2015 (11) TMI 682 - HC - Customs

Imposition of penalty - Whether in the facts and circumstances of the case, the Hon ble Tribunal is justified in setting aside the order imposing penalty upon the first respondent on the basis of the statement of the co-accused recorded by Customs officials in terms of the dictum delivered by the Apex Court in Shri Naresh J. Sukhavani v. UOI reported in 1995 (11) TMI 106 - SUPREME COURT OF INDIA and various benches of the learned Tribunal. - Held that - It is discernible to the extent that in customs cases, a confession alleged to have been given by a co-accused is binding upon other accused. - Jayakumar Nair has given a confession statement, wherein the alleged involvement of the first respondent has been mentioned. - only the said Jayakumar Nair has given the alleged confession. It may be true that in the confession alleged to have been given by the said Jayakumar Nair, some material ingredients are found place against the first respondent and that itself is not at all sufficient for coming to a conclusion that the first respondent has also involved in the offences alleged to have been committed by the said Jayakumar Nair. - The Customs, Excise and Service Tax Appellate Tribunal, Chennai after considering the rival contentions raised on either side and also after considering the correct position of law has rightly disallowed the claim made on the side of the Department. In view of the discussion made earlier, this Court has not found any force in the contention putforth on the side of the appellant and the substantial question of law settled in the present Civil Miscellaneous Appeal is not having substance at all and altogether the present Civil Miscellaneous Appeal deserves to be dismissed. - Decided against Revenue.

Summary

Issues:
Alleged creation of fictitious company for exporting common salt, boosting its value for ineligible drawback amount, confession statement of co-accused, setting aside penalty based on co-accused statement, interpretation of confession in customs cases.

Analysis:
The judgment revolves around the appeal against Final Order No. 1163 of 2008 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai. The Department contended that the first respondent, with Jayakumar Nair, created a fictitious company to export common salt under the name "Organic G-Salt," boosting its value to claim an ineligible drawback amount. A show cause notice was issued, and Jayakumar Nair's confession implicated the first respondent. The Commissioner of Appeals upheld the demand, which was challenged before the Tribunal in the present appeal.

The substantial question of law settled for consideration was whether the Tribunal was justified in setting aside the penalty based on the co-accused's statement, citing precedent from the Apex Court and various Tribunal benches. The appellant argued that the Tribunal erred in allowing the appeal, emphasizing the confession and the upheld demand. Conversely, the first respondent's counsel contended that a co-accused's confession is not binding in customs cases, and no reliable documents connected the first respondent to the alleged activities.

The appellant relied on the Naresh J. Sukhawani case, asserting the importance of the co-accused's confession as substantive evidence. However, the first respondent's counsel referenced the Union of India v. Bal Mukund case, highlighting that a co-accused's confession alone cannot decide charges against others. The Tribunal, after considering the arguments and legal positions, rejected the Department's claim, leading the Court to dismiss the appeal, finding no merit in the appellant's contentions.

Ultimately, the Court upheld the Tribunal's decision, emphasizing that the confession alone was insufficient to implicate the first respondent in the alleged offenses. The judgment concluded that the appeal lacked substance, warranting dismissal without costs.