2024 (7) TMI 120 - AT - Customs

Levy of penalty - Allegation of smuggling activity - violation of principles of natural justice - no copy of relied upon documents was provided to the appellant and no notice or personal hearing was served upon the appellants - when the seizure case has been done by the Police and the Police handed over the said goods to the Customs, in that circumstances, the provisions of Section 123 of the Customs Act, 1962 are applicable or not? HELD THAT - The said issue has been examined by the Hon ble Apex Court in the case of GIAN CHAND AND OTHERS VERSUS STATE OF PUNJAB 1961 (11) TMI 1 - SUPREME COURT , which was followed by this Tribunal in the case of MAHESH B. MALI VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2013 (4) TMI 7 - CESTAT MUMBAI , wherein this Tribunal has observed ' The provisions of Sea Customs Act and the Customs Act, 1962 are identical with respect to the seizure and the onus of proof in the instant case. From the records it is evident that it is the police who seized the goods on 6-11-2009 and thereafter they were handed over to the Customs authorities by the police on the request of the Customs authorities. In other words, the Customs authorities did not seize the goods from the appellants; therefore, the provisions of Section 123 which casts the onus on the appellants to prove that the goods are not smuggled is not applicable, inasmuch as no seizure has been made from the appellant by the Customs.' As the provision of Section 123 of the Customs Act, 1962, are not applicable for seizure of goods and Indian Currency in this case. The Revenue has failed to discharge the burden to prove that the gold in question is smuggled one and currency seized is sale proceeds of the smuggled gold, therefore, the gold and seized currency are liable for confiscation. Thus, no penalty can be imposed on the appellants. Accordingly, the penalties imposed on the appellants are set aside - appeal allowed.

Summary

Issues:
Challenging penalties imposed on appellants for alleged offenses under IPC and Customs Act, violation of principles of natural justice, burden of proof regarding seized goods, confiscation of cash and private vehicle.

Analysis:

The judgment by the Appellate Tribunal CESTAT KOLKATA involved the challenge of penalties imposed on the appellants for offenses under IPC and the Customs Act. The appellants were apprehended by the Police Personnel and subsequently arrested for alleged offenses. The seized goods, including gold bars and Indian currency, were handed over to Customs Authorities for further proceedings. The appellants were issued a Show Cause Notice proposing confiscation of goods, penalties, and prosecution. However, the appellants claimed that the impugned order was passed in violation of principles of natural justice as they were not provided with relied upon documents or a notice of personal hearing.

The appellants argued that the burden of proof regarding the seized goods did not lie with them as the goods were initially seized by the Police and later handed over to Customs. They contended that the Revenue had to substantiate the alleged smuggled nature of the goods to impose penalties. The appellants also challenged the confiscation of Indian currency and the private vehicle, claiming that they should not be penalized.

The Revenue argued that the penalties were rightly imposed as the appellants failed to show a licit manner for procuring the goods. However, the Tribunal examined the circumstances of the case and referred to legal precedents, including the decision in Gian Chand and Others v. State of Punjab, to determine the applicability of Section 123 of the Customs Act, 1962. The Tribunal held that since the goods were not seized directly from the appellants by Customs, the burden of proof lay with the Revenue to establish the goods were smuggled.

Consequently, the Tribunal ruled in favor of the appellants, setting aside the penalties imposed on them. The judgment highlighted that as the burden of proof was not discharged by the Revenue, no penalties could be imposed. The appeals filed by the appellants seeking immunity from penalties were allowed, and the penalties imposed were overturned, leading to the disposal of the appeals.

In conclusion, the judgment emphasized the importance of following principles of natural justice, the burden of proof in cases of seized goods, and the necessity for Revenue to establish the illicit nature of goods for penalties to be imposed. The ruling provided relief to the appellants by overturning the penalties and allowing their appeals.