2018 (11) TMI 1668 - AT - Customs

Tribunal rejects Revenue's appeal for betel nut confiscation due to lack of evidence

The Appellate Tribunal upheld the decision of the Commissioner (Appeals) and rejected the Revenue's appeal for the confiscation of betel nuts and the ... Smuggling - Betel Nuts - foreign origin goods or not - confiscation of vehicle in terms of Section 115(2) of the Customs Act - Section 123 of the Customs Act - HELD THAT:- 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 has been illegally smuggled into the country. Revenue has not produced any evidence to show that the betel nuts in question were smuggled into India. The respondent had also brought on record a survey report on the cultivation of areca nuts in India issued by the Directorate of Arecanut and Spices Development, Ministry of Agriculture, Government of India which shows that substantial production of betel nuts in West Bengal, Assam and North Eastern State. In the absence of any positive evidence to establish the foreign origin of the goods and their illegal smuggling into the country, we agree with the Appellate Authority that their confiscation is neither warranted nor justified. Revenue dismissed. Issues:1. Confiscation of betel nuts alleged to be of foreign origin and smuggled into India.2. Confiscation of the vehicle used for transportation.3. Onus of proof on Revenue to establish smuggling.4. Reliance on local trade opinion and scientific test report for determining country of origin.5. Applicability of Customs Act and relevant case laws.Analysis:1. The case involved the confiscation of betel nuts and the vehicle used for transportation on the grounds that the goods were of foreign origin and appeared to have been illegally smuggled into India. The Original Adjudicating Authority had passed an order for confiscation, which was later set aside by the Commissioner (Appeals), leading to the Revenue filing the present appeal before the Appellate Tribunal.2. The facts of the case revealed that the betel nuts were intercepted from a truck, and various documents, including tax invoices and delivery challans, were produced. Subsequent investigations, including opinions from local traders and the Arecanut Research & Development Foundation, indicated that the betel nuts were of Indonesian origin. However, the respondent presented evidence showing substantial production of betel nuts in certain Indian states, suggesting a local origin.3. The Appellate Tribunal noted that the onus to prove smuggling rested on the Revenue, as established in relevant case laws. The Tribunal emphasized that the reliance on the opinion of the Arecanut Research & Development Foundation for determining the country of origin was not conclusive, as the organization clarified that it could not definitively establish the origin through laboratory tests.4. Furthermore, the Tribunal highlighted the necessity of proving illegal smuggling for confiscation of goods of foreign origin. Despite the indications of foreign origin, the Revenue failed to provide concrete evidence demonstrating the illegal entry of the betel nuts into India. The respondent's submission of a survey report on local cultivation of betel nuts further supported the argument against confiscation.5. Ultimately, the Appellate Tribunal upheld the decision of the Commissioner (Appeals), rejecting the Revenue's appeal for confiscation. The Tribunal concluded that without substantial evidence of illegal smuggling and considering the local production of betel nuts in India, the confiscation of the goods was deemed unwarranted and unjustified. Additionally, a stay petition filed by the Revenue was disposed of accordingly.