2021 (10) TMI 1398 - HC - Customs

Smuggling of betel nuts: accredited laboratory evidence required to prove foreign origin; appeal dismissed due to inadequate proof

Departmental burden to prove smuggling of imported betel nuts was held unmet because the seized goods were non-notified and the department relied on a ... Smuggling - Betel Nuts of foreign origin - seizure of bags of betel nut under Section 110 of the Customs Act on the ground that the said betel nuts were brought to India through unauthorised route in violation of the Customs Act and are liable for confiscation under Section 111(b) and 111(d) of the said Act - HELD THAT:- The Division Bench of the Tribunal recorded the finding that the confiscated betel nut is non-notified goods and therefore, burden to prove the fact of smuggling lies on the department and same has not been discharged. In this regard, the department relied upon the certificate issued by the Arecanut Research and Development Foundation, Mangalore to show that the confiscated goods/betel nuts are of foreign origin. However, the Tribunal refused to consider this certificate on the ground that the said Institution is not accredited and hence the report was not relied on. The Tribunal in this regard relied on the decision of the Patna High Court reported in M/S AYESHA EXPORTS VERSUS THE UNION OF INDIA AND ORS. [2019 (1) TMI 1633 - PATNA HIGH COURT] where it was held that This court is of the opinion that in absence of there being a standardized laboratory test for tracing the country of origin, established under some statute and such Labs have been accredited by the competent authority and the Labs could have the scientific method to come to a conclusion that a Betel Nut is of a particular country's origin, it would not be in the interest of justice to direct the petitioner to pay the custom's duty. There are no error in the findings given by the Tribunal - appeal dismissed. Issues:1. Seizure of betel nut consignment suspected to be of foreign origin under the Customs Act.2. Confiscation of vehicles and betel nuts, imposition of penalty, and appeal process.3. Dispute regarding the burden of proof in proving smuggling of non-notified goods.4. Consideration of certificate from an unaccredited institution as evidence.5. Judicial review of the Tribunal's decision and dismissal of the appeal.Issue 1: Seizure of betel nut consignment suspected to be of foreign origin under the Customs ActThe judgment discusses the interception and seizure of two trucks carrying betel nut consignments suspected to be of foreign origin by the appellants under the Customs Act. The reason for the seizure was the suspicion that the betel nuts were brought into India through an unauthorized route in violation of the Customs Act. The trucks and the betel nuts were seized, and a show cause notice was issued to the respondent for further proceedings under the Customs Act.Issue 2: Confiscation of vehicles and betel nuts, imposition of penalty, and appeal processThe Commissioner of Customs confiscated the vehicles and betel nuts under Section 111(b) and (d) of the Customs Act, along with imposing a penalty of Rs. 10,00,000 on the respondent after a hearing. The respondent appealed this decision before the Customs, Excise & Service Tax Appellate Tribunal, Kolkata, which allowed the appeal, leading to the current appeal. The High Court reviewed the Tribunal's decision and found no error in its findings, leading to the dismissal of the appeal.Issue 3: Dispute regarding the burden of proof in proving smuggling of non-notified goodsThe Division Bench of the Tribunal found that the confiscated betel nuts were non-notified goods, placing the burden of proving smuggling on the department. The Tribunal did not accept a certificate from an institution as evidence because it was unaccredited. The Tribunal's decision was based on a precedent from the Patna High Court, emphasizing the department's failure to discharge the burden of proof regarding smuggling of non-notified goods.Issue 4: Consideration of certificate from an unaccredited institution as evidenceThe Tribunal's refusal to consider the certificate from the unaccredited institution as evidence played a crucial role in the decision-making process. This decision was based on the institution's lack of accreditation, leading to the rejection of the certificate as proof of the betel nuts' foreign origin. The reliance on a precedent from the Patna High Court supported the Tribunal's stance on this matter.Issue 5: Judicial review of the Tribunal's decision and dismissal of the appealAfter a thorough review of the Tribunal's judgment and order, the High Court found no error in the findings. The Court determined that the Tribunal's decision was well-supported by reasons, indicating that there was no basis for interference in the appeal. Consequently, the appeal was deemed to lack merit and was dismissed by the High Court.This detailed analysis of the judgment from the Meghalaya High Court provides insights into the legal intricacies surrounding the seizure, confiscation, burden of proof, evidentiary considerations, and appellate review processes under the Customs Act in the context of the betel nut consignment case.