2017 (10) TMI 521 - HC - Customs

Court quashes penalty orders, stresses concrete evidence. Criticizes inappropriate language in tribunal order.

Ciabro Alemao, Joaquim Alemao Churchill Alemao, Anthony John Rodrigues, & Subhash Pandey Versus The Commissioner of Customs

Ciabro Alemao, Joaquim Alemao Churchill Alemao, Anthony John Rodrigues, & Subhash Pandey Versus The Commissioner of Customs - 2018 (362) E.L.T. 465 (Bom.) Issues Involved:1. Imposition of penalty under Section 112(a) of the Customs Act without seizure or confiscation of contraband gold.2. Application of Section 138B of the Customs Act to departmental adjudication proceedings.3. Reliance on Supreme Court observations from a separate case for proof of contraband.4. Credibility of retracted statements under Section 108 of the Customs Act without cross-examination.5. Sufficiency of sole testimony for determining the value of alleged contraband.Issue-wise Detailed Analysis:1. Imposition of Penalty Without Seizure or Confiscation:The court questioned whether penalty proceedings under Section 112(a) of the Customs Act could be initiated without the actual seizure or confiscation of the alleged contraband. The absence of the contraband itself was deemed a critical flaw. The judgment emphasized that the Customs Act relies on 'evidentiary certainty,' which was not met as the contraband's existence and value were based solely on conjecture and the uncorroborated testimony of a single officer.2. Application of Section 138B to Departmental Adjudication:The court examined if Section 138B, which pertains to the relevance of statements in prosecution for offences under the Customs Act, could be applied to departmental adjudication proceedings. The judgment clarified that while Section 138B makes certain statements relevant, it does not equate to proof without cross-examination. The CESTAT's reliance on this section was found to be a misinterpretation, as the statements needed to be subjected to the rigors of cross-examination to be considered as evidence.3. Reliance on Supreme Court Observations from a Separate Case:The CESTAT's reliance on the Supreme Court's observations in a separate case involving the same officer (Fernandes) was scrutinized. The Supreme Court's decision in Fernandes' case was related to his prosecution under Section 155 of the Customs Act and did not establish the existence of contraband gold. The CESTAT's interpretation that the Supreme Court had concluded the presence of gold was incorrect and misleading.4. Credibility of Retracted Statements Without Cross-Examination:The court highlighted the importance of cross-examination for the credibility of statements recorded under Section 108 of the Customs Act. The non-availability of key witnesses for cross-examination was a significant breach of natural justice. The judgment referenced precedents that underscored the necessity of cross-examination for the admissibility and reliability of such statements.5. Sufficiency of Sole Testimony for Determining Contraband Value:The judgment critically assessed the reliance on Fernandes' sole testimony regarding the value and quantity of the alleged contraband. Fernandes' estimation, based on his experience and without any scientific or metric examination, was deemed insufficient. The court emphasized that the valuation of goods under the Customs Act requires specific metrics and proof, which were absent in this case.Conclusion:The court allowed all five appeals, quashing the impugned orders dated 14th October 1994 and 13th December 2004. The judgment underscored the necessity of evidence and proof in penalty adjudication proceedings under the Customs Act, rejecting conjecture and uncorroborated testimonies. The court also criticized the inappropriate language used in the CESTAT order, emphasizing the need for sobriety and adherence to legal principles in judicial proceedings.