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TMI Blog2025 (1) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... t Singh. The appellant has filed this appeal against imposition of the penalties mentioned above. 2. The issue to be decided in the present appeal is whether the lower appellate authority was justified in confirming the imposition of penalties of Rs.2,00,00,000/- under Section 112(a)(i) of the Act and Rs.3,00,00,000/- under Section 114AA of the Act on the appellant or not. 3. The facts of the case are that Directorate of Revenue Intelligence, Kolkata Zonal Unit (DRI-KZU) received an intelligence that two import consignments stuffed in two 20 feet containers having nos. MSCU3395894 and MSCU6953120 covered under Bills of Lading Nos. SMTLMBCCU2021099 dated 25.05.2021 and SMTLMBCCU2021098 dated 30.04.2021, respectively, lying at the Container Freight Station (CFS) of M/s. Phonex Logistics Private Limited, Kolkata-700066, declared to contain 'ladies garments' also has cigarettes concealed inside. The intelligence indicated that there were no statutory health warnings printed on the cigarette packages, as mandated under the provisions of the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire investment was made by the appellant; that copies of the two Bills of Lading Nos. SMTLMBCCU2021099 dated 25.05.2021 and SMTLMBCCU2021098 dated 30.04.2021 in respect of the two consignments of Cigarettes seized were received by Vivek as attachment to a WhatsApp message that came to him (Vivek) from the Mobile No. 8146500011 belonging to the appellant. The appellant also points out that the said statement alleges that the appellant had financial dealings with Vivek without mentioning details of such transactions and without giving the said documents as RUDs to the Show Cause Notice. 4.2. It is the submission of the appellant that by way of the Statement of Mr. Vivek Agarwal [Vivek] recorded by the DRI on 26.07.2022 under Section 108 of the Customs Act, 1962, Mr. Vivek has implicated the appellant and extricated himself from the alleged smuggling of cigarettes. The main ground under which the appellant has been implicated in the alleged offence is that the appellant shared copies of the two Bills of Lading Nos. SMTLMBCCU2021099 dated 25.05.2021 and SMTLMBCCU2021098 dated 30.04.2021 in respect of the two consignments, on WhatsApp with Mr. Vivek. In this regard, the appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint of alleged import and mis-declaration of the goods by the appellant for the purpose of smuggling as mastermind and conspirator. It is submitted that the ld. adjudicating authority could have relied upon this statement only when the appellant was extended the opportunity to cross examine the person who has given the statement as provided under Section 138B of the Customs Act, 1962; under the facts and circumstances of this case, the provisions of Section 138B assume significance since the allegations against the appellant are based solely on the single belated statement of Mr. Vivek Agarwal. Thus, the appellant submits that the allegations against him are not supported by any other corroborative evidence and hence not sustainable. 4.4. Accordingly, the appellant contends that the penalties imposed on him are not sustainable. 5. The Ld. Authorized Representative of the Revenue submits that the appellant was given adequate opportunity to explain his stand; however, he has not availed the opportunity granted and failed to appear for the summons. He contends that the statement dated 26.07.2022 of Mr. Vivek Agarwal has categorically named the appellant as the mastermind behind the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e companies like M/s. Fair Deal Agencies of Shri Vivek Agarwal, M/s. R. M. Product of Shri Rakesh Agarwal (father of Vivek Agarwal) and M/s Hansha Agencies of Shri Shubham Agarwal (brother of Vivek Agarwal). Hence, the money transaction details available in the Bank Statements are due to their normal business on account of trading of cigarettes and other tobacco products. They have no relation with the smuggled cigarettes. We observe that there is no evidence brought on record by the Revenue to substantiate the allegation that the transaction between M/s. Blue Water Agencies, the company of the appellant and the companies owned by Mr. Vivek Agarwal were related to illegal smuggling of cigarettes. In the absence of any corroborative evidence, we hold that the money transaction through bank between the companies of Mr. Vivek Agarwal and Appellant's company, M/s. Blue Water Agencies cannot be the ground to conclude the involvement of the appellant in the alleged smuggling of foreign cigarettes. 7.4. Another evidence relied upon by the adjudicating authority to implicate the appellant in the alleged offence is that the copies of the two Bills of Lading Nos. SMTLMBCCU2021099 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we hold that the statement of Shri. Vivek Agarwal cannot be relied upon to implicate the appellant in the alleged smuggling of foreign brand cigarettes. 7.6. We find that this view has been taken by the Hon'ble Calcutta High Court in the case of Ajay Saraogi& ors. V. Union of India & ors. [2023 (9) TMI 733 - Calcutta High Court] and Shri M. Mayandi & Shri M. Sudalaimuthu v. The Commissioner of Customs, Chennai-VIII [2022 (10) TMI 1022 - Madras High Court]. 7.7. With regard to breach of principles of natural justice by not allowing the assessee to cross examine the witnesses by the adjudicating authority, we observe that in the case of Andaman Timber Industries Vs Commissioner of Central Excise, Kolkata-II [2015 (324) E.L.T. 641 (S.C.)], the Hon'ble Apex Court has held that denial of cross-examination would be a serious flaw. The relevant part of the said decision is reproduced below: - "6. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that penalty under Section 112(a) can be imposed only when evidence available on record indicates that the appellant has involved in or had active knowledge in the commission of offence which rendered the goods imported liable for confiscation. Penalty under Section 114AA can be imposed when the evidence available on record indicates that the appellant has made, signed or used, any declaration, statement or document which is false or incorrect. In this case, there is no evidence available on record indicate the involvement of the appellant in the alleged offence of smuggling of foreign brand cigarettes. The only evidence relied upon by the ld. adjudicating authority to implicate the appellant is the statement dated 27.06.2022 of another accused in this case namely, Mr. Vivek Agarwal. We also find that Mr. Vivek Agarwal had written a letter dated 28.02.2022 to the DRI, prior to his statement dated 22.06.2022, wherein he has not made any disclosure about the involvement of the appellant. We also observe that the goods 'ladies garments' have been imported by using the IEC code of Shri Narayan Sharma. His statement was also recorded by DRI and he has also not implicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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