2025 (6) TMI 1607 - AT - Customs

Smuggling - vehicle used for transporting goods - owner/transport operator has no knowledge or involvement in the smuggling activity - Confiscation - redemption fine - penalty - HELD THAT - In this case the Officers of the DRI had intercepted the said Vehicle bearing Registration No. NL-01AA-5448 near Bettiah (Bihar) which was carrying 3, 975 kgs. of Vietnamese Black Pepper and 17, 021 kgs. of Arhar. It is a fact that the appellant has been carrying the goods in his capacity as a transporter on receipt of transportation charges. It is also found that there is no evidence available on record to indicate that the appellant was having knowledge that the goods in question were smuggled into the country. Thus the appellant cannot be held responsible for the act of transportation of the said goods. Considering the fact that there is no evidence available on record to substantiate the allegation that the appellant is also involved in the alleged offence the truck carrying the said goods cannot be confiscated. Consequently the redemption fine imposed in lieu of such confiscation is liable to be set aside. It is further observed that there is no proof that the appellant had played any role in the alleged offence to warrant imposition of penalty on him under Section 112 of the Customs Act. Therefore the penalty imposed on the appellant under Section 112 of the Act is also liable to be set aside. Conclusion - i) Confiscation of the vehicle was set aside. ii) Redemption fine imposed in lieu of confiscation was set aside. iii) Penalty under Section 112 of the Customs Act imposed on the appellant was set aside. Appeal disposed off.

Summary

The core legal questions considered in this appeal are:

1. Whether the vehicle used for transporting goods alleged to be smuggled can be confiscated under the Customs Act, 1962, when the owner/transport operator has no knowledge or involvement in the smuggling activity.

2. Whether the redemption fine imposed in lieu of confiscation of the vehicle is justified under the circumstances.

3. Whether penalty under Section 112 of the Customs Act, 1962 can be imposed on the appellant, the vehicle owner and transporter, in absence of evidence of his involvement or knowledge of the smuggling.

Issue 1: Confiscation of the Vehicle

The relevant legal framework includes Section 111 and Section 125 of the Customs Act, 1962, which empower authorities to confiscate goods and conveyances used in smuggling, and to impose redemption fines in lieu of confiscation. Section 112 provides for penalty on persons involved in smuggling or customs offences.

Precedents generally hold that confiscation of a vehicle used in smuggling is justified if the owner or driver is complicit or has knowledge of the illegal act. Mere ownership or possession of the vehicle is insufficient to warrant confiscation if the vehicle was used without the owner's knowledge or consent.

The Court's interpretation emphasized the absence of any evidence on record indicating that the appellant had knowledge or involvement in the smuggling of goods. The appellant was acting as a transporter, carrying goods on receipt of transportation charges, and the vehicle was under the custody of the driver who allegedly used it without the appellant's knowledge.

Key findings include the fact that the vehicle was intercepted carrying Vietnamese Black Pepper and Arhar smuggled from Nepal, but no evidence linked the appellant to the smuggling activity beyond ownership and transportation.

The Court applied the law to these facts by holding that confiscation of the vehicle was not warranted as the appellant was not complicit. The competing argument by the Revenue that the vehicle itself was liable for confiscation was rejected due to lack of evidence of the appellant's involvement.

The conclusion was that the vehicle could not be confiscated under the Customs Act in these circumstances.

Issue 2: Redemption Fine in Lieu of Confiscation

Section 125 of the Customs Act allows for imposition of a redemption fine as an alternative to confiscation. The fine is generally imposed on the owner or person in possession of the vehicle.

Given the Court's finding that confiscation was not justified, the redemption fine imposed in lieu thereof was also considered unwarranted.

The Court reasoned that since the vehicle could not be confiscated, the redemption fine imposed as a substitute was liable to be set aside.

Issue 3: Penalty under Section 112 of the Customs Act

Section 112 penalizes persons involved in smuggling or customs offences. The penalty is imposed on those who have knowledge or collusion in the offence.

The appellant contended that he had no knowledge or motive to carry smuggled goods and was merely a transporter receiving transportation charges. There was no evidence to establish collusion or involvement in smuggling.

The Court found no proof that the appellant played any role in the smuggling offence beyond transportation, and thus the penalty under Section 112 was not sustainable.

The Revenue's argument that the penalty was justified because the vehicle was used in smuggling was rejected due to absence of evidence against the appellant personally.

The conclusion was that the penalty imposed on the appellant under Section 112 should be set aside.

Significant Holdings

The Court held:

"I also find that there is no evidence available on record to indicate that the appellant was having knowledge that the goods in question were smuggled into the country. Thus, I find that the appellant cannot be held responsible for the act of transportation of the said goods."

"Considering the fact that there is no evidence available on record to substantiate the allegation that the appellant is also involved in the alleged offence, I hold that the truck carrying the said goods cannot be confiscated. Consequently, the redemption fine imposed in lieu of such confiscation is liable to be set aside."

"I further observe that there is no proof that the appellant had played any role in the alleged offence, to warrant imposition of penalty on him under Section 112 of the Customs Act. Therefore, the penalty imposed on the appellant under Section 112 of the Act is also liable to be set aside."

These holdings establish the principle that mere ownership or possession of a vehicle used in smuggling is insufficient for confiscation or penalty unless there is evidence of knowledge or involvement in the offence.

The final determinations were:

• Confiscation of the vehicle was set aside.
• Redemption fine imposed in lieu of confiscation was set aside.
• Penalty under Section 112 of the Customs Act imposed on the appellant was set aside.