2014 (10) TMI 554 - AT - Customs

Confiscation and seizure of goods of foreign origin - Penalty u/s 112 - whether non-allowing of cross examination as requested by Shri Vinod Agarwal, is violative the principle of natural justice - Held that - cross examination cannot be claimed as a matter of right in departmental proceedings and each case has to be examined on its own merit. In the present case, it is not in dispute that the goods of foreign origin were recovered from the godown owned by the Appellant. As stated above, none of the mobile numbers purported to belong to Shri Vijay Bhuwania, were actually found in his name. On the contrary, the Appellant had executed lease deed for his godown with Shri Vijay Bhuwania, who did not exist. Appellants are involved in an act or omission which resulted in diversion of Nepal bound containers of the imported through Haldia Dock, their storage, re-packing and transportation of the said goods. We also find that even though Shri Vijay Bhuwania as per deed was tenant of the said godown and he stated to have been seen by Shri Lahoti and Shri Shyam Suder Singhal, but the facts mentioned about Shri Bhuwania, by them, could not lead to apprehending of Shri Bhuwania. It also appears from the statement of various persons that the Appellants were in knowledge of the activities carried at the said godown - Decided against the appellants.

Summary

Issues Involved:
1. Confiscation of seized goods of foreign origin.
2. Imposition of penalties on various noticees.
3. Legality of lease deed and involvement of brokers.
4. Non-allowance of cross-examination and principles of natural justice.
5. Mens rea requirement for imposing penalties.
6. Adequate opportunity of hearing for the appellant.

Issue-wise Detailed Analysis:

1. Confiscation of Seized Goods of Foreign Origin:
The Commissioner confiscated goods of foreign origin valued at Rs. 2.16 Crores, found in a godown owned by one of the appellants, due to the absence of licit import documents. The goods included electronics, medicinal powder, and ball bearings. The investigation revealed that the goods were stored, repacked, and transported from the godown without proper documentation, indicating involvement in smuggling activities.

2. Imposition of Penalties on Various Noticees:
Penalties were imposed under Section 112 (a) & (b) of the Customs Act, 1962, on multiple individuals:
- Rs. 25.00 lakhs on the owner of the godown.
- Rs. 10.00 lakhs each on two brokers.
- Rs. 50,000/- on another individual for falsifying documents.
The penalties were based on their roles in facilitating the storage and transportation of smuggled goods.

3. Legality of Lease Deed and Involvement of Brokers:
The lease deed for the godown, signed between the owner and a purported tenant, was found to be irregular:
- It was for an unusually long period (22 years) and was not registered.
- The brokers facilitated the lease without verifying the tenant's antecedents.
- The tenant's provided address was found to be fake, and the brokers could not provide credible information about the tenant's whereabouts.

4. Non-allowance of Cross-examination and Principles of Natural Justice:
The appellant argued that the denial of cross-examination of departmental officers violated natural justice. However, it was held that cross-examination is not an absolute right in departmental proceedings. The Commissioner found sufficient grounds to implicate the appellant without the need for cross-examination, thus not violating natural justice principles.

5. Mens Rea Requirement for Imposing Penalties:
The appellant contended that there was no mens rea (guilty mind) for imposing penalties. The judgment clarified that mens rea is not a prerequisite for personal penalties under Section 112 (a) of the Customs Act, 1962. The violation of civil obligations suffices for imposing penalties, as supported by precedents from the Hon'ble High Court of Madras.

6. Adequate Opportunity of Hearing for the Appellant:
One appellant argued that he was penalized without a proper hearing. The Tribunal acknowledged this and remanded his case back to the Commissioner for a fresh decision, ensuring an adequate opportunity for a hearing.

Conclusion:
The appeals of the owner of the godown and the brokers were rejected, affirming the penalties imposed. However, the case of the individual penalized without a hearing was remanded for reconsideration, ensuring compliance with procedural fairness. The judgment underscored the importance of proper documentation and verification in lease agreements and upheld the penalties for facilitating smuggling activities.