2013 (1) TMI 253 - AT - Customs

Smuggling - Notification 9/96-Cus - Consignment seized from railway station on belief that the goods were smuggled into India from Nepal - Confiscation u/s 111(d) of Custom Act - Held that - To invoke notification 9/96-Cus first it has to be proved that the goods were exported to Nepal from a country other than India and then that the goods have been imported from Nepal to India. None of these two facts are proved. An expert s opinion that the goods are not produced in India does not mean that the above two facts are proved. Notification No. 9/96-Cus., dated 22-1-1996 cannot be interpreted to mean that customs authorities can seize any goods anywhere in India alleging that the goods have been first exported from countries other than India to Nepal and then imported into India from Nepal For confiscating the goods Revenue should have discharged the burden to prove that the goods were exported to Nepal from a country other than India and then the goods were imported into India from Nepal. In both the matters Revenue has failed to discharge the onus. The reason that the mandi receipt and the Railway Receipt were in the names of a firm not found at the address given does not discharge this onus Revenue is not challenging the appellant s ownership of the goods inasmuch as penalty has been imposed on the appellant. If the appellant had bought the goods from another party with name of R.P. Enterprises whose address was fake or if the appellants themselves have transacted the business in the name of a fake company that cannot constitute an offence under the Customs Act enabling the customs officers to seize and confiscate the goods. In favour of appellant

Summary

Issues:
1. Confiscation of betel nuts consignment believed to be smuggled goods.
2. Imposition of penalties on the appellant firm and the proprietor.
3. Burden of proof on Revenue regarding the alleged smuggling.
4. Reliance on expert opinion without opportunity for cross-examination.
5. Interpretation of Notification No. 9/96-Cus. regarding import from Nepal.
6. Ownership claim by the appellant and the address discrepancy.
7. Legality of the lower authorities' orders and the appeal outcome.

Analysis:
1. The case involved the confiscation of a consignment of betel nuts, suspected to be smuggled goods, seized by Revenue at Mughalsarai Railway Station. The consignment was claimed by M/s. Arati Enterprises, with penalties imposed on the appellant firm and its proprietor.

2. The appellant argued that betel nuts were not listed under Section 123 of the Customs Act, shifting the burden of proving smuggling onto Revenue. The goods, originating from West Bengal, were legally purchased and transported, challenging Revenue's basis for confiscation and penalties.

3. A key contention was the lack of evidence by Revenue to prove smuggling, especially regarding the goods' origin and import status. The appellant highlighted discrepancies in Revenue's case and questioned the reliance on an unchallenged expert opinion without the opportunity for cross-examination.

4. The interpretation of Notification No. 9/96-Cus. was crucial, as it pertained to import restrictions from Nepal. The Tribunal emphasized the necessity for Revenue to establish the goods' export to Nepal from a non-Indian country and subsequent import into India, which was not proven in this case.

5. Ownership claims by the appellant, supported by documents, raised doubts about the alleged fake firm involvement and the basis for confiscation. The Tribunal noted that mere discrepancies in names or addresses did not justify confiscation without proper proof of smuggling.

6. Ultimately, the Tribunal found Revenue's case lacking in discharging the burden of proof required for confiscation and penalties. The lower authorities' orders were deemed legally unsustainable, leading to the appeal's success in setting aside the confiscation and penalties imposed on the appellant firm and its proprietor.