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TMI Blog2023 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the finding that the goods, being of Indonesian origin, were not entitled to the concessional rate of duty, intended for betel nuts harvested in Sri Lanka and conforming to Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. The impugned goods were confiscated under the authority of section 111(h) and 111(o) of Customs Act, 1962 and Shri Gulam Farooq Noorani was proceeded with under the authority of section 2(26) and section 2(39) as well as section11 of Customs Act, 1962, along with the two partners of M/s Silver Exports as also liable for the duty, fine and penalty recoverable from M/s Silver Exports. The authenticity of declaration of Sri Lankan origin is to be established by submission of certificate of origin as provided for in rule 11 of Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. That the declaration in the four bills of entry, covering the goods under seizure at Nhava Sheva, as well as that of goods already cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HARMA, MEMBER (JUDICIAL) Mr Prakash Shah, Mr A K Jayaraj and Mr Mihir Mehta, Advocates for the appellant Shri S B Hatangadi, Assistant Commissioner (AR) for the respondent ORDER There are stories of customs cases and there are stories in customs cases. In these ten appeals arising from import of betel nuts , the two conflate as a narrative in which this commonplace product obtains a fascinating twist. And that is not the only thread in the story; the fabric, as it were, is revealed as the tale unfolds with one seizure in the interiors of the country and the other at a leading port on the west coast involving the shadowy figure of an alleged kingpin whose long tentacles obscured his proximity till then. To top it all, the exchequer was allegedly defrauded by a conspiracy, with insinuations of international collusion, that the kingpin, whom the investigators stumbled upon, confessed to and, thus, led to the offending imports now impugned before us. One set of appeals stems from adjudication of Commissioner of Customs (NS-I), Nhava Sheva and the other from proceedings before Commissioner of Customs, Central Excise Service Tax (Appeals), Nagpur. 2. The alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 110 of the Customs Act, 1962 appears to be liable for confiscation under Section 111(b), 111(d) and 111(h) of Customs Act, 1962. xxxx in show cause notice dated 8th October 2018 that was confirmed, along with consequential confiscation, determination of fine in lieu thereof and imposition of penalties, in the impugned order [order-in-original no. 01/2020-21/Commr/NS-I/JNCH dated 7th April 2020] of Commissioner of Customs (NS-I), Nhava Sheva. 3. Yet another consignment of concern came under scrutiny when a warehouse of M/s Goyal Cold Storage at Bhandara Road, Nagpur was searched by officers of Directorate of Revenue Intelligence (DRI) on 10th September 2017 and found to have been used for storage of 236 MT of betel nuts in gunny bags bearing markings, including that of BUDIMAN 90 , of which 106.11 MT were believed to be that of M/s SA Enterprises, sole proprietorship of Shri Sayeed Ahmed Sheikh. Through a series of statements recorded under section 108 of Customs Act, 1962, it was set out that the betel nuts had been transported from Assam and had been stored in the warehouse at the instance of Mr Ghulam Farooq Noorani. On completion of investigatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinued availability in the country, does not bode well for rule of law. 6. Surprisingly, threat to domestic production, so vigorously repelled by them, fails to make its brooding presence evident; for there is no complaint, let alone public outcry, against the concession, and the intricacies of negotiation, including detriment to domestic production of goods that covered that surely informed the terms of the treaty, must have been handled by agencies of the State no less concerned; the policing of the concessions embodied in the scheme of preferential treatment, intended by such bilateral or multilateral trade agreements and built into the treaty itself, is made manifest in the statutory instruments birthed thereupon for implementation by the very same administration and, under the grab of acting only to deter imports from other countries. Loss of revenue by misuse of the preferential route is certainly repugnant to the objectives of the agreement and there can be no cavil on action initiated against such misuse subject to satisfaction that misuse has been credibly set out in the manner prescribed. Cavil about, and rejection of, detriments, there will be if such determination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he has primarily gone by the fact that betel nuts are not notified under Section 123 of the Customs Act and the onus to prove that the same are smuggled is on the Revenue as held by the Tribunal in the case of Baboo Banik v. Commissioner of Customs, Lucknow reported in 2004 (174) ELT 205 (Tri.-Kolkata). Further, the Tribunal in the case of Bijoy Kumar Lohia v. CC, Patna, reported in 2006 (196) ELT 215 (Tri.-Kolkata) has held that the local trade opinion cannot take the place of the legal evidence. also leaves no room for doubt that such reports, lacking obvious credibility and rationality, must be ignored. 