2025 (6) TMI 1681 - AT - Customs

Gold smuggling penalties reduced under Section 112(b)(i) as appellants proved they were carriers not beneficiaries

Shri Nirbhay Kumar Upadhyay Versus Commissioner of Customs (Preventive) North Eastern Region, Shillong And Shri Bachchalal Versus Commissioner of Customs (Preventive) North Eastern Region, Shillong

CESTAT Kolkata reduced penalties imposed on appellants under Section 112(b)(i) of Customs Act, 1962 for gold smuggling. Appellants claimed they were ... Levy of penalty u/s 112(b)(i) of the Customs Act, 1962 - smuggling - gold biscuits bearing foreign marking - failure to produce any licit documents to prove legal purchase - submission made by the appellants is that they had been induced by some unidentified person, to act as carriers of the gold in question, for a certain sum of money - HELD THAT:- The appellants are merely the carriers of the gold in question. They have claimed that they are not the actual beneficiaries of the said gold. It is found that the Revenue has not brought in any evidence to counter the said claim made by the appellants that they are not the actual beneficiaries of the gold. It is also observed that the ld. adjudicating authority has absolutely confiscated the gold in question and the appellants are not making any claim regarding the gold so confiscated by the ld. adjudicating authority. They are only praying for taking a lenient view while imposing penalties. Considering the fact that the appellants have acted merely as a carriers and the Department has not been able to prove that they are the ultimate beneficiaries of the seized gold, this is a fit case for taking a lenient view by reducing the penalties imposed on the appellants. Conclusion - Considering the fact that the appellants have acted merely as carriers and the Department has not been able to prove that they are the ultimate beneficiaries of the seized gold, this is a fit case for taking a lenient view by reducing the penalties imposed on the appellants. By considering the facts and circumstances of this case, the penalties imposed on each of the appellants u/s 112(b)(i) of the Customs Act, 1962 reduced from Rs.3,13,000/- each to Rs.1,00,000/- each. Appeal disposed off. The core legal questions considered in this case include:1. Whether the appellants, found carrying gold biscuits concealed in their body cavities without licit documents, are liable for confiscation under Sections 111(b) and (d) of the Customs Act, 1962.2. Whether penalties under Section 112(b)(i) of the Customs Act, 1962 are rightly imposed on the appellants for smuggling activity.3. Whether the appellants, claiming to be mere carriers induced by unidentified persons and not ultimate beneficiaries, are entitled to leniency in the imposition of penalties.Issue-wise Detailed AnalysisIssue 1: Liability for Confiscation of Gold under Sections 111(b) and (d) of the Customs Act, 1962Relevant legal framework and precedents: Sections 111(b) and (d) of the Customs Act provide for confiscation of goods that are smuggled or unlawfully imported. The Act mandates confiscation where goods are brought into the country without proper declaration or in violation of customs laws.Court's interpretation and reasoning: The Court found that the appellants were intercepted carrying six gold biscuits weighing 996 grams, bearing foreign markings, and valued at over Rs. 31 lakhs. The appellants failed to produce any licit documents proving lawful possession or purchase. The gold was concealed in their body cavities, indicating deliberate concealment to avoid detection.Key evidence and findings: The recovery of gold biscuits was based on specific intelligence and thorough search by customs officers. Testing at the Assam Hallmarking Centre confirmed the purity and karat of the gold. The appellants' own statements admitted to carrying the gold concealed in their bodies.Application of law to facts: Given the concealment, lack of documents, and admission by the appellants, the Court upheld confiscation under Sections 111(b) and (d). The appellants did not dispute the confiscation and did not claim ownership of the gold.Treatment of competing arguments: The appellants did not contest confiscation but claimed they were mere carriers, not beneficiaries. The Court acknowledged this but found no basis to alter confiscation since the gold was smuggled.Conclusions: The Court confirmed the confiscation of the gold biscuits as per the Customs Act provisions.Issue 2: Imposition of Penalties under Section 112(b)(i) of the Customs Act, 1962Relevant legal framework and precedents: Section 112(b)(i) authorizes imposition of penalties on persons involved in smuggling