Seizure of consignment is invalidatedupon failure to establish foreign origin of seized goods as well as factum of its smuggled into India

Hearing an appeal challenging the seizure of a consignment of Betel Nuts by the Customs Department, based on the allegation that the nuts had been smuggled into India, the Customs, Excise and Service Tax Appellate Tribunal Bench at Kolkata observed that the onus was on the Department to establish both the foreign origin of the seized goods, as well as the fact that they had been smuggled into India, on account of Betel Nuts being non-notified goods.

A Single Judge Bench of Mr. Rajeev Tandon, Member (Technical) observed that neither of the two had been conclusively established by the Department, in which case, the seizure of the consignment was invalidated.

The Bench further stated that the fact of the Assessees having held the Betel Nuts for a prolonged period of time, would not help the Department in discharging its onus of proving the smuggled nature of the goods or their foreign origin.

The Appellants-Assessee were represented by Ms. Atika Sumran Ahmed, Advocate, whereas the Respondent-Department was represented by Mr. S Chakraborty, AR.

Based on specific information concerning illegal import of cut betel nuts from Nepal into India, S.H.O. of Mufassil Police Station, Siwan, intercepted a truck coming from Gopalgunge side. The examination revealed it to be laden with cut betel nuts. The driver along with three other occupants present at the time of interdiction, however could not produce any documentation in relation to the cut betel nuts being transported. The driver however informed that the goods belong to one Shri Munna Mishra of Motihari and he was carrying the cut betel nut from Nepal to be delivered at Balia.

The Customs Officer upon taking over the said case seized the said 5700 kgs of cut betel nuts, packed in 100 bags, under Section 110 of the Customs Act 1962. Investigations were also undertaken with Shri Bijay Kumar Singh the claimant of the said goods. In defence he submitted a copy of invoice No.133 dated 13th March, 2016 issued by Shri Arvind Kumar Shahee, Patna alongwith a copy of order dated 24th March, 2015.

As per investigations carried out and the statements of Shri Bijay Kumar Singh recorded under Section 108 of the Customs Act, the said cut betel nuts were procured by him from M/s Shree Shai System, Patna, under cover of above referred invoice and that the goods were seized while in transit.

Investigation undertaken with Shri Sai Systems, Patna confirmed that the impugned goods were sold by them to the appellant and they in turn had procured the said goods from Customs Division, Forbesganj, vide order dated 24th March, 2015 – On appeal, the Commissioner (Appeals) upheld the orders of the adjudicating authority confiscating the said cut betel nut, allowing their provisional release imposition of redemption fine penalty on the various notices, besides confiscating and allowing provisional release of the truck carrying the impugned goods.

On hearing the contentions of both sides, the Bench observed that the Department has not discharged the burden cast on itself, to establish the smuggled character of goods. Since being non-notified items the smuggled character of the goods is required to be established by the Department led by positive evidence and for any legal action, it has to be beyond an iota of doubt.

That the goods were of a perishable nature, or that the Assessees have not given any valid reason to hold on to the goods for this long, and such like questions do not come to the help of the department for discharge of their onus. On the contrary the fact of mould infection is indicative of goods being old and their improper storage etc., thereby lending support to the plea of the Assessees, the Bench noted.

It was further observed that no evidence has been led by the Department to establish that the seized/confiscated cut betel nuts were actually smuggled and of foreign origin. Finding laches in the version of the Assessees could not bail out the department in discharge of the specific onus cast upon them to prove their smuggled character, the Bench clarified.

Thus the Department has thus miserably failed in establishing the foreign origin of the seized, confiscated and provisionally released cut betel nuts. There being no shred of any positive piece of evidence led by the Department, to establish the smuggled nature of the goods, being non notified goods, the onus is on the Department to establish smuggled foreign origin of the cut betel nuts, the Bench concluded.

The Bench also observed that the Assessees discharged their burden on the basis of invoice tendered and related procurement source. Moreover, it is not the case of the Department that the goods were not procured in auction by the supplier.

Thus, the Bench concluded that the Department failed to establish the foreign/cross border territories the said goods (if at all were smuggled) had passed through to establish their smuggled character, and thus the order of seizure was set aside.

Cause Title: M/s Vijay Kumar Singh vs Commissioner of Customs (Preventive) [Customs Appeal No.79482 of 2018 / 2023-Enterslice-8-CESTAT-Kol]

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Vijay-Kumar-Singh-vs-Commissioner-of-Customs