2015 (3) TMI 1037 - HC - Customs

Offense of smuggling - Import of prohibited / restricted goods - Levy of penalty - Import of bulk (commercial) quantity of Chinese silk textiles of 81,160 yards in contravention of provisions of Customs Act, 1962 - Held that - The order of the Commissioner - as well as the CESTAT in each of the case of the appellants before us, has noted exhaustively the dates and time when the conversation between the appellants and the foreign nationals took place. The appellants argued that such conversations ipso facto cannot lead to any inference, much less adverse inference, of guilt. At the same time, the proximity of these conversations with the timing of the flights which landed at the relevant time, containing the consignments and commodities of prohibited items is a matter of record. Furthermore, the statement of Abdul Qahar, said to be generic, is a piece of evidence which weighs in against the appellants. That the appellants were traders in Chandni Chowk area who legitimately dealt in silk no doubt is a circumstance which has to be borne in mind. However, we notice that when confronted with the telephone numbers, either there was denial or refusal to answer the queries of the investigators. In these circumstances, given the nature of the materials which were otherwise established, painstakingly collected evidence such as movement of trucks etc. and the statement of transporters of certain commodities, it cannot be said that the findings of guilt recorded by the Commissioner against the appellants were given in the absence of sufficient evidence. - that no substantial question of law arises - Decided against assessees.

Summary

Issues Involved:
1. Legitimacy of the denial of cross-examination rights to the appellants.
2. Adequacy of evidence establishing the appellants' knowledge and involvement in smuggling activities.
3. Validity of the penalties imposed under Section 112(b) of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Legitimacy of the denial of cross-examination rights to the appellants:
The appellants contended that the denial of cross-examination of witnesses who deposed against them was a significant oversight. The Court noted that the Tribunal (CESTAT) had previously considered this grievance and concluded that the statements of witnesses, together with other available material, were sufficient to establish guilt. The Tribunal's decision was based on the detailed analysis provided by the Commissioner, which included statements, call detail records, and other circumstantial evidence. The Court upheld this view, referencing its judgment in Sudhir Sharma V. UOI CUSAA No.29/2011, where similar arguments were rejected, emphasizing that the denial of cross-examination did not invalidate the findings of guilt.

2. Adequacy of evidence establishing the appellants' knowledge and involvement in smuggling activities:
The Commissioner's order, which was upheld by the Tribunal, meticulously analyzed the evidence against each appellant. This included statements from Abdul Qahar and other foreign nationals, call detail records showing frequent communication between the appellants and known smugglers, and circumstantial evidence such as the timing of calls coinciding with the arrival of flights carrying smuggled goods. The Court noted that despite the appellants' denial of knowledge about the smuggled nature of the goods, the cumulative evidence, including the testimony of Abdul Qahar and the detailed call records, was sufficient to establish that the appellants were aware of and involved in the smuggling activities. The Court emphasized that the proximity of conversations with the timing of flights and the refusal of appellants to answer investigators' queries further corroborated their involvement.

3. Validity of the penalties imposed under Section 112(b) of the Customs Act, 1962:
The Commissioner initially imposed a penalty of Rs. 5 lakhs on each appellant, which was later reduced to Rs. 2.2 lakhs by the CESTAT. The Court upheld this penalty, noting that the evidence established the appellants' conscious knowledge and involvement in the smuggling racket. The Tribunal had relied on the interpretation of Section 112(b) provided by the Supreme Court, which includes a wide interpretation of the term "concerned" to encompass anyone who consciously takes steps to promote smuggling. The Court found that the appellants' actions, including frequent telephonic contacts with known smugglers and involvement in the sale and purchase of smuggled goods, met the criteria for penal action under Section 112(b).

Conclusion:
The Court dismissed the appeals, concluding that no substantial question of law arose. It affirmed the findings of the Commissioner and the Tribunal, emphasizing that the cumulative evidence, including witness statements, call detail records, and circumstantial evidence, sufficiently established the appellants' guilt and justified the penalties imposed under Section 112(b) of the Customs Act, 1962.