Case Law Details
Ishwar Chand Gupta Vs Commissioner of Customs (CESTAT Kolkata)
Introduction: In the case of Ishwar Chand Gupta vs. Commissioner of Customs (CESTAT Kolkata), an intriguing legal battle unfolded over the confiscation of a truck transporting prohibited Red Sander Wood. The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Kolkata entered the spotlight by directing the refund of a security deposit to the successor of the late proprietor of Himalayan Roadways, Shri Ishwar Chand Gupta. This article provides an in-depth analysis of the case.
Detailed Subheading Wise Analysis
1. Seizure of Red Sander Wood: Shri Ishwar Chand Gupta, the proprietor of M/s Himalyan Roadways India, based in New Delhi, found himself in a legal quagmire when one of his trucks, bearing registration number NA 3KHA 6351, was intercepted by Nepali Customs authorities. The inspection revealed the clandestine transportation of 797.5 kilograms of prohibited Red Sander Wood.
2. Confiscation and Penalty: Following standard procedure, the Adjudicating Authority, through Order No. 27-Cus/ADC/Rxl/2012 dated 30/03/2012, determined that the truck, along with its cargo, was liable for confiscation under Section 115 of the Customs Act, 1962. Additionally, a penalty was imposed on Shri Ishwar Chand Gupta.
3. Appeal to the Commissioner (Appeals): Aggrieved by this decision, Shri Ishwar Chand Gupta appealed to the Commissioner (Appeals). In OIA No. 89-94/Pat/Cus/Appeal/2013 dated 22/02/2013, the Commissioner (Appeals) considered several aspects of the case. The contention put forth by the appellant, supported by his son, was that the goods were transported in accordance with normal commercial practices, and they had no malicious intent or mens rea.
4. Commissioner’s Findings: The Commissioner (Appeals) found that the department had failed to provide concrete evidence to establish mens rea or malicious intent on the part of the appellants. Moreover, there was no follow-up investigation into certain aspects of the case, leaving critical questions unanswered.
5. Setting Aside Penalties and Confiscation: Based on these findings, the Commissioner (Appeals) set aside the penalties imposed on the appellants and also annulled the confiscation of the truck. Importantly, the Revenue did not file any appeal against this order, making the Commissioner’s conclusions final.
6. Refund of Security Deposit: The case took a new turn when it came to the security deposit. Shri Ishwar Chand Gupta had provisionally released his goods by depositing a security deposit of Rs. 2 lakhs. However, after the Commissioner (Appeals) fully set aside the penalties and confiscation, Shri Ishwar Chand Gupta was entitled to the refund of this security deposit.
7. Succession and Refund: Tragically, Shri Ishwar Chand Gupta passed away on 14/02/2015. His son, Dinesh Gupta, filed an application as the successor of his father. After fulfilling the necessary formalities, including addressing defects pointed out by the Registry, Dinesh Gupta sought the refund of the security deposit.
8. CESTAT’s Decision: The CESTAT Kolkata, after reviewing the case documents and the Commissioner (Appeals)’s order, concluded that since the Commissioner had set aside the penalties and confiscation without any appeal from the Revenue, the security deposit should be refunded. It was determined that the Department could not retain this amount. However, the verification of Dinesh Gupta’s status as the rightful successor was to be conducted by the Adjudicating Authority.
Conclusion: The case of Ishwar Chand Gupta vs. Commissioner of Customs (CESTAT Kolkata) serves as a prime example of how legal intricacies can unfold in matters of confiscation and penalties. In this instance, the CESTAT Kolkata ensured that justice was served by directing the refund of a security deposit rightfully due to the successor of Shri Ishwar Chand Gupta. This case underscores the importance of proper legal procedures and appeals in customs matters.
Please note that the analysis provided here is based on available information and does not constitute legal advice.
