Evidence must be provided by revenue to establish smuggling of exotic birds and mammals along with confiscation and penalty under the Customs Act

The Customs, Excise and Service Tax Appellate Tribunal ('CESTAT'), Eastern Zonal Bench, Kolkata in Domnic Jacob Sequeira Versus Commissioner of Customs (Preventive), Kolkata And Principal Commissioner of Customs (Preventive), Kolkata Versus Gouse Gaffar Shaikh, Balashaed Appasaheb Dhumal, Domnic Jacob Sequeira - 2026 (7) TMI 269 - CESTAT KOLKATA held that the revenue must fulfill the onus lies upon him to establish that the exotic birds and mammals ('imported goods') have been procured through the illicit means and are smuggled, which they have been failed to do so. In absence of the evidence, the charges under Customs act, 1962('the act') cannot be framed.

Facts:

Directorate of Revenue Intelligence ('DRI') on intelligence intercepted an alleged smuggling of certain live birds and mammals into India from Myanmar. Sri Domnic Jacob Sequeria ('the appellant') with his associates were about to transport 35 live birds in five cages, from Aizwal (Mizoram) to Kolkata. The department alleged that the birds and mammals were not indigenous to India and hence the importation required compliance. Whereas, no import documents, bills of entry, license or health certificates of the imported goods were provided at the time of interception.

Upon recording of statement, the appellant accepted that he met one Sukanda, which proposes the transportation of exotic birds and animals from Bangkok to India via Indo-Myanmar Border through her associate Kima of Aizawl. The appellant accepted the proposal and finalized various purchases. The appellant accepted that the he remained in contact with Kima, an associate of Sukanda. Upon further investigation at the locations of Kima, the alleged supplier, Sailo, was found which admitted that he facilitated the transportation through the Indo-Myanmar Border and arranged 4 consignments to the appellant.

A Show Cause notice ('SCN') was issued for alleged smuggling of goods of foreign origin in violation of Section 3(2) and 3(3) of the Foreign Trade (Development & Regulation) Act, 1992('FTDR Act') and Foreign Trade Policy ('FTP') read with Section 11 of the Act. The department proposed confiscation of 35 exotic live birds/mammals seized from airport, 19 exotic birds from the residential premises of appellant, and confiscation of Scorpio used for transportation under Section 115 of the Act and penalty under Section 112(b) of the act.

The additional Commissioner confirmed the demand of SCN vide Order-in-original ('OIO') dated March 16, 2020. On its appeal, Ld. Commissioner of Customs (Appeals) vide Order in Appeal ('impugned order') dated November 21, 2021 directed release of 19 birds seized from the residential premises, seized Mahindra Scorpio and also reduced the personal penalty over the appellant and its alleged associates. Against the impugned order, both the revenue and appellant filed appeal before this tribunal.

Issues:

Whether the appellant procured the subject goods through illicit means and without following the procedure for importation under the Customs Act?

Held:

The CESTAT,Eastern Zonal Bench, Kolkata in Domnic Jacob Sequeira Versus Commissioner of Customs (Preventive), Kolkata And Principal Commissioner of Customs (Preventive), Kolkata Versus Gouse Gaffar Shaikh, Balashaed Appasaheb Dhumal, Domnic Jacob Sequeira - 2026 (7) TMI 269 - CESTAT KOLKATA​​​​​​​held as under:

• Observed that the exotic birds and mammals are not notified items within the meaning of Section 123 of the Customs Act, 1962. Therefore, the onus in this case lies on the department to prove that the exotic birds/mammals in question are of foreign origin and that the appellant has smuggled the same into India through illicit means.
• Noted from the statements of Shri Sailo that, it is clear that the said exotic birds and animals were handed over to him to one Racer, at Mizoram, who supplied these birds/animals to the appellant in the domestic area. The appellant has discharged their onus of procurement of the exotic birds and mammals within India and through licit means.
• Found that the revenue failed to establish the burden of proof by means of tangible and corroborative evidence that the said exotic birds/mammals have been procured through the illegal means in violation of customs Act.
• Followed the rationale of Rajesh Agarwal @ Raju Sagar Versus Commissioner of Customs, Indore - 2021 (1) TMI 523 - CESTAT NEW DELHI in which Hon'ble Principal Bench CESTAT, Delhi observed that in case of town seizure, not interception at the point of entry in India, the revenue must establish the allegation of smuggling with any cogent evidence.
• In Rajesh Aggrawal (Supra),by following the Judgement of Hon'ble Allahabad High Court in Dinesh Chandra Versus U.O.I. Thru. Addl. Prin. Chief. Conservator Of Forest & Others - 2020 (7) TMI 750 - ALLAHABAD HIGH COURT, it was noted that 'exotic species' is not found in any schedule of the Wildlife (Protection) Act, 1972 and was never prohibited. Hence, no permission is required as per customs Act for keeping, breeding, buying, selling and exhibiting of such exotic birds/ animals within the country.

Hence, the penalty imposed on the appellant and its alleged associates stands set aside. Also, the vehicle in question is also not liable for confiscation.

Our Comments:

Section 123 of the Customs Act: 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 112. Penalty for improper importation of goods, etc.

Any person,- (a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (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,-

Section 115: Confiscation of conveyances.-

(2) Any conveyance or animal used as a means of transport in the smuggling of any goods or in the carriage of any smuggled goods shall be liable to confiscation, unless the owner of the conveyance or animal proves that it was so used without the knowledge or connivance of the owner himself, his agent, if any, and the person in charge of the conveyance or animal 1***: