Suresh Maruti Patil Vs Commissioner of Customs (Preventive) (CESTAT Kolkata)
Summary: CESTAT Kolkata allowed the appeal of Suresh Maruti Patil and set aside the penalty of Rs.10,00,000/- imposed under Sections 112(a) and 112(b) of the Customs Act, 1962 in connection with seizure of two foreign-origin gold bars weighing 1,000 grams each. The gold had been recovered from Rajesh Bhagat, while the Department alleged, principally on the basis of a statement made by co-noticee Ashish Lakhotia, that the appellant was the intended purchaser. The Tribunal noted that no gold was recovered from the appellant and there was no independent evidence establishing that he was the intended buyer. More importantly, during cross-examination before the adjudicating authority, Ashish Lakhotia stated that his earlier statement was not voluntary.
The Tribunal therefore held that the statement could not be relied upon against the appellant. It further found that there was no other corroborative evidence on record connecting the appellant with the alleged smuggling of the foreign-origin gold. Following its decision in Gagan Karel v. Commissioner of Customs (Preventive), Kolkata, where a penalty based solely on statements without corroborative evidence had similarly been set aside, CESTAT held that the requirements for imposing penalty under Sections 112(a) and 112(b) were not established. Accordingly, the Rs.10 lakh penalty was held unsustainable, the impugned order was set aside insofar as it concerned the appellant, and the appeal was allowed with consequential relief.
Cases Discussed
Gagan Karel v. Commissioner of Customs (Preventive), Kolkata, Final Order No. 75104 of 2025 dated 23.01.2025 in Customs Appeal No. 76205 of 2017 (CESTAT Kolkata) — Relied upon. CESTAT followed this decision for the proposition that where statements of other persons constitute the only evidence implicating an appellant and there is no corroborative evidence, penalty under Sections 112(a) and 112(b) cannot be sustained without legally reliable evidence connecting the appellant with the alleged offence.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The present appeal has been filed against the Order-in-Appeal No. KOL/CUS/CCP/AKR/714/2021 dated 06.09.2021 wherein the Ld. Commissioner of Customs (Appeals), 3rd Floor, Custom House, 15/1, Strand Road, Kolkata – 700 001 has upheld the penalty of Rs.10,00,000/- (Rupees Ten Lakhs only) imposed on Shri Suresh Maruti Patil (hereinafter referred to as the “appellant”) in the Order-in-Original No.05/ADC(P)/CUS/WB/20-21 dated 21.07.2020 passed by the Ld. Additional Commissioner of Customs (Prev.), West Bengal, Kolkata.
2. Brief facts of the case are that on 06.04.2018, the Officers of the Directorate of Revenue Intelligence, Siliguri Regional Unit, intercepted a white Maruti Wagon R bearing Registration No. WB70J4837 near Bankim Chandra Road, Hakimpara, Siliguri. Upon interception of the said vehicle, it was found that one Shri Rajesh Bhagat was driving the said vehicle. On enquiry, it was found that he was carrying two pieces of gold bars of foreign origin, weighing 1000 grams each. Since Shri Rajesh Bhagat was not having any licit documents in his possession for legal purchase of the said gold bars, the Officers were of the view that the said gold bars had been smuggled into India from China via the Indo-Bhutan border at Jaigaon. During further verification with Shri. Rajesh Bhagat, it was revealed that the said bars were to be delivered to one Shri Ashish Lakhotia of Hakimpara, Siliguri.
2.1. Thereafter, the Officers conducted a thorough search of the premises of Shri Ashish Lakhotia whereby they recovered Indian Currency collectively worth Rs.39,83,000/-, which was alleged to have been kept for the purchase of the said foreign origin gold bars from Shri Rajesh Bhagat. Accordingly, the said Indian Currency amounting to Rs.39,83,000/- recovered from the residential premises of Shri Ashish Lakhotia was seized under Section 110 of the Customs Act, 1962.
2.2. The two(02) pieces of gold bars recovered from Shri Rajesh Bhagat were also seized on the reasonable belief that the said gold bars were smuggled into India without payment of appropriate Customs duties.
2.3. Samples of the two gold pieces were drawn and assaying was done by Assayer viz. M/s. Tarak Jewellery, Rajibmore, Ashrampara, Siliguri – 734 001 by which it was found that the said gold bars were of 24 Carat purity and each weighed 1000 grams.
3. Subsequently, statements of different persons were recorded, including the appellant herein, under Section 108 of the Customs Act, 1962. In his statement recorded on 06.04.2018, Shri Ashish Lakhotia had inter alia stated that the gold bars recovered from his were meant for delivery to the appellant.
