2023 (7) TMI 113 - AT - Customs

Confiscation - Smuggling of Betel Nuts - discharge of burden to prove u/s 123 of Customs Act - whether Revenue has established the allegation that the seized betel nuts are of foreign origin and are smuggled? - HELD THAT - Ongoing through the records of the case, it is seen that Appellant has submitted documents that the goods were imported from Myanmar under Indo Myanmar Trade Agreement at a concessional 5% Customs duty - It is found that the investigation has not adduced any evidence with regard to proving smuggled character of the goods, other than finding some contradictions in the documents produced by the Appellant. That from the circumstances leading to seizure, it is found that the place of loading being Silchar, Assam, place of detection being mainstream Assam and both the places are far away from Indo Myanmar Border in Mizoram. Betel nuts are produced hugely in Mizoram Assam. Directorate of Areca Nut and Spices Development (DANSD,), Ministry of Agriculture, Govt. of India, has published report regarding areca nut production in all the states of India including Mizoram and Assam. Report shows Assam is the second highest grower of Betel nuts and the Mizoram is the 8th highest grower in India. No prudent person on visual examination can ascertain as to whether the Betel nuts under seizure were of Myanmar origin and that too smuggled, when place of seizure is mainland of the country, far away from border - There existed no reasonable belief which is a pre-condition for making seizure under Section 110 of the Customs Act, 1962. The betel nut is not notified under Section 123 of the Customs Act, 1962 and therefore, the burden of proof lies with the department to prove the same. It s not just enough to prove by negative inference of the documents produced by the appellant on microscopic analysis to find fault. Allegation requires to be proved by cogent and positive evidence. Find that no such positive evidence has been put forth by the department. There is not even a reference or narration as to how and wherefrom the impugned goods are smuggled - Tribunal in the case of DHARMENDRA KR. JHA VERSUS COMMISSIONER OF CUSTOMS (P) , PATNA 2015 (11) TMI 1639 - CESTAT KOLKATA held that betel nut is not a notified commodity under Section 123 of the Customs Act, Act 1962 and the onus is on the department that seized goods were in fact smuggled in to India. We find that the department has not discharged its burden. Seizure of impugned betel nut is not justified and needs to be set aside. Therefore, nothing survives in the case and appeal is liable to be allowed - appeal allowed.

Summary

Issues Involved:
1. Legality of the seizure of Betel nuts.
2. Ownership and origin of the seized Betel nuts.
3. Compliance with Indo-Myanmar Trade Agreement.
4. Burden of proof regarding the smuggled nature of goods.
5. Discrepancies in documentation and their impact on the case.

Summary:

1. Legality of the seizure of Betel nuts:
The Tribunal had previously set aside the Order-in-Original confiscating the Betel nuts but the High Court of Meghalaya remanded the matter for a de novo decision. The Customs (Preventive) Unit, Shillong, detained and seized trucks carrying Betel nuts on the belief that they were smuggled from Myanmar. The Tribunal found that the seizure lacked a 'reasonable belief,' a pre-condition under Section 110 of the Customs Act, 1962. The Tribunal concluded that the seizure was not justified, and the appeal was allowed with consequential relief.

2. Ownership and origin of the seized Betel nuts:
Shri Manik Ranjan Paul claimed ownership of the seized Betel nuts, providing various documents to support that the goods were legally imported under the Indo-Myanmar Trade Agreement. The Tribunal noted that the sellers confirmed the credit sale of Betel nuts to Shri Manik Ranjan Paul and that the goods were transported legally from Mizoram to Assam.

3. Compliance with Indo-Myanmar Trade Agreement:
The appellant submitted documents showing that the Betel nuts were imported at a concessional 5% Customs duty under the Indo-Myanmar Trade Agreement. The Tribunal found no evidence from the investigation to prove the smuggled character of the goods, other than some discrepancies in the documents produced by the appellant.

4. Burden of proof regarding the smuggled nature of goods:
The Tribunal emphasized that Betel nuts are not notified under Section 123 of the Customs Act, 1962, placing the burden of proof on the department to establish that the goods were smuggled. The Tribunal found that the department failed to provide positive evidence to support the allegation of smuggling.

5. Discrepancies in documentation and their impact on the case:
The Tribunal addressed various discrepancies pointed out by the department, such as differences in the weight and number of bags, and mismatched seals and signatures. The Tribunal accepted the appellant's explanations for these discrepancies, deeming them plausible and typical in business practices. The Tribunal also noted that the department's reliance on negative inferences from these discrepancies was insufficient to prove the smuggling allegation.

Conclusion:
The Tribunal set aside the seizure of the Betel nuts and the trucks, finding that the department failed to prove the goods were smuggled. The appeal was allowed with consequential relief, applying the ratio of the judgment in the case of LALTANPUII, which was affirmed by the Hon'ble Supreme Court.