2025 (8) TMI 342 - AT - Customs

Penalty upheld under Section 112(b) Customs Act for smuggling over 11 kg gold worth Rs 3 crore; appeal dismissed

The CESTAT upheld the penalty under Section 112(b) of the Customs Act, 1962, imposed for smuggling 11,233.370 grams of foreign-origin gold valued over Rs ... Levy of penalty u/s 112 (b) of the Customs Act, 1962 - smuggling of gold - recovery of 11233.370 gm foreign origin gold - denial of opportunity for cross-examination under Section 138B of the Customs Act, 1962 - violation of principles of natural justice - HELD THAT:- It is quite evident that the Appellant was arrested on 23.02.2018 and produced before the CJM (Economic Offences) on the same date thereafter he continued to be in judicial custody. He never retracted from the statement made by him under Section 108 of the Customs Act, 1962, nor ever complained with regards to the fact that his statement was recorded under duress or by force. He was suitably represented before the Commissioner (Appeal) in by the counsel, wherein also no such averment was made. If Appellant had any such grievance he could have stated the same before the CJM before whom he was produced, Jailor, District Jail Varanasi while in judicial custody or before the Commissioner (Appeal). The averment made by the appellant to this effect in this appeal before the tribunal and at the time of hearing of appeal, is nothing but an afterthought and needs to be rejected. Thus the submission made by the appellant that his statement that 23.02.2018 was not voluntary lacks merit. The factum of recovery of the illicitly imported/ smuggled gold of foreign origin from the possession of the appellant is not in dispute. No claimant has come forward to claim the ownership of the gold valued at more than Rs 3 crore. Appellant was not only carrying the gold but was also aware of it smuggled nature as is evident from his statement and details revealed by them in his statement recorded on 23.02.2018. The details revealed were corroborated by the presence of the shops and persons owning such shop for whom he was carrying this gold. The corroboration of the facts stated by the appellant in his statement are sufficient enough to adduce his knowledge about the smuggled nature of the gold which has been held liable for confiscation under Section 111 (b) and (d) of the Customs Act, 1962. The facts and circumstantial evidence adduced in the present case are sufficient to hold appellant guilty of the offence of abetting in the act of smuggling of gold, contrary to the express provisions of Customs Act, 1962. Hence he is liable to penalty under Section 112 (b) ibid - The facts point that appellant is a habitual offender carrying huge quantity of smuggled gold from Kolkata for delivery in Kanpur and other places. He has admitted so in his statement recoded under Section 108. Taking note of the value of the confiscated gold (more than Rs 3 Crore) and the fact that appellant has been involved in commission of similar offences in past as per his own statement, it is not found that the penalty imposed upon him of Rs 10,00,000/- to be excessive. Thus the quantum of penalty imposed by the adjudicating authority and upheld by the appellate authority need not be interfered. Appeal dismissed. ISSUES: Whether penalty under Section 112(b) of the Customs Act, 1962 can be imposed on a person who is neither owner nor claimant of seized smuggled goods but found in possession thereof.Whether a statement recorded under Section 108 of the Customs Act, 1962, if retracted, can form the basis for penalty or conviction without corroborative evidence.Whether denial of opportunity for cross-examination under Section 138B of the Customs Act, 1962 violates principles of natural justice in penalty proceedings.Whether the burden of proving lawful importation under Section 123 of the Customs Act, 1962 lies on the person found in possession of the seized goods.Whether the quantum of penalty imposed under Section 112(b) of the Customs Act, 1962 is justified given the facts and circumstances of the case. RULINGS / HOLDINGS: Penalty under Section 112(b) is sustainable against a person found in possession of smuggled goods who fails to prove lawful importation as required under Section 123 of the Customs Act, 1962; ownership or claimant status is not a prerequisite for imposition of penalty.A statement recorded under Section 108, even if retracted, is admissible and can form the sole basis for penalty or conviction if it is voluntary and truthful; corroboration by other evidence is desirable but not mandatory for each detail.Denial of cross-examination under Section 138B without justification violates principles of natural justice; penalty imposed without such compliance is unsustainable and requires remand for de-novo consideration.The burden to prove lawful importation of seized goods lies on the person in possession, and failure to discharge this burden justifies confiscation and penalty under relevant provisions.The quantum of penalty imposed (Rs. 10,00,000/-) is justified considering the value of smuggled goods (over Rs. 3 crore), the appellant's admitted involvement in repeated offences, and the nature of the contravention. RATIONALE: The Court applied statutory provisions of the Customs Act, 1962, particularly Sections 108, 111(b), 111(d), 112(b), 119, 123, 135, and 138B, alongside established Supreme Court precedents on admissibility and evidentiary value of confessional statements under Section 108.Precedents such as K I Pavunny and related Supreme Court rulings were relied upon to affirm that voluntary confessional statements under Section 108 form substantive evidence and may be used as sole basis for penalty or conviction if found truthful.The Court emphasized that the burden of proof for lawful importation under Section 123 rests on the possessor of the seized goods, and absence of such proof leads to presumption of smuggling and confiscation.The Court recognized the necessity of compliance with Section 138B for cross-examination to uphold natural justice, setting aside penalty where such procedure was not followed and remanding for fresh adjudication.The decision reaffirmed the principle that in smuggling cases, evidence must be evaluated on the basis of probability and circumstantial evidence due to the secretive nature of the offence, and that the prosecution need not prove every link with mathematical precision.