9. That the Hon ble High Court of Patna, based on the lack of credibility in the claim of that very institution to be able to identify source of betel nuts , was even more scathing in its criticism of action under Customs Act, 1962 thus 12. Having heard Learned Senior Counsel for the petitioner and Learned Additional Solicitor General of India, this Court is of the considered opinion that once the Learned Coordinate Bench of this Court has held that in absence of there being any material to show that M/s. Arecanut Research Development Foundation, Mangalore is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel drew our attention to 21. The issue to be decided in these appeals is (i) whether the betel nut of foreign origin of 106.11 MT valued at Rs. 2,65,68,246/- has been smuggled and brought to Nagpur and stored in Goyal Warehous, Umri Phata, Bhandara Road, Nagpur and liable to confiscation. (ii) Whether all the appellants are involved in smuggling of said betel nuts of foreign origin, and (iii) Accordingly whether they are liable to penalty under Customs Act, 1962. xxxxxx 23.1 I further observed that samples of betel nut were drawn from 106.11 MT seized betel nut under panchnama and sent to local laboratory i.e. Regional Public Health Laboratory, Nagpur in order to ascertain its compliance to FSSAI norms reported that the samples do not confirm to the regulations No. 2.12 of proprietary food and is unsafe as per section 3(i)(22)(x) of food safety standards Act, 2006 along with Rules Regulations, 2011. The samples were also sent to ARDF, Mangaluru sent test report dt. 25.4.2018 and confirmed the country of origin of betel nut. As per report, the betel nut was of Indonesian Myanmar origin. 23.3 Their further contention is that the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the domestic market from C.R. Stores, Assam. I find that the Noticee have never submitted the any documentary evidence regarding purchase bills to the officers of the DRI. Even the copy of the purchase bills have never been shown / submitted before the adjudicating authority during the course of personal hearing by the Adv. A.K. Jayraj, Authorised representative of the Noticee. Even he have not submitted any documentary evidence along with the reply dt, 09.09.2019 received in this office on 19.09.2019 to corroborate his statement that the betelnuts have been purchased from C.R.Stores, Assam. Further only bills are not sufficient for evidence. Also evidence of money transactions are required which were not produced before the Adjudicating Authority. I find that the investigating agency has drawn out the samples from 106.11 MT seized goods and sent to the Arecanut Research Development Foundation, Mangaluru, Karnataka. The Arecanut Research and Development Foundation, Mangaluru is a well known name in the research on Betel Nut and they have advanced technologies to identify the goods properly. Geographical Indicators are specific and based of morphology, physical appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with applicable interest, and the former, though confiscated under section 111 (h) and 111(o) of Customs Act, 1962, was allowed to be redeemed on payment of fine of ₹ 50,00,000 subject to discharge of duty liability thereon. Penalties of ₹ 50,00,000, ₹ 20,00,000 and ₹ 20,00,000 were imposed in addition, under section 112(a) of Customs Act, 1962 on the importer and on Shri Sayeed Ahmed Shaikh and Shri Mujeeb Begawala respectively and of ₹ 50,00,000, ₹ 20,00,000 and ₹ 30,00,000 on S/Shri Gulam Farooq Noorani, Deepak Arjandas Sadhwani and Varun Deepak Sadhwani besides penalties of ₹ 30,00,000 on Shri Gulam Farooq Noorani and ₹ 20,00,000 each on the other individuals under section 114AA of Customs Act, 1962. The adjudicating authority considered this scale of penalties to be warranted as Shri Sayeed Ahmed Shaikh and Shri Mujeeb Begawala, partners in M/s Silver Exports, permitted Shri Gulam Farooq Noorani to use the cover of their import export code (IEC) for indulging in wrongful availment of exemption, extended to betel nuts from Sri Lanka, on goods of Indonesian origin. 13. The goods, packed in loose form in gunny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidences as discussed above and which are duly corroborated by statements of the IEC holder and Shri Shri Gulam Farooq Noorani, the actual importer and owner of the goods. The evidences in the form of the parallel sets of Bill of Lading and words scribed on the jute bag namely, 'Budhiman - 90', owner of the said brand being M/s SweeChoon Co. Pte. Ltd. Indonesia, is proof of the fact that the goods were never procured from Sri Lanka hut originated from Indonesia, travelled to Colombo and took a circuitous route from Colombo to the Port of Nhava-Sheva. The evidence here is to the extent that there was no destuffing of the cargo at the Port of Colombo and the cargo came to the Port of Nhava Sheva as it is. I, therefore find adequate force in the allegations made in the show cause notice that the goods imported were not from Sri Lanka but originated from Indonesia for which there was no exemption notification applicable at the relevant time when the imports were made from Indonesia. in the adjudication order impugned before us. That statements recorded in other proceedings could be insinuated into this proceedings was found thus 49.4. Thus, I find that these State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India contributing to over half thereof leaving others distantly behind and indistinguishable as to its origin, cannot be conclusively held to have originated from Indonesia without clear evidence of having been sourced from Indonesia. The relied upon evidence may have been reason enough cast doubts on the declared origin which, of itself, is too inconclusive except by resort to rule 13(2) and 13(3) of Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. Neither has any step been taken to initiate the procedure prescribed in rule 13(4) of Customs Tariff (Determination of Origin of Goods under Free Trade Agreement between the Democratic Socialistic Republic of Sri Lanka and the Republic of India) Rules, 2000. Treaties and agreements are, generally, enforced through national legislation and, even if not, have been judicially determined as enforceable through courts of law. Here is an institution of the State of a contracting party that places such premium on lack of trust in institutional mechanism established by the Agreement, and with overriding effect, as to supe ..... 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