2017 (2) TMI 238 - AT - Customs

Confiscation of imported goods - cut betel nuts - smuggled character - goods released on the belief that the onus of proving the goods to be smuggled in character as per Section 123 of the Customs Act, 1962 has not been fulfilled - Held that - the betel nut imported by the respondents herein is a non-notified item and as such, the burden of proof is on the appellant-department to substantiate the allegation of illegal import with evidences. I find that there is no evidence to show that the goods are of foreign origin and had been imported illegally. Reliance was placed in the case of Commr. of Customs (Preventive) Vs. Dungarmal Mohata 2006 (5) TMI 92 - HIGH COURT AT CALCUTTA , where it was held that when at the time of inventory if the markings of the names of the foreign countries are not found, then the Revenue had failed to establish a case that the betel nuts are of foreign origin and smuggled into India. The allegation of findings of the presence of the Third Country Origin Mark is not found in the panchanama and also in the SCN or in the Order-in-Original. The Department has failed to establish that the said goods are of foreign origin - appeal dismissed - decided against appellant-Revenue.

Summary

Issues:
Import of cut betel nuts without valid documents, confiscation of goods, penalty under Customs Act, 1962, provisional release of seized goods, failure to prove contraband nature, burden of proof on department, foreign markings on bags, legal importation evidence, non-notified item, evidence of foreign origin, case law precedent, trade opinion, cross-examination of witnesses, burden of proof on revenue, presence of Third Country Origin Mark.

Analysis:
The appellant Revenue alleged that the respondents imported cut betel nuts without valid documents, leading to confiscation of goods and penalty under the Customs Act, 1962. The Hon'ble High Court of Patna ordered provisional release of seized goods. The adjudicating authority issued a provisional release order in compliance with the court's directive. A Show Cause Notice proposing confiscation of betel nuts and penalty was issued, which was confirmed by the adjudicating authority. However, the lower appellate authority set aside the Order-in-Original, stating the department failed to prove the contraband nature or legal importation of the goods, shifting the burden of proof onto the department.

The advocate for the respondents argued that the department's claim of foreign markings on bags lacked specifics, questioning the basis of assuming illegal importation from Nepal. The burden of proof regarding legal importation was emphasized, challenging the department's assumptions. The lower Appellate Authority's decision was supported, highlighting the lack of evidence to substantiate illegal importation claims for non-notified items like betel nuts.

Upon review, the Tribunal found the lower Appellate Authority's decision justified, emphasizing the burden of proof on the department for non-notified items. Citing a case precedent, it was established that the revenue failed to prove the foreign origin or smuggled nature of the betel nuts. The Tribunal noted discrepancies in the department's evidence, such as the absence of Third Country Origin Mark in official documents. The Tribunal upheld the decision, dismissing the appeals and affirming the lack of evidence to support the department's claims of illegal importation.

In conclusion, the Tribunal found no grounds for interference with the lower Appellate Authority's decision, emphasizing the department's failure to meet the burden of proof for proving illegal importation of non-notified items like betel nuts. The appeals were dismissed based on the lack of substantial evidence supporting the department's allegations.