2019 (11) TMI 1290 - HC - Customs

High Court annuls Customs Act penalty of Rs. 10 lacs due to lack of concrete evidence

The High Court set aside the penalty imposed on the appellant under Section 114 of the Customs Act, 1962, amounting to Rs. 10 lacs. The court found that ... Carriage and smuggling of contraband item - Confiscation of vehicle alongwith the goods - Misdeclaration of export goods - attempt to export antiques and other goods from India into Nepal - On perusal of the bills of export filed with respect to the goods loaded inside the said truck and entered for export to Nepal, it transpired that the major part of the goods inside i.e 19 out of 35 packets including the said female statue, were not declared - HELD THAT:- From perusal of the records, we do not find any reference been made to the Director General, Archaeological Survey of India in terms of section 24 of the Antiquities and Art Treasures Act, 1972. However, in the facts of the instant case, since the appellant has denied any knowledge or role in loading of the antique idols, whatever be their value, we do not deem it necessary to proceed any further in the matter of valuation. Denial of cross-examination - HELD THAT:- We certainly are not impressed nor find merit in the contentions of the appellant that he did not get the opportunity to cross-examine the driver and that the show cause notice issued to him did not mention about the consequences on his failure to submit the defence reply - From a reading of the statement of the driver of the truck, it does not transpire that any allegation either direct or indirect, had been made against the appellant. It is also not pointed out by learned counsel for the appellant as to what prejudice has been caused to the appellant on denial of opportunity to cross examine the said driver. Another allegation that the show cause notice issued to the appellant did not contain the consequences in case, the defence reply did not find favour with the authorities - HELD THAT:- Since the show cause notice was issued under Section 124 of the Customs Act, 1962, the statute itself takes care of the consequences of rejection. From a perusal of the materials that was laid before the Commissioner, Patna and the Appellate Tribunal at Kolkata for their opinion, it would transpire that there is no material whatsoever against the appellant in so far as the seizure of the truck on 28.08.2001 and the undeclared goods, is concerned. The driver of the truck Sheikh Ahmed in his statement on 29.08.2001 has clearly stated that the goods were loaded on the truck on 28.08.2001 on the directions of Ishwar Chand Goel, the Manager and the truck was bound for Nepal. With respect to the appellant it was simply stated that he sits in Kolkata - from the materials that has transpired including the statements/defence reply of the Customs House Agent A.K. Sinha, Manager Ishwar Chand Goel@Pappu and the driver of the truck Sheikh Ahmed, it is clearly evident that no legal/ admissible evidence had been brought on record to show the involvement of the appellant or that he was guilty of any act or omission or even guilty of abatement of such illegal act so as to fasten the penal liability of ₹ 10 lacs under Section 114 of the Customs Act 1962. The other lacuna in the proceeding is that while holding the appellant guilty on grounds that he was overall in-charge of the partnership firm, the respondents did not choose to proceed against the other partner of the transport company namely, Rajesh Goel who is said to reside at A/23 Model Town, Delhi. The instant is a case of no evidence, so far as the appellant herein is concerned - With respect to the discussions made by the Commissioner, Customs, Patna and the Appellate Tribunal at Kolkata in the impugned order(s) is concerned, it stands long settled that suspicion, howsoever grave, cannot be a basis for imposing penalty and the same could not have been done in absence of any legal and admissible evidence to confirm the guilt of the appellant. Confiscation as well as penalties set aside - appeal allowed. Issues Involved:1. Legality of the penalty imposed on the appellant under Section 114 of the Customs Act, 1962.2. Procedural fairness concerning the opportunity to cross-examine witnesses.3. Adequacy of evidence to support the findings against the appellant.4. Compliance with the Antiquities and Art Treasures Act, 1972.Issue-wise Detailed Analysis:1. Legality of the penalty imposed on the appellant under Section 114 of the Customs Act, 1962:The appellant was penalized under Section 114 of the Customs Act, 1962, for his alleged involvement in smuggling activities. The Commissioner, Customs, Patna, held the appellant liable based on the assertion that he was the principal owner of M/s Prakash Transport and controlled the illegal activities. The Customs Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, affirmed this decision, stating that the appellant was responsible for all activities of the firm and was aware of the smuggling activities conducted by his Manager, Ishwar Chand Goel. However, the High Court found no direct or indirect evidence implicating the appellant in the seizure of the truck and the undeclared goods. The statements from the driver, the Manager, and the Customs House Agent did not provide any admissible evidence against the appellant. The High Court concluded that the findings against the appellant were based on suspicion rather than concrete evidence, leading to the setting aside of the penalty.2. Procedural fairness concerning the opportunity to cross-examine witnesses:The appellant contended that he was not given the opportunity to cross-examine the driver of the seized truck, Sheikh Ahmed. The High Court noted that the statement of the driver did not contain any allegations against the appellant. Moreover, the court found that the appellant did not demonstrate any prejudice caused by the lack of cross-examination. The court also dismissed the appellant's argument that the show cause notice did not mention the consequences of an unsatisfactory reply, stating that the Customs Act itself outlines the consequences.3. Adequacy of evidence to support the findings against the appellant:The High Court scrutinized the materials laid before the Commissioner and the Appellate Tribunal. It found that the evidence primarily indicated the involvement of the Manager, Ishwar Chand Goel, and not the appellant. The statements from various individuals, including the driver and the Customs House Agent, did not implicate the appellant. The court emphasized that suspicion, however grave, cannot substitute for legal and admissible evidence. Consequently, the court determined that there was no evidence to support the imposition of a penalty on the appellant.4. Compliance with the Antiquities and Art Treasures Act, 1972:The case involved the seizure of two antique idols, which were alleged to be smuggled. The High Court noted that there was no reference made to the Director General, Archaeological Survey of India, as required under Section 24 of the Antiquities and Art Treasures Act, 1972, to determine whether the seized items were indeed antiquities. However, since the appellant denied any knowledge or role in the loading of the antique idols, the court did not delve further into the matter of valuation.Conclusion:The High Court set aside the orders of the Commissioner, Customs, Patna, and the CESTAT, Kolkata, which had imposed a penalty of Rs. 10 lacs on the appellant. The court concluded that the findings against the appellant were based on suspicion rather than evidence, and there was no legal or admissible evidence to confirm the appellant's guilt. The appeal was allowed, and the penalty was annulled.