No Penalty and Confiscation if Revenue Fails to Prove Foreign Origin of Non-Notified Goods (Peas)

The Hon'ble CESTAT, Eastern Zonal Bench: Kolkata, in Smt. Kanchan Devi Versus Commissioner of Customs (Preventive), Patna - 2026 (4) TMI 449 - CESTAT KOLKATA held that the Revenue cannot confiscate a vehicle or impose penalties for transporting non-notified goods based on mere suspicion of foreign origin.

Facts:

• On October 5, 2020, a vehicle owned by Smt. Kanchan Devi ('the appellant') was intercepted near the Maithi Toll Plaza on Darbhanga Road. Although the driver produced an invoice for 'Khesari,' a search of the vehicle revealed 100 jute bags containing green and yellow peas weighing 4,300 kgs. Local traders provided an opinion that the recovered peas appeared to be of foreign origin.
• Consequently, Show Cause Notice ('SCN') was issued and the adjudicating authority ordered the absolute confiscation of the goods, the confiscation of the vehicle (with an option to redeem on payment of a fine under Section 125 of the Customs Act, 1962, and imposed a penalty under Section 112(b). On appeal, the Ld. Commissioner (Appeals), by way of the impugned order, has upheld the order passed by the ld. adjudicating authority.

Issues:

• Whether the Revenue is justified in confiscating a vehicle and imposing a penalty on the owner when there is no documentary evidence proving the foreign origin of non-notified goods being transported?

Held:

The Hon'ble CESTAT, Eastern Zonal Bench: Kolkata, in Smt. Kanchan Devi Versus Commissioner of Customs (Preventive), Patna - 2026 (4) TMI 449 - CESTAT KOLKATA held as under:

• Noted that the sole allegation against the appellant is that of transporting goods, i.e., green peas / yellow peas, of foreign origin in the vehicle owned by the appellant.
• Observed that green and yellow peas are not 'notified goods' under Section 123 of the Customs Act, 1962. Therefore, the legal presumption that the goods are smuggled does not apply, and the onus remains on the Revenue to prove their foreign origin and illegal importation.
• Found that the Department failed to produce any concrete documentation or evidence to support the allegation that the peas were of foreign origin. The mere opinion of local traders was insufficient to satisfy the legal requirements for confiscation.

Hence, set aside the impugned order and allow the appeal.

Relevant Sections:

• Section 112(b) of the Customs Act, 1962:Penalty for improper importation of goods,

Any person,(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable,-

(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty 5[not exceeding the value of the goods or five thousand rupees], whichever is the greater;

• Section 123 of the Customs Act, 1962. Burden of proof in certain cases.-

(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be-

(a) in a case where such seizure is made from the possession of any person,-

(i) on the person from whose possession the goods were seized; and

(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;

(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.]

(2) This section shall apply to gold, [and manufactures thereof], watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.

• Section 125 of the Customs Act, 1962: Option to pay fine in lieu of confiscation.

(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods 4[or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit: