicability of sections 123 and 111(d) of Customs Act, 1962.

The judgment pertains to a case where the godown of the appellant was searched under section 105 of the Customs Act, 1962, leading to the seizure of various goods, including cigarettes of foreign origin and tobacco products. The goods were confiscated due to the appellant's failure to discharge the onus under section 123 of the Customs Act, 1962. The appellant challenged the order of confiscation after an unsuccessful appeal before the Commissioner of Customs (Appeals), Mumbai-III.

The case for absolute confiscation was based on the appellant's inability to prove that the seized goods were not smuggled, as required under section 123 of the Customs Act, 1962. The judgment highlighted the importance of compliance with the Cigarettes and Other Tobacco Products Act, 2003, in determining the licit importation of goods. The confiscation of cigarettes of foreign origin and other tobacco products was justified under various sections of the Customs Act, 1962.

The Tribunal ruled that the confiscation of goods outside the customs area based on non-compliance with the Cigarettes and Other Tobacco Products Act, 2003, was not within the jurisdiction of customs authorities. The judgment emphasized that the obligations under the municipal law could only be enforced by designated authorities after clearance, and not by customs officers.

The dispute centered around the confiscability of certain tobacco products despite explanations provided by the appellant regarding the source of the goods. The Tribunal questioned the competence of customs authorities to seek explanations from traders outside the customs area under the Customs Act, 1962. The deeming of certain products as 'cigarettes' under section 123 of the Customs Act, 1962, was deemed erroneous based on the interpretation of relevant tariff laws.

Ultimately, the Tribunal found the confiscation and penalty imposed on the appellant to be void ab initio due to the lack of evidence of smuggling. The confiscation of cigarettes of foreign origin was upheld, while the penalty imposed was reduced. The judgment was pronounced on 15/05/2024, disposing of the appeal on revised terms.