2023 (9) TMI 1073 - AT - Customs

Tribunal overturns confiscation & penalties due to lack of evidence. Revenue fails to prove smuggling.

The Tribunal upheld the Commissioner (Appeals) decision, setting aside the confiscation of betel nuts and the vehicle, as well as the imposition of ... Smuggling - Betel Nuts of Foreign origin - no documentary evidence could be produced with regards to legal import - burden to prove - Confiscation - Penalty - HELD THAT:- The Form CA-5 which has been filed is incomplete and fails to record even the basics of the cases as per the impugned orders of the lower authorities. Commissioner (Appeal) has in appeal filed by two of the aggrieved persons against the order in original sets aside the entire order in original even against the person whose appeal was not under consideration by him, and revenue files this appeal even without uttering a single word about the same. Might be the revenue is only aggrieved by the setting aside of the order against the respondent and not against setting aside of the entire order in original without any appeal. On going through the impugned order of Commissioner (Appeals), it is noted that he has primarily gone by the fact that bBABOO BANIK VERSUS COMMISSIONER OF C. EX. & CUS., LUCKNOW [2004 (7) TMI 482 - CESTAT, KOLKATA]. Further, the Tribunal in the case of BIJOY KUMAR LOHIA VERSUS COMMISSIONER OF CUSTOMS (PREV.), PATNA [2005 (11) TMI 306 - CESTAT, KOLKATA] has held that the local trade opinion cannot take the place of the legal evidence. It is also noted that the reliance on the opinion of Arecanut Research & Development Foundation (ARDF), Mangalore as regards the country of origin by the Original Adjudicating Authority was not proper inasmuch as the said organization in reply to an RTI query has stated that it is not possible to determine the place of origin of betel nuts through test in laboratory. As such, the Appellate Authority is agreed upon that the said report can only be treated as an opinion and not as scientific test report regarding the country of origin. 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 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, the Appellate Authority is agreed upon that their confiscation is neither warranted nor justified. The order of the Allahabad bench in case of COMMISSIONER, CUSTOMS (PREV.) , LUCKNOW VERSUS M/S MAA GAURI TRADERS, [2018 (11) TMI 1668 - CESTAT ALLAHABAD] relying on which impugned order has given the relief to the respondent, was relied upon by the Kolkata Bench in case of SMT. LALTANPUII VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) , NER, SHILLONG [2020 (12) TMI 377 - CESTAT KOLKATA]. The Bench stated 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; the report of ADRF, Mangalore cannot be relied upon. On the issue of goods being held to be unfit for human consumption, it is held that as the goods are neither imported nor proved to be smuggled, no action by Customs is warranted. SLP filed by the revenue against this order of Hon’ble High Court has been dismissed by the Hon’ble Supreme Court as reported at [2022 (382) ELT 588 (SC)]. There are no infirmity in the impugned order of the Commissioner (Appeals) and the same is upheld - appeal of Revenue dismissed. Issues Involved:1. Confiscation of Betel Nuts2. Confiscation of the Vehicle3. Imposition of PenaltiesIssue 1: Confiscation of Betel NutsOn 09.09.2017, Customs Preventive Division Lucknow intercepted a truck loaded with 211 bags of betel nuts. The driver produced an invoice issued by the appellant. Market opinions and a report from Arecanut Research and Development Foundation (ARDF) indicated the betel nuts were of foreign origin, specifically Indonesian. The consignment was seized on 18.12.2017 for lack of legal import documentation, making it liable for confiscation under Section 111 of the Customs Act, 1962. A show cause notice was issued on 08.02.2018, proposing confiscation of the betel nuts. The Original Adjudicating Authority ordered the confiscation but allowed release upon payment of a redemption fine. Commissioner (Appeals) overturned this decision, noting the onus to prove smuggling was on the Revenue, which had not been discharged. The Tribunal upheld this, citing the unreliability of ARDF's report and lack of evidence of improper importation.Issue 2: Confiscation of the VehicleThe vehicle used for transporting the betel nuts was also seized under Section 115(2) of the Customs Act, 1962. The Original Adjudicating Authority ordered its confiscation but allowed release upon payment of a redemption fine. Commissioner (Appeals) set aside this order, and the Tribunal upheld this decision, noting the lack of evidence proving the vehicle was used for smuggling activities.Issue 3: Imposition of PenaltiesPenalties were imposed under Section 112 of the Customs Act on various individuals and entities associated with the consignment. Commissioner (Appeals) set aside these penalties, and the Tribunal upheld this decision, emphasizing the lack of evidence supporting the allegations of smuggling and improper importation.Conclusion:The Tribunal found no infirmity in the Commissioner (Appeals) order, which set aside the confiscation of betel nuts and the vehicle, as well as the imposition of penalties. The Revenue's appeal was rejected, affirming that the onus to prove smuggling was on the Revenue, which had failed to provide sufficient evidence.