or carrying smuggled goods. The penalty amount is discretionary, depending on the gravity of the offense and involvement of the accused.Court's interpretation and reasoning: The adjudicating authority imposed penalties of Rs. 3,13,000/- each, considering the serious nature of smuggling and concealment. The Commissioner (Appeals) upheld these penalties.Key evidence and findings: The appellants' confession to concealment and carriage of gold, the high value of the seized gold, and the circumstances of concealment supported the imposition of penalties.Application of law to facts: The Court recognized that the appellants were liable for penalties as carriers of smuggled gold. However, the appellants' claim of being induced by unidentified persons and their financial hardship was also considered.Treatment of competing arguments: The appellants' counsel relied on precedent where leniency was granted to carriers who were not ultimate beneficiaries and acted under inducement and financial distress. The Revenue emphasized the active concealment and involvement in smuggling, supporting the penalty amount.Conclusions: The Court acknowledged the appellants' mitigating circumstances and reduced the penalties from Rs. 3,13,000/- to Rs. 1,00,000/- each, taking a lenient view consistent with precedent.Issue 3: Entitlement to Leniency in Penalty Imposition for Mere CarriersRelevant legal framework and precedents: The Tribunal referred to a prior decision where penalties were reduced for a carrier who was not the ultimate beneficiary, having been lured by poverty and inducement to carry smuggled gold. The principle of leniency in such cases is recognized where the carrier's culpability is less than that of the mastermind or beneficiary.Court's interpretation and reasoning: The Court accepted the appellants' assertion that they were induced by unidentified persons and acted as carriers due to financial hardship. The Revenue failed to produce evidence to rebut this claim or establish the appellants as ultimate beneficiaries.Key evidence and findings: The appellants' statements, absence of contrary evidence from Revenue, and the fact that they did not claim ownership of the gold were critical in this determination.Application of law to facts: Applying the precedent and principles of proportionality and equity, the Court found it appropriate to reduce penalties while maintaining confiscation and recognizing the appellants' liability as carriers.Treatment of competing arguments: The Revenue's argument for maintaining full penalties was considered but outweighed by the appellants' mitigating circumstances and lack of evidence against them as beneficiaries.Conclusions: The Court concluded that a lenient approach was warranted and accordingly reduced the penalties.Significant Holdings'Admittedly, the appellants have not denied the fact of carrying the said gold concealed in their body. The submission made by the appellants is that they had been induced by some unidentified person, to act as carriers of the gold in question, for a certain sum of money. They have stated that due to financial hardship, they had accepted the money and thus had agreed to carry the said gold, as carriers.''Considering the fact that the appellants have acted merely as carriers and the Department has not been able to prove that they are the ultimate beneficiaries of the seized gold, I am of the view that this is a fit case for taking a lenient view by reducing the penalties imposed on the appellants.''As regards Basir, factum of recovery of gold biscuit from his possession has not been denied by him. However, a prayer has been made for the reduction of the penalty amount, keeping in view the fact that appellant was not himself a person responsible for smuggling the gold biscuit ... which he agreed to do because of his poverty... I take a lenient view and reduce the penalty from Rs. 15,000.00 to Rs. 1,000.00 (Rupee one thousand) only.''Thus, by considering the facts and circumstances of this case and by relying on the decision cited supra, I reduce the penalties imposed on each of the appellants, under Section 112(b)(i) of the Customs Act, 1962, from Rs.3,13,000/- (Rupees Three Lakh Thirteen Thousand only) each to Rs.1,00,000/- (Rupees One Lakh only) each.'The Court confirmed the confiscation of smuggled gold under Sections 111(b) and (d) of the Customs Act, 1962, upheld the appellants' liability for penalties under Section 112(b)(i), but reduced the penalty amounts on account of the appellants' role as mere carriers induced by unidentified persons and financial hardship, following established precedent and principles of equitable discretion in penalty imposition.