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TMI Blog2022 (8) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... lant in the activities relating to the smuggled gold, there were no grounds for imposition of penalty on him.It is now well established that mensrea is an important ingredient for imposing a penalty on the person enumerated in Section112(b) of the Customs Act. The evidence brought out by the department nowhere suggests that the appellant was aware that the goods in question were smuggled into the India. The penalty imposed on Appellant, therefore, cannot be sustained. The appellant is not liable imposition of penalty under Section 112(b) of the Customs Act, 1962 - Appeal allowed - decided in favor of appellant. - Customs Appeal No. 10061 of 2022 - FINAL ORDER NO.A/10975/2022 - Dated:- 12-8-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Hans Raj Garg, Consultant for the Appellant Shri. R. P Parekh, Superintendent (AR) for the Respondent ORDER This appeal is filed by the Appellant against the Order-In-Original No. AHM-CUSTM-000-COM-015-016-21-22 dated. 29.11.2021 whereby the Commissioner of Customs, Ahmedabad imposed the penalty of Rs. 50,00,000/- under Section 112(b)(i) of the Customs Act 1962 in relation to his role in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ramp area of the airport. Shri Jignesh Savaliya had been concealing the gold in the dress worn by him and smuggled the same into India by exiting SVPI Airport, Ahmedabad by Shri Jignesh Savaliya which was handed over by him to Shri Rutugna Trivedi or the specific person sent by Shri Rutugna Trivedi and informed to Shri Jignesh Savaliya. Adopting the above modus operandi, Shri Rutugna Trivedi and his associates smuggled into India 4886.206 Kgs. Gold during the period from 07.03.2013 to 26.05.2019. The authenticity of the details of the gold smuggled into India by various carriers sent by Shri Rutugna Trivedi has also been corroborated by the travel details provided by the travel agent through whom the tickets were purchased for the carriers on the instruction of Shri Rutugna Trivedi Ms. Nita C. Parmar and the dates of arrival of the carriers in India at SVPI Airport, Ahmedabad. The details recorded in the diary of Shri Jignesh Savaliya as well as in the We Chat messages recovered from his mobile phone were verified with the actual arrival dates of the persons as available in records of Airport and found to be correct. 2.2. With this background, show cause notices were i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23.07.2019 and 04.10.2019. However, no incriminating documents were recovered nor any other material was seized. Burden of proving the allegations is on the Department and the Department has miserably failed to discharge the said burden, as they have not produced any evidence supporting the allegations except the statements of Ms. Divya Kishore Bhundia and Shri Jignesh Savalia who are two of the co-noticees. However, the statements of these two co-noticees are not corroborated by any independent evidence and further compounded by the fact that the alleged mastermind Shri Rutugna Trivedi has also not endorsed the aforesaid statements to be true and correct. It is well settled law that statements of co-noticees cannot be relied upon in the absence of any corroborative evidence to substantiate the same. He placed reliance on the following decisions. Vikram Singh Dahiya 2008 (223) ELT 619 (Tri - Del) Jaswinder Singh1996 (83) ELT 175 (Tribunal) Mehul Roadways2009 (246) ELT 660 (Tri-Ahmd) J. I. Gandhi Silk Mills 2009 (237) ELT 103 (Tri - Ahmd) KK Jain2009 (235) ELT 170 (Tri - Ahmd) 3.2 He also submits that as a business associate and on account of personal re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfiscation which action, if committed, calls for imposition of penalty under Section 112(b)(i). However, the Adjudicating Authority has imposed a penalty of Rs 50 Lakh on the Appellant under Section 112(b)(i) of the Customs Act, 1962 for his allegedly indulging in financing of the activity of smuggling of gold. It must be understood that both the provisions of clause (a) and clause (b) of Section 112 are in different spheres of operation. The Ld. Commissioner erred in imposing penalty on the Appellant under Section 112 (b) of the Act inasmuch as the Ld. Commissioner has failed to appreciate that the mandatory and statutory conditions precedent to such imposition of the penalty did not exist in this case. He placed reliance on the following decisions. M/s Green Express Transport Service reported as 2010 (1) TMI 436 - CESTAT, Delhi Pratibha Processors [1996 (88) ELT 12 (SC)]. Suresh RajaramNewagi v/s Commissioner of Customs reported as 2008 (5) TMI 66 - CESTAT Mumbai. 