2025 (11) TMI 211 - AT - Customs

Penalty under s.112(b) set aside where retracted duress statement and lack of corroboration breached natural justice

Shri Pramod Kumar Verma Versus Commissioner of Customs (Preventive), Lucknow

CESTAT ALLAHABAD - AT allowed the appeal and set aside the penalty under s.112(b) Customs Act, finding the impugned order rested solely on a retracted ... Levy of penalty u/s 112 (b) of the Customs Act, 1962 - certain groups of passengers regularly carrying out smuggling of goods like gold, silver and other contraband items like cigarettes, saffron, etc. in their personal baggage - corroborative evidence to the statements made by the Appellant which has been retracted - no cross-examination was granted to the Appellant - violation of principles of natral justice - HELD THAT:- The Appellant is penalised solely on the statement given under duress and the evidence such as recovery of cash has not been found proper. The Appellant has been linked to the crime without giving proper opportunity of hearing. The Appellant has not been given opportunity to cross examine any witness and object on any of the evidences presented or recovery done. Also, the recovery done from the Appellant’s home on same day when the Appellant was held hostage cannot be said proper proof as the explanation given by the Appellant and his family for the amount recovered cannot be overlooked. In case of Commissioner of Customs (Preventive), Kolkata, vs. Amit Jalan, [2023 (2) TMI 331 - CESTAT KOLKATA], it has been held that statements made cannot be accepted blindly without corroborative evidence as, ‘the issue is, can that statement be accepted blindly without corroboration, and the answer is no.’ The impugned order cannot be sustained - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether statements recorded from the accused/officer in custody described as a 'hostage-like' situation and under alleged duress are admissible and can form the basis for imposing penalty under the Customs Act, 1962 (including initiation under Section 136 and penalty under Section 112(b)). 2. Whether recoveries (cash and contraband) seized from the appellant and his residential premises on the date of the incident are sufficiently connected and corroborative to the alleged smuggling acts so as to sustain confiscation under Section 111 and penal consequences. 3. Whether reliance on statements of co-accused or third parties, telephone material and audio/photographic evidence without independent corroboration amounts to proof of mens rea/abetment or supports imposition of personal penalty. 4. Whether principles of natural justice were complied with in the proceedings - specifically, the right to cross-examine prosecution witnesses and to have adequate opportunity to challenge evidence relied upon in the Show Cause Notice. ISSUE-WISE DETAILED ANALYSIS Issue 1: Admissibility and probative value of statements recorded under alleged duress/hostage-like custody Legal framework: Statements recorded by investigating agencies are admissible subject to compliance with statutory safeguards and general principles of voluntariness and reliability; confession or inculpatory statements obtained under coercion/duress are suspect and may be excluded or accorded low evidentiary value. Precedent Treatment: The Court referred to authorities holding that statements of co-accused or third parties require corroboration before being treated as substantive evidence; it relied on and applied precedent distinguishing cases where a co-accused's statement inculpates both parties from cases where guilt is shifted without independent corroboration. Interpretation and reasoning: The Tribunal found the first statements of the appellant were recorded in a 'hostage-like' situation overnight, with alleged forcible seizure of phones and detention of staff; the appellant subsequently retracted or gave differing account in later statement. The Tribunal emphasized that incriminatory statements recorded in illegal custody, without presence of representatives and under duress, cannot be accepted at face value and require corroboration from independent evidence. The circumstances of detention, the differential treatment of senior officers who were allowed to go, and the appellant's immediate retraction weigh against reliability. Ratio vs. Obiter: Ratio - Statements recorded under duress/illegal custody cannot sustain penal liability absent independent corroboration. Obiter - Observations about the conduct of DRI officers and detention practices as aggravating the unreliability of statements. Conclusion: The impugned order could not rely solely on the statements recorded on 19/20.12.2019; those statements lacked probative value sufficient to impose penalty and were therefore insufficient to uphold personal penalty. Issue 2: Sufficiency of recovery evidence and linkage between recovery and alleged smuggling Legal framework: Recovery of contraband and cash can be evidentiary; however, to sustain confiscation or personal penalty the recovery must be properly linked to the accused and the specific smuggling incident. Explanation by accused for recovered property must be considered; mere temporal coincidence (recovery on same day) does not automatically establish connection. Precedent Treatment: