2024 (6) TMI 1335 - AT - Customs

Appeals allowed against penalties under sections 112(a) and 112(b) for gold smuggling due to procedural violations

Shri Birendra Kumar Gupta Versus Commissioner of Cus., C. Ex. and Service Tax, Siliguri And Shri Bharat Sonar Versus Commissioner of Cus., C. Ex. and Service Tax

Shri Birendra Kumar Gupta Versus Commissioner of Cus., C. Ex. and Service Tax, Siliguri And Shri Bharat Sonar Versus Commissioner of Cus., C. Ex. and ... Issues Involved:1. Legality of the penalty imposed under Section 112(a) and 112(b) of the Customs Act, 1962.2. Compliance with Section 138B of the Customs Act, 1962 regarding the admissibility of statements.3. Right to cross-examination of witnesses.4. Burden of proof under Section 123 of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Legality of the Penalty Imposed under Section 112(a) and 112(b) of the Customs Act, 1962:The appellants were penalized with Rs. 25,00,000/- each under Section 112(a) and 112(b) of the Customs Act, 1962. The penalties were imposed based on the recovery of nine gold bars from appellant no. 2 and the subsequent implication of appellant no. 1. The Tribunal found that the evidence on record did not conclusively establish the active involvement of appellant no. 2 in the smuggling of gold. The Tribunal held that, as per Section 112, penalties could only be imposed if the involvement in smuggling was conclusively proven, which was not the case here.2. Compliance with Section 138B of the Customs Act, 1962 Regarding the Admissibility of Statements:Appellant no. 2 contended that the statements were not voluntary and were obtained under duress. The Tribunal observed that the provisions of Section 138B, which pertain to the admissibility of statements, were not followed by the adjudicating authority. The Tribunal cited precedents, including Sampad Narayan Mukherjee v. Union of India and Commissioner of Cus., Airport & Admn., Kolkata v. Himadri Chakraborty, to emphasize that statements recorded without allowing cross-examination cannot be relied upon.3. Right to Cross-examination of Witnesses:Appellant no. 2 argued that he was denied the opportunity to cross-examine the Pancha witnesses, which violated the principles of natural justice. The Tribunal noted that the Department should have allowed cross-examination to verify the truthfulness of the claims. The Tribunal referenced several judicial decisions, including Sampad Narayan Mukherjee v. Union of India, to assert that adjudication without allowing cross-examination is vitiated by a breach of natural justice.4. Burden of Proof under Section 123 of the Customs Act, 1962:The Department contended that appellant no. 2 was liable to prove that the gold was not smuggled, as per Section 123 of the Customs Act. However, the Tribunal observed that appellant no. 2 had not claimed ownership of the gold. Therefore, the burden of proof under Section 123 did not apply to him. The Tribunal concluded that without establishing ownership, the provisions of Section 112(a) and 112(b) could not be invoked to impose penalties.Conclusion:The Tribunal set aside the penalties imposed on both appellants, citing non-compliance with Section 138B and the denial of the right to cross-examination. The appeals filed by the appellants were allowed, and the cross objections filed by the Revenue were disposed of accordingly. The judgment emphasized the importance of adhering to procedural requirements and ensuring the right to a fair trial.