2022 (4) TMI 85 - AT - Customs

Levy of penalty u/s 112(a)/112(b)/114A/114AA of Customs Act - Smuggling - Gold Bars - Baggage Rules - failure to satisfy the requirement of six months stay abroad stipulated for the import of gold as part of passenger baggage provided under Rule 3(1)(h) of the Foreign Trade (Exemption from Application of Rules in certain Cases) Order, 1993 - reliability of statements recorded - existence of cogent and corroborative evidence or not - HELD THAT - In the impugned order, the Commissioner has summarised the penalties on various notices; insofar as Shri Ashruf Kullangal appellant No.(iv) and Shri T.K. Faiz appellant No. (vi) , penalty has been imposed under Section 112(a) (b). Section 112 can be invoked for imposing penalty on any person for violation specified under (a) or (b) and it can never be for (a) (b) because, there is a clear and disjunctive or between the two limbs (a) (b), which gives no room to read the same as and since the breach defined in (a) is distinct and that in (b) is distinct. Therefore, the penalty imposed under Section 112(a) (b) for alleged improper importation of goods etc. is unsustainable. For this reason alone, we are prima facie satisfied that the penalty levied at least on two of the appellants i.e., Shri Ashruf Kullangal and Shri T.K. Faiz cannot be sustained and accordingly, the same is set aside. Admittedly, the ladies, i.e., the alleged gold carriers had gone out of the airport and it is also mentioned in the Order-in-Original that they were waiting for their fellow passenger outside the airport. Secondly, there was a search on Mr. Haris, the male passenger accompanying the alleged gold carriers, which had resulted in the seizure of a letter by M/s. AU Jewellery, Dubai. These two vital facts are not only ignored before levying the penalty, but has never been discussed in the OIO - hence, there has been some confusion on the part of the Revenue and it appears that there is something which is not properly explained and brought out either in show-cause notice or Order-in-Original. Also, it is found that those statements are also inconsistent and hence reduced to be unreliable, and therefore, their evidentiary value would have to be very carefully examined before counting on them. Admittedly there are no independent eye witnesses who have been examined, nor any documentary evidence placed on record to corroborate statements recorded under Section 108 ibid - un-corroborated statement of one cannot become a conclusive proof to crucify another, without following the process of law. This becomes rather a necessity when only statements, that too which are inconsistent, are relied upon, like in the case on hand. Such statements therefore, could at best be a lead, requiring further investigation, by the concerned authorities. But to our dismay, apparently, there is no such move as could be seen from the OIO or the documents placed before us. Hence it is our responsibility to critically analyse, before applying such statements here. 36 Kgs of gold allegedly smuggled on the earlier occasions - HELD THAT - Admittedly, there is no direct evidence for this. The same is based on the statements of so-called carriers. No one has seen them loading/unloading the gold, other than the entries in the respective passports. It is a pure golden castle in the air built on statements again. Though the narration of the whole story is attractively designed, but the law requires that the preponderance of probabilities be in favour of this version, and of course seizure of the whole or any part of the same, to declare a person guilty. So far as the gold alleged to have been smuggled on the earlier occasions of 36 kgs, the Revenue has simply relied on the statements of alleged careers and nothing else. Other than this there is not even a single piece of evidence to corroborate that 36 kgs gold bars were smuggled on earlier occasions. It is a different matter if at least the alleged gold bars were available or at least its destination was known - when the so-called carriers are said to have smuggled the gold, including the person to whom the same was delivered upon their arrival in India, no effort has ever been made to track that recipient, nor is there any follow-up action to ascertain its veracity. Hence, we totally disbelieve this part of the story and do not endorse levy of penalty insofar as it relates to 36 Kgs, against the appellants. Reliability of statements recorded - HELD THAT - A statement, if found vitiated by any means is clearly unreliable, in the absence any other corroborative piece of evidence, so also the magnanimous confession of a co-appellant inculpating other/s while gracefully exculpating himself, cannot have any evidentiary value, and hence, the benefit of doubt cannot be denied to the appellants. Quality of statements recorded by the revenue on which sole reliance is placed by the revenue - HELD THAT - Though only a part of the alleged gold was confiscated, but nevertheless none of the appellants did claim ownership of any of the gold bars and in any case the same was not seized/confiscated from them. Hence, the requirement of Section 112 insofar as it relates to confiscation from the passengers alone is satisfied, but not any of the limbs (a) or (b) of the said section. The links in the chain that resulted in confiscation of goods are not at all there which has thus left the chain incomplete in all respects. Here in the case on hand, some of the officials are not even put on SCN, a few of the persons and some officials who were put on notice have been exonerated, crucial witnesses were not examined/questioned, nothing is forthcoming as to the fate of letter found and seized from Mr. Haris and hence, there are too many loose ends perhaps due to lack of proper investigation - there are no other sustainable evidence against any of the appellants and hence, the revenue has not made out any case against them. Consequently, penalty levied against them cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Confiscation of smuggled gold under Section 111 of the Customs Act, 1962.
2. Imposition of penalties under Sections 112(a), 112(b), 114A, and 114AA of the Customs Act, 1962.
3. Liability of various individuals involved in the smuggling operation.
4. Procedural fairness and adherence to natural justice principles.