The Tribunal relied on prior decisions holding that recovery from an accused or his premises requires particulars linking it to the alleged offence and may be disbelieved if credible explanation is offered or if seizure lacks particularisation. Interpretation and reasoning: The Tribunal noted that the Department did not provide specifics linking the cash recovered from the appellant's residence (Rs.8,25,500/-) to the airport smuggling incident; the appellant provided an explanation (family/ matrimonial gift) supported by a notarized affidavit. The amounts claimed as possible gratification (e.g., Rs.2,000/- per clearance) were inconsistent with the large cash recovered. The Tribunal held that recovery without nexus and without independent corroboration cannot be treated as decisive evidence of guilt or abetment. Ratio vs. Obiter: Ratio - Recovery must be specifically linked to the offence and corroborated; unexplained or unexplained-in-fact recovery unsupported by nexus and inconsistent with alleged modus operandi is insufficient for imposing penalty. Obiter - Comment that same-day house searches while the appellant was detained undermine the reliability of linking. Conclusion: The cash recovery and other seizures did not provide the necessary corroborative link to the appellant's alleged involvement; confiscation/penal consequences based on such recovery could not be sustained. Issue 3: Reliance on statements of co-accused/third parties and electronic material (audio/photos) without corroboration Legal framework: Statements of co-accused and third parties and electronic material are admissible but require verification and corroboration; the burden on the prosecuting authority to indicate how such material connects the accused to the offence remains. Precedent Treatment: The Tribunal reiterated established position that co-accused statements, when uncorroborated, cannot be accepted as gospel truth; decisions cited demonstrate that where a co-accused shifts guilt onto others without independent evidence, personal penalty is unwarranted. Interpretation and reasoning: The impugned Show Cause Notice relied on phone evidence, an unidentified photograph and audio clips without temporal or contextual corroboration. The Tribunal observed absence of transcripts, absence of linkages to dates/incidents or voice verification, and that the impugned paras of the SCN relied upon statements made under the alleged illegal custody. Given these deficits, the Tribunal found the electronic and third-party statement material inadequate to establish abetment or culpability. Ratio vs. Obiter: Ratio - Electronic/audio/photo evidence and co-accused statements uncorroborated by independent proof cannot sustain penalty. Obiter - Emphasis on need for voice verification, transcripts and contextual specificity as part of due inquiry. Conclusion: Reliance on co-accused statements and electronic material without independent corroboration does not constitute sufficient proof for imposing penalty. Issue 4: Compliance with principles of natural justice - cross-examination and opportunity to contest evidence Legal framework: Principles of natural justice require that an accused has an opportunity to know the case against him, to adduce evidence in rebuttal and, where relevant, to cross-examine witnesses whose statements constitute the basis for adverse findings; denial of such opportunity can vitiate findings and penalties. Precedent Treatment: The Tribunal applied long-standing administrative law principles and prior authorities holding that absence of opportunity to cross-examine material witnesses or challenge incriminating statements may render the evidence infirm. Interpretation and reasoning: The Tribunal found the appellant was not afforded opportunity to cross-examine witnesses or to meaningfully object to evidence relied upon in the SCN; statements were recorded under custody and there was no effective engagement with appellant's explanation for the recovered cash. The Tribunal considered these procedural deficiencies significant in assessing the weight of the evidence. Ratio vs. Obiter: Ratio - Failure to provide adequate opportunity of hearing and cross-examination undermines the admissibility/weight of incriminating material and justifies setting aside penalty orders. Obiter - Observations on interplay between departmental disciplinary proceedings already imposed and pending departmental appeal not barring adjudicatory scrutiny. Conclusion: Non-compliance with principles of natural justice (lack of cross-examination/opportunity to challenge evidence) contributed to the untenability of the penalty order. Overall Conclusion and Disposition The Tribunal held that the impugned appellate order upholding the penalty could not be sustained: (a) primary inculpatory statements were recorded under alleged duress/hostage-like custody and lacked corroboration, (b) recoveries were not sufficiently linked to the alleged smuggling incident and were plausibly explained, (c) reliance on co-accused statements and electronic material without independent corroboration was impermissible, and (d) principles of natural justice were not fully observed. On these grounds the appellate order was set aside and the appeal allowed with consequential relief as per law.