2017 (9) TMI 1279 - HC - Customs

Penalty u/s 112 of CA - principles of natural justice - the petitioner was denied an opportunity of cross-examination of the material witnesses relied upon by the prosecution - Held that - The show cause notice although intulated as to be one under Section 124 of the Customs Act, 1962, the order in original proceeds to impose penalty under Section 112 of the Customs Act, 1962 - The allegations in the proceedings are that, about 40 kgs. of gold were found in the custody of the petitioner. These allegations along with the order in original are required to be gone into. With the petitioner not providing any asset from which the penalty can be recovered, it would not be prudent to grant an unconditional stay of the imposition of the personal penalty.

Summary

Issues:
- Denial of opportunity for cross-examination of material witnesses
- Breach of principles of natural justice in imposing personal penalty under Section 112 of the Customs Act, 1962
- Entitlement to right of cross-examination in a proceeding under Section 124 of the Customs Act, 1962
- Availability of personal assets to secure penalty imposed

Analysis:

The High Court of Calcutta heard a writ petition challenging an order passed by the Commissioner of Customs (Preventive) West Bengal, Kolkata. The petitioner contended that they were denied the opportunity for cross-examination of material witnesses, a right they claimed under Section 112 of the Customs Act, 1962. The petitioner specifically objected to the imposition of a personal penalty, not the confiscation of goods. The Additional Solicitor General argued that the principles of natural justice could be limited and that there was no right to cross-examination in a proceeding under Section 124 of the Customs Act, 1962, citing a relevant case law. The Court considered the arguments and decided to allow the respondents time to file affidavits to present material facts.

The Court noted that the order in original, although labeled under Section 124 of the Customs Act, 1962, imposed a penalty under Section 112. To further explore the issues raised, the Court directed the respondents to file affidavits by a specified date. The Court also scheduled the case for hearing in November 2017. Regarding interim relief, the Court found that the petitioner had a prima facie case, but the availability of personal assets to secure the penalty was a crucial factor. The petitioner disclosed having only a limited amount in a bank account and no other assets to secure the penalty. Given the serious allegations and the lack of assets for penalty recovery, the Court decided against granting an unconditional stay of the personal penalty imposition.

In conclusion, the judgment addressed the denial of cross-examination rights, breach of natural justice in penalty imposition, the scope of cross-examination in Customs Act proceedings, and the importance of personal assets in securing penalties. The Court's decision reflected a balanced approach considering the legal principles and practical implications of the case.