Case Law Details

Case Name : Lalit Jain Vs C.C. (CESTAT Ahmedabad)
Appeal Number : Customs Appeal No. 10061 of 2022
Date of Judgement/Order : 12/08/2022
Related Assessment Year :

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.

  • Vikram Singh Dahiya 2008 (223) ELT 619 (Tri – Del)
  • Jaswinder Singh1996 (83) ELT 175 (Tribunal)
  • Mehul Roadways2009 (246) ELT 660 (Tri-Ahmd)
  • 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 relationship, Shri Rutugna Arvindkumar Trivedi had called and informed the Appellant about the incident of his person being caught by Customs authorities. The Appellant had stated this fact in his statement dated 05.09.2019 wherein he had also further mentioned that out of fear he had switched off the phone and destroyed the same. The fact is that as a law abiding citizen, the Appellant was shocked to hear the news and as an immediate reaction, he switched off his phone and decided not to use it again. The Ld. Commissioner wrongly interpreted this and unfairly observed in impugned order. By relying the ratio of case law in the matter of Mahendra Kumar Bajpai and Girish Agarwal Vs Commissioner, Customs, Goods & Service Tax & Central Excise, Lucknow reported as 2021 (12) TMI 291 – CESTAT ALLAHABAD he submits the penalty imposed on the Appellant to be set aside.

3.3. He further submits that the Adjudicating authority has erred in observing that towards his active role in the smuggling activity, the Appellant was awarded with the designation of Independent Director by Shri Rungta Arvindkumar Trivedi in his company M/s Akhand jyot Energy & Power Products Pvt Ltd. The Appellant had stated in his statement recorded on 05.09.2019, inter-alia, that he met Shri Rutugna Arvindkumar Trivedi during an exhibition of LED Lights at Delhi in June 2018 and thereafter interacted on several occasions and that in March 2019, he was inducted as an Independent Director in M/s Akhand jyot Energy & Power Products Pvt Ltd a company of Shri Trivedi. The Ld. Commissioner has ignored this fact and substituted it with his personal opinion regarding induction of the Appellant as an Independent Director in the company of the main accused as a reward for his alleged active role in the smuggling activity.

3.4 He also submits that impugned Order imposing the penalty of Rs 50 Lakh on Appellant under Section 112 (b) is self-contradictory. On the one hand, the Ld. Commissioner has held that the Appellant had knowingly funded Shri Rutugna Arvindkumar Trivedi and actively involved himself in the activity of smuggling of gold which action, if committed, calls for imposition of penalty under Section 112(a)(i). Simultaneously, in the next breath, it has been held that the Appellant had concerned himself in selling or purchasing and dealingwith the said smuggled gold which he knew was liable to confiscation 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 knowingly or intentionally make, sign or use, or caused to be made, signed or used, any declaration, statement or document which was false or incorrect in any material particulars in relation to the smuggling of the gold. In these facts, then the Appellant cannot be charged with financing of the activity of smuggling of gold. Therefore, the penalty of Rs 50 Lakh imposed on the Appellant under Section 112(b)(i) of the Customs Act, 1962 for his allegedly indulging in financing the activity of smuggling of gold must be set aside on this ground alone.

4. Shri R P Parekh, Superintendent Authorized Representative appearing on behalf of the Revenue reiterates the findings of the impugned order.

5. We have carefully considered the submissions made by both sides and perused the record. To examine the above issues, it would be appropriate to extract Section 112 of the Customs Act, 1962 which reads as :-

“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, to a penalty not exceeding the duty sought to be evaded on such goods or five thousand rupees, whichever is greater;

(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 hereinafter 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.”

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 contraventions mentioned in Clause (a) to (p) of Section 111 have been committed in respect of the imported goods acquired or dealt with by him. For imposition of penalty under Section 112(b) of Customs Act, 1962, it is also necessary to prove that the person had knowledge or had reason to believe that the goods acquired or dealt with by him are liable for confiscation under Section 111.

