Smuggled goods proof and customs jurisdiction limits defeated confiscation where domestic market records supported lawful procurement.

In a town seizure of non-notified goods, the Revenue had to independently prove smuggled nature under the Customs Act, 1962; invoices, transport records and supplier details supported domestic procurement, and no substantive evidence of smuggling was produced, so confiscation of the goods and currency could not stand. Customs also lacked jurisdiction to found confiscation on alleged non-compliance with the Standards of Weights and Measures Act, 1976 and the Packaged Commodity Rules for goods found in the domestic market, because enforcement in that setting lay with the authority under that regime. On both grounds, confiscation, penalties and related demand-based objections were unsustainable.

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Issues: (i) Whether the Revenue had established that the seized goods and currency were smuggled or otherwise liable to confiscation under the Customs Act, 1962. (ii) Whether the Customs authorities had jurisdiction to allege and act upon non-compliance with the Standards of Weights and Measures Act, 1976 and the Packaged Commodity Rules in respect of goods found in the domestic market.

Issue (i): Whether the Revenue had established that the seized goods and currency were smuggled or otherwise liable to confiscation under the Customs Act, 1962.

Analysis: The seized goods were found in the appellant's shop and godown in a town seizure. They were not notified goods under Section 123 of the Customs Act, 1962, so the burden remained on the Revenue to prove smuggled nature. The appellant produced invoices, transport records and names of suppliers, and the record also showed that earlier documents had already been resumed by the department. The suppliers and transport-related material supported the appellant's version that the goods were procured from the domestic market. No substantive evidence was adduced by the Revenue to establish smuggling, and the confiscation of currency also fell with the failure of the main charge.

Conclusion: The Revenue failed to prove that the goods or currency were liable to confiscation, and the finding against the appellant could not stand.

Issue (ii): Whether the Customs authorities had jurisdiction to allege and act upon non-compliance with the Standards of Weights and Measures Act, 1976 and the Packaged Commodity Rules in respect of goods found in the domestic market.

Analysis: The alleged non-compliance related to goods found outside the customs area, in the domestic market. The ruling proceeded on the basis that inspection and enforcement under the Standards of Weights and Measures Act, 1976 in such circumstances lay with the authority appointed under that statute, and not with Customs officers acting outside the customs area. The invocation of packaging and declaration requirements therefore could not sustain confiscation in the facts of the case.

Conclusion: The Customs authorities lacked jurisdiction to found confiscation on alleged violations of the Standards of Weights and Measures regime in the domestic market.

Final Conclusion: The confiscation order, penalties and demand-based objections were unsustainable, and the appellant was entitled to relief including return of the seized amount and consequential benefits.

Ratio Decidendi: In a town seizure involving non-notified goods, the Revenue must independently prove smuggling; absent such proof, and where the alleged regulatory infraction falls outside Customs jurisdiction in the domestic market, confiscation and penalty cannot be sustained.

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