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2022 (10) TMI 211 - AT - CustomsPenalty under Section 112(b)(i) of the Customs Act 1962 - Smuggling - Gold activity - entire case has been booked based on the worksheet /documents retrieved from the pen-drive recovered from the residential premises of Ms. Nita Parmar - reliance placed upon the documents retrieved from the third party - burden to prove - reasons to believe - mens rea - levy of penalty - HELD THAT - The role of the Appellant in the whole episode has been derived only from the printout sheet/emails retrieved from the pen-drive seized from the residential premise of Ms. Nita Parmar. The said pen drive containing worksheet title Vipul Joshi which was allegedly found in folder named Rajubhai . The foremost point raised by the appellant is that they have not been supplied said worksheet. It is seen that the department has not given copies of the said relied upon documents to Appellant. This is clear from the letter dtd. 12.10.2021, 11.11.2021 and 30.11.2021 submitted by the Appellant. Clearly, relied upon documents have not been supplied by department. When the show cause notice is issued proposing to impose such huge penalties, the department ought to have taken sufficient care to supply all relied upon documents to the appellant. The adjudication conducted without supply of relied upon documents is against principles of natural justice and vitiated. The Adjudication Authority held that the appellant was issued summons dated 10.09.2019 and 12.09.2012 to appear before investigating authority. It is observed that the appellant had sought time and requested for another date of his appearance. However, the Adjudicating Authority held that act of none appearance of the appellant, hence mensrea on part of the appellant - From the statement of Shri Milan Raythatha, it reveals that appellant used to make payment in occasional cases under instruction of Shri Rutugna Trivedi, since he is brother in law of the appellant.Merely because the appellant made payment in some occasions that itself does not mean that the appellant has financed to Shri Rutugna Trivedi for smuggling of Gold. The statements of Ms. Nita Chunilal and others persons remain uncorroborated during the investigation. Of course, no offence should be established merely based on the statement of thirdparty and without corroborative evidence and without granting cross examination of person whose statement alone is relied upon.The evidence on record is not sufficient to hold that the appellant involved in alleged activity of smuggling of gold. It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated in material particulars by independent evidence. The statement of co-accused cannot be relied upon, particularly when appellant has denied his involvement in respect of the goods in question. The Adjudication Authority held that the appellant was issued summons dated 10.09.2019 and 12.09.2012 to appear before investigating authority. It is observed that the appellant had sought time and requested for another date of his appearance. However, the Adjudicating Authority held that act of none appearance of the appellant, hence mensrea on part of the appellant - From the statement of Shri Milan Raythatha, it reveals that appellant used to make payment in occasional cases under instruction of Shri Rutugna Trivedi, since he is brother in law of the appellant. Merely because the appellant made payment in some occasions that itself does not mean that the appellant has financed to Shri Rutugna Trivedi for smuggling of Gold. Penalty - HELD THAT - The appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation. In the absence of the department having not proved the knowledge of the appellant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him. It is now well established that mensrea is an important ingredient for imposing a penalty on the persons enumerated in Section112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellants were aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. The appellant is not liable for imposition of penalty under Section 112(b) of the Customs Act, 1962 - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Violation of principles of natural justice. 2. Denial of cross-examination. 3. Lack of direct evidence against the appellant. 4. Reliance on third-party documents and statements. 5. Burden of proof on the revenue. 6. Applicability and interpretation of Section 112(b) of the Customs Act, 1962. Detailed Analysis: 1. Violation of principles of natural justice: The appellant argued that the impugned order violated the principles of natural justice as the relied-upon worksheet and documents were not supplied to them. Despite repeated requests via letters dated 12.10.2021, 11.11.2021, and 30.11.2021, the department failed to provide these documents. The Tribunal noted that the adjudication conducted without supplying the relied-upon documents is against the principles of natural justice and vitiated. 2. Denial of cross-examination: The appellant contended that the Commissioner erred in not granting cross-examination of key witnesses, namely Shri Rutugna Trivedi and Ms. Nita Parmar. The Tribunal observed that since the entire case was based on documents retrieved from a third party, it was an obligation to grant cross-examination to reveal the correct facts. The Tribunal cited Section 138B of the Customs Act, which mandates examining persons before relying on their statements. 3. Lack of direct evidence against the appellant: The Tribunal found that the role of the appellant was derived solely from the printout sheet/emails retrieved from a pen drive seized from Ms. Nita Parmar's residence. The appellant was not directly implicated through any incriminating documents or statements. The Tribunal emphasized that the burden lies on the revenue to prove the appellant's involvement in smuggling, which was not discharged with cogent and tangible evidence. 4. Reliance on third-party documents and statements: The Tribunal noted that the adjudicating authority heavily relied on third-party documents and statements, which were not corroborated. The statements of Ms. Nita Parmar and Shri Rutugna Trivedi did not implicate the appellant. The Tribunal held that uncorroborated statements of co-accused and third-party documents cannot form the sole basis for imposing penalties. 5. Burden of proof on the revenue: The Tribunal reiterated that the revenue failed to discharge its burden of proving the appellant's involvement in smuggling. It highlighted that the investigating authority did not search the appellant's premises or record his statement during the investigation. The absence of direct evidence and affirmative statements against the appellant led the Tribunal to conclude that the revenue did not meet its burden of proof. 6. Applicability and interpretation of Section 112(b) of the Customs Act, 1962: The Tribunal analyzed Section 112(b) of the Customs Act, which requires knowledge or reason to believe that goods are liable for confiscation. The Tribunal found no evidence to establish that the appellant had such knowledge or was involved in any activities mentioned in the section. It emphasized that penalties under Section 112(b) require proof of knowledge or belief regarding the smuggled nature of goods, which was not established in this case. Conclusion: The Tribunal concluded that the appellant was not liable for the penalty under Section 112(b) of the Customs Act, 1962. It set aside the penalty and allowed the appeal with consequential relief, emphasizing the lack of direct evidence, violation of natural justice, and the revenue's failure to meet its burden of proof.
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