Goods smuggling case remanded for duty redetermination. Liability confirmed, penalty set aside. Correct classification & duty rate required.

The court upheld that the goods were smuggled and remanded the case to the adjudicating authority for re-determination of duty and penalty. The liability of the company for duty and interest was confirmed, while the penalty on Mr. I. John was set aside due to lack of knowledge of smuggling. The correct classification and duty rate for the goods must be determined, and the penalty on the company is subject to change based on the revised duty amount.

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Issues Involved:
1. Jurisdiction of the adjudicating authority.
2. Evidence of smuggling.
3. Liability of LCPL for duty and interest.
4. Classification and duty rate applicable to the smuggled goods.
5. Penalty on LCPL under Section 114A.
6. Penalty on Mr. I. John under Section 112(b).

Detailed Analysis:

1. Jurisdiction of the Adjudicating Authority:
The issue of jurisdiction was not raised before the adjudicating authority but was introduced only at the appellate stage, which is considered an afterthought. The investigation originated in Mumbai, and the appellant's Managing Director admitted that the goods were smuggled through passenger baggage, presumably through Mumbai airport. The principle established in the case of K.P. Abdul Majeed v. Collector of Customs & Central Excise, Cochin, supports the jurisdiction of the Commissioner in charge of Mumbai Airport to adjudicate the matter.

2. Evidence of Smuggling:
The appellant argued that there was no evidence of smuggling except for Mifepristone. However, Mr. N.P. Jajodia admitted to smuggling 24 kgs of Mifepristone through carriers, and this admission was never retracted. The statements of Mr. Jajodia and corroborative evidence from M/s. Cadilla Healthcare and Earnest Healthcare Ltd. confirmed that the goods were of foreign origin and smuggled. The Hon'ble High Court of Madras in Govindasamy Raghupati held that admitted facts need not be proved.

3. Liability of LCPL for Duty and Interest:
LCPL argued that they did not smuggle the goods themselves. However, the goods were smuggled at their behest, and they sold the smuggled goods. Therefore, LCPL is liable to discharge the duty liability. The investigation revealed that the claims of indigenous procurement by Mr. Jajodia were false, and the onus was on LCPL to prove licit procurement, which they failed to do. The duty liability is upheld, and the liability to pay interest is automatic and consequential.

4. Classification and Duty Rate Applicable to the Smuggled Goods:
The duty was calculated at the highest baggage rate of 60%, which is not applicable as per the Supreme Court's decision in M. Ambalal & Co. The goods should be classified under the appropriate tariff heading applicable to the goods. Mifepristone and Dexamethasone Sodium Phosphate should be classified either under Chapter 29 as organic chemicals or Chapter 30 as medicinal preparations, depending on their form at the time of supply. The adjudicating authority must re-determine the duty based on the correct classification and tariff rate.

5. Penalty on LCPL Under Section 114A:
The penalty under Section 114A is imposed for collusion or willful misstatement or suppression of facts. The charge of smuggling against LCPL is established, making them liable for a penalty equal to the duty demanded. However, the penalty amount will change based on the revised duty determined.

6. Penalty on Mr. I. John Under Section 112(b):
To impose a penalty for abetment, the person must have knowledge that the goods are smuggled. Mr. I. John admitted to issuing invoices without supplying goods but did not know they were smuggled. There was no proposal or finding that the goods were liable to confiscation under Section 111. Therefore, the penalty imposed on Mr. I. John is not sustainable in law.

Conclusion:
The findings of the adjudicating authority that 24 kgs of Mifepristone and 187 kgs of Dexamethasone Sodium Phosphate are smuggled are upheld. The matter is remanded back to the adjudicating authority for re-determination of the value and quantum of duty and reconsideration of the penalty under Section 114A. The penalty imposed on Mr. Ignatius John is set aside. The appeals are disposed of accordingly.

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