2023 (10) TMI 754 - AT - Customs

Smuggling - red Betel Nuts - Foreign origin goods - notified goods or not - onus to prove - confiscation of vehicle in terms of Section 115(2) of the Customs Act - HELD THAT - The Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA 2005 (11) TMI 306 - CESTAT, KOLKATA has held that the local trade opinion cannot take place of the legal evidence. The reliance on the opinion of Arecanut Research Development Foundation (ARDF), Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory - the Appellate Authority is agreed upon that the said report can only be treated as an opinion and not as scientific test report regarding the country of origin. Further, even if the betel nuts are held to be of foreign origin, the same can be confiscated only when it is proved that betel nuts have been illegally smuggled into the country. Revenue has not produced any evidence to show that the betel nuts in question were smuggled into India. In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country, the Appellate Authority is agreed upon that their confiscation is neither warranted nor justified. As such, there are no infirmity in the impugned order of the Commissioner (Appeals). Appeal of Revenue dismissed.

Summary

Issues Involved:
The issues involved in the judgment are the interception of a truck loaded with betel nuts, determination of the origin of the betel nuts, confiscation of the goods under the Customs Act, imposition of penalties, reliance on trade opinions and scientific reports, and the burden of proof on the Revenue to establish smuggling.

Interception and Origin of Betel Nuts:
The truck loaded with betel nuts was intercepted by Customs officers, and various documents were provided by the driver regarding the origin and transport of the goods. Market opinions and a report from Arecanut Research and Development Foundation confirmed the foreign origin of the betel nuts, specifically from Indonesia. The authorities suspected that the betel nuts were smuggled into India from Indonesia, leading to the initiation of proceedings for confiscation under relevant sections of the Customs Act.

Confiscation and Imposition of Penalties:
The adjudicating authority confiscated the betel nuts and imposed penalties on the respondents under Sections 111 and 112 of the Customs Act. However, the betel nuts had already been released on bond under a court order. The penalties were imposed based on the belief that the goods were smuggled and in contravention of customs regulations.

Appeal and Commissioner's Orders:
The respondents appealed the confiscation and penalties to the First Appellate Authority, which set aside the confiscation order. The Commissioner (Appeals) found that the evidence presented by the Revenue was insufficient to prove improper importation of the betel nuts. The reliance on trade opinions and the ARDF report was deemed insufficient to establish smuggling, especially considering betel nuts are not prohibited for import under the EXIM Policy.

Legal Analysis and Tribunal Decision:
The Tribunal analyzed previous judgments emphasizing the Revenue's burden to prove smuggling, especially for non-notified items like betel nuts. The Tribunal noted that trade opinions are not legal evidence and questioned the reliability of the ARDF report. Without concrete evidence of improper importation, the confiscation of the betel nuts and the imposition of penalties were deemed unjustified. The Tribunal upheld the Commissioner (Appeals) decision to set aside the confiscation order and penalties, rejecting the Revenue's appeals.

Conclusion:
The Tribunal rejected the Revenue's appeals, affirming the decision to set aside the confiscation of the betel nuts and penalties. The judgment highlighted the importance of concrete evidence in proving smuggling, especially for non-notified items like betel nuts, and emphasized the burden of proof on the Revenue to establish illegal importation. The reliance on trade opinions and scientific reports was deemed insufficient without corroborating evidence of smuggling.