Shri Gulshan Ahmed Barbhuiya And Anr. vs Commissioner Of Customs (Preventive), Kolkataata

The facts of the case in brief are that the Directorate of Revenue Intelligence (DRI) received information and intercepted one truck with Betel Nuts near Goaltuli More on Fullbari-Ghoshpukur By-pass Road, P.S. Phansidewa, District-Darjeeling on 26.10.2021 on the suspicion that they were of foreign origin. During investigation, the Appellants produced GST Invoices, Lorry receipts, E-Way Bills and other documents to assert that the goods were indeed of domestic origin. Not satisfied with the documents which were provided, DRI seized the consignment along with the truck and issued a Show Cause Notice since none of the occupant (driver/helper of the truck) produced any documents in support of the legal importation of the recovered Betel Nuts. The Show Cause Notice was adjudicated by the Additional Commissioner of Customs, who held as follows :-

"i) I order for absolute confiscation of the seized Betel Nuts having total weight of 19.50 M.T. as detailed in the Inventory of Goods of the Seizu8re Case No.06/CL/IMP/DRI/SLG/2017-18 dated 27.10.2017 valued at Rs.39,00,000/- (Rupees Thirty-Nine Lakhs) only under section 111 (b) & 111 (d) of the Customs Act, 1962 read with the Plant Quarantine (Regulation of Import into India) Order, 2003 under provisions of the extent Foreign Trade Policy for illegal importation into India from Myanmar in contravention of the provisions of the Act and the Policy ibid.

ii) I order for confiscation of 250 nos. Gunny Bags used for packing the smuggled betel nuts should not be confiscated under Section 119 of the Customs Act, 1962.

iii) I order for confiscation of the carrier vehicle bearing Registration No.AP-16TF-9279 used for transporting 19.50 M.T. smuggled Betel Nuts under Section 115 (2) of the Customs act, 1962. However, as the said carrier vehicle has been provisionally released, I impose a redemption fine of Rs.4,00,000/- (Four Lakhs Rupees) only in terms of Section 125 of the said Act.

iv) I impose a penalty of Rs.20,000/- (Twenty Thousand Rupees) only on Syed Basha Anwar, S/o Syed Habib, 8-432D, Gafoor Bazar, Vuyyuru, Krishna, Andhra Pradesh-521165 under Section 112(a) and 112(b) of the said Act for his acts of omission and commission as discussed hereinabove.

v) I impose a penalty of Rs.10,000/- (Ten Thousand Rupees) only on Shri Durga Rao, S/o Ramlu, Mudinepalli, Dist - Krishna, Andhra Pradesh - 521325 under Section 112(a) and 112(b) of the said Act for his acts of omission and commission as discussed hereinabove.

vi) I impose a penalty of Rs.4,00,000/- (Four Lakhs Rupees) only on Shri Gulshan Ahmed Barbhuiya, S/o Shri Fakar Uddin Barbhuyia, Proprietor - M/s. Gulshan Traders, Vill: Purbokitterbond-II, P.O. amala, P.S. Lala, Dist : Hailakandi, Assam-788164 under Section 112(a) and 112 (b) of the said Act for his acts of omission and commission as discussed hereinabove.

vii) I impose a penalty of Rs.4,00,000/-(Four Lakhs Rupees) only on Zakir Hussain Laskar, S/o Sri Azir Uddin Laskar, Lala Road, Opposite to Shifa Hospital and Research Centre, Ward No.4, Hailakandi, Assam-788151 under Section 112(a) and 112(b) of the said Act for his acts of omission and commission as discussed hereinabove.

viii) I impose a penalty of Rs.2,69,246/- (Two Lakhs Sixty-nine Thousand Two Hundred Forty-six Rupees) only on Shaik Allabakshu, S/o Kareem Abdul, D. No.1/549-23A, Bypass Road, Rajiv Nagar, Gudivada, Krishna District, Andhra Pradesh - 521301 under Section 112(a) and 112(b) of the said Act for his acts of omission and commission as discussed hereinabove.

ix) I impose a penalty of Rs.4,00,000/- (Fopur Lakhs Rupees) only on Shri Sayeed Ahmed Shaikh, S/o Shri Rashid Ahmed Shaikh, Proprietor of M/s.S.A. Enterprises, 8/D/5, Sagar Cooperative Housing Society, Sector-10, Kaparkhairne, Navi Mumbai-400079 under Section 112 (a) and 112(b) of the said Act for his acts of omission and commission as discussed hereinabove.

