AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1555
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..... The Petitioners have challenged the Order-in-Original dated 25th March, 2025 passed by the Office of the Commissioner of Customs (hereinafter, 'impugned order') by which substantial amount of penalties have been imposed on the Petitioners in the following terms: "71. In view of the above, I pass the following order: Order (i) I order for absolute confiscation of 126,22,000 cigarette-sticks of various brands of foreign origin, smuggled in container no. BAXU50515958 (covered under bill of entry no. 2512888 dated 27.01.2021) and in container no. BAXU5041026 (covered under bill of lading no. BAXSSS084458 dated 27.01.2021), having market value or Rs. 13,57,00,000/ (Rupees Thirteen Lac Fifty Seven Thousand only), under Section 111(d) of the Customs Act, 1962 read with section 3 of the Foreign Trade (Development and Regulation) Act, 1992; (ii) I order for absolute confiscation of the 36 old & used photocopier machines smuggled in container no. BAXU5015958 (covered under bill of entry no. 2512888 dated 27.01.2021) and in container no. BAXU5041026 (covered under bill of lading no. BAXSSS084458 dated 27.01.2021), having FOB value of Rs. 42,09,000/-(Rupee....
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....Rupees Ten Lac only) under Section 114AA of the Customs Act, 1962 on Shri Dinesh Kumar Sharma, G-card of M/s Lohia Travel & Cargo (xiii) I impose a penalty of Rs. 7,00,00,000/- (Rupees Seven Crore only) under Section 112(a)(i) of the Customs Act, 1962 on Shri Amit Kumar, G-card of M/ s Lohia Travel&, Cargo; (xiv) l impose a penalty of Rs. 7,00,00,000/- (Rupees Seven Crore only) under Section 114AA of the Customs Act, 1962 on Shri Amit Kumar, G-card of M/s Lohia Travel &, Cargo; (xv) I impose a penalty Rs. 14,00,00,000/- (Rupees Fourteen Crore only) under Section 112(a)(i) of the Customs Act, 1962 on Shri Raj Gadiya; (xvi) I impose a penalty of Rs. 28,00,00,000/- (Rupees Twenty Eight Crore only) under Section 114AA of the Customs Act, 1962 on Shri Rajesh Gadiya; (xvii) I impose a penalty Rs. 25,00,000/- (Rupees Twenty Five Lac only) under Section 112(a)(i) of the Customs Act, 1962 on M/s Star Sales; (xviii) I impose a penalty Rs. 25,00,000/- (Rupees Twenty Five Lac only) under Section 114AA of the Customs Act, 1962 on M/s Star Sales; (xix) I refrain from from imposing penalty under Section 112b & 114A of the Customs Act,....
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.... under section 108 of Customs Act, 1962, wherein he interalia stated that: * One of his friend namely Shri Rajiv Sethi informed him about scrap import business and advised him to form a firm. Thereafter, he obtained GSTIN and IEC four months before with the help of his Chartered Accountant. * His firm Shree Sai Overseas is located at Ground Floor, Plot No. 150, Pocket-I, Sector-4, Bawana, New Delhi-110039 and its godown is also at the same address. The GSTIN of Shree Sai Overseas is 07BFUPM006A1ZW and IEC is BFUPM0006A. * Shri Rajiv Sethi told him that they will import a total of 5 containers out of which the first 3 containers will contain only scrap whereas in the 4th and 5th container they will import cigarettes though the import of same is not permissible. Shri Rajiv Sethi promised to pay Rs. 2 Lakh per container to him and he agreed for the same in greed of money. * Shri Rajiv Sethi used to book scrap from Dubai. He used to talk to some Ahmad Zahid on Mobile No. 00971528581042 at Dubai for the same. He had also talked to Ahmad Zahid who had informed that scrap will be sent in the first 4 containers and the 5th container will be contain....
