2014 (1) TMI 1218 - AT - Customs

Confiscation of goods - Imposition of penalty - Goods confiscated to be smuggled from other country - Held that - lower authorities have absolutely confiscated the iron drum sheets on the findings that the same stands smuggled from Nepal - The absence of any generator of such iron drum sheets in that area may lead to some doubt of the goods having been smuggled from Nepal but in the absence of any evidence, such doubt cannot be converted into a judicial order. We have to keep in mind that iron drum sheets are not notified items under the provisions of Section 123 of the Customs Act. In that case the onus to prove, beyond doubt, by production of sufficient positive and tangible evidence showing illegal entry of the goods into the country, lies very heavily on the Revenue - apart from a hear-say evidence, there is no other evidence on record indicating movement of goods from Nepal to India. In the absence of such a evidence, the impugned order cannot be upheld. Accordingly, I set aside the absolute confiscation of iron drum sheets along with setting aside of penalties - Decided in favour of assessee.

Summary

Issues:
1. Smuggling of goods from Nepal into India.
2. Confiscation of goods and imposition of penalties.
3. Burden of proof on Revenue to establish illegal entry of goods.
4. Reliance on evidence and lack of tangible proof.
5. Decision on absolute confiscation of goods and penalties.

Detailed Analysis:
1. The case involved the interception of a truck loaded with iron scrap and zinc powder suspected to be smuggled from Nepal into India. The officers seized the goods under a Panchnama and conducted follow-up actions at the premises of the supplier. Statements from individuals involved indicated a connection to goods originating from Nepal, raising suspicions of smuggling.

2. The Revenue issued a show cause notice proposing confiscation of the goods, including iron drum sheets and zinc scrap, along with imposing penalties on the involved parties. The adjudicating authority upheld the confiscation and penalties, which were further affirmed by the Commissioner (Appeals), leading to the present appeal before the Tribunal.

3. The Tribunal analyzed the evidence presented, focusing on the statements of the truck driver and the supplier. While there were indications of goods being sourced from Nepal, the Tribunal emphasized the lack of concrete proof establishing the illegal entry of goods. Notably, iron drum sheets were not classified as notified items under the Customs Act, shifting the burden of proof heavily onto the Revenue to demonstrate illegal importation beyond doubt.

4. The Tribunal highlighted the reliance on hearsay evidence and the absence of tangible proof indicating the movement of goods from Nepal to India. Despite doubts arising from the lack of local production of iron drum sheets, the Tribunal emphasized the necessity of substantial positive evidence to support allegations of smuggling. In the absence of such evidence, the Tribunal set aside the confiscation of iron drum sheets and penalties imposed on the involved parties.

5. Regarding the zinc metallic powder, as the appellants disowned the goods and did not claim ownership, the Tribunal did not issue any specific orders for confiscation. Consequently, the appeal was allowed with consequential relief, setting aside the confiscation of iron drum sheets and penalties on the involved parties, while disposing of the appeal concerning the zinc metallic powder accordingly. The judgment was pronounced in the open court on 29-2-2012.