2021 (11) TMI 490 - AT - Customs

Smuggling - Betel Nuts - foreign origin goods or not - reversal of burden of proof - assessment of goods under Section 17 of the Customs Act - HELD THAT - The goods were undisputedly seized within India at Assam-Mizoram border. The ground for seizure and subsequent confiscation is that the owners/occupants were not able to prove the licit import of the Betel nuts which DRI suspected to be of foreign origin. The GST invoices, E-way bills etc. produced by the appellants were found to be not satisfactory. In respect of some goods, the Customs Act, 1962 reverses the burden of proof and makes it the responsibility of the person from whom the goods are seized or the owner of the goods to prove that they are not smuggled under Section 123. It is clear that even if the goods are of foreign origin, if they have been imported and cleared for home consumption, they cease to be imported goods thereafter and the importer ceases to be the importer. Therefore, no duty can be assessed on such goods under Section 17 of the Customs Act. There is also no responsibility on the importer or on any other person from whom the goods are seized to keep or produce the import documents to establish their legal import once they have been cleared for home consumption. The goods can be used, sold, re-sold, etc. without any duty either on the importer or any subsequent buyer of such goods to keep or produce the import documents. In this case, the goods were clearly seized within India. The burden of proof shifts to the importer or the owner of the goods only when such goods are notified under Section 123 and betel nuts were not notified. The Department has not proved in this case that the goods were smuggled goods. Unless Revenue can establish that the betel nuts have been imported illegally into India, they cannot be confiscated. The impugned order upholding the impugned order of the Adjudicating Authority confiscating the goods on the ground that the appellants were not able to establish that they were not smuggled goods cannot be sustained as the appellants have no such responsibility. The Revenue, on which the burden of proof rests, has not established that the seized betel nuts were smuggled. It is immaterial whether the betel nuts were of foreign origin or not. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Seizure and confiscation of goods suspected to be of foreign origin
- Burden of proof in cases of seized goods
- Interpretation of Customs Act, 1962 regarding importation and clearance for home consumption

Analysis:

Seizure and Confiscation of Goods Suspected to be of Foreign Origin:
The case involved the interception of seven trucks carrying Betel nuts near the Assam-Mizoram border on suspicion of being of foreign origin. Despite producing GST invoices and E-way bills to prove domestic origin, the Directorate of Revenue Intelligence (DRI) seized the goods and issued a show cause notice. The Additional Commissioner of Customs adjudicated the matter, concluding that the goods were of foreign origin and smuggled into India, leading to confiscation under the Customs Act, 1962.

Burden of Proof in Cases of Seized Goods:
The appellants challenged the confiscation, arguing that the burden of proof under Section 123 of the Customs Act shifts to the person from whom the goods are seized or the owner to prove that they are not smuggled goods. However, it was highlighted that this burden only applies to goods notified under Section 123, which did not include Betel nuts in this case. Therefore, the responsibility to prove smuggling rested with the Revenue, which failed to establish that the goods were indeed smuggled.

Interpretation of Customs Act, 1962 Regarding Importation and Clearance for Home Consumption:
The Tribunal clarified that once goods are imported and cleared for home consumption, they cease to be imported goods, relieving the importer from the duty to produce import documents. In this context, even if the goods were of foreign origin, if cleared for home consumption, no duty can be assessed under the Customs Act. The Tribunal emphasized that unless the Revenue proves illegal importation, confiscation cannot be justified. As the Department failed to establish smuggling, the impugned order of confiscation was set aside, granting relief to the appellants.

Overall, the Tribunal allowed the appeals, setting aside the impugned order and emphasizing the importance of establishing smuggling for confiscation under the Customs Act.