2024 (12) TMI 178 - AT - Customs

Customs penalty set aside for smuggling case due to denial of cross-examination and improper evidence under Sections 138B and 138C

CESTAT Ahmedabad allowed the appeal in a customs penalty case involving smuggling of memory cards concealed in import cargo. The adjudicating authority ... Levy of penalties under Sections 112(a) and 114AA of the Customs Act, 1962 - Smuggling of memory cards by concealing them in the import cargo - adjudicating authority has not considered the request for cross-examination - violation of principles of natural justice - HELD THAT:- The Ld. Adjudicating authority not considered the request of appellants for cross-examination of witnesses. It is found that persons are not examined in the adjudication proceedings and as such their statements are not admissible, as evidence under the provisions of Section 138B of Customs Act, which provides that if an authority in any proceedings under the Act wants to rely upon the statement of any person (made during enquiry), such person is required to be examined as witness and if the adjudicating authority finds the evidence of the witness ‘admissible’, then such witness should be offered for cross-examination and only thereafter the evidence is admissible. In absence of compliance with the provision of Section 138B of the Act, the statements are not admissible as evidence and accordingly, the case of revenue against the appellants does not stand. Tribunal in case of M/S. S.N. AGROTECH, SHRI NIKHIL ASRANI, SHRI ASEEM ASRANI, M/S. SURESH KUMAR & CO. (IMPEX) PVT. LTD. VERSUS C.C., NEW DELHI [2018 (4) TMI 856 - CESTAT NEW DELHI], has held that Section 138C of the Act ibid is pari materia to Section 65B of Evidence Act, 1872 and therefore evidence in form of computer printouts etc. can be admitted only subject to satisfaction of conditions precedent under Section 138C of the Act ibid and in absence of certificate, these electronic documents cannot be relied upon by the Department to prove role of the appellants. In this case there is no such certificate. It is found that for imposition of penalty under Section 112(a), a positive act or omission is to be established. For imposition of penalty mala fide act/omission is one of the requirements. In the present matter it is found that no mala fide has been brought on record on the part of appellant so as to impose penalties on the appellants under Section 112(a) and Section 114AA of the Customs Act, 1962. The impugned order upholding imposition of penalties on the appellants are set aside - Appeal allowed. Issues:1. Violation of principles of natural justice in imposing penalties.2. Justification of penalties under Sections 112(a) and 114AA of the Customs Act, 1962.3. Reliance on oral evidence without corroboration from independent sources.4. Admissibility of electronic evidence under Section 138C of the Customs Act.Analysis:Issue 1:The Appellants argued that the impugned order violated the principles of natural justice by not allowing cross-examination of witnesses. They contended that the adjudicating authority did not consider their request for cross-examination, which is crucial for a fair hearing. The Appellants relied on various judgments to support their argument.Issue 2:Regarding the justification of penalties under Sections 112(a) and 114AA of the Customs Act, the Appellants claimed that there was no evidence to show their involvement or knowledge of the contravention. They argued that the penalties were imposed without establishing their connection to the improper importation. The Appellants cited specific legal provisions and case laws to support their stance.Issue 3:The Appellants further contended that the case against them was primarily based on oral evidence from the importer, without corroboration from independent sources. They highlighted the importer's contradictory actions, such as claiming ownership of the goods while seeking their release through legal channels. The Appellants presented relevant judgments to strengthen their argument.Issue 4:The use of electronic evidence, specifically emails, was challenged by the Appellants, questioning its admissibility under Section 138C of the Customs Act. They argued that electronic evidence must comply with the legal requirements for admissibility, citing precedents from the Supreme Court and Tribunal decisions. The absence of necessary certification for electronic documents was emphasized.The Tribunal, after considering the arguments from both sides, found that the adjudicating authority had a pre-judged perception against the Appellants. It noted the lack of examination of witnesses and non-compliance with Section 138B of the Customs Act regarding the admissibility of statements. The Tribunal concluded that there was insufficient evidence to justify the penalties imposed under Sections 112(a) and 114AA. Additionally, it highlighted the inadmissibility of electronic evidence without proper certification under Section 138C. Consequently, the Tribunal set aside the impugned order and allowed the appeal filed by the Appellants, providing consequential relief.This comprehensive analysis addresses the key legal issues raised in the judgment, covering violations of natural justice, justification of penalties, reliance on evidence, and admissibility of electronic evidence, leading to the final decision of setting aside the penalties imposed on the Appellants.