2009 (5) TMI 213 - AT - Customs

Smuggling - illegall import computer parts brought into country from illegal routes - recovery of fake bills in the course of search made the transactions questionable - We do appreciate that smuggling is done under concealment in the mind of smuggler. The concealed facts come to see the light of day only when the process of law unearths the same. We have noticed that the entire design of the appellant was discovered by search connivance of parties and their monus operandi established by materials on record - confiscation and penalty is sustainable - However, we noticed that the penalty imposed is disproportionate to the gravity of the offence when habitual offence alleged is not corroborated by any evidence on record. Therefore the cases call for reduction of penalty and we reduce the same.

Summary

Issues:
Penalties imposed under Section 112(a) of Customs Act, 1962 on four Appellants for alleged smuggling and illegal importation of goods. Dispute over the valuation of imported goods and imposition of penalties. Confiscation of goods and penalties upheld by Adjudicating Authority. Reduction of penalties sought by Appellants.

Analysis:
The Appellants challenged penalties imposed by the ld. Commissioner of Customs (Prev.) under Section 112(a) of the Customs Act, 1962. The Appellants contended that the Revenue officers accused them of smuggling and illegal importation based on the presence of imported goods alongside domestically procured goods in their godown. The Department alleged smuggling after recovering documents and currencies during searches, but the mere recovery of goods did not establish smuggling charges automatically. The Appellants argued that the Department overvalued the goods, and the penalties imposed were disproportionate, especially considering the decrease in local market prices. The Appellants maintained that the Department failed to prove undervaluation or smuggling, and confiscation without concrete evidence was unjust.

The Revenue, represented by Shri A.K. Madan, highlighted that the seizure was undisputed, and the ld. Commissioner held that the seized computer parts were illegally brought into India from Nepal through unauthorized routes, justifying confiscation. The Adjudicating Authority found evidence of concealing smuggled goods at one of the Appellant's premises, leading to confiscation. The Revenue argued that the penalties and confiscation were appropriate, following principles of natural justice and due process.

Upon review, the Tribunal acknowledged the smuggling of contraband goods and questionable transactions, supported by the recovery of fake bills during searches. The Tribunal found evidence of connivance and smuggling operations, leading to evasion of Revenue. The ld. Commissioner extensively examined the matter, considered all pleadings, and framed issues against the Appellants, resulting in the order for confiscation of seized goods. The Tribunal emphasized the discovery of the smuggling design during the legal process and cited the need for penalties in line with established legal principles.

Ultimately, the Tribunal reduced the penalties imposed on the Appellants, considering the lack of corroborating evidence for habitual offenses and the disproportionate nature of the original penalties. The revised penalties were set at Rs. 5 lakhs for M/s. Sun Informatics, Rs. 10 lakhs for Shri R.C. Khurana, Rs. 5 lakhs for Shri Gaurav Khurana, and Rs. 10,000 for Shri S.B. Maheshwari. The Tribunal upheld the confiscation of goods and penalties, except for the reduction in penalty amounts as indicated.