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2024 (6) TMI 1335 - AT - CustomsPenalty u/s 112(a) and 112(b) of the Customs Act 1962 - absolute confiscation - Smuggling of foreign origin gold - recovery of Gold from the body of appellant no.2 - non-compliance with section 138B of CA 1962 - no cognizance can be taken of the statements recorded during the course of investigation which have been relied upon by the ld. adjudicating authority - onus to prove u/s 123 of the Customs Act - HELD THAT - In the case of COMMISSIONER OF CUSTOMS AIRPORT AND ADMN. KOLKATA VERSUS SHRI HIMADRI CHAKRABORTY RAHUL RANJAN SHRI KISLAY GIRISH SHARMA SUJAY KUMAR SARKAR M/S. AAI CARGO LOGISTIC AND ALLIED SERVICES COMPANY LIMITED 2023 (6) TMI 557 - CALCUTTA HIGH COURT the Hon ble Calcutta High Court has held that if an opportunity of cross-examination of persons from whom statements are recorded is refused by an adjudicating authority then such statements cannot be relied upon by the adjudicating authority - the Hon ble Calcutta High Court has held that if an opportunity of cross-examination of persons from whom statements are recorded is refused by an adjudicating authority then such statements cannot be relied upon by the adjudicating authority. It is observed that an adjudicating authority should allow cross-examination of the person(s) making the statements before relying on such statements against the appellants. In the present case the ld. adjudicating authority has denied the opportunity of cross-examination of the Pancha witnesses sought by the appellant - By not allowing the cross-examination the Department could not conclusively establish that the nine gold bars were seized from the appellant. There is no evidence available on record to dispute the claim made by the appellant. In view of the above we hold that the benefit of doubt should be given to the appellant no. 2. Penalty imposed on the appellant no. 2 - HELD THAT - It is observed that the appellant no. 2 has not claimed ownership of the gold. Penalty under section 112(a) and 112(b) can be imposed only when the active involvement of the appellant is established in the smuggling of gold - In the present case the evidence available on record does not establish that appellant no.2 was actively involved in the smuggling of the gold. Accordingly the penalty imposed on the appellant no. 2 under Section 112(a) and 112(b) of the Act is not sustainable in the facts and circumstances of this case. Penalty imposed on the appellant no. 1 viz. Shri Birendra Kumar Gupta - HELD THAT - It is observed that the appellant no. 2 implicated him in his Statement dated 16.08.2015 as the person who handed over the gold to him. However there is no corroborating evidence available on record to substantiate this allegation. Later after four months Shri Birendra Kumar Gupta was arrested in another case. While recording his Statement dated 13.01.2016 in that case he admitted that he has earlier sold the said 9 kgs gold to Shri Bharat Sonar - the provisions of Section 138B of the Customs Act have not been followed by the ld. adjudicating authority before taking cognizance of the statement given by appellant no.1. Since the provisions of Section 138B have not been followed the statements recorded from appellant no.1 and 2 cannot be relied upon to implicate them in the offence - the penalty imposed on the appellant no. 1 is not sustainable. As per Section 123 of the Customs Act 1962 the burden of proving that gold is not smuggled in nature lies on the person who claims ownership of the said gold. In the present case both the appellants have not claimed ownership of the gold and hence the provisions of sections 123 of Customs Act 1962 are not applicable to them - the ingredients available in Section 112(a) and 112(b) of the Customs Act 1962 are not existing in this case to impose penalty on both the appellants. Accordingly the penalty imposed on both the appellants under Section 112(a) and (b) of the Customs Act 1962 is not sustainable and hence the same is set aside. The penalties imposed on the appellant no. 1 and appellant no. 2 is set aside - appeal allowed.
Issues Involved:
1. Legality of the penalty imposed under Section 112(a) and 112(b) of the Customs Act, 1962. 2. Compliance with Section 138B of the Customs Act, 1962 regarding the admissibility of statements. 3. Right to cross-examination of witnesses. 4. Burden of proof under Section 123 of the Customs Act, 1962. Issue-wise Detailed Analysis: 1. Legality of the Penalty Imposed under Section 112(a) and 112(b) of the Customs Act, 1962: The appellants were penalized with Rs. 25,00,000/- each under Section 112(a) and 112(b) of the Customs Act, 1962. The penalties were imposed based on the recovery of nine gold bars from appellant no. 2 and the subsequent implication of appellant no. 1. The Tribunal found that the evidence on record did not conclusively establish the active involvement of appellant no. 2 in the smuggling of gold. The Tribunal held that, as per Section 112, penalties could only be imposed if the involvement in smuggling was conclusively proven, which was not the case here. 2. Compliance with Section 138B of the Customs Act, 1962 Regarding the Admissibility of Statements: Appellant no. 2 contended that the statements were not voluntary and were obtained under duress. The Tribunal observed that the provisions of Section 138B, which pertain to the admissibility of statements, were not followed by the adjudicating authority. The Tribunal cited precedents, including Sampad Narayan Mukherjee v. Union of India and Commissioner of Cus., Airport & Admn., Kolkata v. Himadri Chakraborty, to emphasize that statements recorded without allowing cross-examination cannot be relied upon. 3. Right to Cross-examination of Witnesses: Appellant no. 2 argued that he was denied the opportunity to cross-examine the Pancha witnesses, which violated the principles of natural justice. The Tribunal noted that the Department should have allowed cross-examination to verify the truthfulness of the claims. The Tribunal referenced several judicial decisions, including Sampad Narayan Mukherjee v. Union of India, to assert that adjudication without allowing cross-examination is vitiated by a breach of natural justice. 4. Burden of Proof under Section 123 of the Customs Act, 1962: The Department contended that appellant no. 2 was liable to prove that the gold was not smuggled, as per Section 123 of the Customs Act. However, the Tribunal observed that appellant no. 2 had not claimed ownership of the gold. Therefore, the burden of proof under Section 123 did not apply to him. The Tribunal concluded that without establishing ownership, the provisions of Section 112(a) and 112(b) could not be invoked to impose penalties. Conclusion: The Tribunal set aside the penalties imposed on both appellants, citing non-compliance with Section 138B and the denial of the right to cross-examination. The appeals filed by the appellants were allowed, and the cross objections filed by the Revenue were disposed of accordingly. The judgment emphasized the importance of adhering to procedural requirements and ensuring the right to a fair trial.
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