2008 (10) TMI 461 - AT - Customs

Summary

Issues:
1. Appeal against dropping of penalty under Section 112 of Customs Act.
2. Validity of statement recorded under Section 108 of the Customs Act.
3. Use of statement as substantive evidence.

Analysis:
1. The appeal was filed by the Revenue against the dropping of penalty under Section 112 of the Customs Act in a case where heroin, fake currency, and arms were recovered from a vehicle. The occupants of the vehicle were found with incriminating items, and the proceedings were initiated against them. However, the proceedings against one of the occupants, the present respondent, were dropped by the adjudicating authority.

2. The Revenue contended that the statement recorded under Section 108 of the Customs Act by one of the occupants, implicating the present respondent, should be considered as substantive evidence. The Revenue argued that the respondent did not cooperate with the investigation and only appeared at the time of the personal hearing, denying the allegations against him. The Revenue relied on legal precedents to support the admissibility of such statements as evidence in customs cases.

3. The Tribunal referred to a Supreme Court decision where it was held that statements made before Customs officials under Section 108 of the Customs Act can be used as substantive evidence to connect the accused with the contravention of the Customs Act. In light of this legal position and the specific details provided in the statement by one of the occupants of the vehicle, implicating the present respondent as a recipient of part of the contraband, the Tribunal found that the dropping of proceedings against the respondent was not sustainable. Consequently, the Tribunal set aside the decision and imposed a penalty of Rs. Five lakhs on the respondent, deeming it appropriate to meet the ends of justice.

In conclusion, the Tribunal allowed the appeal filed by the Revenue, emphasizing the admissibility and significance of statements recorded under Section 108 of the Customs Act as substantive evidence in customs cases. The decision highlights the importance of such statements in establishing connections and liabilities in contraventions of customs laws.