2025 (7) TMI 1090 - AT - Customs

CESTAT sets aside confiscation of 18,880 kgs Zinc Ash after Revenue fails to prove smuggling allegations

CESTAT Kolkata allowed the appeal challenging confiscation of 18,880 kgs Zinc Ash and truck, setting aside penalties imposed on appellants. Revenue ... Smuggling - goods of Nepalese origin - corroborative evidence to substantiate the allegation that the said goods were smuggled into the country or not - notified goods under Section 123 of the Customs Act, 1962 - goods were accompanied with G.S.T. Invoice and e-way bills, which have not been found to be forged during the investigation - HELD THAT:- In the present case, the goods viz. Zinc Ash have been seized from the Truck bearing Registration No. UP-78DN / 3179, within the territory of India. The primary allegation of the Revenue is that the goods were of Nepalese origin, which were smuggled into India without payment of appropriate duties of Customs. However, there are no corroborative evidence brought on record by the Revenue to substantiate the allegation that the said goods were smuggled into the country. It is a fact on record that the officers of the DRI, Muzzafarpur intercepted the said vehicle near C.R.P.F. Camp, Muzaffarpur in Sitamarhi-Muzaffarpur road. The appellant no. 1 has enclosed copies of the relevant purchase receipts and ledger containing the entries in respect of the goods purchased/accumulated, which evidences that the goods have been purchased locally. It is also observed that the invoices and e-way bills issued by the consignor / appellant no. 1 in this case were in terms of the G.S.T. law. I find that no investigation has been carried out to this effect to counter the claim made by the appellant that the goods were domestically procured, consolidated by them and sold locally, to the consignee in Kanpur. The documents submitted by the appellant were not found to be fake or forged. Thus, the evidences available on record clearly indicate that the impugned goods are of domestic origin and sold by the appellant no. 1 / consignor through valid documents and hence, the said goods are not liable for confiscation. It is also pertinent to note that the impugned goods are not notified items under Section 123 of the Customs Act, 1962. Thus, the onus is cast on the Revenue to establish the smuggled nature of the goods in question, which has not been done in the instant case. Thus, even on this count, the order of confiscation of the impugned goods is not sustainable - the investigation has not established that the goods were of smuggled in nature and hence the order of confiscation of the goods set aside. Since the goods are not liable for confiscation, the vehicle carrying the goods is also not liable for confiscation - there is no violation warranting imposition of penalties under Section 112(a)/(b) of the Customs Act, 1962 on the appellants. Accordingly, the penalties imposed on the appellants herein are also set aside. The order of confiscation of the seized 18880 kgs. of Zinc Ash valued at Rs.26,43,200/- under the provisions of Sections 111(b),(d),(e),(f),(g),(h),(i) & (p) of the Customs Act, 1962 is set aside. Accordingly, the redemption fine imposed in lieu of such confiscation also stands set aside - The order of confiscation of the Truck bearing Registration No. UP-78DN / 3179 under the provisions of Section 115(2) of the said Act is also set aside. Accordingly, the redemption fine imposed in lieu of such confiscation also stands set aside - The penalties imposed on Shri Nawal Kishore and Shri Bal Govind ( the appellants herein ) under Section 112(a)/(b) of the Act are set aside. Appeal disposed off. ISSUES: Whether the seized goods (Zinc Ash) were smuggled into India without payment of appropriate customs duties.Whether the seizure and confiscation of the goods and the truck under various provisions of the Customs Act, 1962, including Sections 111, 112, 115, and 125, were justified.Whether the Hazardous Waste (Management, Handling & Trans-boundary Movement) Rules, 2008, were violated by the appellants in relation to the seized goods.Whether penalties under Section 112(a)/(b) of the Customs Act, 1962, were rightly imposed on the appellants. RULINGS / HOLDINGS: On the allegation of smuggling, the court held that 'no corroborative evidence' was produced by the Revenue to substantiate that the goods were smuggled; the goods were found to be of domestic origin supported by valid invoices and e-way bills, and thus 'the said goods are not liable for confiscation.'The confiscation of the goods and the truck under the Customs Act, 1962, was set aside as the foundational basis for confiscation-smuggling-was not established, and accordingly, the redemption fines imposed in lieu of confiscation were also set aside.Regarding the Hazardous Waste Rules, the court found that these Rules were 'not applicable to the instant case' as the goods were sourced domestically, and no specific or detailed allegations or findings of violation were made; thus, the alleged contravention was not established.The penalties imposed under Section 112(a)/(b) of the Customs Act, 1962, were set aside since there was 'no violation warranting imposition of penalties' given the goods' Indian origin and valid documentation. RATIONALE: The court applied the statutory framework of the Customs Act, 1962, including Sections 110, 111, 112, 115, and 125, which govern seizure, confiscation, and penalties related to smuggled goods.The decision relied on the principle that the Revenue must establish the smuggled nature of goods beyond mere suspicion, supported by the precedent that ''reason to believe' that the goods were of smuggled in nature, cannot be based merely on suspicion, gossip or rumour,' as affirmed by the Hon'ble High Court and Supreme Court in related jurisprudence.The court emphasized the evidentiary value of valid GST invoices, e-way bills, and purchase receipts in demonstrating domestic procurement and sale, which negated the smuggling allegation.The absence of specific findings or detailed allegations regarding the Hazardous Waste Rules led to the rejection of the Revenue's claim of their violation, indicating a strict requirement for particularized proof under these Rules.No doctrinal shift or dissent was noted; the judgment reaffirmed established legal standards on burden of proof and procedural fairness in customs confiscation cases.