Revenue must prove the foreign origin and smuggling of non-notified betel nuts.

DRI officers intercepted two trucks in Darjeeling, West Bengal, carrying 39.156 MT of betel nuts.

The trucks carried invoices and other transport documents identifying Mizoram consignors and West Bengal consignees.

DRI alleged that the betel nuts had been smuggled from Myanmar through Mizoram.

A report from the Arecanut Research and Development Foundation (ARDF) stated that samples “seem[] to be of North-East including Myanmar Region.”

The adjudicating authority ordered absolute confiscation under Sections 111(b) and 111(d) of the Customs Act, 1962, and imposed penalties under Section 112.

The Commissioner (Appeals) upheld that order; the appellants then appealed to the Tribunal.

1. Whether the Revenue proved that the seized betel nuts were of foreign origin and had been smuggled into India, so as to justify confiscation under Sections 111(b) and 111(d) of the Customs Act, 1962

2. Whether penalties under Section 112 could stand if the alleged smuggling was not established

Sections 111(b) and 111(d) of the Customs Act permit confiscation of goods imported or brought into India contrary to law; Section 112 provides for penalties for specified acts connected with goods liable to confiscation.

Betel nuts are not goods notified under Section 123, so the statutory burden-shifting presumption does not apply and the Revenue must prove their foreign origin and smuggled character.

Foreign origin alone does not establish smuggling, and suspicion or an inconclusive opinion cannot substitute for evidence.

The Tribunal relied on Commissioner of Customs, Central Excise and Service Tax, Siliguri v. Subodh Das [2023 (385) E.L.T. 693 (Cal.)], affirmed by the Supreme Court [2024 (388) E.L.T. 391 (S.C.)]; Maqsood Alam v. Commissioner of Customs, Lucknow [2015 (324) E.L.T. 162 (Tri.-Del.)]; and Maa Kamakhya Trader v. Commissioner of Customs (Preventive) [2024 (389) E.L.T. 185 (All.)].

The Tribunal found that the ARDF report was not conclusive: its statement that the samples seemed to be from the North-East, including Myanmar, did not establish Myanmar origin.

The goods were intercepted in West Bengal, not at the international border, and the trucks carried invoices identifying domestic consignors and consignees.

As betel nuts are non-notified goods, the burden remained on the Revenue to establish smuggling; the report and statements relied upon did not discharge that burden.

Applying the cited authorities, the Tribunal held that confiscation could not rest on assumption or presumption and that penalties could not survive once the smuggling allegation failed.

It set aside the confiscation order and held that no penalties were imposable on the appellants.

The impugned appellate order was set aside and the appeals were allowed.