2018 (7) TMI 1607 - HC - Customs

Principles of natural justice - Cross-examination of persons - Mis-declaration of imported goods - Smuggling of contraband - Held that - Revenue did not rely merely upon the statement of Mr. Malkiat Singh who later claimed was a mere lender and had no substantial means but also upon other material including crucial evidence seized from the premises of Mr. H.S. Chadha - the plaintiff s request for cross-examination and its rejection by the Revenue cannot be characterized as violation of principles of natural justice. Penalty u/s 112 on Mr. Inderjit Singh - Held that - Involvement of Mr. Inderjit Singh in the whole operation was also with knowledge. The fact that he was an employee of Mr. H.S. Chadha in the opinion of the Court does not in any manner absolve him of having contravened provisions of law which attracted penalty - penalty upheld. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Legality of penalties imposed under Section 112(a) of the Customs Act, 1962.
2. Validity of the evidence and findings against the appellants.
3. Alleged violation of principles of natural justice due to denial of cross-examination.

Issue-wise Detailed Analysis:

1. Legality of Penalties Imposed under Section 112(a) of the Customs Act, 1962:

The appellants challenged the penalties imposed by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). The penalties were confirmed based on the adjudicating authority's findings that the appellants were involved in smuggling contraband goods. The goods, including cigarettes, radial tubeless tires, and premium brand foreign liquor, were seized under Section 110 of the Customs Act. The penalties imposed were significant, amounting to ?1 crore each for Mr. H.S. Chadha and Mr. Inderjit Singh. The CESTAT upheld these penalties, citing substantial evidence of their involvement in the smuggling operations.

2. Validity of the Evidence and Findings Against the Appellants:

The investigation revealed that Mr. H.S. Chadha was the mastermind behind the smuggling operations, administratively and financially controlling the scheme. Electronic and digital files seized from his laptop and mobile phone provided incriminating evidence. The materials included emails and photos of the smuggled goods. Mr. Inderjit Singh was found to have actively assisted in the operations, including arranging an official address for Shivani Industries and handling customs clearance. The adjudicating authority and CESTAT both found the evidence sufficient to substantiate the charges against the appellants.

3. Alleged Violation of Principles of Natural Justice Due to Denial of Cross-Examination:

The appellants argued that the denial of cross-examination of key witnesses, including Mr. Malkiat Singh, violated principles of natural justice. The Commissioner rejected the request for cross-examination, stating that the case was not solely based on the statements of the witnesses but also on corroborative evidence, including documents and computer records. The court found that the rejection of the cross-examination request did not constitute a violation of natural justice, as the Revenue relied on substantial evidence beyond the witness statements.

Conclusion:

The court upheld the CESTAT's findings and dismissed the appeals. It concluded that the penalties imposed were justified based on the substantial evidence of the appellants' involvement in the smuggling operations. The denial of cross-examination was not deemed a violation of natural justice, given the corroborative evidence supporting the charges. The court found no reason to interfere with the penalties imposed and dismissed the appeals, stating that no question of law arose in the case.