1988 (10) TMI 207 - AT - Central Excise

Summary

Issues Involved:
1. Imposition of penalty under Section 112 of the Customs Act.
2. Imposition of penalty under Section 74 of the Gold (Control) Act.
3. Validity of the Collector's orders based on the evidence and statements.

Issue-wise Detailed Analysis:

1. Imposition of penalty under Section 112 of the Customs Act:

The appellant challenged the imposition of a penalty of Rs. one lakh under Section 112 of the Customs Act. The Collector had accepted the initial statements of Gopal Mehta, which implicated the appellant. However, the Collector failed to consider the subsequent retraction and contradictions in Gopal Mehta's statements. The appellant argued that the Collector did not establish a nexus between the appellant and the seized gold, Indian currency, or the Fiat car. The Tribunal noted that the Collector must discuss the acts or omissions of each person penalized under Section 112 and found that the Collector did not provide a detailed discussion or reliable evidence against the appellant. The Tribunal concluded that the penalty under the Customs Act was unjustified due to the lack of corroborative evidence and the contradictory statements of Gopal Mehta.

2. Imposition of penalty under Section 74 of the Gold (Control) Act:

The appellant also contested the imposition of a penalty of Rs. one lakh under Section 74 of the Gold (Control) Act. The appellant's counsel argued that the order under the Gold (Control) Act was a replica of the order under the Customs Act, with only the section number altered. The Tribunal found merit in this argument, noting that the offenses under the two Acts are different and require different proofs. The Tribunal observed that the Collector did not specify the provisions of the Gold (Control) Act contravened by the appellant or provide evidence of possession of primary gold by the appellant. Consequently, the Tribunal set aside the penalty under the Gold (Control) Act.

3. Validity of the Collector's orders based on the evidence and statements:

The appellant's counsel highlighted several issues, including the lack of application of mind by the Collector, the absence of a clear finding on possession of primary gold, and the reliance on contradictory statements of Gopal Mehta. The Tribunal agreed with these contentions, noting that the Collector did not properly evaluate the reliability of Gopal Mehta's statements or consider the defense put forward by the appellant. The Tribunal emphasized that the Collector must provide cogent reasons for accepting or rejecting evidence, especially in light of contradictory statements and cross-examination. The Tribunal found that the Collector's orders were based on assumptions and lacked a thorough discussion of the evidence, leading to the conclusion that the penalties imposed were unjustified.

Conclusion:

The Tribunal allowed both appeals, setting aside the penalties imposed under both the Customs Act and the Gold (Control) Act. The Tribunal ordered the refund of the penalties paid by the appellant, subject to verification of the payments made.