Burden of proof in smuggling cases stays with the Department where seized goods are not notified and evidence is insufficient.

Questions about whether seized goods were of foreign origin and smuggled were treated as factual matters of evidence rather than pure questions of law. Because the goods were not notified under Section 123 of the Customs Act and were outside Chapter IV-A, the burden of proving smuggling did not shift to the assessee. Labels, alleged bogus invoices, and the supplier's untraceability were held insufficient on their own to prove illegal import or foreign origin. The proposed questions were therefore not referable questions of law, and the Department could not dislodge the finding that smuggling was not proved.

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Issues: Whether the proposed questions raised only issues of appreciation of evidence and burden of proof, so as to justify a reference, and whether the Department had established that the goods were of foreign origin and smuggled.

Analysis: The Tribunal treated the proposed questions as turning substantially on factual evaluation rather than on any pure question of law. The seized goods were not notified under Section 123 of the Customs Act, 1962, and were also not covered by Chapter IV-A of that Act, so the burden of proving that the goods were smuggled did not shift to the assessee. On the facts noted by the Tribunal, the labels alone, the alleged bogus invoices, and the untraceability of the supplier were held insufficient to establish illegal import or foreign origin. The questions framed on these aspects were therefore held to be matters of evidence appreciation and not referable questions of law.

Conclusion: The reference application was not maintainable on the proposed questions and was rejected; the Department failed to dislodge the Tribunal's finding that the goods were not proved to be smuggled.

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