2014 (12) TMI 1053 - HC - Customs

Confiscation of seized goods - Seizure of gold and silver bars - Gold bars bear the foreign origin marking but silver bars does not have the same - Appellant claims only silver bars - appellant acquitted by the Judicial Magistrate in the criminal proceedings initiated by the Customs Authorities under Section 135(1)(b)(i) - Whether the plea of the appellant that in view of the acquittal of the appellant in the criminal proceedings, there could not be any imposition of penalty in the adjudicating proceedings is correct - Whether the contention of the respondent that the criminal court has not gone into the question of mensrea and in such circumstances, the judgment of acquittal would not affect the finding of the Tribunal is correct. Held that - Act contemplates two separate proceedings for the same act or omission and therefore, there is no question of double jeopardy involved, as rightly pointed out by the learned counsel appearing for the first respondent. - mere acquittal in the criminal proceedings before Magistrate court in every case cannot result in setting aside, ipso facto, the orders of the confiscation passed by the competent authority under the Act. Therefore, the contention of the appellant that the judgment of the Judicial Magistrate acquitting the appellant was binding on the Departmental Authorities, adjudicating the question of confiscation is not correct. As rightly pointed out by the learned counsel appearing for the first respondent, the fact of seizure of gold and silver bars recovered from the appellant s residence is not in dispute. In the criminal proceedings, it is the duty of the prosecution to prove the case beyond any reasonable doubt and also to prove the mensrea for the above said criminal act by adducing reliable evidence. In the instant case, the respondents have discussed in detail about the seizure of gold and silver bars from the residence of the appellant and the above said fact was not disputed by the appellant. Therefore, the appellant cannot be exonerated from adjudication proceedings. - only on the ground of acquittal in the criminal proceedings, the respondents need not exonerate the appellant from the adjudication proceedings regarding imposition of penalty and therefore, the final order passed by the Customs, Excise and Service Tax Appellate Tribunal is valid in law - Decided against assesse.

Summary

Issues Involved:
1. Whether the judgment of acquittal by the Criminal Court on the same set of facts and evidence mandates exoneration of the appellant in adjudicating proceedings.
2. Whether the Tribunal can disregard the reasoning of the Magistrate's judgment of acquittal by claiming it did not address mens rea.
3. Notification requirements under Section 11B of the Customs Act for traders possessing non-imported silver (not pressed by the appellant).

Issue-Wise Detailed Analysis:

1. Judgment of Acquittal and Exoneration in Adjudicating Proceedings:
The appellant argued that the acquittal in criminal proceedings should nullify the penalties imposed in the adjudicating proceedings. The appellant was acquitted by the Judicial Magistrate due to insufficient evidence regarding the smuggling of gold and silver bars and procedural lapses, such as improper sanction for prosecution and non-examination of key witnesses. However, the court held that acquittal in a criminal case does not automatically nullify the findings of the adjudicating authority under the Customs Act. The Supreme Court's decision in Gopaldas Udhavdas Ahuja v. Union of India clarified that departmental proceedings and criminal prosecutions are independent, and an acquittal in criminal court does not necessarily invalidate confiscation orders by the competent authority. The court emphasized that the degree of proof required in criminal cases is higher than in departmental adjudications, which allows for different outcomes in parallel proceedings.

2. Tribunal's Jurisdiction to Disregard Criminal Court's Reasoning:
The Tribunal rejected the appellant's contention that the acquittal should influence the adjudicating proceedings, noting that the Judicial Magistrate did not address the crucial aspect of mens rea. The Tribunal maintained that the evidence considered in the adjudicating proceedings was different from that in the criminal trial. The court supported this view, stating that the Customs Act allows for separate and independent proceedings for adjudication and prosecution. The Tribunal's decision to uphold the penalties, despite the criminal acquittal, was deemed appropriate since the adjudicating authority had sufficiently established the appellant's illicit possession and concealment of the goods.

3. Notification Requirements Under Section 11B of the Customs Act:
This issue was not pressed by the appellant, and therefore, it was not discussed in the judgment.

Conclusion:
The court concluded that the acquittal in criminal proceedings does not necessitate exoneration in adjudicating proceedings. The Customs Act provides for independent adjudication and prosecution processes, and different conclusions can be reached based on the varying standards of proof required. The Tribunal's decision to impose penalties on the appellant was upheld, and the appeal was dismissed. The court emphasized that the findings of the Judicial Magistrate in criminal proceedings do not bind the adjudicating authorities under the Customs Act.