2019 (8) TMI 976 - AT - Customs

Imposition of penalties u/s 114 of the Customs Act, 1962 - illegal exports of rice from India - Non-Basmati Rice - prohibited item - Corroborative evidences or not - cross-examination of statements - HELD THAT - Admittedly the offence against the appellants relates to the past transactions inasmuch as it is the Revenue s own case that the present three appellants have procured rice in India from M/s.Ganesh Agro Product and has exported the same illegally to Nepal. The said allegations stand made on the basis of the statements of the appellants recorded during investigations. The said statements have not been further corroborated by the Revenue by producing any independent evidence. No export based as admitted as having purchased the goods from the said deponents, neither the vehicles used for such export stand identified. Not only that even off-routes, alleged to have been adopted by the present appellants for illegal exports to Nepal have been identified. Cross-examination - HELD THAT - The deponents of the said statements have not been allowed to be cross-examined. It is well settled law that statements alone cannot be held to be the admissible evidence for the purpose of holding against the assesses without allowing cross-examination of the same. Inasmuch as in the present appeal, the entire case of the Revenue is based upon the statements, without any further corroboration and that too in respect of past activities, the imposition of penalties upon the appellants is not justified - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Imposition of penalties under section 114 of the Customs Act, 1962 on individuals involved in illegal export of rice to Nepal.
2. Lack of corroboration of statements made during investigations as evidence for penalty imposition.
3. Requirement of cross-examination and examination in chief for admissibility of statements as evidence.
4. Discrepancy in the order regarding penalty imposition on M/s.Ganesh Agro Products.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved the imposition of penalties under section 114 of the Customs Act, 1962 on individuals for their involvement in the illegal export of rice to Nepal. The case stemmed from investigations revealing that the appellants were procuring rice from a specific company and exporting it to Nepal through illegal means. The Commissioner had imposed significant penalties on the individuals based on their statements during investigations, without substantial corroborating evidence.

The appellants challenged the impugned order primarily on the grounds that the penalties were solely based on their uncorroborated statements, which were not subjected to cross-examination or examination in chief as required by the Customs Act. The appellants argued that the reliance on their statements without proper testing through cross-examination was not justifiable, citing legal precedents emphasizing the importance of corroborative evidence and proper examination procedures for admissibility.

The Tribunal noted that the Revenue's case against the appellants relied heavily on their statements without additional corroboration or identification of key elements such as the vehicles used for illegal exports. Emphasizing the necessity of cross-examination and examination in chief, the Tribunal referred to various judicial decisions supporting the requirement for proper testing of statements to establish admissibility as evidence. Consequently, the Tribunal found the imposition of penalties unjustified and set them aside, allowing the appeals of the three individuals.

Regarding the Revenue's appeal, the Tribunal acknowledged a discrepancy in the order regarding penalty imposition on M/s.Ganesh Agro Products. However, since the penalties on the individuals were set aside due to lack of proper evidence and examination procedures, the Tribunal rejected the Revenue's appeal for penalty imposition on the company. The judgment was pronounced on 21 August 2019, disposing of all four appeals related to the case.