2022 (9) TMI 446 - HC - Customs

Principles of natural justice - opportunity of cross examination denied - identity of Jallaludeen and as to whether he had had any role to play in the transaction - illegal transportation - retraction of statements - HELD THAT - In view of the admitted relationship between the parties and the close nexus between the facts and circumstances as noticed, the grounds raised by the petitioners in regard to lack of opportunity of cross examination is rejected as being a mere ploy and devise to delay proceedings with the ultimate hope of frustrating the same. Prosecution, under Section 138A, falls under Chapter XVI, entitled Presumption of culpable mental state . The language used therein is categoric to the effect that the Department must, beyond any reasonable doubt, establish guilt of the accused. However, such language is conspicuously absent when seen on a combined reading of Sections 111 and 112 of the Act. In matters of the present nature that the Revenue establish preponderance of possibilities and the Court must, while taking a decision in such cases, adopt a practical, holistic and pragmatic approach that would not place an unreasonable and artificial strain upon the Revenue in matters of burden of proof - the petitioners have exhausted revisional remedies where the findings of fact clearly set out. Thus, in light of the concurrent findings of fact there would be very limited avenue for this Court to intervene under Article 226 of the Constitution of India. Prior to 2018, the Act extended to the whole of India and post amendment, by way of insertion of the portion in parenthesis above, the Act had saved those transactions wherein persons/entities outside the territory of India had played a role, in relation to egregious/violative acts committed in the territory/on the soil, of India - In the present case, the act warranting imposition of penalty is for improper importation of gold, which is an act committed on Indian soil. All players in connection with this act where ever situated would thus come within the frame work and application of the Indian Customs Act. Petition dismissed.

Issues Involved:
1. Imposition of penalty based on statements recorded under Section 108 of the Customs Act.
2. Retraction of statements and its impact on penalty.
3. Denial of opportunity for cross-examination.
4. Classification of goods as 'gold' versus 'contraband'.
5. Applicability of the Customs Act to transactions outside India prior to the 2018 amendment.

Issue-wise Detailed Analysis:

1. Imposition of Penalty Based on Statements Recorded Under Section 108 of the Customs Act:
The customs authorities intercepted carriers at Chennai International Airport, who were found with parcels containing gold bits concealed in tile polishing machines. The goods were confiscated under Section 111(e) of the Customs Act, 1962, and penalties were imposed under Section 112. The penalties ranged from Rs. 70,000 to Rs. 10 lakhs, with the appellate authority reducing the penalty for some parties. The revision petitions were rejected, confirming the liability of all involved parties.

2. Retraction of Statements and Its Impact on Penalty:
The petitioners argued that the penalties were based solely on statements recorded under Section 108, which were later retracted. The court examined the initial statements and found them credible, despite subsequent retractions. The court noted that retractions appeared to be a device to get over the initial honest confessions. The statements of the carriers and receivers consistently implicated the petitioners, and their subsequent retractions did not undermine the initial admissions.

3. Denial of Opportunity for Cross-examination:
The petitioners contended that their request for cross-examination was denied, violating principles of natural justice. The court observed that the petitioners had multiple opportunities to appear and make their case but failed to do so. The court cited judgments where similar requests for cross-examination were denied, noting that such requests were often strategic ploys to delay proceedings. The court concluded that the denial of cross-examination did not vitiate the proceedings, given the overall facts and circumstances.

4. Classification of Goods as 'Gold' Versus 'Contraband':
The petitioners argued that the goods in question were 'gold' and not 'contraband,' and thus, the penalty was unjustified. The court rejected this argument, stating that the concealment of gold in tile polishing machines constituted improper importation, warranting confiscation and penalty under the Customs Act. The court emphasized that the nature of the goods did not exempt them from the penalties imposed for improper importation.

5. Applicability of the Customs Act to Transactions Outside India Prior to the 2018 Amendment:
The petitioners contended that the Customs Act, prior to its 2018 amendment, did not apply to transactions outside India. The court clarified that the restriction was transaction-specific, not person-specific. Since the goods were received in India, the transaction fell within the purview of the Customs Act, even if part of the transaction occurred outside India. The court noted that the act of improper importation occurred on Indian soil, bringing all involved parties within the framework of the Indian Customs Act.

Conclusion:
The court dismissed the writ petitions, upholding the penalties imposed by the customs authorities. The court found that the statements recorded under Section 108, despite subsequent retractions, were credible and sufficient to establish the petitioners' involvement. The denial of cross-examination was justified, and the classification of goods as 'gold' did not exempt them from penalties for improper importation. The Customs Act applied to the transaction, even if part of it occurred outside India. The court emphasized a holistic and pragmatic approach in such cases, supporting the findings of the customs authorities.

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