Penalty under Section 114 Customs Act set aside for violation of natural justice principles in pulse export case

CESTAT Allahabad set aside penalty of Rs. 14,00,000 imposed under Section 114 of Customs Act, 1962 on appellant for alleged illegal export of pulses to Nepal. The Tribunal found that lower authority violated principles of natural justice by denying cross-examination of witnesses despite earlier remand directions specifically allowing it. The impugned order was passed contrary to remand directions without valid justification and could not be sustained. Appeal allowed to extent of penalty relief sought.

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Issues Involved:
1. Confiscation of goods and vehicles.
2. Imposition of penalties.
3. Denial of cross-examination of witnesses.
4. Compliance with principles of natural justice.

Summary:

Confiscation of Goods and Vehicles:
The Commissioner ordered the confiscation of 40,000 Kg. of Urad Ki Dal valued at Rs. 14,20,000 under Section 113(b) & (d) of the Customs Act, 1962, and appropriated the cash security of Rs. 3,55,000/- to the exchequer. Additionally, two trucks bearing Registration Nos. UP-35-H-9828 and UP-78-CN-4811 were confiscated under Section 115(2) of the Customs Act, 1962, with redemption fines of Rs. 2,00,000/- each already deposited by their lawful owners.

Imposition of Penalties:
Penalties were imposed as follows:
- Rs. 14,00,000/- on Shri Kamlesh Gupta, owner of the seized Urad Ki Dal, with Rs. 5,00,000/- already appropriated from pre-deposits.
- Rs. 10,000/- on Shri Bhola Shanker Pandey, owner of one of the seized trucks, with the amount already deposited.
- No penalty was imposed on Shri Vijay Shanker Tripathi, owner of the other seized truck.

Denial of Cross-Examination of Witnesses:
The Tribunal had previously remanded the matter to the Commissioner for de novo consideration, emphasizing the need for cross-examination of witnesses. The Commissioner, however, expressed inability to allow cross-examination, citing the unavailability of daily wage laborers who were panch witnesses. The Tribunal found this unacceptable, noting that the genuineness of the Panchnama could not be established without cross-examination.

Compliance with Principles of Natural Justice:
The Tribunal highlighted that the denial of cross-examination violated principles of natural justice. It referenced several judicial precedents, including decisions from the Hon'ble Supreme Court and High Courts, which underscored the necessity of cross-examination to test the veracity of statements and documents relied upon in adjudicatory proceedings.

Conclusion:
The Tribunal set aside the impugned order due to the failure to provide cross-examination of witnesses, which was crucial for establishing the genuineness of the Panchnama. The penalty of Rs. 14,00,000/- imposed on the appellant was also set aside, and the appeal was allowed to the extent of the prayer made.

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