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2012 (5) TMI 38 - HC - CustomsPenalty on Seven traders - held to be trading in Chinese silk cloth and unstitched cloth illegally imported - Customs duty was not paid on the said import Held that - Tribunal was not right in disposing of the appeal without specifically dealing and examining the contentions and issues raised - The contentions and issues raised by the appellants e.g., in the case of Mahender Jain (Appearance for Assessee)it was submitted that his statement under Section 108 of the Act does not bring out or support the Revenue s allegation; does not show his involvement in the smuggled goods was ignored Non speaking and unreasoned order was passed ignoring the evidence and material relied upon by the parties - remit back the issue to the tribunal to re-hear the arguments and thereafter pass a reasoned and speaking order - in favour of the assessee .
Issues Involved:
1. Whether the order dated 25th January, 2011 passed by the Customs, Excise, and Service Tax Appellate Tribunal meets and deals with the contentions raised by the parties as required and mandated by law. Detailed Analysis: Issue 1: Adequacy of the Tribunal's Order - Background: The appellants are traders dealing in silk and unstitched cloth, penalized under Section 112(b) of the Customs Act, 1962, for trading in illegally imported Chinese silk. The Customs, Excise, and Service Tax Appellate Tribunal dismissed their appeals, leading to the current legal question regarding the adequacy of the Tribunal's order in addressing the contentions raised. - Tribunal's Findings: The Tribunal's decision to dismiss the appeals was primarily based on the appellants' failure to demonstrate their dissociation from the smuggling racket. The Tribunal noted that the appellants had intimate connections with the smuggling racket and dealt with smuggled goods, as evidenced by their statements and telephonic contacts with key figures in the smuggling operation. - Appellants' Contentions: The appellants admitted to knowing individuals involved in the smuggling racket but contended that they were unaware of the illegal nature of the goods. They argued that penalties under Section 112(b) could only be imposed if they had knowledge or reason to believe that the goods were liable for confiscation. - Court's Observations: The Court found that the Tribunal's order was insufficiently detailed and failed to specifically address and examine the contentions and evidence presented by the appellants. The Tribunal's order was deemed a "non-speaking order" that did not meet the legal requirements for a reasoned and speaking order, which should include a thorough discussion of the evidence and material relied upon by the parties. - Specific Contentions Ignored: The Court highlighted that the Tribunal did not adequately address various specific contentions raised by the appellants, such as the lack of evidence showing conscious involvement in smuggling, the reliability of statements under Section 108 of the Customs Act, and the absence of incriminating evidence in statements recorded under Section 164 of the Code of Criminal Procedure. - Legal Requirement: The Court emphasized that the first appellate authority, being the final fact-finding authority, is mandated to pass a reasoned and speaking order that thoroughly examines the contentions and issues raised by the appellants. - Conclusion: The Court concluded that the Tribunal's order did not meet the prescribed legal parameters. Consequently, the Court answered the substantial question of law in favor of the appellants and against the Revenue, remitting the case back to the Tribunal for re-hearing and issuance of a reasoned and speaking order. - Directions for Re-hearing: The Court directed the appellants to appear before the Tribunal on 17th May, 2012, for the scheduling of a new hearing date. The Court refrained from discussing the merits of the case to avoid influencing the Tribunal's decision. Final Order: The appeals were disposed of with no order as to costs, and the Tribunal was instructed to re-hear the arguments and pass a reasoned and speaking order as required by law.
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