2002 (8) TMI 876 - AT - Customs

Tribunal upholds Collector's jurisdiction & reduces penalties; criticizes denial of cross-examination as violation of natural justice.

The Tribunal upheld the jurisdiction of the Collector in adjudicating the case and found that the issuance of the Show Cause Notice under Section 124 of ... - Issues Involved:1. Jurisdiction and propriety of the proceedings.2. Validity of the import licenses and whether they were forged.3. Existence of M/s. Agrico Industries and its proprietor, Shri Toshilaya.4. Denial of principles of natural justice due to non-allowance of cross-examination.5. Appropriate penalties and fines.Detailed Analysis:1. Jurisdiction and Propriety of the Proceedings:The appellants challenged the issuance of the Show Cause Notice under Section 124 of the Customs Act, 1962, arguing that the matter should have been reopened via Sections 28 or 129D(4) of the Customs Act. The Tribunal found that the assessments were not completed as the examination of goods, an essential part of the process, was pending. Thus, the department was justified in issuing a notice under Section 124 and the Collector was within his jurisdiction to adjudicate the case.2. Validity of the Import Licenses:The Tribunal found that the endorsements on the licenses were forged based on the statement and affidavits of Shri L. Kharmalong, Controller of Imports and Exports, Shillong. However, the Tribunal noted that the department did not obtain an expert opinion on the alleged forgery, nor did they verify the records of the Controller's office. The Tribunal concluded that the endorsements were forged but reduced the penalties considering the appellant acted in good faith as a letter of authority holder.3. Existence of M/s. Agrico Industries:The Tribunal observed that the department's inquiries were insufficient as they did not cover all the addresses associated with M/s. Agrico Industries. The appellants provided documents indicating the existence of M/s. Agrico Industries during 1981-84. The Tribunal found that the department failed to cross-check these documents with relevant authorities and concluded that there was insufficient evidence to definitively prove the non-existence of M/s. Agrico Industries.4. Denial of Principles of Natural Justice:The Tribunal held that the denial of cross-examination of Shri Kharmalong constituted a violation of natural justice. The Tribunal emphasized that cross-examination was necessary, especially when the department's case heavily relied on Shri Kharmalong's statements and no expert opinion was obtained.5. Appropriate Penalties and Fines:The Tribunal reduced the fines and penalties imposed by the Collector. In Appeal No. C-305/86-Cal., the fine was reduced from Rs. 4.50 lakhs to Rs. 1.50 lakhs, and the penalty on Shri G.R. Agarwal was reduced from Rs. 1 lakh to Rs. 33,000. In Appeal No. C-306/86-Cal., the fine was reduced from Rs. 21 lakhs to Rs. 7 lakhs, and the penalty on Shri G.R. Agarwal was reduced from Rs. 4 lakhs to Rs. 1.33 lakhs.Conclusion:The Tribunal, by majority decision, reduced the fines and penalties imposed by the Collector, taking into account the long duration of the case and the appellant's good faith in acting as a letter of authority holder. The Tribunal found that the remand would be a futile exercise given the age of the case and the unavailability of records.