FULL TEXT OF THE CESTAT KOLKATA ORDER
1. Shri Ishwar Chand Gupta was the proprietor of M/s Himalyan Roadways India located at New Delhi. Truck No. NA 3KHA 6351 belonging to Himalayan Roadways was intercepted by Nepali Customs authorities. It was detected that 797.5 Kg of prohibited Red sanders wood was being transported in a concealed manner. After due process, the Adjudicating Authority vide Order No. 27-Cus/ADC/Rxl/2012 dated 30/03/2012 held that truck carrying the goods were liable for confiscation under Section 115 of the Customs Act, 1962. He also imposed penalty on the Appellant. Being aggrieved, the Appellant preferred and Appeal before the Commissioner (Appeals) who vide his OIA No. 89-94/Pat/Cus/Appeal/2013 dated 22/02/2013 held as under:-
(9). The contention of the Appellant No. 1 & 5 who happen to be father & son respectively are that it is appellant No. 5 (Son) who looks after the entire business and not the father and the goods were brought and booked under Normal & proper invoice and the same were transported as per normal commercial practice. The submission continued that it was they who informed the Customs Authorities about the address of M/s Nidhi Traders (oticee NO. 8) & Parvider Kumar (notice no. 6) as they procured the same from Transport department and not the Customs Authorities and Customs Authorities could not conduct follow up at the said address even today and they took all the reasonable precautions and they have no malafide intention or mens-rea and department has proved nothing as such. I find that there are two seizures, one at Nepal by Nepal Customs and other by Indian Customs. As far as seizure at Nepal Custom is concerned, there is nothing on record to suggect about the same as no documents have been relied on by the department or produced during hearing to prove that seizure. Ld. Adjudicator has mainly punished the Father-Son duo on that basis when he reasoned that both have played their role in sending he consignment of Red Sanders Wood illegally to Nepal. It is also on record that it was father-Sonduo who provided the addresses of person/firm which booked the prohibited consignment on their own efforts to provetheir bona-fide but the department could not conduct follow up at those address even today as is clear from impugned order itself. The basis that other persons/notices did not appear cannot be a basis for penalties under Section 114 of Customs Act which require mens-rea. The facts clearly suggest that Department has not been able to prove that Appellant No. 1 & 5 have any malafide or mens-rea. Similarly, Shri Rajesh war Sharma (Appellant NO. 3) who is the manager of Appellant No. 1 has been imposed penalty because of non-appearance on summons. No other grounds/evidence there against the said Appellant. The contention of this Appellant that non-appearance on summons cannot be a ground of imposing penalty under Section 114 of Customs act is well argued and supported by legal provisions. Similar are the contention of Shri Rajesh Sharm (Appellant No. 4) who is loading & unloading incharge of M/s. Himalayan Roadways and are factual as no evidence have been brought by the Department to prove his mensrea in whole of the act of attempt to smuggle the Red Sanders Wood. In fact, what Ld. Adjudicator has done is that anyone whose name appears or are concerned with the truck & Consignment in question have imposed penalties but what the investigation has not done is to prove their malafide or mens-rea in any way. This is one of the case where follow up investigation has not been done properly to say the least. The Transporter namely Shri Rajeshwar Kalwar (notice No. 4) has also contented correctly that vehicle under Section 115 of Customs Act can only be seized if there are cavities etc. in the truck itself or the owner of Driver has the knowledge of illegal activities, but I find that there is no such thing proved by the Department.
2. Based on the above findings, he has set aside the penalties imposed on the present Appellant and other Appellants, and also has set aside the confiscation of truck. No Appeal has been filed by the Revenue against this OIA. The present Appeal has been filed by Shri Ishwar Chand Gupta, Proprietor of Himalaya Roadways on the ground that his goods valued at Rs.20,12,150/- were provisionally released against the Security Deposit of Rs. 2 lakhs made by him. Since the Commissioner (Appeals) has fully set aside the OIO and has held that no penalty and confiscation of truck are warranted and set aside the same, the Appellant is required to get back the security deposit of Rs. 2 Lakhs paid by him when the goods were provisionally released.
3. Dinesh Gupta, son of the Appellant (Shri Iswar Chand Gupta), has filed a letter along with Death Certificate of Shri Ishwar Chand Gupta on 4th April 2015 stating that Shri Ishwar Chand Gupta has expired on 14/02/2015. It is seen from the records that on 16/04/2015, Mr. Dinesh Gupta has filed the application as successor of Shri Iswar Chand Gupta and has also cured the defects pointed out by the Registry.
4. We have perused the Appeal Papers and documents available herein with the help of the Learned AR.
5. It is seen from the extract of OIA reproduced above that the Commissioner (Appeals) has set aside the penalty on the Appellant and also set aside the confiscation of the truck. Against this OIA, the Department has not filed any Appeal. Hence, the conclusions arrived at by the Commissioner (Appeals) remain unchallenged and are final as on date. Therefore, in this case, the Commissioner (Appeals) should have also ordered for release of security deposit of Rs. 2 Lakhs which was deposited by the Late Shri Ishwar Chand Gupta, towards provisional release of the consignment.
6. After going through the factual matrix, we hold that the Department cannot retain this amount. The Appellant’s successor would be eligible to get the refund of security deposit of Rs. 2 Lakhs.
7. While we hold that the Appellant’s successor is eligible to get the refund of Security deposit, it is for the Adjudicating Authority to cause necessary verification in respect of the claim of the Sri Dinesh Gupta that he is the relevant successor.
8. The Appeal is disposed of thus.
(Pronounced in the open court on 24/08/2023)
