Lalit Jain Vs C.C. (CESTAT Ahmedabad)
Held that penalty under Section 112(b) of the Customs Act cannot be imposed if the assessee has not dealt with or transported goods physically in any manner.
Facts-
Based on the investigation and evidences in the form of statements of persons involved in smuggling of gold from Dubai to India, it was alleged that the appellant along with others was actively financing the smuggling racket. Accordingly, penalty u/s. 112(b)(i) of Rs. 50,00,000/- was imposed on the appellant. Being aggrieved, the appellant has preferred the present appeal.
Conclusion-
In the case of R.C. Jain Vs. Commissioner of Central Excise and Service Tax – 2016 (334) ELT 115, Hon’ble Tribunal held that penalty under Section 112(b) of the Customs Act cannot be imposed if the assessee has not dealt with or transported goods physically in any manner.
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 dealing with any goods which the appellant knew or had reason to believe are liable to confiscation. In the absence of the department having proved the knowledge of the appellant 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.
FULL TEXT OF THE CESTAT AHMEDABAD 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 smuggling Gold.
2. The brief facts of the case as per the department is that the officers of Airport Intelligence Unit, Ahmedabad found that Shri Jignesh Savaliya working as Duty Officer, M/s Globe Ground India on 04.06.2019, to be behaving in a suspicious manner with a passenger in the Aerobridge of Bay No.32 and found to be in possession with yellow metals. The officers conducted personal search of Shri Jignesh Savaliya whereby it was found to him carrying 9 brown packets in the presence of panchas under panchanama dtd. 04.06.2019. The officers opened the packet and found the same contained 47 gold bars. The officers seized the said gold under Seizure memo dtd. 04.06.2019. Statement of Shri Jignesh Savaliya was recorded wherein he stated that the said gold bars were given to him by a person named Shri Lokesh Sharma and he was supposed to hand over the same to Shri Rutugna Trivedi outside the Airport terminal. The officers further carried out the investigation and the evidences in the form of statements of persons involved in smuggling of gold, documents recovered after searches carried out at various locations, documents recovered and retrieved from the Mobile phones of various persons involved in smuggling of gold, data storage devices recovered from the residence of Ms. Nita C Parmar and also the email recovered from account of Shri Jignesh Savaliya and Shri Jitendra Rokad reveal that a Gold smuggling racket was orchestrated and operated by Shri Rutunga Trivedi, his wife Smt. Hina Rutunga Trivedi and their employee and key associate Ms. Nita C Parmar. This smuggling activity was aided by Shri Jignesh Savaliya, Asst. Duty Officer of M/s Global Ground India Pvt. Ltd., ground handling agency working at Sardar Vallabhbhai Patel International (SVPI) Airport, Ahmedabad, in as much as he received the gold from these carriers and brought them outside the airport by exiting from the cargo gates. It further emerges from the evidences that this smuggling racket was actively financed by Shri Jitendra Rokad, Mehul Bhimani, Raju Goswami, Vipul Joshi and Lalit Jain.
2.1. The smuggling of gold from Dubai to India was carried out with intent not to pay Customs Duty using the persons as carriers. Upon arrival at SVPI Airport, Ahmedabad the gold carried by the carriers sent by Shri Rutugna Trivedi was handed over to Shri Jignesh Savaliya, either in the Aerobridge or 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 issued proposing confiscation of the seized goods under Sections 111(d), 111(i), 111(I) and 111(m) of the Customs Act, 1962 and demanding customs duty and imposition of penalty under Section 112(a) & 112 (b) and Section 114A & Section 114AA read with Section 123 of the of the Customs Act. Appellant was also issued show cause notice whereby it was alleged that the Appellant had also given finance to Shri Rutugna Trivedi, which was used by him to procure Gold in Dubai and to smuggle the same into India. Thus it appears that Appellant was knowingly involved in smuggling of gold into India which he had reasons to believe the smuggle under Section 111 of the Customs Act, 1062. After following due process, the adjudicating authority vide impugned order dated 29-11-2021 confirmed the charges and demands proposed in Show Cause Notice. He imposed the penalty of Rs. 50,00,000/-under Section 112(b)(i) of the Customs Act 1962 on the appellant. Being aggrieved, the appellants preferred appeal before this Tribunal.
3. The Learned Consultant, Shri H.R. Garg appearing on behalf of Appellant submits role of the Appellant in the whole episode has been derived only from oral statements of two persons namely Ms.Divya Kishore Bhundia and Shri Jignesh Savalia. The above statements remained uncorroborated inasmuch as during the investigation, the Appellant was examined and his statement was recorded on 05.09.2019 wherein to a specific question, he replied that ‘he did not know Shri Jigneshkumar Govindbhai Savalia and Ms Divya Kishore Bhundia and did not agree about the mention of his name made by them in their respective statements. The Adjudicating authority has therefore erred in holding that the knowledge and involvement of the Appellant is corroborated by the versions of Shri Jignesh kumar Govindbhai Savaliya and Ms. Divya Kishore Bhundia. Furthermore, both Shri Jigneshkumar Govindbhai Savaliya and Ms Divya Kishore Bhundia had retracted their respective statements when they were arrested during the investigation. Revenue failed to investigate the matter thoroughly and has merely proceeded on the basis of doubtful statements which have also not been tested on touchstone of cross-examination and as such are not admissible as evidence.
3.1. He submits that during the investigation, Appellant’s premises in Mumbai were searched by the investigating officers under Panchanamas 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.
