2022 (7) TMI 248 - AT - Customs

Tribunal rules in favor of Appellant due to Revenue's failure to prove betel nuts were smuggled.

The Tribunal ruled in favor of the Appellant, finding that the Revenue failed to prove that the seized betel nuts were of foreign origin and smuggled. As ... Smuggling - Betel Nuts - foreign origin goods or not - notified goods or not - owner/driver could not produce the documents in support of the goods - Mizoram has no or very less production of Betel nut - burden to prove - HELD THAT:- The Revenue has not adduced any evidence to prove the allegation. Betel nut is not notified under Section 123 of the Customs Act, 1962 and therefore, the burden of proof lies with the department to prove the same. It is not just enough to prove by negative inference. Allegation requires to be proved by cogent and positive evidence. There are no such positive evidence has been put forth by the department. There is not even a reference or narration as to how and where from the impugned goods are smuggled. The Tribunal in the case of SMT. LALTANPUII VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , NER, SHILLONG [2020 (12) TMI 377 - CESTAT KOLKATA] and in the case of DHARMENDRA KR. JHA VERSUS COMMISSIONER OF CUSTOMS (P) , PATNA [2015 (11) TMI 1639 - CESTAT KOLKATA] held that betel nut being a non-notified commodity under Section 123 of the Customs Act, 1962 and the onus is on the department that seized goods were in fact smuggled into India, but the department has not discharged its burden. The same ratio applies to the case in hand. The betel nut being non-notified goods; burden to prove the fact of smuggling lies on the department and the same has not been discharged - seizure of impugned betel nut is not justified and needs to be set aside - appeal allowed - decided in favor of appellant. Issues:1. Confiscation of goods based on lack of supporting documents and origin of betel nuts.2. Burden of proof on the Revenue to establish seized goods are of foreign origin and smuggled.3. Interpretation of Customs Act and previous tribunal judgments on non-notified goods like betel nuts.Analysis:1. The case involved the confiscation of 310 bags of dry betel nuts by the Customs authorities after being intercepted from two trucks in Mizoram. The drivers failed to produce any documents at the time of seizure, leading to the goods being formally seized. The owner later claimed ownership and applied for provisional release of the goods, despite lacking legal documents to support the ownership. The goods were provisionally released on security deposit, bank guarantee, and bond.2. The Adjudicating authority confiscated the goods citing the lack of supporting documents and the assertion that Mizoram has minimal production of betel nuts, implying the goods were of foreign origin and possibly smuggled. However, the Appellant contested this confiscation, arguing that documents were indeed submitted, including GSTIN documents, which were system-generated and could not be manipulated. Referring to an APEDA report, it was highlighted that Mizoram is a significant betel nut producer, contradicting the Adjudicating authority's findings.3. The central issue for consideration was whether the Revenue had proven the seized betel nuts were of foreign origin and smuggled. The Tribunal emphasized that betel nut is not a notified commodity under the Customs Act, shifting the burden of proof to the department. It was noted that the Revenue failed to provide positive evidence to support the allegation of smuggling, and mere negative inference was insufficient. Relying on previous tribunal judgments, the Tribunal reiterated that the burden to prove smuggling of non-notified goods like betel nuts lies with the department, which they had not discharged in this case.4. Ultimately, the Tribunal concluded that the burden of proof regarding the smuggling of betel nuts, a non-notified commodity, rested with the department, and they had not met this burden. As a result, the seizure of the betel nuts was deemed unjustified, and the Appeal filed by the Appellant was allowed, with any consequential relief to be granted as per the law.