Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 26.10.2026
CESTAT Kolkata: Foreign Origin and Smuggled Character Are Two Distinct Questions Under Customs Law
This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata has allowed nine connected appeals concerning the seizure of 39.156 metric tonnes of betel nuts, ruling that Customs did not establish that the goods were of foreign origin or had been smuggled into India.
In Final Order Nos. 76499-76507/2026, pronounced on 15 October 2026, the Tribunal set aside the confiscation order and all related penalties. The decision underscores an important principle in customs law: for non-notified goods such as betel nuts, the burden remains on the Revenue to prove smuggling with reliable evidence rather than assumptions, inconclusive reports, or uncorroborated statements.
Background: Two Trucks Intercepted Near Siliguri
The case arose from a Directorate of Revenue Intelligence (DRI) operation on 3 March 2019. Acting on intelligence that allegedly smuggled betel nuts from Myanmar were being transported through the Siliguri area, officers intercepted two trucks at Goaltuli More on the Fulbari-Ghoshpukur Bypass Road in Darjeeling district, West Bengal.
The trucks, bearing registration numbers AP-27TX-6129 and WB-65C-5608, were carrying betel nuts stated to have been loaded at Vairengte, Mizoram, for delivery to consignees in Hooghly and Nabadwip, West Bengal. The drivers produced transport documents, tax invoices, consignment notes and e-way bills. One consignment was documented as supplied by M/s A.D. Store to M/s Papai Traders, while the other was documented as supplied by M/s Zotei Enterprise to Shri Narayan Karmakar.
Following a search at the DRI office in Siliguri, officers found:
- 209 bags weighing 16.302 MT in truck AP-27TX-6129;
- 293 bags weighing 22.854 MT in truck WB-65C-5608; and
- A combined quantity of 39.156 MT, valued by Customs at Rs. 1,07,67,900.
Customs seized the goods, the two carrier vehicles, related documents and two mobile phones. The department alleged that the betel nuts had been smuggled from Myanmar through the Indo-Myanmar border and were therefore liable to confiscation under Sections 111(b) and 111(d) of the Customs Act, 1962.
Customs Case and Earlier Orders
The Revenue relied mainly on statements recorded from the truck drivers and helpers, investigation into the consignors and consignees, call-detail records, and a report from the Arecanut Research and Development Foundation (ARDF), Mangalore.
The ARDF report stated that the samples βseems to be of North-East including Myanmar region.β It also noted mould infestation and non-compliance with BIS standards. Customs treated this report, along with the statements and surrounding circumstances, as support for the allegation that the consignments were of Myanmar origin and had entered India illegally.
On 28 August 2020, the adjudicating authority ordered absolute confiscation of the betel nuts and imposed penalties on the persons connected with the consignments. The Commissioner of Customs (Appeals) upheld that order on 23 February 2022.
The affected parties, including Debasish Saha of M/s Papai Traders, Dipak Saha, Narayan Karmakar, Sujit Mitra, Md. Shamim Uddin, Zoramthari, Nilkamal Saha, Anjan Kumar Paul and Lalenkawli, then appealed to CESTAT.
Tribunalβs Findings: Evidence Did Not Prove Smuggling
The Tribunal found that the departmentβs evidence was insufficient to establish either foreign origin or illegal importation.
1. The ARDF opinion was not conclusive
CESTAT noted that the ARDF report did not say the goods were of Myanmar origin. Its wordingβthat the samples βseems to be of North-East including Myanmar regionββwas held to be inconclusive. A reference to a broad region that includes Myanmar could not, by itself, prove that the goods originated in Myanmar.
The Tribunal also relied on judicial precedents that question the evidentiary value of such reports where there is no recognised scientific or objective test capable of determining the territorial origin of betel nuts.
2. Betel nuts are non-notified goods
A central point in the ruling was that betel nuts are not notified under Section 123 of the Customs Act. As a result, the statutory burden does not shift to the person from whom the goods are seized. Instead, Customs must prove that the goods are smuggled.
The Tribunal held that the Revenue could not meet this burden merely by relying on suspicion, a tentative expert opinion, or statements. Even if goods were assumed to be of foreign origin, that alone would not establish illegal importation; positive evidence of smuggling was still required.
3. The seizure location and accompanying documents mattered
The goods were intercepted in West Bengal, not at the Indo-Myanmar border. The trucks also carried invoices and other commercial transport documents identifying Mizoram-based suppliers and West Bengal consignees.
The Tribunal held that these facts did not permit an automatic inference that the goods had crossed the border illegally. The documentary trail could not be displaced without cogent contrary evidence.
4. Precedents required proof, not presumption
The order relied on the Calcutta High Courtβs ruling in Commissioner of Customs, Central Excise and Service Tax, Siliguri v. Subodh Das, which was subsequently affirmed by the Supreme Court. That line of authority establishes that, for non-notified betel nuts, Customs must discharge the burden of proving foreign origin and smuggled character.
The Tribunal also referred to Maqsood Alam v. Commissioner of Customs, Lucknow and Maa Kamakhya Trader v. Commissioner of Customs (Preventive). These decisions emphasise that visual assessments, inconclusive opinions and strong suspicion cannot replace objective evidence of smuggling.
Outcome: Confiscation and Penalties Quashed
CESTAT concluded that the Revenue had failed to prove that the seized betel nuts were smuggled goods. It therefore set aside the confiscation of the 39.156 MT consignment and held that no penalties could be imposed on the appellants.
The Tribunal allowed all connected appeals and overturned the Order-in-Appeal dated 23 February 2022.
Key Legal Significance
This ruling reinforces that customs enforcement actions involving non-notified goods must rest on clear, affirmative and legally reliable evidence. In particular:
- A tentative report suggesting a possible regional origin is not proof of foreign origin.
- Foreign origin, even if established, does not automatically prove that goods were illegally imported.
- For non-notified goods, Customs bears the burden of proving smuggling.
- Confiscation and penalties cannot be sustained on presumptions, suspicion or inadequately supported statements.
The decision provides a significant restatement of evidentiary standards in betel-nut smuggling cases, particularly where seizures occur away from an international border and goods are accompanied by commercial documentation.
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Source: CESTAT Kolkata
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