x) I impose a penalty of Rs.1,00,000/- (One Lakh Rupees) only on Shri Dinesh Kumar Singh, Proprietor of M/s.J.D. Roadlines, S/o Late Shiv Shankar Singh, East Padmanagar, Bilpar, Silchar, Dist. Cachar, Assam - 788001 having permanent address as Vill.+P.O. Lalganj, Dist. Vaishali, Bihar, PIN-844113 under Section 112(a) and 112(b) of the said Act for his acts of omission and commission as discussed hereinabove.

xi) I order for enforcement of Bond of full value of carrier vehicle and Security Deposit of Rs.6,69,246/- only deposited to the Government Exchequer vide TR6 challan No.01.17-18 dated 12.03.2018 submitted by Shri Shaik Allabakshu, owner of the vehicle at the time of provisional release of the carrier vehicle towards payment of redemption fine and penalty as mentioned at Sl.No.(iii) and (viii) above."

Being aggrieved, the Appellant appealed to the First Appellate Authority, who passed order rejecting the Appeal. Hence the Appellants are in Appeal before the Tribunal.

Heard both sides and perused the Appeal records.

I find that the goods were undisputedly seized within India. The ground for seizure and subsequent confiscation is that the owners/occupants were not able to prove the licit import of Betel Nuts which DRI suspected to be of foreign origin. The GST Invoice, E-Way Bills etc. produced by the Appellant were found to be not satisfactory. In respect of some goods, the Customs Act, 1962 reverses the burden of proof and makes it the responsibility of the person from whom the goods are seized or the owner of the goods to prove that they were not smuggled under Section 123. It reads as follows:-

SECTION 123. Burden of proof in certain cases. - [(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be -

(a) in a case where such seizure is made from the possession of any person, -

(i) on the person from whose possession the goods were seized; and

(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;

(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.]

(2) This section shall apply to gold, [and manufactures thereof,] watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.

This shows that the burden gets shifted if "(1) the seizure was under the reasonable belief that the goods are smuggled goods; and (2) the goods in question, are gold and manufactures thereof or watches or other class of goods which are notified by Central Government in the official gazette. There is nothing on record to show that the Betel Nuts were notified under Section 123. Therefore, Appellants had no responsibility whatsoever to prove that the seized Betel Nuts were not smuggled even if they were of foreign origin. It is for the Revenue to establish that the goods, in question, were smuggled. Smuggling is defined in Section 2(39), which reads as follows:-

SECTION 2. Definitions.- In this Act, unless the context otherwise requires.

....................................

.............................................

(39) "smuggling", in relation to any goods, means any act or omission which will render such goods liable to confiscation under section 111 or section 113;

"Imported goods" and "importer" are defined in Section 2(25) and 2(26) as follows:-

(25) "imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption;

(26) "importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes [any owner, beneficial owner] or any person holding himself out to be the importer;

From the above definitions it is clear that even if the goods are of foreign origin, if they have been imported and cleared for home consumption, they cease to be imported goods thereafter and the importer ceases to be the importer. Therefore, no duty can be assessed on such goods under Section 17 of the Customs Act, 1962. There is also no responsibility on the importer or to any other person from whom the goods are seized to keep or produce the import documents to establish their legal import once they have been cleared for home consumption. The goods can be used, sold, re-sold etc. without any duty either on the importer or any subsequent buyer of such goods to keep or produce the import documents. Of course, if the goods have been smuggled into India, not through the designated Customs Ports, Airports or Land Customs Station, they will be liable for confiscation, but it must be established that the goods have been so imported. In this case, the goods were clearly seized within India. The burden to prove shifts to the importer or the owner of the goods only when such goods are notified under Section 123 and Betel Nuts were not notified. The Department has not proved in this case that the goods were smuggled goods. Unless Revenue can establish that the Betel Nuts have been imported illegally into India, they cannot be confiscated, the impugned order of the Adjudicating authority confiscating the goods on the grounds that the Appellants were not able to establish that they were not smuggled goods, cannot sustain as the Appellants have no such responsibility. Revenue, on which the burden of proof rests, has not established that the seized Betel Nuts were smuggled. It is immaterial whether the Betel Nuts were of foreign origin or not.

In view of the above, the impugned order is set aside and the Appeals are allowed with consequential relief to the Appellants, if any.

(Order pronounced in the open court on 09 November 2021.)