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TMI Blog2000 (2) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... oyees, and in the absence of penalty on either of these, penalty could be imposed on the airline under clause (a) or clause (b) of section 112 on the airline. 3. Whether, if the answer to the above question is in the negative penalty was imposable under section 112 on the airline. 4. Whether, in the light of the Commissioner s finding about the lack of involvement of the airline in the smuggling of gold, the redemption fine for the aircraft should be Rs. one crore or Rs. 30 lakhs. 2. The facts of the case leading to the appeal are :- This is an appeal filed by the appellants against the decision dated 15.03.1997 passed by the Commissioner of Customs (Prev), Mumbai in order in original No. CCP/MGV/ADJN/17/97 whereunder he confiscated 30988 kgs. of gold under section 111(d), (e) and (f) of the Customs Act and imposed a penalty of one crore on the appellants under section 112(a) and (f) of the Customs Act, 1962. By the said order the Commissioner ordered confiscation of aircraft under section 115(d) of the Customs Act but fixed redemption fine at Rs. 1 crore. He also confiscated 3 blue coloured belts under section 118 and 119 of the Customs Act. The appellants ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was probably placed in the aircraft during the transit time between GF050 on March 26 between 2050 and 2205 hrs. local time at Muscat airport. We suspect involvement of Oman Aviation Services. (2) We believe the gold was delivered by road from Dubai to Muscat. So the whole operation seems to be preplanned. (3) Any involvement of persons at Doha airport is now ruled out. (4) Upon arrival at Bombay we believe that the gold was to be removed from the aircraft by an employee of Combata Aviation. (5) We suspect the involvement of loading supervisor of Combata who signed in for duty at 0538 hrs. on March 27, 1996, although his rostered shift was 0700 to 1600 hrs. same day. The arrival time of GF 050 was 0611 hrs. (6) Involvement of Gulf Air employees whether ground staff or engineer staff or crew is also now ruled out, obviously our investigation continues. The action by customs staff at Bombay on the morning of 27-3-1996 in searching several other aircrafts GF050 makes it apparent that the Indian authorities had prior information of a smuggling attempt. The Asst. Commissioner Tandon has previously been asked and agreed to assist by sharing his information, which has not been received. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance or knowledge of the appellant and section 112 of the Customs Act cannot be made applicable. Only 115(2) can be applied. 5. It is further urged that the discussion by the Ld. Judicial member in page 172 of the paper book shows confusion in the mind about the knowledge of the appellant or the connivance to attract the penalty. There was no agency but there was a casual worker. The witnesses are not under the control of the appellant. Failure to produce the witnesses cannot be called as not discharging of the burden. Failure to take action against the agency cannot be concluded as there is something sinister about the whole affair. As discussed in page 174 of P.B. failure to disclose full facts covered through the investigation does not amount to keeping something behind the back of the customs authorities. The facts in the report narrated above shows the willingness of the security agency of the appellant in disclosing the information gathered. There is no burden under section 112(a) of the Customs Act on the appellant in that regard, according to which the act must be in relation to the goods and not investigation. The appellant was not aware of anything. Section 112(b) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smuggled gold have come is not revealed. When there is a ground handling and international security for the gulf Air to manage it cannot escape. The penalty is correctly imposed. As per 1987 (27) E.L.T. 726 the master of vessel cannot lack knowledge when contraband was found in the vessel. The redemption fine and penalty imposed is proper, as held by Ld. Judicial Member. 8. From the 4 questions framed in the order of the Tribunal it is clear that the airlines, its director and the captain of the aircraft were not aware of the presence of the gold in the aircraft. With this background it has to be examined whether the penalty could be imposed under section 112(a), and (b) of the Customs Act on the Airlines. In the absence of the notice to the Combata Aviation services or its employee, and the absence of the penalty on either them can the penalty be imposed on the appellant under the above provision has to be examined. Ultimately, whether any penalty under section 112 could be imposed on the airline requires to be examined. Finally it has to be decided what is proper redemption fine for the aircraft to pay, when there is a lack of involvement of the airlines in the smuggling of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t regard. 10. Questions 1 to 3 are jointly considered below. These three questions deal with the imposition of penalty under section 112 of the Customs Act. It is already discussed in the above paragraphs that penalty under 112(b) of the Customs Act cannot be imposed on the appellant, agreeing with the Ld. Technical Member. Section 112 deals with penalty for improper importation of goods. According to clause (a) any person who in relation to any goods does or omits to do any act, which act or omission would render such goods liable to confiscation under section 111 or abets in doing or omission of such act. Under clause (b) any person who acquires possession or in any way concerned in carrying removal, depositing, harbouring, keeping, concealing selling or purchasing in any other manner dealing with any goods which knows or has reason to believe are liable to confiscation under section 111 shall be liable to penalty not exceeding 5 times the value of the goods or Rs. 1000/- whichever is greater, when it is prohibited goods. In the case of dutiable goods, 5 times the duty sought to be evaded on such goods, and in the case of valuation of the goods in the bill of entry or in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner to employ independent watchman on the activities of the crew members. The case cannot be brought out under the proviso of clause (a) of section 112. (5) 1998 (100) E.L.T. 282 in the case of Harbonsingh Narula v. CCE Mumbai under section 112 of the Customs Act, penalty imposed on the first appellant was set aside as not being knowingly concerned with the goods. The appellant were concerned with the running of a transport company where the consignment of contraband goods were found. They could not be expected to know or be aware of the contents of packages, which must have passed through their office. No evidence to show that the appellant had reason to believe that the packages in question contained contraband. The general principles laid down in the above decisions are considered below. 