2015 (5) TMI 131 - AT - Customs

Confiscation of goods - Imposition of redemption fine - Betel nuts confiscated on doubt of being smuggled - Whether the impugned goods were of foreign original and were smuggled - Held that - It is seen that betel nuts are not notified under Section 123 of the Customs Act, 1962. Consequently, the onus to prove that the goods are of foreign original and are smuggled is squarely on Revenue and this onus cannot be discharged merely on the basis of suspicion. Neither in Show Cause Notice nor in adjudication order any evidence has been produced as to from where the goods have been smuggled and what is the origin thereof. It is seen that Shri Maqsood Alam has confirmed that the goods were sent by him to M/s. RK Enterprises, who has also confirmed having placed the order therefor. M/s. Bahubali Attractions Pvt. Ltd. has accepted having supplied the goods to Shri Maqsood Alam and has also claimed along with the evidence of cash memos that they had bought almost 46 tons of betel nuts under various cash memos (on payment including VAT) from two cooperative societies, which in turn had bought the goods from NCCF and the cooperative societies have mentioned the invoice numbers of NCCF under which the goods were bought by them (i.e., the cooperative societies). Opinions that the goods are of foreign origin based on visual examination are totally insufficient to quasi judicially arrive at a finding that the goods are of foreign origin. Further being of foreign origin in itself does not mean that the goods are smuggled for which positive evidence is to be produced by Customs authorities to establish the smuggled nature of goods. We find that the Customs has not even attempted to produce any such evidence in the present case. As regards the marking Triveni, Kolkata in transit to Nepal found on a few bags, in the case of CC (Preventive) Vs. Dugarmal Mohata (2006 (5) TMI 92 - HIGH COURT AT CALCUTTA), the Kolkata High Court observed, No reliance can be placed regarding inscription Biratnagar, Nepal, Transit to Calcutta to Nepal which were found on some of the seized bags . It may be mentioned here that mere suspicion based on circumstances is not sufficient to sustain the allegation of smuggling. - Customs have failed to establish that the goods were smuggled. Once the allegation of smuggling is held to be unsustainable, no penalties and redemption fine survive - Decided in favour of assessee.

Summary

Issues:
1. Confiscation of betel nuts and truck
2. Imposition of penalties on individuals
3. Allegation of smuggling and foreign origin of goods

Confiscation of Betel Nuts and Truck:
The appeals were filed against an Order-in-Original that confiscated 14,609 kgs of betel nuts and a truck. The Customs authorities suspected the betel nuts to be smuggled from Nepal based on visual examination and discrepancies in packaging. However, the appellants argued that there was no concrete evidence to prove smuggling. The onus to establish foreign origin and smuggling lay on the Revenue, and mere suspicion was insufficient. The adjudicating authority primarily relied on visual opinions and statements from cooperative societies, which the appellants contested as unreliable. Legal precedents were cited to support the appellants' argument that visual examination alone cannot prove smuggling. Ultimately, the Tribunal found that Customs failed to provide substantial evidence of smuggling, leading to the decision to set aside the confiscation.

Imposition of Penalties on Individuals:
Apart from the confiscation, penalties were imposed on various individuals involved in the transaction. The appellants challenged these penalties based on the lack of concrete evidence supporting the smuggling allegation. They argued that without establishing the goods as smuggled, penalties and redemption fines were unjustified. The Tribunal, in line with the analysis of the smuggling allegation, concluded that since the smuggling charge was not proven, the penalties and redemption fine could not be upheld. Therefore, all the appeals were allowed, and the impugned order was set aside, leading to the nullification of penalties.

Allegation of Smuggling and Foreign Origin of Goods:
The core issue revolved around determining whether the betel nuts were of foreign origin and smuggled. The Customs authorities suspected foreign origin based on visual examination and packaging markings. However, the appellants contested this suspicion, highlighting the lack of concrete evidence linking the goods to smuggling. Legal precedents were cited to emphasize the necessity of substantial proof in cases of non-notified goods. The Tribunal reiterated that mere opinions and visual examinations were insufficient to establish smuggling. Without concrete evidence, such as the country of origin or the smuggling process, the allegation could not be sustained. The absence of substantial evidence led to the conclusion that Customs failed to prove the goods were smuggled, resulting in the decision to set aside the confiscation and penalties.