2024 (6) TMI 259 - AT - Customs

Penalty u/s 114(iii) of Customs Act, 1962 - mis-declaration of export goods - undue benefit of duty drawback availed - Admissibility of statements as evidence u/s 138B of the Customs Act, 1962 - Admissibility of WhatsApp messages as evidence u/s 138C of the Customs Act, 1962. Admissibility of statements as evidence u/s 138B of the Customs Act, 1962 - HELD THAT - Since it is matter of record that that the entire case against the appellant is based solely on the statements of the witnesses and in spite of request made to the Adjudicating Authority for their examination in chief and cross-examination, the Adjudicating Authority has not examined the crucial witnesses nor they were offered for cross-examination and therefore, we are of the opinion that considering the statements as an evidence against the appellant without following the procedure laid down under section 138B of Customs Act, 1962, is against the accepted legal practices and judicial pronouncements made by various Courts and therefore it is held that none of the statement is admissible as an evidence against the appellant. Admissibility of WhatsApp messages as evidence u/s 138C of the Customs Act, 1962 - HELD THAT - The exchanges of messages nowhere specifically mentions that the appellant is involved in misdeclaration of export consignment - the retrieval of the data from mobile phone of a person is as good as taking out data print out from a hard disk of a computer. Thus, the procedure laid down under Section 138C (supra) should have been followed. Since the procedure as mentioned above has not been followed by the Adjudicating Authority, it looses its evidentiary value. Thus, the statements and whatsapp messages on the basis of which the penalty has been imposed cannot be taken as an evidence against the appellant without following due legal procedure laid down under the Customs Act, 1962 - the impugned order-in-original, so far as imposition of personal penalty of Rs. 25 Lakh under Section 114(iii) of the Customs Act, 1962 is legally not sustainable and therefore, set aside - appeal allowed.

Summary

Issues Involved:
1. Mis-declaration of export consignment.
2. Imposition of penalty on the appellant u/s 114(iii) of the Customs Act, 1962.
3. Admissibility of statements and WhatsApp messages as evidence.

Summary:

1. Mis-declaration of Export Consignment:

The department detained the export consignments of M/s. Dynamic International based on intelligence that the declared Ladies Fancy Scarves were actually waste clothes (rags). The goods were seized u/s 110(1) of the Customs Act, 1962, under the belief of mis-declaration to avail undue duty drawback benefits. Statements of various individuals, including the appellant, were recorded u/s 108 of the Customs Act, 1962. A show cause notice was issued for the mis-declaration with intent to avail undue duty drawback benefits.

2. Imposition of Penalty on the Appellant u/s 114(iii) of the Customs Act, 1962:

The Adjudicating Authority imposed a penalty of Rs. 25 Lakh on the appellant u/s 114(iii) of the Customs Act, 1962, for alleged involvement in the mis-declaration. The appellant contended that he had no role in the assessment or clearance of the export consignment and that the penalty was wrongfully imposed based on retracted statements. The appellant emphasized that he was not involved in the misdeclaration and that the WhatsApp messages did not indicate his involvement.

3. Admissibility of Statements and WhatsApp Messages as Evidence:

The appellant argued that the statements used against him were not admissible as evidence since the procedure u/s 138B of the Customs Act, 1962, was not followed. The Tribunal noted that the Adjudicating Authority failed to provide the opportunity for cross-examination of the witnesses, making the reliance on these statements a violation of principles of natural justice. The WhatsApp messages were also deemed inadmissible as evidence due to non-compliance with Section 138C of the Customs Act, 1962, which is para-materia to Section 65B of the Indian Evidence Act, 1872.

Conclusion:

The Tribunal concluded that the statements and WhatsApp messages could not be considered as evidence against the appellant without following the due legal procedure. Consequently, the penalty of Rs. 25 Lakh imposed u/s 114(iii) of the Customs Act, 1962, was set aside, and the appeal was allowed.

(Pronounced in the open court on 06.06.2024)