2020 (10) TMI 71 - AT - Customs

Levy of Penalty u/s 114(i) of the Customs Act 1962 - Smuggling - Red Sanders - retraction of statements - preponderance of probability - HELD THAT - The statements have been recorded under Section 108 of the Customs Act 1962 and the provisions thereof have been explained to the appellants and the retractions are held to be an afterthought. Therefore the statements of the appellants and those of the co-accused have evidentiary value in the proceedings before us. We find that the appellants have also taken a plea that the CBI has not found any evidence to proceed against them and have not filed any FIR against them and therefore the proceedings against them under Customs Act also need to be discharged. The proceedings under CrPC and proceedings under Customs Act 1962 are on a different footing. The standard of proof in a criminal proceeding is proof beyond doubt whereas in the adjudication proceedings the standard of proof is preponderance of probability. The role of Shri Mohammad Altaf has been established with a reasonable degree of evidence so as to establish the offence under Customs Act 1962 in adjudication proceedings. We find that Shri Mohammad Altaf has involved himself in the act of smuggling of red sanders. Ongoing through the facts of the case we are convinced that Shri Mohammad Altaf has played a pivotal role in the smuggling of red sanders. He has not only negotiated with the suppliers the middleman the exporters and the logistics persons in the export of red sanders but also has invested certain amount in the business - The Advocate representing Shri Mohammad Altaf pleaded that there is some discrepancy in the amount stated to have been invested by Shri Altaf. Shri Altaf is alleged to have invested 50 00 000/- as per his own statement whereas Shri Meghani reported the same to be 12 50, 000/-. However this goes to prove that Shri Mohammad Altaf has invested certain amount with a view to have pecuniary gain in the business. The retractions made by Shri Altaf have no substance and have been rightly held to be an afterthought by the Adjudicating Authority. The role played by Shri Mohammad Altaf is evident in the case and looking into the fact that he is a responsible officer of the Customs Department entrusted with the responsibility of curbing smuggling activities we find that the appellant has not made out any case for proving the allegations to be wrong and baseless. It is a clear case of the fence eating the crop and therefore need to be treated with circumspection - the investigation has to a reasonable extent came out with evidence that can be analysed and accepted on the principles of preponderance of probability - the penalty imposed on Shri Mohammad Altaf under Section 114 (i) of Customs Act 1962 is upheld but quantum is reduced. The other appellant Shri Ali Imran Shafiullah Khan had a role in tampering with the seals and loading that container with red sanders with the help of Dilip (Deepak Joshi), Sheru Nayan Singh (driver arranged by Sheru) and Arif. It has not been brought on record as to the amount of financial benefit that accrued to the appellant. Under the circumstances we find that penalty of 25 00, 000/- imposed on Shri Ali Imran Shafiullah Khan is on the higher side. While finding that the role played by Shri Khan is brought out with reasonable evidence we are inclined to reduce the penalty to 5 00, 000/-. Other pleas not considered. Appeal allowed in part.

Issues Involved:
1. Confiscation of Red Sanders under Section 113 of the Customs Act, 1962.
2. Imposition of penalties under Section 114(i) of the Customs Act, 1962.
3. Validity of retracted statements.
4. Burden of proof and standard of evidence in adjudication proceedings.
5. Discrepancies in the investigation and procedural fairness.

Issue-wise Detailed Analysis:

1. Confiscation of Red Sanders under Section 113 of the Customs Act, 1962:
The intelligence developed by the DRI Mumbai Zonal Unit revealed that a syndicate had exported a consignment of Red Sanders by replacing the original cargo of "Indian Hand Knotted Woollen Carpets." The container was recalled, examined, and 12.295 MT of Red Sanders valued at ?1.22 Crores was seized. The Commissioner of Customs, in the impugned order, confiscated the Red Sanders under Section 113 (d), (f), (g), (h), and (k) of the Customs Act, 1962.

2. Imposition of penalties under Section 114(i) of the Customs Act, 1962:
The Commissioner imposed penalties of ?2 crores and ?25 lakhs on Shri Mohammed Altaf and Shri Ali Imran Saifulla Khan, respectively, under Section 114(i) of the Customs Act, 1962. The penalties were based on the involvement of the appellants in the smuggling activities as evident from their confessional statements and corroborative evidence.

3. Validity of retracted statements:
The appellants argued that their confessional statements were recorded under threat and coercion and were later retracted. The Commissioner, however, found the retractions to be an afterthought and not credible. The statements were detailed and signed voluntarily by the appellants, indicating their involvement in the smuggling activities. The retractions lacked specific points of refutation and were not supported by any cogent reasons.

4. Burden of proof and standard of evidence in adjudication proceedings:
The Tribunal emphasized that the standard of proof in adjudication proceedings under the Customs Act is based on the preponderance of probability, unlike in criminal proceedings which require proof beyond a reasonable doubt. The Tribunal cited various judgments to support this principle, including the cases of K.V. Rajagopal and S.N. Ojha, where it was held that adjudication proceedings can proceed independently of criminal proceedings.

5. Discrepancies in the investigation and procedural fairness:
The appellants raised several issues regarding the investigation, such as the non-arrest of certain individuals, non-examination of key witnesses, and the denial of cross-examination. The Tribunal, however, found these issues to be irrelevant to the core question of the appellants' involvement in the smuggling activities. The Tribunal noted that the investigation had gathered sufficient evidence to establish the appellants' roles based on the principles of preponderance of probability.

Conclusion:
The Tribunal upheld the penalties imposed on the appellants but reduced the amounts considering the long legal proceedings and the extent of their involvement. The penalty on Shri Mohammed Altaf was reduced to ?25,00,000, and the penalty on Shri Ali Imran Saifulla Khan was reduced to ?5,00,000. The Tribunal found that the retractions were an afterthought and that the statements recorded under Section 108 of the Customs Act, 1962, had sufficient evidentiary value. The appeals were disposed of by modifying the penalties accordingly.

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