3.1. In his statement, the appellant / Shri Suresh Maruti Patil inter alia stated that he has been engaged in melting and refining of gold and silver and also engaged as a trader for sale and purchase of gold as a bullion merchant. The appellant further stated that he had been carrying on the trade in the name and style of M/s. Siliguri Hallmarking Centre, Siliguri. On being confronted with the statement of Shri Ashish Lakhotia, who had inter alia stated that he was purportedly in contact with the appellant with Mobile No. 7407411105, the appellant denied the same and informed that the said Mobile number never belonged to him. It was noticed by the investigating authorities that the appellant was implicated in another smuggling case relating to six pieces of gold bars of foreign origin, wherein also penalty had been imposed on the appellant.
4. On completion of the investigation, a Show Cause Notice dated 01.04.2019 was issued to the appellant, amongst others, on the allegation that the appellant is a major person of a smuggling syndicate who carried out the illegal activity of smuggling foreign origin gold into India; that in the instant case, the appellant purportedly was the intended buyer of the said gold which was seized from the possession of Shri Rajesh Bhagat. Accordingly, penalty was sought to be imposed on the appellant under Section 112(a) and 112(b) of the Customs Act, 1962.
5. On adjudication, the ld. adjudicating authority granted the opportunity of cross-examination of Shri. Ashish Lakhotia. On 24.12.2019, during the course of cross-examination, Shri Ashish Lakhotia inter alia stated before the ld. adjudicating authority that the statement given by him was involuntary in nature. Thus, the appellant submits that the said statement has lost its evidentiary value and hence the same cannot be used against him. Subsequently, the ld. adjudicating authority passed the Order-in-Original No. Order-in-Original No.05/ADC(P)/CUS/WB/20-21 dated 21.02.2020 wherein he has inter alia imposed a penalty of Rs.10,00,000/- on the appellant herein under Section 112(a) and 112(b) of the Act.
6. On appeal, the Ld. Commissioner (Appeals), vide the impugned order, upheld the penalty imposed on the appellant in the Order-in-Original dated 21.02.2020.
6.1. Aggrieved by the imposition of penalty on him, the appellant has filed this appeal.
7. It is the submission of the Ld. Counsel appearing on behalf of the appellant that in the present case, neither was the gold recovered from his possession nor had he claimed ownership of the said gold. It is pointed out that except the statement of the co-noticee namely, Shri Ashish Lakhotia, there is no other evidence to implicate the appellant in this case. It is further submitted that Shri Ashish Lakhotia, during the course of his cross examination before the adjudicating authority has denied to his statement being voluntary in nature and hence the same has lost its evidentiary value.
7.1. The appellant also states that the penalty has been imposed on him on the ground that he was the intended purchaser of the said gold. However, it is pointed out that there is no evidence available on record against the appellant to indicate that he was the intended purchaser of the said gold, from Shri Ashish Lakhotia, as alleged.
7.2. The appellant relied upon the decision of the Tribunal, Kolkata in the case of Gagan Karel v. Commissioner of Customs (Preventive), Kolkata, [Final Order No. 75104 of 2025 dated 23.01.2025 in Customs Appeal No. 76205 of 2017 (CESTAT, Kolkata)] wherein similar penalty has been set aside.
7.2. In view of the above submissions, the Ld. Counsel for the appellant prayed for setting aside the penalty imposed on the appellant.
8. On the other hand, the Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order.
9. Heard both sides and perused the appeal records.
10. We observe that in this case, two (02) gold bars, each weighing 1000 grams, were seized from Shri Rajesh Bhagat on 06.04.2018. In his statement dated 06.04.2018, Shri Ashish Lakhotia had inter alia informed that the gold was supposed to be sold to the appellant. However, it is observed that during the course of cross examination, the said Shri Ashish Lakhotia has informed that his statement was not voluntary. Accordingly, we find that the said statement cannot be relied upon against the appellant.
11. We also find that other than the said statement, there is no other corroborative evidence available on record to implicate the appellant in the alleged offence of smuggling gold bars of foreign origin into the country. It is also observed that there is no evidence against the appellant to indicate that he was the intended purchaser of the gold bars in question. Under these circumstances, we hold that no penalty is imposable on the appellant.
