2020 (10) TMI 72 - AT - Customs

Customs Act penalty overturned due to lack of evidence and denial of involvement

The Tribunal set aside the penalty imposed under Section 112 of the Customs Act, 1962 on the appellant for alleged involvement in smuggling Bangladesh ... Levy of penalty under Section 112 of the Customs Act, 1962 - Smuggling - Bangladesh Currency - cross-examination of the persons on the basis of whose statements the appellant has been made a co-accused, denied - violation of principles of Natural Justice - HELD THAT:- In the absence of cross-examination of Shri Manoj Roy, his statement do not appear to inspire confidence for use as a reliable evidence to impose penalty upon the appellant in these proceedings - Hon’ble Supreme Court in the case of ANDAMAN TIMBER INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA-II [2015 (10) TMI 442 - SUPREME COURT] have categorically held that not allowing the appellant to cross-examine the persons by the Adjudicating Authority, though the statements of those persons were made the basis of the impugned order, tantamounts to serious flaw which makes the order a nullity inasmuch as it amounted to violation of principles of natural justice because of which the appellant was adversely affected. The case of the Revenue remains disapproved as the investigation is inconclusive and insufficient in the absence of corroborative/substantial evidences. The case is only based on the statement of Shri Manoj Roy and on assumption, presumption or suspicion. As no case has been established by the Revenue through reliable evidences, directly or indirectly connecting the appellant in connection with the seized Bangladesh currency – Taka, the penalty imposed on the appellant is unwarranted - the penalty ₹ 5,44,000/- imposed under Section 112 of the Customs Act, 1962 on Shri Dipak Kumar Agarwala is set aside. Appeal allowed - decided in favor of appellant. Issues:Imposition of penalty under Section 112 of the Customs Act, 1962 for alleged involvement in smuggling of Bangladesh Currency.Analysis:The appellant was issued a Show Cause Notice along with two other persons for alleged involvement in smuggling of Bangladesh Currency, proposing a penalty under Section 112 of the Customs Act, 1962. The Adjudicating Authority imposed a penalty of Rs. 5,44,000 equivalent to the seized Bangladesh Currency. On appeal, the Commissioner(Appeals) upheld the order, leading to the present appeal before the Tribunal.Appellant's Arguments:The appellant denied involvement in any illegal activities, stating the allegations were false and baseless. He requested to cross-examine Shri Manoj Roy, whose statement formed the basis of the case. The appellant argued that without corroboration, no allegation could be substantiated based solely on the accused's statement.Revenue's Response:The Authorized Representative for the Revenue justified the impugned orders, stating there was no merit in the appeal.Tribunal's Observations:The Tribunal found that the appellant's statement under Section 108 of the Customs Act denied knowledge of Shri Manoj Roy or involvement in carrying Bangladesh currency. It noted discrepancies in statements of individuals involved. The main issue was whether the penalty was correctly imposed on the appellant.Principle of Natural Justice:The Tribunal cited the case of Andaman Timber Industries where the Supreme Court emphasized the importance of allowing cross-examination of witnesses whose statements formed the basis of an order. Not permitting cross-examination was deemed a serious flaw violating natural justice.Decision:The Tribunal found the investigation inconclusive and insufficient, based solely on Shri Manoj Roy's statement without corroborative evidence. Relying on the Andaman Timber Industries case, the penalty of Rs. 5,44,000 imposed on the appellant was set aside. The appeal was allowed with consequential relief.This detailed analysis highlights the legal proceedings, arguments presented, tribunal's observations, and the application of legal principles leading to the final decision in the case.