2005 (9) TMI 204 - AT - Customs

Tribunal Overturns Penalties: Vessel Confiscation Reversed Due to Lack of Smuggling Evidence Against Company.

The tribunal allowed the appeal, setting aside the penalties imposed on the appellants due to their acquittal by the criminal court on the same facts and ... Confiscation - Penalty - ship breaking facilities - ball bearings [of Russian and Japanese origin] in 824 cardboard boxes having been concealed in a cavity in the hind part of the vessel - HELD THAT:- After examining files relating to auction sale of the confiscated ball bearings, the court found that over 21,000 ball bearings in excess of the confiscated ball bearings (1,31,076) had been auctioned by the Department, which could not be explained by the prosecution witnesses. The court pointed out many other defects of investigation and flaws of prosecution and came to the conclusion that the charge against the accused had not been proved beyond doubt. Thus, it is discernible from the criminal court's judgment that the prosecution could not even prove the alleged fact that the accused physically dealt with 1,31,076 ball bearings. Hence the court had no occasion to presume anything against the accused in terms of Section 138A(1) and, therefore, the accused had no liability to rebut any presumption under the said provision. This is because, as ruled by the Apex Court in Gopaldas's case [2004 (7) TMI 10 - SUPREME COURT], it is only after the prosecution has adduced clear evidence of the accused having physically dealt with the offending goods that the accused would assume the burden of proving that they so dealt with the goods without mens rea, i.e, without the knowledge or belief that the said goods were liable to confiscation u/s 111. Thus, for the appellants, the present case stands on a stronger footing than Gopaldas's case wherein the prosecution could prove the fact that the accused was in possession of gold but the presumption of mens rea in relation to the said fact was rebutted by the accused. We have found that the offence charged against the appellants in both the adjudication and prosecution proceedings is substantially the same. Both the cases are based on the same set of facts. The evidence considered by the adjudicating authority and the criminal court is, by and large, the same. After appreciating the evidence, the criminal court acquitted the accused after finding that the charge against them had not been proved. In the circumstances, we are of the view that the judicial approach taken in Paul Anthony's [1999 (3) TMI 625 - SUPREME COURT] and Gopaldas's cases can be applied to this case and accordingly the order passed by the adjudicating authority imposing penalties on the appellants cannot stand in the face of their acquittal by the criminal court. However, as we have already noted, the view taken consistently by the Apex Court is that, notwithstanding the fact that adjudication and criminal proceedings are independent, any order of confiscation and penalty resulting from adjudication cannot be allowed to stand in the face of an order of acquittal passed by the criminal court on the same set of facts and evidence. When this ruling of the Apex Court is applied to the present case, we have no option but to set aside the penalties. None of the appellants has challenged the confiscation order. Their challenge is only against the penalties. Hence we set aside the penalties imposed on the appellants by the Commissioner. The appeals are allowed. Issues Involved:1. Confiscation of the vessel and ball bearings.2. Imposition of penalties on various appellants.3. Relevance of the criminal court's acquittal in the adjudication proceedings.Detailed Analysis:1. Confiscation of the Vessel and Ball Bearings:The vessel M.T. STEREG USHCHIY was purchased by M/s. Jesudasans Pvt. Ltd. for ship breaking. Upon inspection, customs officers found 1,31,076 ball bearings of foreign origin concealed in the vessel. The vessel and ball bearings were seized, and a show-cause notice was issued proposing confiscation under Sections 111(d) and 115 of the Customs Act. The Commissioner of Customs ordered the absolute confiscation of the ball bearings and the vessel, with an option for the company to redeem the vessel upon payment of a fine.In Appeal No. C/69/1999, it was argued that the confiscation of the vessel was inconsistent with the Commissioner's finding that the company's directors had no knowledge of the concealed ball bearings. The tribunal found no evidence that the company or its agents had knowledge of the smuggling, rendering Section 115 inapplicable. Consequently, the order of confiscation of the vessel was deemed unsustainable and the appeal was allowed.2. Imposition of Penalties on Various Appellants:The Commissioner imposed penalties on several individuals under Section 112 of the Customs Act. The appellants argued that since the criminal court had acquitted them of charges under Section 135 of the Customs Act based on the same set of facts, the penalties should not stand.The tribunal noted that the criminal court's acquittal was on merits, not on technical grounds. The court had found that the prosecution failed to prove the charges beyond a reasonable doubt. The tribunal referred to several decisions, including the Supreme Court's ruling in Gopaldas Udhavadas Ahuja & Another v. Union of India & Others, which held that an acquittal on merits in a criminal case should influence adjudication proceedings.3. Relevance of the Criminal Court's Acquittal in the Adjudication Proceedings:The tribunal considered whether the acquittal by the criminal court should impact the adjudication proceedings. The criminal court had acquitted the appellants after evaluating the same evidence presented in the adjudication proceedings. The tribunal emphasized that adjudication and criminal proceedings are independent, but when an acquittal is on merits, it should affect the adjudication outcome.The tribunal referred to multiple precedents, including Capt. M. Paul Anthony v. Bharat Gold Mines Ltd. & Another, which supported the view that an acquittal on the same set of facts should preclude penalties in adjudication proceedings. The tribunal found that the criminal court's judgment was based on a thorough evaluation of evidence and the prosecution's failure to prove the charges.Conclusion:The tribunal set aside the penalties imposed on the appellants due to their acquittal by the criminal court on the same set of facts and evidence. The appeals were allowed, and the penalties were annulled.(Pronounced in open Court on 13-9-2005)