TaxTMI 
TaxTMI 
2023 (6) TMI 328
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....or final determination together as the initial cause of action arose on similar factual background, the show cause notices issued to the parties/respondents are common and also the orders under challenge. All the Appeals were admitted by this court the under its order dated 16.02.2023 framing the following substantial questions of law: "(i) Whether the CESTAT, Kolkata, erred in law in holding that the standard of proof as envisaged under Section 123 of the Customs Act, 1962 is the best beyond reasonable doubt? (ii) Whether the CESTAT, Kolkata, has erred in law in setting aside the order of confiscation when seized goods were found to be unfit for human consumption as per test report of Export Inspection Agency, Kolkata, under Food and Standard (Food Products Standards and Food Additive) Regulations, 2022? (iii) Whether findings of the CESTAT, Kolkata are perverse under the present facts and circumstances of the case?" 4. The basic facts leading to filing of the present appeals as pleaded by the appellant are summarized as follows: (i) On the basis of intelligence input, the DRI Officers of Silchar searched a godown, however nothing was found. ....
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....) Being aggrieved, the respondent preferred an appeals before the Appellate Tribunal and the Appellate Tribunal under its order dated 10.11.2021 allowed the appeals and set aside impugned orders with consequential relief to the appellants if any. Being aggrieved, the present appeal is preferred. 5. Findings of the Adjudicating Authority: The Adjudicating Authority while passing the order dated 18.03.2020 concluded the following: (i) The goods under seizure are undoubtedly of foreign origin. The statement of the noticees and report of the forensic laboratory confirms the fact that goods are smuggled in nature. (ii) There is a trend of smuggling of contrabands, specifically betel nuts from the neighboring countries into India, which is established from intelligence reports and regular seizures made by various agencies located in the Northeast region. (iii) The noticees had failed to produce any document of legal importation/ transportation/ possession of the said goods and therefore, the betel nuts are illegally smuggled to India. (iv) The confession by the noticees that goods were smuggled across the border into India rendered the seized goo....
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....ceases to be importer and no duty can be assessed on such goods under Section 17 of the Customs Act. (iv) The burden of proof shifts to the importer or owner of the goods, only when such goods are notified under Section 123 and betel nuts are not notified goods under Section 123. (v) The department has not proved the case that goods were smuggled goods. 8. Arguments advanced on behalf of the appellants: Mr. S.C. Keyal, learned counsel for the appellants argues the followings: (i) The department has been able to prove their case in as much as the respondent has admitted that the areca nuts were received in Champhai, Mizoram, which were brought on horse load in the night. (ii) The learned CESTAT has insisted on the proof beyond reasonable doubt inasmuch as standard of proof as required under Section 123 of the Customs Act, 1962 is not to prove the case beyond reasonable doubt but by mere preponderance of probabilities. The standard of proof in case of all other goods except notified goods should be preponderance of probability. It is enough when the department furnishes prima-facie proof of the goods being smuggled. (iii) Thus, the l....
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.... Therefore, the finding of the learned Appellate Tribunal cannot be faulted with on this count. 10. Determination of this Court: (i) Section 123 of the Act, 1962 provides that where any goods included under Sub-section 2 of Section 123 are seized under the provision of the Act, 1962, on the basis of reasonable belief that the same are smuggled goods, then the burden of proving that they are not smuggled goods, shall lie upon the person from whose possession such goods have been seized and in a case, when another person claims to be owner thereof though such goods have not been seized from his possession, upon such claimant and in other cases on the person, who claims to be owner of the goods so seized. (ii) Sub-section (2) of Section 123 clearly provides that Section (1) shall apply to gold and manufactures thereof, watches and any other classes of goods, which the Central Government may by notification in the official Gazette specify. (iii) Therefore, the condition precedent is that the revenue authority must have a reasonable belief that goods seized were smuggled goods and fall under the category of goods enumerated or notified under Subsection 2 of Section 123 of th....
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.... that the goods seized are of foreign origin lies upon the revenue authority, when the same are not notified goods under Section 123. (xi) The learned appellate tribunal has not held that standard of proof as envisaged under Section 123 of the Act, 1962 is beyond reasonable doubt. What it has concluded is that the burden of proof under Section 123 (1) of the Act, 1962 is not applicable, in the present case for the reason that the seized goods suspected to be of foreign origin were not notified goods under Section 123 (2) of the Act, 1962 and such a view is the correct view. Therefore, the first question of law framed is answered against the appellant. (xii) Coming to the question of perversity, as discussed hereinabove, it is clear that the revenue authority has failed to discharge its initial burden and also failed to lay the foundational fact that the suspected goods were of foreign origin. The GST Invoices etc were not believed by the Adjudicating authority as well as by the Appellate authority, however, why such documents were discarded is also not discernible from contents of both the decisions. (xiii) There is nothing on record, to even have a prima-facie view that t....