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 3 crore. The appellant's claim of denial of cross-examination and involuntary statement was rejected as an afterthought, given no prior complaints during judicial custody or appeals. The recovery of smuggled gold from the appellant was undisputed, and his statement confirmed knowledge of its illicit nature. The appellant was found to be a habitual offender transporting large quantities of smuggled gold. The penalty of Rs 10,00,000 was held appropriate considering the value involved and past offenses. The appeal was dismissed.

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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.

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