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....88 dated 27.01.2021." 8. Thereafter, another container was pending for arrival. After the arrival of the said container, the same was inspected by the Customs Department, and in the said container also cigarettes were found, though the consignment was described as 'Aluminium Scrap Talk'. The said container was found to contain approximately 65 lakh cigarette sticks of brands such as 'Benson and Hedges Blue Gold', 'Pine', 'Davidoff White Slim', 'Dunhill', and 'Gold Flake Honey Dew'. 9. This led to issuance of the SCN. Post the SCN being issued, some of the parties appeared before the Adjudicating Authority in the matter. The statement of Mr. Rajesh Gadiya was also recorded. The G Card holder as also the CHA agent gave their statements. The facts revealed during search and seizure as also the various statements given, led the Adjudicating Authority to arrive at the conclusion that all the said parties were acting in connivance with each other. 10. The findings of the Adjudicating Authority were that the Petitioners were involved in smuggling of foreign origin cigarettes and old and used photocopier machines. According to the Adjudicating Authority, the importer i.e., Mr. Sur....
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....sed Photocopier machines imported by him. It is clear he is admitting in his every statement the illicit import was made by him and Shri Rajeev Sethi. However, during investigation there is no evidence against deceased Shri Rajeev Sethi. Suresh Malik took the name of Shri Rajeev Sethi only for sharing of his wrong doings and tried to distract the investigation." 13. The findings recorded by the Adjudicating Authority does reveal a conspiracy for smuggling of cigarettes and photocopier machines. Such acts are not innocent but are in fact deliberate and conscious acts meant to dupe the Exchequer. The Adjudicating Authority also records that despite repeated opportunities, the importer i.e., Mr. Suresh Malik did not appear at all. Paragraph 55 of the order in this regard is set out below: "55. The Noticees were granted opportunity for personal hearing on 09.02.2024, 23.02.2024, 08.03.2024, 11.04.2024, 16.04.2024, 22.07.2024, 24.09.2024 and 20.12.2024 vide letters dated 19.01.2024, 13.02.2024, 23.02.2024, 26.03.2024, 19.04.2024, 05.07.2024, 12.09.2024 and 06.12.2024. In response to said PH notices, following Noticees or their authorized representatives appeared for personal....
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....have any role in the actual supplies itself. Mr. Suresh Malik was introduced by Mr. Rajesh Gadiya to the suppliers. Under these circumstances, ld. Counsel submits that the main role was of Mr. Rajiv Sethi and not the Petitioner. 17. Heard. The present case reveals the manner in which various parties had colluded with each other in order to indulge in smuggling, which if true, is completely contrary to law. The role of each of these parties is something which the Adjudicating Authority has gone into. As far as Mr. Rajesh Gadiya is concerned, even if the statements made by the CHA or the importer i.e., Mr. Suresh Malik are ignored, the admitted position is that Mr. Rajesh Gadiya himself admits that he had introduced the supplier to the importer and had enabled the filing of documentation. 18. The facts recorded by the Adjudicating Authority also reveal a much more active role played by Mr. Rajesh Gadiya in terms of sending and forwarding e-mails, making calls, enabling documentation, etc. The most incriminating circumstance which in such an investigation ought to go completely against Mr. Rajesh Gadiya is the destruction of all the e-mails and the destruction of the mobile phon....
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.... BAXU5015958 and BAXU5041026 imported by Shree Sai Overseas from SAM GLOBAL FZE LLC from Dubai for Shree Sai Overseas and the original documents from the suppliers were also received at his residence through courier. Also the documents related to the import of Shree Sai Overseas used to come to his residence by courier and he had also arranged for scrap importers from Dubai for M/s Shree Sai Overseas, which clearly indicates that Shri Rajesh Gadiya was actively involved in importation of goods from Dubai and assisted Suresh Malik in each & every step. Shri Rajesh Gadiya stated that he arranged scrap from the overseas supplier SAM GLOBAL FZE LLC, however as discussed above the actual supplier in the documents of Dubai Customs was Al Garhoud General Trading LLC, therefore, it appears that he also assisted Suresh Malik in false declaration of exporter as SAM GLOBAL FZE LLC and fabricating the invoice submitted for container no. BAXU5015958. 69.5.3 Further, it is observed that a similar case on the same modus operandi was also booked by SIIB, ICD Patparganj & other ICDs against M/s Triple A Destinations on 06.02.2021 at ICD Jhattipur, Haryana wherein during examination a large....
