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2025 (3) TMI 750 - HC - CustomsViolation of principles of natural justice - Correctness of setting aside the penalty against the Respondent herein without assigning any reason for the same - HELD THAT - Since on merits the Tribunal has given relief to the company of which the respondent is a Director the question of penalty on the Director would be consequential and in any case the order is a reasoned order raising no substantial question of law but is based on facts and no perversity has been shown. The appeal does not raise any substantial question of law and the appeal is dismissed.
ISSUES PRESENTED and CONSIDERED
The primary legal questions considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Justification of CESTAT's Decision to Set Aside the Penalty Relevant Legal Framework and Precedents: The appeal was filed under Section 130 of the Customs Act, 1962, which allows appeals on substantial questions of law. The Tribunal's decision was challenged on the grounds that it lacked sufficient reasoning. The legal framework emphasizes the necessity for a reasoned order, especially when a penalty is set aside. Court's Interpretation and Reasoning: The Tribunal's decision was based on the lack of corroborative evidence to support the inculpatory statement made by the Director of the company. The Tribunal found that the retraction of the statement was not adequately considered by the Adjudicating Authority, thereby necessitating independent corroboration. Key Evidence and Findings: The Tribunal noted that the value declared was not in doubt, and the statement made by the Director was retracted. The Tribunal emphasized that the statement could not be accepted without corroboration, especially since the adjudicating authority and investigating officers were not privy to the contents of the goods. Application of Law to Facts: The Tribunal applied the principles from the Supreme Court decision in K.I. Pavunny v. Assistant Collector, which allows reliance on a retracted confession only when corroborated by other evidence. The Tribunal found that the lack of corroborative evidence meant that the penalty could not be sustained. Treatment of Competing Arguments: The Tribunal considered the arguments from both sides, including the reliance on previous judgments and the necessity for corroboration of retracted statements. The Tribunal ultimately found that the lack of independent evidence to support the inculpatory statement warranted setting aside the penalty. Conclusions: The Tribunal concluded that the penalty could not be upheld due to the absence of corroborative evidence and the retraction of the inculpatory statement. The Tribunal's decision was deemed reasoned and based on factual findings, with no substantial question of law arising. 2. CESTAT's Role as Final Fact-Finding Authority Relevant Legal Framework and Precedents: As the final fact-finding authority, the CESTAT is required to issue reasoned orders that consider all materials on record. The Tribunal's decision must be based on a thorough examination of the evidence and findings of the Adjudicating Authority. Court's Interpretation and Reasoning: The Court found that the Tribunal had issued a reasoned order, considering the materials on record and the findings of the Adjudicating Authority. The Tribunal's reliance on the absence of corroborative evidence and the retraction of the statement was deemed appropriate. Key Evidence and Findings: The Tribunal's decision was based on the lack of evidence to support the inculpatory statement and the retraction of the statement by the Director. The Tribunal also noted the absence of evidence indicating mis-declaration or circumstantial deductions. Application of Law to Facts: The Tribunal applied the legal principles regarding the necessity for corroboration of retracted statements and found that the absence of such evidence justified setting aside the penalty. Treatment of Competing Arguments: The Tribunal considered the arguments regarding the necessity for corroboration and the differences between sections of the Customs Act and Central Excise Act. The Tribunal found that the lack of corroborative evidence was decisive. Conclusions: The Tribunal's decision was deemed reasoned and based on factual findings, with no substantial question of law arising. The Court found that the Tribunal had fulfilled its role as the final fact-finding authority. SIGNIFICANT HOLDINGS The Court held that the Tribunal's decision to set aside the penalty was justified due to the lack of corroborative evidence and the retraction of the inculpatory statement. The Tribunal's decision was based on factual findings and did not raise any substantial question of law. Core Principles Established:
Final Determinations on Each Issue:
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