2019 (7) TMI 466 - HC - Customs

Smuggling - Gold - waiver of penalty u/s 112(b) of Customs Act - acquittal of the appellant passed by a criminal court giving the benefit of Doubt - launching of prosecution of Section 135(1)(b) of the Act - HELD THAT - Clause (b) of Section 112(b) and Section 135(1b) of the Act unambiguously requires the acquiring of possession by the person concerned of the goods which are liable to confiscate under Section 111 of the Act. Two consequences follow upon these ingredients be found available. One is imposition of penalty under Section 112(b) of the Act another is prosecution in the Criminal Court which may result in an imprisonment. There is no dispute before us that on the same set of facts and evidence the concerned Criminal Court has already acquitted the respondents before us giving them the benefit of doubt. The appeal filed by the Revenue/prosecution against such acquittal has also failed. The learned counsel for the Revenue could not point out any additional evidence or material available with the Revenue other than the one which was considered by the Courts with regard to the prosecution of Respondents under Section 135 of the Act. The reason of such double jeopardy to be avoided is obvious even though the two proceedings may operate in different fields and may have different nature. The Departmental proceeding on civil side which is based on preponderance of probability premise based whereas on the criminal side it is the proof beyond the reasonable doubt which forms the basis of conviction or acquittal are different but the distinguishing feature to allow the two proceedings to go ahead parallely is that the different set of facts and evidence should be available before the concerned authorities proceeding in two parallel proceedings. The same principles would apply in a taxing statute like the Customs Act 1962 also because the ingredients sought to be satisfied for imposition of penalty as well as for prosecution of the concerned accused persons is same and identically worded as it would appear from the quotation of the two provisions. In the absence of any additional or further material with the Revenue we do not find any error committed by the learned Tribunal to set aside the penalty under Section 112 (b) of the Act on the basis of the order of acquittal by the concerned trial court below - Penalty rightly set aside. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Whether the penalty imposed under Section 112(b) of the Customs Act, 1962, can be sustained despite the acquittal of the accused under Section 135(1)(b) by the criminal court.
2. The relevance of the criminal court's acquittal in departmental penalty proceedings.
3. The interpretation and application of Sections 112(b) and 135(1)(b) of the Customs Act, 1962.

Detailed Analysis:

Issue 1: Whether the penalty imposed under Section 112(b) of the Customs Act, 1962, can be sustained despite the acquittal of the accused under Section 135(1)(b) by the criminal court.

The Revenue filed an appeal against the CESTAT's order, which set aside the penalties imposed on the respondents under the Customs Act, 1962. The Tribunal's decision was based on the acquittal of the respondents by the criminal court, which found that the prosecution failed to prove the charges beyond a reasonable doubt. The Tribunal applied the judicial approach from Capt. M. Paul Anthony's and Gopaldas' cases, which held that departmental proceedings should not stand if the accused is acquitted on the same set of facts and evidence by the criminal court.

Issue 2: The relevance of the criminal court's acquittal in departmental penalty proceedings.

The respondents were acquitted by the criminal court, and this acquittal was affirmed by the High Court. The Revenue argued that Sections 112(b) and 135(1)(b) of the Customs Act operate in different fields and serve different purposes, implying that an acquittal under Section 135(1)(b) should not automatically nullify a penalty under Section 112(b). However, the respondents contended that the same set of facts and evidence were used in both the criminal and departmental proceedings, and the acquittal should therefore nullify the penalty.

Issue 3: The interpretation and application of Sections 112(b) and 135(1)(b) of the Customs Act, 1962.

Both Sections 112(b) and 135(1)(b) require the acquisition of possession of goods liable to confiscation under Section 111. The court noted that the ingredients for imposing a penalty under Section 112(b) and for prosecution under Section 135(1)(b) are identically worded. Given that the criminal court acquitted the respondents on the same set of facts and evidence, the court held that the penalty under Section 112(b) could not stand.

The court emphasized the principle of avoiding double jeopardy, noting that while departmental and criminal proceedings can operate in different fields, they must be based on different sets of facts and evidence. Since the prosecution failed to provide additional evidence beyond what was considered by the criminal court, the penalty could not be sustained.

The court also referenced the Supreme Court's decision in Capt. M. Paul Anthony, which held that if both criminal and departmental proceedings are based on the same set of facts and evidence, the acquittal in the criminal case should influence the outcome of the departmental proceedings.

The Rajasthan High Court's decision in Bhagwati Metals was also cited, reinforcing that the findings of a court of law cannot be ignored by adjudicating authorities if based on the same set of facts and evidence.

Conclusion:
The High Court dismissed the Revenue's appeal, affirming the Tribunal's decision to set aside the penalties under Section 112(b) of the Customs Act. The court concluded that the acquittal of the respondents by the criminal court, based on the same set of facts and evidence, precluded the imposition of penalties under Section 112(b). The principle of avoiding double jeopardy was upheld, and the court found no additional evidence to justify the penalties.