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.... Act, 1962 provides that "if a person knowingly, or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purpose of this Act." shall be liable for penalty. As held in preceding paras, Sh. Rajesh Gadiya knowingly and intentionally in connivance with Sh. Shri Suresh Malik involves in the smuggling of impugned goods through M/s Shree Sai Overseas. Therefore, I hold that Sh. Rajesh Gadiya is liable for penalty under Section 114AA of the Customs Act, 1962." 19. The above conclusions that the Adjudicating Authority has arrived at is mostly based on statements of Mr. Rajesh Gadiya himself and the documentary evidence. While there can be no doubt that statements would be relevant, subject to the right to cross examination being given, in the very judgment which is cited by Mr. Prem Ranjan, ld. Counsel for Mr. Rajesh Gadiya i.e., J&K Cigarettes Ltd. (Supra), the Court observes as under: "24. We may also point out at this stage itself that the power of the Parliament to make such a provision is not in question. It is also c....
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....of natural justice that must be complied with no matter the strict rules of the Evidence Act had been excluded from its application. ... ... 24. Mr Malhotra, on the other hand, argued that the right of cross-examination was available to a party under the Evidence Act which had no application to the adjudication proceedings under FERA. ... ...He also placed reliance upon a decision of this Court in Surjeet Singh Chhabra v. Union of India (1997(1) SCC 508=1997 SCC (Cri) 272) to argue that cross-examination was unnecessary in certain circumstances such as the one at hand where all material facts were admitted by the appellants in their statements before the authority concerned. 25. There is, in our opinion, no merit even in that submission of the learned counsel. It is evident from Rule 3 of the Adjudication Rules framed under Section 79 of FERA that the rules of procedure do not apply to adjudication proceedings. That does not, however, mean that in a given situation, cross-examination may not be permitted to test the veracity of a deposition sought to be issued against a party against whom action is proposed to be taken. It is only when a deposition goes through th....
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....nishing false and fabricated incorrect materials, no specific reasons or points have been attributed for seeking his cross-examination. Further Noticee No. 2 has not given any specific fact that would emerge in his favour upon the cross-examination of Sri Reji Cherian. Further as Sri Reji Cherian is a co-Noticee, this authority cannot direct him to be present for proceedings that may cause him to incriminate himself and therefore the request for cross-examination of Sri Reji Cherian cannot be acceded to. 2. On a perusal of Ext.P5 order, and the reasons given by the respondent to deny the request of the petitioner for cross-examination, I do not find any illegality in the said order that would warrant an interference with the said order in these proceedings under Article 226 of the Constitution of India. The writ petition, in its challenge against Ext.PS order, the ref ore fails, and is accordingly dismissed. a. Cross-examination is not a matter of right and should be claimed by stating valid reasons which the Sh. Rajesh Gadiya and Amit Kumar in the instant case has failed to do so. This is held by the CESTAT in the case of Kitti Steels ltd. Vs. Commissioner of Cus....
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....it can be held that no iota of doubt that the adjudicating authority duly observed the principles of natural justice." Therefore, I hold that Sh. Rajesh Gadiya and Amit Kumar by requesting cross-examination of co-noticees without giving any reason are trying to subvert the entire proceedings and accordingly, the opportunity of cross-examination is denied to the said Noticees." 23. It is the settled legal position as held in the above decisions as also the recent decision even by this Court in W.P.(C) 4576/2026 titled M/s Vallabh Textiles vs. Additional Commissioner Central Tax GST, Delhi East and Ors. that the right to cross examination is not an unfettered right. Prejudice has to be shown which would lead to a conclusion that without cross examination substantial justice cannot be done. The relevant portion of the said decision in M/s Vallabh Textiles (Supra) reads as under: "18. A perusal of the above decisions reveals that while cross-examination would be required in certain cases, it need not be given as a matter of right in all cases. The provision of the opportunity to cross-examine depends on the facts and circumstances of each case and is warranted only....
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....ition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent. 13. For the above reasons, we allow the appeal and set aside the impugned order of the High Court. The writ petition filed by the respondent shall stand dismissed. However, this shall not preclude the respondent from taking recourse to appropriate remedies which are available in terms of Section 107 of the CGST Act to pursue the grievance in regard to the action which has been adopted by the state in the present case" 25. In the present case, all the parties were known to each other. Mr. Rajesh Gadiya had introduced the supplier to the importer i.e. Mr. Suresh Malik. Mr. Rajesh Gadiya is a person who is in the trade and is aware of all the happenings in the trade. Mr. Rajesh Gadiya has also prima facie, enabled and facilitated the documentation for the said import. 26. The Adjudica....