3.5 Without prejudice he also submits that the Adjudicating authority has dropped the proceedings under Section 114AA of the Customs Act, 1962 against him which means that the Appellant did not knowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest. From the perusal of above provision, it will be seen that for imposition of penalty on a person under Section 112(b), the following conditions must be satisfied. (i) The person must have acquired possession of or must be in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing or in any other manner dealing with any goods which are liable for confiscation under Section 111 of Customs Act, 1962. (ii) The person must have knowledge or have reason to believe that the goods acquired by him or dealt with by him in the manner as mentioned above, are liable for confiscation under Section 111 i.e. he has knowledge or has reason to believe that any one or more of the contravent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of Section 112(b)(i) of the Customs Act, 1962. 5.2 We find that role of the Appellant in the whole episode has been derived only from oral statements of Ms. Divya Kishore Bhundia and Shri Jignesh Savalia. Statements of above said persons remain uncorroborated during the investigation. As per the department Shri Rutugna being the mastermind of the smuggling racket, however during the investigation Shri Rutugna has nowhere stated the name of Appellant as connected to his alleged activity of smuggling of gold. We also noticed that Appellant in his statement recorded on 05.09.2019 against the specific question replied as under he did not know Shri Jigneshkumar GovindbhaiSavalia and Ms. Divya Kishore Bhundia and did not agree about the mention of his name made by them in their respective statements. Cleary, the Ld. Commissioner in his finding erred in holding that the knowledge and involvement of the Appellant is corroborated by the versions of Shri Jigneshkumar Govindbhai Savaliya and Ms. Divya Kishore Bhundia. In spite of this, the Department has not taken any steps to confirm with Shri Rutugna whether the Appellant also involved with him. The evidence on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case the activity of financing of a fund has been turned by the Ld. Commissioner into direct participation in the conspiracy to smuggle gold. However, regarding the alleged financing no details/evidences was provided by the revenue that how much money was finance, which consignment of the gold imported illicitly were financed, whether the finance was given in India or abroad and what was the understanding about returning of the finance. For imposition of penalty under Section 112(b) of the Customs Act, 1962 the knowledge on part of the person has to be established. During the investigation officers did not find any documents/ piece of paper or any other evidence against the Appellant to show that the Appellant had financed the money for smuggling of gold into India. Even if it is assumed that the appellant has arranged the finance but appellant did not deal with alleged gold smuggling activity in question. Facts borne on record reveal that the appellant has maintained all along that it never had the possession of the impugned goods nor was in any way concerned with the carrying, removing, etc., of the consignments in question and hence, it was beyond his comprehension that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater. Rule 26 of the Central Excise Rules, 2002 Rule 26 came to enacted which came in force with effect from 1st March, 2007. Rule 26 reads as under : Rule 26. Penalty for certain offences. - (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater. (2) Any person, who issues - (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposed if the assesse has not dealt with or transported goods physically in any manner. 5.9 The Tribunal in the case of D. AnkneeduChowdhry Vs.Commissioner of Customs 2004 (178) ELT 578 held that in any other manner dealing with used in Section 112(b) of the Customs Act has to be read ejusdem generis with the preceding expression in the clause viz. carrying, removal or depositing etc. It is held that accordingly to the above doctrine, meaning of expression in any other manner of dealing with should be understood in sense similar or comparable to how preceding words viz. carrying, removing, depositing etc. are understood. In other words, in any other manner dealing with of the goods is also to some physical manner of dealing with the goods. In absence of the finding in the impugned order that the assesse has dealt with the goods physically or any allegation to this effect raised in the proceeding, penalty under Section 112(b) cannot be imposed. 5.10 We also find that the appellant cannot come within the ambit of Section 112(b) because appellants had never acquired possession or in any way concerned in any of the activities mentioned in the Section or any measure dealin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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