11.1. We find that the same view has been expressed by this Tribunal in the case of Gagan Karel v. Commissioner of Customs (Preventive), Kolkata, [Final Order No. 75104 of 2025 dated 23.01.2025 in Customs Appeal No. 76205 of 2017 (CESTAT, Kolkata)] where, under similar facts and circumstances, this Tribunal has set aside the penalty imposed vide Final Order dated 23.01.2025. The relevant part of the said decision are reproduced below:
“6. We find that 58 pieces of gold biscuits and bars and about half a piece of biscuit having a total weight of 10.54855 kgs. collectively valued at Rs.2,85,86,569/- was seized from Shri Pawan Prasad and Smt. Monika Yadav on 16.06.2015.It is alleged that a part of the smuggled gold was supposed to be sold to Shri Gagan Karel, as per the statement recorded from Shri Pawan Prasad. We observe that except the statement dated 16.06.2015 of Shri Pawan Prasad, there is no other evidence available on record to implicate the Appellant in the alleged offence. Since the statements of Shri Pawan Prasad and Smt. Monika Yadav are the only evidences against the Appellant, an opportunity for cross-examining them should have been granted to the Appellant, to verify the claims made by the said persons in their respective statements. In the present case, the ld. adjudicating authority has given only one opportunity of cross-examination of Shri Pawan Prasad and Smt. Monika Yadav on 19.12.2016 and on the said date, both of them had not appeared. The ld. adjudicating authority has not given any further opportunity to cross-examine them and passed the impugned order by relying upon the statements recorded earlier. It is a settled position of law that in such circumstances, when statements recorded from the co-accused are the only evidence to implicate another person in that offence, the said statements cannot be relied upon against the person ( the appellant in this case) without giving an opportunity for cross-examining the persons who have given the statements implicating the appellant. In the present case, it is a fact on record that Shri Pawan Prasad and Smt. Monika Yadav had participated in the adjudication proceedings and therefore, another opportunity must have been given by the ld. adjudicating authority to examine them before relying upon their statements to impose penalty on the appellant. Thus, we hold that the statements of Shri Pawan Prasad and Smt. Monika Yadav cannot be relied upon against the Appellant, without any other corroborative evidence to support the allegations.
7. We have gone through the findings recorded by the ld. adjudicating authority in the impugned order regarding the role played by the Appellant in the alleged offence. From the findings of the ld. adjudicating authority, we observe that except the statements of Shri Pawan Prasad and Smt. Monika Yadav, there is no other corroborative evidence to establish the role of the Appellant in the alleged offence.
8. Section 112 of the Customs Act, 1962, which deals with penalty for improper importation of goods, is reproduced below:-
“SECTION 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
(b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, shall be liable, –
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty [not exceeding the value of the goods or five thousand rupees], whichever is the greater;
(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher :
Provided that where such duty as determined under sub-section (8) of section 28 and the interest payable thereon under section 28AA is paid within thirty days from the date of communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the penalty so determined;]
(iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty [not exceeding the difference between the declared value and the value thereof or five thousand rupees], whichever is the greater;
(iv) in the case of goods falling both 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.”
8.1. From the Section 112 of the Customs Act, 1962 reproduced above, we observe that penalty can be imposed under this section only when a person commits an act which renders the goods liable for confiscation. In the present case, we observe that the gold recovered from Shri Pawan Prasad and Smt. Monika Yadav has been ordered to be confiscated under Section 111 of the Customs Act vide the impugned order dated 31.03.2017 and penalty has been imposed on them for the role played by them in the offence. There is no other evidence available on record to implicate the appellant in the alleged offence. Thus, in the present case, we observe that the elements as mentioned in Section 112 of the Act are not available to impose penalty on the appellant. Hence, we hold the provisions of Section 112(a) and 112(b) cannot be invoked to impose penalty on the appellant. Consequently, we hold that the penalty imposed on the Appellant by invoking the provisions of Section 112(a) and (b) of the Act is not sustainable and hence we set aside the same.
9. In view of the above discussion, we set aside the penalty imposed on the Appellant and allow the appeal filed by the Appellant.”
11.2. Therefore, in view of the above discussion and by relying on the decision cited supra, we hold that the penalty of Rs.10,00,000/- imposed on the appellant under Section 112(a) and 112(b) of the Customs Act, 1962 is not sustainable and accordingly, the penalty imposed on the appellant is set aside.
12. In the result, the impugned order qua imposing penalty on the appellant viz. Shri Suresh Maruti Patil, is set aside and the appeal filed by the appellant is allowed, with consequential relief, if any, as per law.
(Operative part of the order was pronounced in open court)
