2025 (6) TMI 273 - AT - Customs

Smuggling of gold - abetment under Sections 112(a) and 112(b) of the Customs Act 1962 for allegedly orchestrating the smuggling of the gold through two carriers - passed without properly appreciating the facts the law and the binding judicial precedents or not - burden to prove - violation of principles of natural justice - HELD THAT - Though there is contradiction in the statements of two passengers viz. Sh. Parvesh Joshi and Shri Narinder Kumar Joshi but one thing is very clear that these two passengers who have stated in their statements regarding their monthly income amounting to Rs.25, 000/- and their bank details recovered by the Department clearly shows that the seized gold cannot be purchased by them. Further in the statement made by Sh. Parvesh Joshi he has said nothing about the payment made to the seller and moreover the invoice placed on record only shows the quantity recovered and payment made through cash whereas these two passengers never made any payment. It is pertinent to note that during the investigation the appellant was called to appear by the Department but he never appeared which clearly proves that the specific allegation levelled against him by these two carriers that the gold belongs to the appellant. Further I find that the entire expenses of the visit of these two carriers and their stay in the hotel was borne by the appellant as stated by these two carriers in their statements. Further the argument of the learned Counsel that these two passengers who have made statements before the Department were never allowed to be cross-examined by the appellant. This argument does not have force as the appellant has not appeared before the Customs Officer in spite of repeated summons to him. Further the submissions of the learned Counsel for the appellant that the entire case has been made on the basis of oral statements of these two passengers and simply on the basis of these statements penalty cannot be imposed on the appellant under Section 112(a) and 112(b) of the Customs Act 1962 - Further it is found that the appellant did not cooperate with the Department and did not appear in spite of summons issued to him which clearly proves that he is the mastermind in the whole smuggling of seized gold. It is also found that the carriers i.e two passengers in spite of ample opportunities have failed to prove by any evidence documentary or otherwise the legitimate purchase of seized gold in the form of source of funds general use to transfer the said funds to UAE for purchase of gold income as declared in the income tax returns etc. even their bank statements do not prove their capacity to buy the seized gold. Conclusion - The seizure and confiscation of gold were lawful and justified under the Customs Act. The appellant was liable for abetment of smuggling and rightly penalized under Sections 112(a) and 112(b). There is no infirmity in the impugned order passed by the Commissioner (Appeals) - Appeal dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the seized gold objects, weighing approximately 1848 grams and valued at Rs. 89,90,521/-, were smuggled into India in contravention of the Customs Act, 1962, and thus liable for confiscation under Section 111 of the Customs Act, 1962.

- Whether the appellant can be held liable for abetment under Sections 112(a) and 112(b) of the Customs Act, 1962, for allegedly orchestrating the smuggling of the gold through two carriers.

- Whether the statements made by the two carriers (passengers) before the Customs authorities, which were later retracted, can be relied upon as evidence against the appellant.

- Whether the appellant was given a fair opportunity of cross-examination and whether the procedural safeguards under Section 138 of the Customs Act, 1962, were complied with.

- Whether the penalty imposed on the appellant and the two carriers under Sections 112(a) and 112(b) of the Customs Act, 1962, is sustainable in law.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality of seizure and confiscation of gold under Customs Act, 1962

The Customs officers, acting on specific information, conducted a rummaging of flight No. 6E-8451 arriving from Sharjah to Amritsar. They discovered six yellowish objects (four kadas and two chains) concealed within two black elbow sleeves placed in the back pocket of Seat No. 1E. The objects were examined by a jeweller and confirmed to be 24-carat gold weighing 1848 grams with a market value of Rs. 89,90,521/-. The seizure was made under Section 110 of the Customs Act, 1962, and the gold was confiscated under Section 111 of the Act.

The Court considered the physical evidence of the gold, the manner of concealment, and the recovery-cum-seizure memo dated 17.04.2021. It applied the provisions of the Customs Act relating to illegal import and smuggling, including Sections 110, 111, 118, and 119. The Court found that the concealment of gold in the aircraft and the wrapping in elbow sleeves constituted an attempt to evade lawful customs procedures, justifying confiscation.