Detailed Analysis:

1. Confiscation of Smuggled Gold:
The Revenue received intelligence about passengers smuggling gold bars from Dubai to Cochin. Upon search, 20 kg of gold bars were found concealed in jackets worn by two lady passengers. The gold was seized under Section 110 of the Customs Act, 1962, and was deemed liable for confiscation under Section 111 of the Act. The gold was valued at INR 5,78,45,400/- with a market value of INR 6,38,03,476/-.

2. Imposition of Penalties:
Penalties were proposed under Sections 112(a), 112(b), 114A, and 114AA of the Customs Act, 1962, against various individuals for their roles in the smuggling operation.

3. Liability of Various Individuals:
- Mrs. Arifa Haris and Mrs. Asifa Veerappoyil: Both were found with 10 kg of gold each and were penalized under Sections 112(a), 112(b), and 114AA for attempting to smuggle gold and mis-declaring contents of their baggage.
- Mr. Haris Abdul Rahman: Found with a letter from M/s. A.U. Jewellery indicating purchase of gold. He was penalized under Sections 112(a) and 114AA for his role in smuggling and facilitating the smuggling operation.
- Mr. T.K. Faiz: Alleged to have masterminded the smuggling operation and facilitated the clearance of the passengers. He was penalized under Sections 112(a) and (b).
- Mr. P.P. Sunil Kumar: Alleged to have facilitated the unhindered exit of passengers carrying smuggled gold. However, his penalty was set aside as there was no evidence of his involvement in the smuggling activity.
- Mr. M. Shanavas: Alleged to have acquired possession of smuggled gold. The gold and cash seized from his shop were ordered to be released, and his penalty was set aside.
- Mr. Subair Kallungal and Mr. Ashraf Kallungal: Alleged to have transported and financed the smuggling operation. Their penalties were set aside due to lack of evidence and inconsistencies in the statements against them.
- Mrs. Hajira Koodakkara: Alleged to have allowed her car to be used for smuggling. The proposal for penalty was dropped due to lack of evidence.

4. Procedural Fairness and Adherence to Natural Justice Principles:
The Tribunal found that the penalties were based on uncorroborated statements recorded under Section 108 of the Customs Act, 1962, and that there was no other documentary evidence brought on record by the Revenue. The appellants were not given an opportunity to cross-examine the individuals who made statements against them, which violated principles of natural justice. The Tribunal also noted inconsistencies and contradictions in the statements relied upon by the Revenue.

Conclusion:
The Tribunal set aside the penalties imposed on the appellants due to lack of concrete evidence, inconsistencies in the statements, and procedural lapses in adhering to principles of natural justice. The appeals filed by the appellants were allowed.