12. In the impugned order in the appeal, the Commissioner of Customs (P) has imposed combined penalty of Rs. 1 crore on the appellant both under section 112(a) and (b) of the Customs Act. In page 34 of his order he has clearly held that there is no direct evidence to vouch for the prior knowledge of the part of the owner i.e. the appellant which is the corporate body owned by 4 Arab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not sufficient to conclude connivance, when. it is supported by reason as observed in the impugned order. As already discussed above, the chief security of the appellant who had conducted the elaborate investigation has already faxed his report to India for information of the Asst. Commissioner, Tandon. As observed by the Ld. Technical Member, the Customs department should have taken action against such persons to whom they suspect and dealt with a firm hand. There are no compelling circumstances to conclude that there was connivance of the appellant with the act of smuggling of gold. Under section 112(a) of the Customs Act, the act or omission must relate to any goods, which would render such goods liable to confiscation or its abetment. The observation of the adjudicating authority made in his order does not relate to that provision. The observation pertains to the administrative action of the appellant and it is not with respect to goods but against the persons who are alleged to have been involved in these activities. So as discussed and held by the Ld. Technical Member section 112(a) of the Customs Act does not apply to the instant case on hand and that finding based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 it is seen from the impugned order that in page 25 of the PB it is observed that on 25-6-1996 IO report is sent by the local manger and gist is given in page 26 of PB. According to that the item No. 5 is chief security of the appellant of the suspected involvement of loading supervisor of Combata, who signed roaster at 0538 hrs on 27-3-1996 although his roster shift was between 0700 hrs to 1600 hrs same day. The arrival time of GF 050 was 0611 hrs. The involvement of Gulf Air employees whether ground staff engineer staff or crew is also now ruled out. (Item No. 6). Under item No. 1 it is mentioned that the investigation so far indicates the involvement of staff of Oman Aviation Services (suspicion) regarding the placing of the gold in the aircraft during the transit time between GF050 and March 26. Between 2050 and 2205 hrs local time at Muscat airport. The same thing is considered by the Ld Judicial Member in paragraph 12 of his order and in paragraph 3 of the Ld. Technical Member s order that - Loading Supervisor Combata Aviation of local handling agent of the appellant was loading the aircraft in Muscat was involved in the smuggling of gold, which is the view of the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the agent in response to the correspondence of the department with the appellant. There is a definite finding of connivance of the appellant in the alleged smuggling of gold in the impugned order, which is upheld by the Judicial Member. As against this the Ld. Technical Member has held that since the appellant is not involved in the carrying of the gold with knowledge or connivance, looking to the facts and circumstances of the case as evident from the orders of the Commissioner, the redemption fine should be Rs. 30 lakhs instead of Rs. 1 crore. 15. On going through the records, it is seen that even as per the Commissioner there is no direct involvement of the appellant, its owner or staff or captain in the alleged smuggling of the gold. Even regarding the placing of the gold in the 23R hold position in the aircraft there is a conjuncture. It was noticed only in Bombay, after all the luggages were unloaded and the aircraft was ready for departure, by the customs authorities. The statement of the staff of the appellant and the company s report of the security of the appellant and even the impugned order does not connect the appellant with knowledge or connivance about the carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t evidence in the regard, and there is no circumstances pointing out towards the owners of the Gulf Air fixing the knowledge of the alleged smuggling of the gold. So under these circumstances, the question No. 4 is answered that the redemption fine should be 30 lakhs and not Rs. 1 crore, looking to the value of the aircraft and the facts and circumstances of the case as discussed above, agreeing with the discussion and finding of the Ld. Technical Member. 17. In view of the discussion made above I concur with the discussion and finding of the Ld. Technical Member in the orders of the Tribunal and I answer the questions 1 to 4 in the following terms: 1. No penalty could be imposed on the airline, its directors and the captain of the aircraft under section 112(a) and (b) of the Customs Act. 2 3. In the absence of notice issued to Combata Aviation Services or its employee and in the absence of penalty on either of these, no penalty is imposable either under section 112 or section 112(a) and (b) of the Customs Act on the airline. 4. The redemption fine for aircraft should be Rs. 30 lakhs, as held by the Ld. Technical Member in lieu of confiscation of the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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