2025 (2) TMI 1120 - AT - Customs

Penalty upheld under Section 112(b) for cigarette smuggling involvement despite confession retraction, reduced to Rs.25 lakhs

M/s. Shri Santosh Kumar Prasad Versus Commissioner of Customs (Port), Kolkata

CESTAT Kolkata upheld penalty under Section 112(b) of Customs Act, 1962 against appellant for involvement in cigarette smuggling racket. Despite ... Levy of penalty on appellant u/s 112(b) of the Customs Act, 1962 - alleged involvement in the smuggling of foreign-origin cigarettes - entire case upon appellant is based upon the statements recorded behind his back - opportunity of cross- examination of such persons who have given the statements, was not granted - violation of principles of natural justice - HELD THAT:- As per his own admission as well as the statements of different persons concerned like Sri Pravin Kumar Singh, Sri Srimonta Rakshit, Sri Man Singh, Sri Akhilesh Singh and Mr. Matin, Sri Santosh Kumar Prasad is the main link man of this smuggling racket. Shri Santosh Kumar Prasad arranged the CHA, the transporter, the godown and instrumental in the breaking open of the container. He arranged the declared stationery goods for repalcement, as per CTD for the containers GESU5984886 (40) and VMLU 3707024 (20'). The appellant submitted that he has retracted his statement vide his letter dated 28.07.2015. However, his statement was again recorded on 04.08.2015, wherein he has reiterated what he has stated in his earlier statements dated 23.05.2015 and 26.05.2015. Thus, it is observed that the retraction was only an after thought, which need not be taken cognizance as he has affirmed his earlier statements again in his subsequent statement after the retraction. Thus, the statements given by the appellant can be relied upon against him to establish his role in the offence. As the role of the appellant in the offence committed has been established based on his own admission as well as the statements of different persons concerned like Sri Pravin Kumar Singh, Sri Srimonta Rakshit, Sri Man Singh, Sri Akhilesh Singh and Mr. Matin, it is held that the appellant is liable for penalty as per Section 112(b) of the Customs Act, 1962. Conclusion - The Appellant had knowingly or consciously involved himself in the alleged act of smuggling. Thus, the appellant has abetted the illegal smuggling activities and thereby connived with the smuggling racket for smuggling of cigarettes in to the country. Accordingly, the ld. adjudicating authority has rightly imposed penalty on the Appellant under Section 112(b) of the Customs Act, 1962. However, the penalty imposed on him is very high and it can be reduced to commensurate with the role played by him in the offence. Accordingly, the penalty imposed on the appellant in the impugned order is reduced from Rs.50,00,000/- to Rs.25,00,000/-. Appeal disposed off. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered in this judgment include: Whether the imposition of a penalty under Section 112(b) of the Customs Act, 1962, on the appellant, Santosh Kumar Prasad, was justified based on his alleged involvement in the smuggling of foreign-origin cigarettes. Whether the statements recorded from the appellant, which were later retracted, could be relied upon to impose such a penalty. Whether the appellant had the requisite knowledge or reason to believe that the goods involved were liable for confiscation. Whether the penalty amount imposed was proportionate to the appellant's role in the smuggling activities.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsSection 112(b) of the Customs Act, 1962, provides for penalties on any person who acquires possession of, or is in any way concerned in carrying, removing, depositing, harboring, keeping, concealing, selling, or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111 of the Act.Court's Interpretation and ReasoningThe Tribunal analyzed the appellant's involvement based on his own statements and those of other concerned individuals. The Tribunal considered whether the appellant had knowingly participated in the smuggling activities and whether his statements, which were later retracted, could be used against him.Key Evidence and FindingsThe Tribunal found that the appellant had admitted to his involvement in the smuggling activities in his statements recorded under Section 108 of the Customs Act, 1962. These statements indicated that he played a significant role in facilitating the smuggling operations, including arranging for the clearance of goods, organizing transportation, and managing the storage and replacement of goods.The appellant's retraction of his statements was deemed an afterthought, as he reaffirmed his earlier admissions in a subsequent statement. The Tribunal also considered corroborating statements from other individuals involved in the smuggling racket.Application of Law to FactsThe Tribunal applied Section 112(b) to the facts, concluding that the appellant had knowingly been involved in the smuggling activities. His actions, as admitted in his statements, demonstrated his active participation in the illegal importation of cigarettes.Treatment of Competing ArgumentsThe appellant argued that his statements were recorded behind his back and that he was not granted the opportunity for cross-examination, which he claimed rendered the statements unreliable. However, the Tribunal found that the appellant's subsequent affirmation of his statements negated the impact of his retraction. The Tribunal also noted that the appellant's role was corroborated by other participants in the smuggling activities.ConclusionsThe Tribunal concluded that the appellant was liable for a penalty under Section 112(b) due to his knowing involvement in the smuggling activities. However, considering his role as an intermediary and not the ultimate beneficiary, the Tribunal found the original penalty amount excessive and reduced it to Rs. 25,00,000/-.SIGNIFICANT HOLDINGSThe Tribunal held that: The appellant's statements, despite being retracted, were admissible and reliable due to his subsequent affirmation. The appellant was actively involved in the smuggling activities and was aware of the illicit nature of the operations. The imposition of a penalty under Section 112(b) was justified, but the amount was reduced to Rs. 25,00,000/- considering his intermediary role.Core Principles EstablishedThe judgment reinforces the principle that retracted statements can still be relied upon if reaffirmed later and corroborated by other evidence. It also emphasizes the importance of proportionality in penalty imposition, taking into account the individual's role in the offense.Final Determinations on Each IssueThe Tribunal affirmed the imposition of a penalty on the appellant under Section 112(b) but reduced the amount from Rs. 50,00,000/- to Rs. 25,00,000/-. The appeal was disposed of with these modifications.