2015 (3) TMI 820 - HC - Customs

Smuggling racket - Search and seizure - Illegally imported Penalty on Revenue officers - abatement of smuggling - refusal of cross-examination request to the appellants - Held that - SCN and findings of the Adjudicating authority have plainly brought out through various connecting strands of materials the interconnection between those involved in the smuggling and the present appellants. Apart from Mamoor Khan, the role of Dil Agha was highlighted; he figured time and again on various dates when the textiles were brought in. R.N. Zutshi s voluntary statement dated 17.01.2001 identified Dil Agha as having introduced himself as Mamoor Khan s brother and with effect from the last week of July, 2000 he had been in touch with R.N. Zutshi (as a substitute of Mamoor). R.N. Zutshi confirmed that Mobile No.9811065987 and landline No.3930733 belonged to him (Dil Agha) and that after August, 2000, Dil Agha used No.9811158376. This statement corroborated the statement of Dil Agha recorded on 23.05.2001. Dil Agha s unsigned statement was duly supported by two independent witnesses. It established a close connection between Mamoor Khan and Dil Agha on one hand, and regular passengers (or couriers) such as Olga K, Gulia etc. on the other. Dil Agha s association with Mamoor was also confirmed by Abdul Qayum, Manager of Sameer Guest House, Ballimaran, Delhi in his statementdated 20.12.2000. The evaluation of these materials led to the adjudicating orders conclusion that Dil Agha was an important player in smuggling silk fabrics through Uzbeki women and that the charges made against him for conniving, abetting and conspiring were established. - The conclusions of the Customs adjudicating Commissioner did not rest on the various statements recorded under Section 108 only. A very crucial element which lent corroboration to those statements were the call detail records. The absence of goods or the fact that in earlier instances they had been cleared without dispute, or even after payment of differential duty, in the opinion of the Court do not constitute impediments to a SCN and proceedings on the question of abetment of any of the appellants. In all such instances where a conspiracy (that has achieved its objective) is unearthed, the articles - especially in the form of goods would be no longer available. However, that would in no manner absolve the culpability of those involved, especially those who play key roles in the fulfillment of such conspiracies. The fact that differential duties were paid on particular dates and the record of entry of those involved in the smuggling racket, precisely constitute the evidence which both corroborates and establishes the allegations. Printout details of the calls made between those accused of smuggling, such as Dil Agha, Olga established the allegations of conspiracy and abetment. The statement of transporters, smuggled goods traders, those frequently seeing some of them like the manager of Sameer Guest house, lent further support to the statements of R.N. Zutshi (though retracted later) and Dil Agha. Last but not the least, the previous records maintained in the Airport also confirmed the stories of Olga and Dil Agha about the frequency of visits and that on several occasions differential duty was paid; the corroboration of quantities was likewise founded on scrutiny of the records. Commissioner did not go by only the statement of R.N. Zutshi to hold the other appellants guilty; he had a lot of other corroborative materials to support his findings. It is, therefore, held that the Appellants submissions that the charge of abetment could not have been made against them for past transactions in the absence of the goods, or that many of them were not involved or present at the Airport when the actual lone consignment was seized in August 2000, are meritless. Each of the appellants were implicated for their complicity not on the basis of solitary evidence only, such as confessional statement of R.N. Zutshi, but also other materials phone call records during the various past occasions when the passenger couriers had landed; the presence and role of the concerned appellants in helping the clearance of consignments, corroboration through statement of others, etc. The chain of circumstances to prove the allegations they had to answer, therefore, had been explained. The appellants, significantly did not seek cross examination for over 5 years, though they were aware that the statements were to be used during the proceedings that had been put to them in the SCNs. Furthermore, they had also not given any convincing or reasonable explanation for the phone calls received from Mamoor Khan, Dil Agha, Olga, etc. In the circumstances, the findings of the lower authorities that they were not prejudiced, and that principles of natural justice were not violated, cannot be interfered with. Commissioner did not rely only on the weight metre ratio, but also considered another criterion - It was, therefore, concluded that on each of the dates, the weight of the baggage was around 4000 kgs when two trucks of 3750 kgs capacity were hired on each occasion. The investigation calculated the baggage weight on the lowest and safest side as 2364 kgs on 17.7.2000 and 1914 kgs on 21.8.2000 and proposed the same for assessment. The weights were proportionately worked out on the basis of the ratio of actual weight and recorded weight as on 28.8.2000 i.e. 1.9144 times the recorded weight. Here the figure of 2364 kgs was computed by multiplying the recorded weight of 1235 kgs by 1.9144 and the figure of 1914 kgs has been worked out by multiplying the recorded weight of 1000 kgs by 1.9144. This clearly shows application of mind to the material available. The CESTAT too had occasion to consider these findings. Besides stating that the figures were arbitrarily worked out, the appellants were unable to show any intrinsic inaccuracy, given that the past transactions were noticed; wherever the Green Channel was used, the Commissioner endeavored to co-relate the quantities brought in clandestinely with the truck weight relative to that date. The Court does not find any infirmity with this approach warranting interference with a pure finding of fact. Commissioner held that there was no infirmity in arriving at the actual weight of excess baggage brought in, based upon the position of 28.8.2000 and its application for part clearances, based upon practical logic. Acknowledging a margin for accuracy, it was held that since the issue concerned past clearances for which no other documents were available, it was held that it is a reasonable and acceptable methodology and the results thereof cannot be far from truth, though they cannot be absolutely exact. Again, we see no infirmity or question of law with this approach, warranting interference. As far as the question of non-service of notice upon the main culprits is concerned, the Commissioner rendered his findings in Para 418, holding that some of those foreign nationals could not be personally served; yet notice was issued and published in a known manner. The Appellants were, however issued notice; there was clear evidence of their culpability. Therefore, the Customs authorities were entitled to proceed and impose the penalties and make adverse orders. - Decided against assessees.

