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TMI Blog2025 (1) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... onclude the involvement of the appellant in the alleged smuggling of foreign cigarettes. From the documents available on record, it is observed that there is no evidence brought on record to indicate that the appellant had prior knowledge about the concealment of cigarettes in the consignments declared as 'ladies garments'. Thus, this evidence cannot be the basis for imposing penalties on the appellant. The impugned order has confirmed the demand mainly on the basis of the statement dated 27.06.2022 of Mr. Vivek Agarwal - HELD THAT:- There is no other evidence brought on record regarding the conspiracy hatched by the appellant in relation to smuggling of the foreign brand cigarettes into the country. Since the main evidence relied upon by the adjudicating authority against the appellant is the statement of Shri. Vivek Agarwal, an opportunity to cross-examine the person who made that statement ought to have been given as provided under Section 138B of the Customs Act, 1962. However, the ld. adjudicating authority has not granted the opportunity for cross-examination of Mr. Vivek Agarwal. Accordingly, the provisions of Section 138B of the Customs Act, 1962 have been violate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the ingredients required for imposing penalty under Section 114AA of the Act have not been established in this case. Therefore, the penalties imposed on the appellant under both the above provisions/Sections are not sustainable in law.
Penalties set aside - appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... . Vivek Agarwal named him in his statement dated 26.07.2022. The appellant submits that he could not appear for the summons as the time given to him was very short. The investigation was hurriedly completed and the Show Cause Notice was issued on 12.08.2022, within 16 days from the date of issue of summons to him. Thus, it is the contention of the appellant that he was not given a fair and adequate opportunity to join the investigation and the Show Cause Notice was issued without examining him by the officers of the DRI. 4.1. The appellant further submits that Mr. Vivek Agarwal has stated in his statement dated 26.07.2022 inter alia that the entire plan of smuggling of foreign branded cigarettes from abroad by mis-declaring the goods as 'Ladies Garments was the brainchild of the appellant who was based in Amritsar; that after getting the proposal from the appellant, he (Vivek) lured Shri Narayan Prasad Sharma in lending his IEC and did everything to make the deal happen; that he (Vivek) had acted in the deal as a broker to earn quick money and also assured Narayan Prasad Sharma of some payment as his IEC was to be used for importing the goods; and that he had no stake in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant's contention that the IEC of Shri Narayan Prasad Sharma has been used to illegally import the cigarettes from Thailand, but the said Shri Narayan Prasad Sharma had never named the appellant in his statements. Accordingly, the appellant submits that the statement of Shri Vivek Agarwal alone cannot be relied upon without any other corroborative evidence to implicate him in the alleged offence. 4.3. The appellant further submits that the only evidence marshalled by the investigation against him was the said solitary statement dated 26.07.2022 of Mr. Vivek Agarwal; therefore, vide his letter dated 06.09.2022, interim reply to the Show Cause Notice dated 08.09.2022 and further submissions dated 11.10.2022 & 18.10.2023, he has asked for permission to cross examine Mr. Vivek Agarwal, as it is his legal right in terms of Section 138B of the Customs Act, 1962, which has not been granted by the respondent. The appellant submits that when any statement is used against him, an opportunity of cross-examining the person who made that statement ought to be given to him; the statement dated 26.07.2022 of Mr. Vivek Agarwal was recorded under Section 108 of the Customs Act, 1962 to dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs Act, 1962 are legally sustainable or not. 7.2. It is observed that the DRI initiated the investigation on 16.08.2021. The appellant has been implicated for the first time by Mr. Vivek Agarwal in his statement dated 26.07.2022. We also find that Mr. Vivek Agarwal has written a letter dated 28.02.2022 to the DRI, prior to his statement, wherein he has not made any disclosure about the involvement of the present appellant. We also observe that the goods 'ladies garments' have been imported by using the IEC code of Shri. Narayan Sharma. His statement was also recorded by DRI and he has also not implicated the appellant in any of his statements. 7.3. It has also been alleged in the impugned order that the Bank Statement of M/s. Fair Deal Agencies indicate that huge amount of funds had been transferred to the account of M/s Blue Water Agencies of the appellant during the material period and that these financial transactions remain unexplained. In this regard, the appellant submits that during the course of investigation through his Chartered Accountant he has informed the officers of DRI that his company M/s. Blue Water Agencies, Amritsar, had regular business de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes in the consignments declared as 'ladies garments'. Thus, we hold that the this evidence cannot be the basis for imposing penalties on the appellant. 7.5. We observe that the impugned order has confirmed the demand mainly on the basis of the statement dated 27.06.2022 of Mr. Vivek Agarwal. There is no other evidence brought on record regarding the conspiracy hatched by the appellant in relation to smuggling of the foreign brand cigarettes into the country. Since the main evidence relied upon by the adjudicating authority against the appellant is the statement of Shri. Vivek Agarwal, an opportunity to cross-examine the person who made that statement ought to have been given as provided under Section 138B of the Customs Act, 1962. However, the ld. adjudicating authority has not granted the opportunity for cross-examination of Mr. Vivek Agarwal. Accordingly, we find that the provisions of Section 138B of the Customs Act, 1962 have been violated in this case. When any statement is used against an assessee, an opportunity for cross-examining the person who made such statement ought to be given to the assessee. Since the opportunity of cross examination has not been given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions of the Hon'ble Supreme Court cited supra, we hold that the statement of Mr. Vivek Agarwal cannot be relied upon to implicate the appellant in the alleged offence as the provisions of Section 138B of the Customs Act, 1962 have not been followed. 8. We observe that the appellant has challenged the penalties imposed on him under Section 112(a) and Section 114AA of the Customs Act, 1962. For better appreciation of the facts, the said Sections are reproduced below: - Section 112(a): "112. Penalty for improper importation of goods, etc. - Any person,- (a)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 the doing or omission of such an act, or …" Section 114AA: "114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods." 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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