2025 (1) TMI 959 - AT - Customs

Levy of penalty u/s 112(a) and/or 112(b) of the Customs Act 1962 - Habitual offender or not - smuggling of the impugned gold bar of foreign origin - actively colluded with other members of the syndicate and tried to mislead the investigating agency - entire case has been built against the appellant on the basis of the statement dated 24.05.18 of third person (from whom the Gold was recovered/co-accused) - HELD THAT - It is observed that one kg of gold was recovered from Shri Krishna Kumar Gupta on 24.5.18 by DRI officers and Shri Krishna Kumar Gupta has stated that the appellant as the important person connected with the smuggling of gold in that case. Apart from the statement of Shri Krishna Kumar Gupta there was no other evidence to implicate the appellant in the present case. The appellant had categorically stated that he was known to said Shri Krishna Kumar Gupta since both of them were working together at Chhat Puja Committee at Phuentshelling. Shri Krishna Kumar Gupta had also corroborated such fact during the course of cross-examination. In such circumstance it is observed that no adverse conclusion can be arrived at against the appellant on the basis of the sole confessional statement of the co-accused which had been retracted and also denied to be voluntary during cross-examination. In the impugned order it has also been alleged that there was a telephonic call between the appellant and Shri Krishna Kumar Gupta about half an hour before the time of interception of Shri Krishna Kumar Gupta - it is observed that such a telephone call cannot be the basis for the assumption that the appellant was involved in the alleged act of smuggling of gold. It is an admitted position that the appellant and Shri Krishna Kumar Gupta were known to each other and there is nothing irregular or illegal in exchange of call between two known persons. Accordingly on the basis of such telephonic call it cannot be assumed that the appellant was involved in any act of smuggling. Penalty under Section 112 of the Customs Act 1962 - HELD THAT - There is no circumstance in the present case where the provision of Section 112 ibid can be applied against the appellant. Evidence available on record does not indicate that the appellant has played any role in the alleged offence which rendered the impugned goods liable for confiscation under the Customs Act 1962. It is observed that the Ld. Adjudicating authority had imposed penalty upon the appellant under Section 112(a) 112(b) of the Customs Act 1962 together - the appellant had not dealt with the goods under seizure with a prior knowledge or reason to believe that the goods are liable for confiscation. Accordingly penalty under Section 112 of the Customs Act 1962 is not imposable upon the appellant and hence we set aside the penalty imposed on the appellant. Conclusion - No adverse conclusion can be arrived at against the appellant on the basis of the sole confessional statement of the co-accused which had been retracted and also denied to be voluntary during cross-examination. The penalty imposed is set aside. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the penalty imposed on the appellant under Section 112(a) and 112(b) of the Customs Act, 1962, was justified based on the evidence presented.
Whether the appellant could be considered a habitual offender based on previous penalties, which are currently under appeal.
Whether the confessional statement of a co-accused, which was later retracted, can be used as the sole basis for implicating the appellant in the alleged smuggling activity.
Whether a single telephonic call between the appellant and the co-accused can substantiate the appellant's involvement in the smuggling case.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Penalty under Section 112(a) and 112(b) of the Customs Act, 1962

Relevant Legal Framework and Precedents: Section 112 of the Customs Act, 1962, provides for penalties in cases involving improper importation of goods. Clause (a) pertains to acts of omission or commission rendering goods liable to confiscation, while Clause (b) addresses the abetment of such acts.
Court's Interpretation and Reasoning: The court noted that the penalty was imposed under both Clauses (a) and (b) simultaneously, which address different circumstances. The court found this application incorrect as both clauses cannot be applied together.
Key Evidence and Findings: The evidence against the appellant primarily consisted of a retracted statement by a co-accused and a brief telephonic call. The court found no substantive evidence indicating the appellant's involvement.
Application of Law to Facts: The court determined that the evidence did not meet the threshold required under Section 112, as there was no indication that the appellant had knowledge or intent regarding the smuggling.
Treatment of Competing Arguments: The appellant argued that the evidence was insufficient and that the penalties from previous cases were not yet final. The court agreed, emphasizing the lack of concrete evidence.
Conclusions: The court concluded that the penalty under Section 112 was not applicable and set aside the penalty imposed on the appellant.

Issue 2: Consideration of Appellant as a Habitual Offender

Relevant Legal Framework and Precedents: The concept of a habitual offender typically requires a pattern of conduct that has been conclusively established.
Court's Interpretation and Reasoning: The court reasoned that pending appeals on previous penalties cannot be used to label the appellant as a habitual offender.
Key Evidence and Findings: The court noted the appellant's pending appeals and found no basis to assume habitual criminal behavior without finality in those cases.
Application of Law to Facts: The court applied the principle that pending legal proceedings cannot be used to prejudge an individual's character or conduct.
Treatment of Competing Arguments: The respondent's assertion of habitual offending was countered by the appellant's pending appeals, which the court found persuasive.
Conclusions: The court concluded that the appellant could not be deemed a habitual offender based solely on unresolved cases.

Issue 3: Reliance on the Retracted Statement of Co-accused

Relevant Legal Framework and Precedents: Legal standards generally require corroborative evidence when relying on a co-accused's statement, especially if retracted.
Court's Interpretation and Reasoning: The court observed that the retracted statement lacked corroboration and was insufficient to implicate the appellant.
Key Evidence and Findings: The retraction of the statement during cross-examination weakened its credibility.
Application of Law to Facts: The court applied the principle that uncorroborated, retracted statements cannot form the sole basis for penal action.
Treatment of Competing Arguments: The appellant's request for cross-examination led to the retraction, which the court found critical in assessing the evidence.
Conclusions: The court concluded that the retracted statement could not justify the penalty against the appellant.

Issue 4: Significance of the Telephonic Call

Relevant Legal Framework and Precedents: Mere communication between individuals known to each other does not inherently imply criminal intent.
Court's Interpretation and Reasoning: The court found that the call, given the context of their acquaintance, did not indicate involvement in smuggling.
Key Evidence and Findings: The court noted the lack of any additional evidence linking the call to the alleged crime.
Application of Law to Facts: The court held that the call was insufficient to establish any criminal activity or intent.
Treatment of Competing Arguments: The appellant's explanation of the call as a normal interaction was accepted by the court.
Conclusions: The court concluded that the telephonic call did not substantiate the allegations against the appellant.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "We observe that no adverse conclusion can be arrived at against the appellant on the basis of the sole confessional statement of the co-accused which had been retracted and also denied to be voluntary during cross-examination."
Core Principles Established: The court emphasized the need for corroborative evidence when relying on a co-accused's statement and the importance of finality in previous cases before labeling someone a habitual offender.
Final Determinations on Each Issue: The court set aside the penalty imposed under Section 112 of the Customs Act, 1962, and allowed the appeal, providing consequential relief as per law.

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