2017 (1) TMI 832 - AT - Customs

Evidence - statement of accused - end use of Brass Scrap in dispute - confiscation - penalty - Held that - the appeal paper book is having a copy of statement of the appellant dated 10th January 2008 wherein he has categorically stated that he had non role in the import of said Brass Scrap - From the ruling of Hon ble High Court of Allahabad in the case of ASHOK KUMAR SINGH Versus UNION OF INDIA 1998 (8) TMI 99 - HIGH COURT OF JUDICATURE AT ALLAHABAD it was held that on the basis of statement of co-accused alone and in the absence of any other evidence the lower court cannot proceed against an accused. In the present case I find that the statements of Manoj Sikka and Shri R.K. Gupta are contradictory to each other. This situation may create suspicious about the role of Shri R.K. Gupta however suspicion cannot be the basis for punishment and therefore I hold that in the facts and circumstances of the case Shri R.K. Gupta was not liable to impose with penalty - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged misuse of advance license for import of Brass Scrap.
2. Imposition of customs duty and penalty under Customs Act, 1962.
3. Admissibility of statement of co-accused in penalty imposition.

Analysis:
1. The case involved a show-cause notice issued to M/s. The Village Art, Moradabad, regarding the alleged misuse of Brass Scrap imported under an advance license. It was claimed that the scrap was sold in the open market instead of being used for manufacturing goods for export. The appellant, Shri R.K. Gupta, was accused of assisting in the sale, leading to the imposition of customs duty and confiscation of the scrap. A penalty of ?10,00,000 was imposed under various sections of the Customs Act, 1962. The appellant appealed against Order-in-Original No.05/ADC/M-II/2011, which was adjudicated by the Ld. Commissioner (Appeals) through Order-in-Appeal No.10/CUS/MRT-II/2011.

2. During the appeal, the appellant argued that the statements made by a co-accused, Shri Manoj Sikka, were contradictory. The appellant relied on a case law to support the argument. The Department's representative contended that the admissibility of a co-accused's statement for penalty imposition had been discussed by the Ld. Commissioner (Appeals). The Tribunal, after considering the arguments and perusing the record, noted that the statements of Manoj Sikka and Shri R.K. Gupta contradicted each other. While this raised suspicions about the appellant's role, the Tribunal held that suspicion alone cannot be the basis for punishment. Referring to a ruling of the Hon'ble High Court of Allahabad, the Tribunal concluded that in the absence of other evidence, the appellant could not be penalized solely based on contradictory statements. Consequently, the Tribunal set aside the Order-in-Appeal and allowed the appeal.

3. The judgment highlighted the importance of substantial evidence and the legal principle that mere suspicion cannot lead to punishment. It emphasized the need for a clear link between the accused's actions and the alleged offense, especially when relying on statements of co-accused individuals. The case underscored the significance of due process and the requirement for concrete evidence to establish liability under the Customs Act, 1962.