The Court rejected the appellant's contention that the gold was not smuggled or that the seizure was unlawful, noting that the seizure was supported by tangible evidence and proper procedure. The Court also noted that the packing material used for concealment was liable for confiscation.

Issue 2: Liability of the appellant for abetment under Sections 112(a) and 112(b) of the Customs Act, 1962

The appellant was charged with abetment of smuggling on the basis that two passengers, Sh. Parvesh Joshi and Sh. Narinder Kumar Joshi, admitted in their initial statements that they were merely carriers of the gold on behalf of the appellant and had charged Rs. 20,000/- for the service. These statements were recorded under Section 108 of the Customs Act. However, the two carriers later retracted their statements and filed a writ petition, which was withdrawn with an undertaking to cooperate with the investigation.

The Court examined the evidence supporting the appellant's involvement, including the statements of the carriers, call detail records showing communication between the appellant and the carriers during the relevant period, and financial investigations revealing that the carriers lacked the capacity to purchase gold worth Rs. 89 lakhs. The Court found that the appellant bore the expenses of the carriers' travel and stay, further indicating his involvement.

The appellant's failure to appear before the Customs authorities despite summons was considered significant, supporting the inference that he was the mastermind behind the smuggling operation. The Court held that the evidence collectively established the appellant's abetment beyond reasonable doubt.

The appellant's argument that the charge of abetment is serious and must be proved beyond reasonable doubt was acknowledged; however, the Court found that the Department had discharged this burden through corroborative evidence beyond just the oral statements.

Issue 3: Reliance on retracted statements and procedural fairness under Section 138 of the Customs Act

The appellant contended that the statements made by the two carriers were obtained under coercion and pressure, and their retraction rendered them unreliable. The appellant also argued that he was denied the opportunity to cross-examine the carriers, violating the mandate of Section 138 of the Customs Act, which governs recording of statements and cross-examination.

The Court noted that the appellant did not appear before the Customs authorities despite repeated summons, which undermined his claim to have been denied cross-examination. The Court held that the Department was entitled to rely on the statements recorded under Section 108, especially as they were corroborated by independent evidence such as call records and financial documents.

The Court rejected the contention that penalty could not be imposed solely on oral evidence, emphasizing that the evidence was not limited to oral statements but included documentary and circumstantial evidence.

Issue 4: Sustainability of penalty under Sections 112(a) and 112(b) of the Customs Act, 1962

Penalties of Rs. 1 lakh each were imposed on the two carriers and Rs. 10 lakhs on the appellant. The appellant challenged the imposition of penalty on the grounds that the offence was not proved and due process was not followed.

The Court found that the penalty was justified given the appellant's role as the mastermind and the clear violation of customs laws. The Court referred to precedents emphasizing the strict approach towards smuggling and abetment under the Customs Act. The Court also rejected the appellant's reliance on judicial precedents cited, finding them distinguishable on facts and law.

The Court concluded that the penalties were proportionate and lawful, reflecting the gravity of the offence and the appellant's culpability.

3. SIGNIFICANT HOLDINGS

"Though there is contradiction in the statements of two passengers ... one thing is very clear that these two passengers ... clearly shows that the seized gold cannot be purchased by them."

"The Department has collected sufficient evidence in the form of call details between the appellant and these two carriers which clearly proves that the seized gold belongs to the appellant and he has only hired these two carriers to bring gold illegally for him."

"The appellant did not cooperate with the Department and did not appear in spite of summons issued to him which clearly proves that he is the mastermind in the whole smuggling of seized gold."

"The argument that penalty cannot be imposed solely on oral evidence does not have force as the Department's case is supported by documentary and circumstantial evidence."

Core principles established include the admissibility and reliability of statements recorded under Section 108 of the Customs Act even if later retracted, where corroborative evidence exists; the importance of cooperation with investigations; and the justification for confiscation and penalty under the Customs Act for smuggling and abetment.

Final determinations:

- The seizure and confiscation of gold were lawful and justified under the Customs Act.

- The appellant was liable for abetment of smuggling and rightly penalized under Sections 112(a) and 112(b).

- The procedural safeguards were adequately complied with, and the appellant's non-cooperation did not prejudice his right to cross-examination.

- The appeal was dismissed, upholding the order of confiscation and penalty.