2019 (6) TMI 973 - AT - Customs

Imposition of penalty u/s 117 of CA - demand solely based on statement under Section 108 of the Customs Act given before the officers of SIIB - retraction of statements - HELD THAT - The appellants in their reply to the show-cause notice has completely retracted their statement given earlier and has alleged torture and inhuman treatment made to them during the recording of the statement. Further even the copies of the statement have not been given to the appellants and they were not supplied all the documents relied upon by the Department and thereby deprived them to defend themselves properly. Further, the Department has not filed any report in the Police Station for the theft of the seal of the Department. Further, no Mahazar was prepared on the spot for the recovery of the alleged seal and the said alleged seal was never shown to the appellant. Revenue has not been able to prove the allegations against the appellants with cogent and convincing evidence so as to warrant the imposition of penalty under the provisions of Section 117 of the Customs Act, 1962 - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalties under Section 117 of the Customs Act, 1962 on two appellants.
- Allegations of coercion and undue influence during the recording of statements.
- Lack of provision of necessary documents and materials to the appellants.
- Contradictions and discrepancies in the investigation.
- Exemption of penalties on the Senior Manager and Managing Director of the company.
- Legal basis for setting aside the penalties imposed on the appellants.

Detailed Analysis:
1. Imposition of Penalties under Section 117: The appellants were subjected to penalties under Section 117 of the Customs Act, 1962 by the Commissioner of Customs. The penalties were &8377; 50,000 for Appellant No. (1) and &8377; 25,000 for Appellant No. (2). The penalties were based on their statements recorded under Section 108 of the Customs Act, which they retracted in their replies to the show-cause notice. The appellants alleged coercion and threat during the recording of their statements, emphasizing that the evidence was insufficient to support the penalties.

2. Allegations of Coercion and Undue Influence: The appellants, who were employees of a logistics company, claimed that their statements were recorded under threat, coercion, and undue influence. They stated that they were not provided with copies of their statements or necessary documents, hindering their ability to defend themselves adequately. The appellants also highlighted that the Department did not file any report on the alleged theft of a Customs seal, raising doubts about the evidence presented.

3. Lack of Provision of Necessary Documents: The appellants argued that they were not given copies of essential documents and were not provided with a reasonable opportunity to review their statements or present additional evidence. This lack of access to crucial materials compromised their defense and undermined the fairness of the proceedings against them.

4. Contradictions and Discrepancies in the Investigation: The Tribunal noted various contradictions and discrepancies in the investigation, casting doubt on the reliability and coherence of the evidence presented by the Revenue. These inconsistencies contributed to the Tribunal's decision to set aside the penalties imposed on the appellants.

5. Exemption of Penalties on Senior Manager and Managing Director: The Tribunal highlighted that no penalties were imposed on the Senior Manager and Managing Director of the logistics company, despite penalties being levied on the appellants. This exemption raised questions about the justification for penalizing the appellants under Section 117 of the Customs Act, especially when key individuals associated with the company were not penalized.

6. Legal Basis for Setting Aside Penalties: Based on the retraction of the appellants' statements, the alleged coercion during statement recording, lack of crucial documents, absence of a theft report, and inconsistencies in the investigation, the Tribunal concluded that the Revenue failed to prove the allegations against the appellants convincingly. Consequently, the penalties of &8377; 50,000 and &8377; 25,000 imposed on the appellants were set aside, and their appeals were allowed.