Penalty for alleged gold smuggling quashed as uncorroborated co-accused statement, Section 138B Customs Act procedure violated

CESTAT Kolkata allowed the appeal and set aside the penalty imposed on the appellant for alleged smuggling of gold and related Indian currency. The Tribunal held that the Revenue's case was founded solely on the uncorroborated statement of a co-accused, which is a weak form of evidence and, without independent corroboration, insufficient to establish involvement in smuggling. It further held that the mandatory procedure under Section 138B of the Customs Act, 1962, was not followed, as the co-accused was neither examined by the adjudicating authority nor offered for cross-examination. Consequently, the impugned findings lacked admissible evidentiary support and could not sustain the penalty.

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Issues Involved:

1. Legitimacy of the penalty imposed on the Appellant.
2. Reliance on the statement of the co-accused.
3. Compliance with Section 138B of the Customs Act, 1962.
4. Admissibility and corroboration of evidence.

Summary:

1. Legitimacy of the Penalty Imposed on the Appellant:
The Appellant challenged the imposition of a penalty under Section 112(b) of the Customs Act, 1962, arguing that the findings against him were based on assumptions and the uncorroborated statement of a co-accused. The Tribunal found that there was no independent evidence to support the involvement of the Appellant in the smuggling of gold, and the penalty imposed was not sustainable.

2. Reliance on the Statement of the Co-Accused:
The Appellant contended that the statement of the co-accused, Shri Bishnupada Dey, was the sole basis for implicating him. The Tribunal noted that the statement of a co-accused is a weak form of evidence and cannot be relied upon without corroboration. The Tribunal also observed that the connection between the Appellant and Shri Dey was based on a phone number registered in someone else's name, which could not conclusively establish the Appellant's involvement.

3. Compliance with Section 138B of the Customs Act, 1962:
The Appellant argued that the Adjudicating Authority did not comply with Section 138B of the Customs Act, 1962, which requires examining the person whose statement is relied upon and providing an opportunity for cross-examination. The Tribunal agreed, stating that the failure to follow this procedure rendered the statement of the co-accused inadmissible.

4. Admissibility and Corroboration of Evidence:
The Tribunal examined the decisions cited by the Adjudicating Authority and found them distinguishable from the present case. It emphasized that without corroborative evidence, the statement of the co-accused alone could not implicate the Appellant. The Tribunal held that the findings in the impugned order were not supported by any corroborative evidence and set aside the penalty imposed on the Appellant.

Conclusion:
The Tribunal concluded that the penalty imposed on the Appellant was not sustainable due to the lack of corroborative evidence and non-compliance with the procedural requirements under Section 138B of the Customs Act, 1962. The appeal filed by the Appellant was allowed, and the penalty was set aside.

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