2023 (5) TMI 988 - AT - Customs

Customs Act penalty overturned due to lack of evidence and procedural compliance

The Tribunal allowed the appeal, setting aside the penalty imposed on the appellant under Sections 114(i) & 114AA of the Customs Act, 1962. The ... Penalty under Section 114(i) & 114AA of Customs Act - seized foreign currency - whole case is made out on assumptions and presumptions, relying on the statement of Mr. Manoj Phulwani - HELD THAT:- There is no evidence that the seized and confiscated foreign currency was given by the appellant to Mr. Manoj Phulwani. It is further found that the statement of Mr. Manoj Phulwani is not reliable piece of evidence, as revenue have failed to comply with the mandate of Section 138B of the Act. Section 138B(b) requires that such person who made the statement has to be examined as witness in the adjudication proceedings, and if the adjudicating officer having regard to the circumstances of the case, admits the same in evidence, thereafter, such witness should be offered for cross examination by the noticee and only after such statement is tested in cross examination, the same can be relied upon. Sub-section (2) of Section 138B categorically provides that the mandate of Section 138B(1) shall so far as may be, apply in relation to any proceedings under this act, other than a proceeding before a court, as they apply in relation to a proceeding before a court. Appeal allowed. Issues Involved:1. Imposition of penalty under Section 114(i) & 114AA of the Customs Act, 1962. Summary:Issue 1: Imposition of Penalty under Section 114(i) & 114AA of the Customs Act, 19622. The issue involved is whether the appellant have been rightly imposed with penalty under Section 114(i) & 114AA of the Act.3. Brief facts are as follows:3.1 Two persons were intercepted by Customs Officers while carrying Foreign & Indian Currencies valued at INR 38,16,029/- without legal documents or permission as required under the Foreign Exchange Management Act, 1999.4. The first noticee admitted to carrying the currency illegally and stated that it was given by the second noticee for delivery in Dubai.5. The second noticee also admitted to carrying the currency illegally and stated that it was given by a third party for delivery in Dubai.6. They were found illegally carrying the currencies and were arrested under Section 104 of the Customs Act, 1962.8. Follow-up action at their residences and shops did not yield any incriminating evidence.10. Export of Foreign Currency without permission is prohibited under various sections of the Foreign Exchange Management Act, 1999, and the Customs Act, 1962, making the currencies liable for confiscation and the noticees liable for penal action.11. The third noticee denied involvement but was implicated based on statements from the first and second noticees.12. Despite denial, the third noticee's connection was established through statements and evidence.13. The investigation concluded that the noticees were involved in smuggling currencies.14. A show cause notice was issued to the noticees for confiscation of the currencies and imposition of penalties under Section 114 and 114AA of the Customs Act, 1962.15. The appellant denied involvement and produced evidence of his financial status and bank transactions to support his claim.16. The appellant contested the penalty, arguing lack of evidence and improper reliance on the co-accused's statement without cross-examination.17. The Commissioner (Appeals) upheld the penalty based on the Order-in-Original.18. The appellant challenged the impugned order before the Tribunal, arguing that no case of abetment was made out against him and that the evidence was based on assumptions and unreliable statements.20. The Tribunal found no evidence that the appellant gave the seized currency to the co-accused and noted the failure to comply with Section 138B of the Customs Act, which requires the person who made the statement to be examined as a witness and offered for cross-examination.21. The appeal was allowed, and the impugned order was set aside, entitling the appellant to consequential benefits.(Order dictated in the open court)