2021 (1) TMI 523 - AT - Customs

Absolute Confiscation - subject exotic birds and animals owned by the appellant - town seizure of the birds /animals - prohibited and smuggled or not - burden to prove the allegation of smuggling - HELD THAT - It is a case of town seizure and not interception at the point of entry in India. Admittedly, the appellant have purchased the exotic birds/ animals in domestic area within India, which has been corroborated by the two suppliers based at Indore namely Golu and Monu who are also the co-noticees. Further, there is no evidence on record that the said Golu and Monu have smuggled the exotic birds/animals in India. Further, I find that the Revenue has failed to establish the allegation of smuggling with any cogent evidence, either by the appellant or the other two co-noticees. The burden of proof lies on Revenue to support its allegation of smuggling. The Hon ble Allahabad High Court in the case of DINESH CHANDRA VERSUS U.O.I. THRU. ADDL. PRIN. CHIEF. CONSERVATOR OF FOREST OTHERS 2020 (7) TMI 750 - ALLAHABAD HIGH COURT have held that CITES do not govern the domestic trade, possession or breeding by any person including aviaries, but only international trade. It was further observed that internal trade i.e. domestic trade within India, of exotic species is not found in any schedule of the Wildlife (Protection) Act, 1972 and was never prohibited. Only external trade i.e. international trade is governed by the conditions of Foreign Trade Policy. The Hon ble Allahabad High Court further held that domestic trade in exotic birds/ animals is not prohibited and substantial export of the exotic birds from India is seen since several years in view of large scale breeding of exotic species in India. It is further held that no documents are specified and no permission is required as per Customs Act for keeping, breeding, buying, selling and exhibiting of such exotic birds/ animals within the country. It is further held that the exotic birds/animals are not notified under Section 123 of the Customs Act. Thus, there is no presumption of smuggling on the person who is in possession of such exotic birds/ animals, also do not attract the provisions of Chapter IV-A of the Customs Act. The Wildlife Department headed by the. Chief Wildlife Warden have got no jurisdiction in the matter of possession, breeding, domestic trade and transportation of exotic life specifies, since the same is not covered by the Wildlife Protection Act, 1972. The appellant will be entitled to consequential benefits including return of the seized exotic birds/ animals forthwith. The respondent is directed to return the seized birds/ animals etc. within a period of seven (7) days from the date of receipt or service of copy of this order - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Absolute confiscation of exotic birds and animals.
2. Imposition of penalty under Section 112(b)(i) of the Customs Act.
3. Legality of domestic trade and possession of exotic birds and animals.
4. Burden of proof regarding smuggling allegations.
5. Applicability of Wildlife Protection Act, 1972, and Customs Act, 1962, to exotic birds and animals.

Issue-wise Detailed Analysis:

1. Absolute Confiscation of Exotic Birds and Animals:
The appellant contested the absolute confiscation of 192 exotic birds and animals seized by the Directorate of Revenue Intelligence (DRI) under the suspicion of smuggling. The appellant argued that the birds and animals were purchased domestically from local suppliers, Golu and Monu, who confirmed sourcing them within India. The authorities failed to provide evidence that these exotic species were smuggled into India. The Tribunal noted that the exotic birds and animals were purchased domestically, and there was no proof of smuggling provided by the Revenue. The Tribunal emphasized that the burden of proof lies on the Revenue to support allegations of smuggling.

2. Imposition of Penalty under Section 112(b)(i) of the Customs Act:
The Adjudicating Authority imposed a penalty of ?5,00,000 on the appellant, which was later reduced to ?3,00,000 by the Commissioner (Appeal). The Tribunal found that the penalty was imposed based on suspicion rather than concrete evidence of smuggling. The Tribunal referred to the judgments of the Hon’ble Allahabad High Court and the Hon’ble Bombay High Court, which held that domestic trade in exotic birds and animals is not prohibited and that there is no statutory presumption of smuggling for exotic species not notified under Section 123 of the Customs Act.

3. Legality of Domestic Trade and Possession of Exotic Birds and Animals:
The Tribunal highlighted that domestic trade, possession, and breeding of exotic birds and animals are not governed by the Wildlife Protection Act, 1972, or the Customs Act, 1962. The Hon’ble Allahabad High Court in Dinesh Chandra vs. UOI & Ors. clarified that CITES governs only international trade and not domestic trade. The Hon’ble Bombay High Court in Anil Naidu vs. UOI & Ors. also supported the view that domestic trade and possession of exotic species are not restricted. The Tribunal concluded that domestic trade in exotic birds and animals is legal and does not attract the provisions of the Customs Act.

4. Burden of Proof Regarding Smuggling Allegations:
The Tribunal reiterated that the burden of proof lies on the Revenue to establish smuggling allegations. The exotic birds and animals were not notified under Section 123 of the Customs Act, and thus, there was no presumption of smuggling. The Tribunal found that the Revenue failed to provide cogent evidence of smuggling and relied on unsubstantiated statements. The Tribunal emphasized that mere suspicion cannot justify confiscation and penalties.

5. Applicability of Wildlife Protection Act, 1972, and Customs Act, 1962, to Exotic Birds and Animals:
The Tribunal referred to multiple judgments, including those of the Hon’ble Allahabad High Court and the Hon’ble Rajasthan High Court, which held that exotic birds and animals are not covered under the Wildlife Protection Act, 1972. The Customs Act, 1962, and the Foreign Trade (Development and Regulation) Act, 1992, apply only to international trade and not to domestic trade, possession, or breeding of exotic species. The Tribunal concluded that the exotic species in question do not attract the provisions of the Customs Act or the Wildlife Protection Act.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order, and directed the return of the seized exotic birds and animals to the appellant within seven days. The Tribunal emphasized that domestic trade and possession of exotic birds and animals are legal and not governed by the Customs Act or the Wildlife Protection Act. The Revenue failed to establish smuggling allegations with concrete evidence, and mere suspicion cannot justify confiscation and penalties.