Summary

Issues Involved:
1. Whether the findings in the impugned order with regard to abetment by the appellants are justified in law.
2. Did the CESTAT fall into an error of law in upholding the findings based on denial of natural justice, especially the refusal to grant cross-examination to the appellants.
3. Whether the findings based upon mobile phone records and confessional statements of some individuals, notably the co-noticees, are sustainable in law, in the circumstances of the case, in the absence of any other corroborative material.
4. Did the CESTAT err in its findings regarding the method adopted in arriving at the average weight to assess liability, and the absence of essential documents like the passenger declarations.

Detailed Analysis:

1. Abetment Findings Justified in Law:
The court examined whether the appellants abetted the smuggling operations. The Customs Act, Section 112, penalizes abetment of acts leading to improper importation of goods. The appellants argued that their involvement could not be established without the actual goods being seized. However, the court noted that the SCN and the adjudicating authority's findings were based on substantial evidence, including statements from various individuals, mobile phone records, and corroborative materials. The court held that the absence of seized goods did not absolve the appellants' culpability, as the evidence sufficiently established their involvement in the smuggling operations. The court referenced Supreme Court judgments to support the admissibility of retracted confessions and corroborative evidence in establishing conspiracy and abetment.

2. Denial of Natural Justice and Cross-Examination:
The appellants contended that the denial of cross-examination violated principles of natural justice. The Commissioner had denied cross-examination requests, citing the prolonged nature of the proceedings and the availability of all relied-upon documents to the appellants. The court upheld this decision, referencing Supreme Court judgments that cross-examination is not a matter of right in customs proceedings and that principles of natural justice were not violated as the appellants were provided with the necessary materials to defend themselves. The court noted that the appellants did not seek cross-examination for over five years and failed to provide convincing explanations for their telephonic interactions with key individuals involved in the smuggling.

3. Sustainability of Findings Based on Mobile Records and Confessional Statements:
The court evaluated the reliance on mobile phone records and confessional statements. The Commissioner had relied on extensive telephonic interactions between the appellants and individuals involved in the smuggling, corroborating the confessional statements. The court held that the combination of these elements constituted sufficient evidence to establish the appellants' complicity. The court referenced past Supreme Court decisions to support the use of retracted confessions and corroborative evidence in customs proceedings. The court found that the Commissioner had meticulously analyzed the evidence and that the findings were justified.

4. Method of Arriving at Average Weight and Absence of Essential Documents:
The appellants challenged the methodology used to determine the average weight of the smuggled goods. The Commissioner had adopted a weight-metre ratio based on available data and logical deductions, given the absence of seized goods. The court found no infirmity in this approach, noting that the Commissioner had applied practical logic and reasonable methodology to arrive at the weight estimates. The court also addressed the appellants' concerns regarding the absence of passenger declarations and manifests, stating that the Commissioner had reasonably relied on available records and internal inquiries to determine the quantities of smuggled goods.

Conclusion:
The court dismissed the appeals, holding that the findings of abetment, denial of natural justice, reliance on mobile records and confessional statements, and the methodology for determining average weight were justified and supported by substantial evidence. The court upheld the penalties imposed on the appellants under Section 112 of the Customs Act.