Primary gold seizure penalties set aside due to inadmissible statement under Section 107 lacking proper authorization

CESTAT Kolkata set aside penalties imposed under Section 112(b)(ii) of Customs Act, 1962 in a case involving primary gold of foreign origin found in a secret cabinet. The Tribunal held that the statement recorded under Section 107 of Customs Act was inadmissible as evidence since it was not recorded under proper authorization from Principal Commissioner or Commissioner of Customs. Without corroborative evidence beyond the inadmissible statement, penalties against both appellants were quashed and appeal was allowed.

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Issues Involved:
1. Admissibility of the statement recorded under Section 107 of the Customs Act, 1962.
2. Imposition of penalties on the appellants under Section 112(b)(ii) of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Admissibility of the Statement Recorded Under Section 107 of the Customs Act, 1962:

The primary issue in this case was whether the statement of Shri Suman Chandra Paul, recorded under Section 107 of the Customs Act, 1962, could be considered admissible evidence. The appellants contended that the statement recorded under Section 107 has no evidentiary value in law. According to the appellants, for a statement to be admissible under Section 107, it must be recorded by an officer duly empowered by a general or special order from the Principal Commissioner of Customs or Commissioner of Customs. The Tribunal referenced the case of Commissioner of Customs (Preventive), Lucknow v. Sheo Shankar Jaiswal, which held that statements recorded under Section 107 are not admissible unless the officer recording the statement is duly authorized. In this case, the statement of Shri Suman Chandra Paul was not recorded by an officer with such authorization, rendering it inadmissible as evidence.

2. Imposition of Penalties on the Appellants:

The penalties imposed on the appellants were based on the inadmissible statement of Shri Suman Chandra Paul. Appellant No. 1, Shri Dulal Krishna Paul, was penalized based on the statement of his nephew, Shri Suman Chandra Paul, which alleged his involvement in the smuggling of gold. However, since the statement was not admissible, there was no substantial evidence against Shri Dulal Krishna Paul to justify the penalty. Similarly, Appellant No. 2, Shri Suman Chandra Paul, was penalized for his alleged role in acquiring, possessing, and transporting smuggled gold. The Tribunal found that the penalties were unjustified as they were based solely on the inadmissible statement. Consequently, the penalties of Rs. 25,00,000/- on Appellant No. 1 and Rs. 5,00,000/- on Appellant No. 2 were set aside.

Conclusion:

The Tribunal concluded that the penalties imposed on both appellants were not sustainable due to the reliance on an inadmissible statement. The appeals were allowed, and the penalties were set aside, as the evidence against the appellants was insufficient to uphold the penalties under the Customs Act, 1962. The judgment emphasized the necessity for proper authorization for statements to be considered admissible, reinforcing the legal standards for evidence in customs-related offenses.

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