2017 (9) TMI 600 - HC - Customs

Penalty - smuggling of cultured pearls, consumer goods and cellphone accessories of foreign origin - unaccompanied baggage - The only allegation against the petitioner is that he had given his passport to one Mr.Durai Srinivasan for clearing the consignments and therefore, the respondent would state that the petitioner would have had the knowledge of the contents of the baggage - Held that - What is important to note is that the original authority while imposing penalty on the petitioner vide its order dated 29.09.2003 did not specifically render a finding as to how he connects the petitioner with the tainted consignments. This is required because charge against the petitioner is criminal in nature (i.e.,) charge of smuggling when admittedly it was an unaccompanied baggage. There should be a clear finding to show that the petitioner, with full knowledge, had filed baggage declaration and used his passport for clearing the goods. It cannot be conclusively held that the petitioner had knowledge that the baggage contained tainted goods. Admittedly, there is no statement recorded from Durai Srinivasan, who was evading summons. Thus, the finding against the petitioner is based on presumption, as admittedly there was no direct evidence to show that the petitioner had knowledge of the contents of the baggage and goods were being smuggled into India. Therefore, the imposition of penalty on the petitioner alone and allowing the other person viz., Durai Srinivasan to go scot-free is not sustainable. Petition allowed - decided in favor of petitioner.

Summary

Issues:
1. Confiscation of goods and penalty imposition under Customs Act.
2. Allegation of smuggling against the petitioner.
3. Lack of direct evidence connecting the petitioner to the smuggled goods.

Analysis:
1. The petitioner contested an order for confiscation and penalty imposed under the Customs Act due to seized goods of foreign origin. The case involved cultured pearls and consumer goods smuggled into India, leading to a show cause notice citing violations of Customs Act provisions. The petitioner denied knowledge of the goods' contents and ownership, emphasizing that the seized baggage was unaccompanied, with no proof of personal travel to the origin country.

2. The primary allegation against the petitioner was based on lending his passport for clearing consignments, implying awareness of the contents. Despite the petitioner's detailed denial and lack of direct involvement in filing baggage declarations, the adjudicating authority ordered confiscation and imposed penalties. The appellate and revisional authorities modified and confirmed the penalties, respectively, without a clear finding connecting the petitioner to the smuggling activity.

3. The lack of a conclusive finding linking the petitioner to the tainted consignments raised concerns regarding the criminal charge of smuggling. The original authority failed to establish the petitioner's direct involvement, leading to reduced penalties by the appellate authority. The revisional authority's reliance on presumptions without direct evidence against the petitioner highlighted the unfairness in penalizing one party while absolving another, especially when the key individual evaded summons.

In conclusion, the High Court of Madras allowed the writ petition, setting aside the impugned orders due to the absence of substantial evidence connecting the petitioner to the smuggling activities. The judgment emphasized the importance of clear findings and direct evidence in imposing penalties under the Customs Act, highlighting the need for fairness and accountability in such cases.