5.1. We find that as regard the role of Appellant Ld. Commissioner in impugned order observed as under:

“ Shri Jignesh Kumar Govindbhai Savaliya has stated in his statement dtd. 05.06.2019 that Shri Rutugna Arvindkumar Trivedi had informed him that the money is yet to be sent to Dubai by one Mr.Lalitbhai. In her statement dtd. 16.07.2019, Ms.Divya Kishore Bhundia has stated that the financial help with regard to the smuggling activity was done by the Noticee and the smuggled gold was being handed over to Ms. Nita Chunilal parmar, who later on was sending the same to Shri Lalit Jain. Thus, the knowledge and involvement of Noticee is corroborated by the versions of Shri Jigneshkumar Govindbhai Savaliya and Ms.Divya Kishore Bhundia. Further Ms.Jagruti Pradeep has stated in her statement dtd. 07.11.2019 that Noticee was enrolled as an independent director in M/s Akhandjyot Energy & Power Products Pvt. Ltd. in the year 2019. Towards his active role in the smuggling activity, Noticee was awarded with the designation of Independent Director by Shri Rutugna Arvindkumar Trivedi in his frim. The conjoint analysis of the above facts, indicate that Noticee has financed the activity of gold smuggling and been actively involved in the entire activity. As agaist the same Noticee has failed to produce any evidence to establish his innocence in the matter.

Accordingly, I find that Noticee No. 19 has knowingly funded to Shri Rutugna Arvindkumar Trivedi and actively involved himself in the activity of smuggling of gold. I have already come to the conclusion that such gold is covered under the category of prohibited goods and is liable for confiscation in terms of the provisions of Section 111 of the Customs Act, 1962 in my discussion at paras 119.20 to 119.20.8 hereinabove. Therefore, I find that Noticee No. 19 has concerned himself in selling or purchasing and dealing with any goods which he knew were liable to confiscation and thereby, rendered himself liable to penalty in terms of the provisions 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 is not sufficient to hold that the appellant was involved in alleged activity of smuggling of gold.It is well settled law that the statements of the co-noticee cannot be adopted as a legal evidence to penalize the accused unless the same are corroborated in material particulars by independent evidence. The statement of co-accused cannot be relied upon, particularly when appellant has denied his involvement in respect of the goods in question. In this connection, the following judgments are relevant and they fortify the views expressed by us :

  • Punam Chand Bhotra Collector of Customs – 1993 (63) E.L.T. 237.
  • Jai Narain Verma Collector of Customs, New Delhi 1995 (76) E.L.T. 421.
  • Jaswinder Singh Collector of Customs, New Delhi – 1996 (83) E.L.T. 175.
  • Mahabir Prasad Commissioner of Cus. (Prev.), I.N.B., Patna – 2000 (126) E.L.T. 803.
  • Pradeep Shah Vs. Commissioner of Customs, Patna -2006 (197) E.L.T. 301 (Tri. – Kolkata)
  • Vikram Singh DahiyaVs. Comm. Of Cus.(Export), New Delhi – 2008 (223)ELT 619 (Tri. Del.)
  • Surinder Kumar Khanna Vs. Intelligence Officer, DRI- 2018(362) ELT 935 (SC)
  • Habib UzZamanVs. Commissioner of Customs, New Delhi – 2021(376) ELT 666 (Tri. Del.)
  • K. Jain Vs. Commissioner of Customs, Kandla – 2009(235)ELT 170 (Tri. Ahmd.)

5.3 We further find that in the present case persons were not examined in the adjudication proceedings and as such their statements are not admissible for framing the charge against the appellant as evidence under the provisions of Section138B of Customs Act, which provides that – if an authority in any proceedings under the Act wants to rely upon the statement of any person (made during enquiry), such person is required to be examined as witness and if the adjudicating authority finds the evidence of the witness ‘admissible’, then such witness should be offered for cross-examination and only thereafter the evidence is admissible. In absence of compliance with the provision of Section138B of the Act, the statements are not admissible as evidence and accordingly, the case of revenue against the appellant does not stand. We further find that the appellant have categorically denied his connection with the alleged smuggling of gold activity and in absence of any corroborative evidence the imposition of penalty on him is bad and liable to be set aside.

5.4 We also find that in the present 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 the goods in question were per se liable for confiscation under Section 111(d) ibid. It is nowhere on record that the appellant, in its capacity, was knowingly involved in alleged activity of smuggling gold. Section embodies the phrase “…which he knows or has reason to believe are liable to confiscation under Section 111…” which is of specific importance in this situation. Revenue has nowhere ascertained as to the knowledge of the appellant whether he knew or had reason to believe that the goods in question were liable for confiscation. Undisputed peculiar facts of the case are that the appellant is neither the importer nor the owner who had acquired possession nor in any way concerned with the carrying, removing, etc., of the goods in question, and Revenue has nowhere ascribed knowledge of the appellant as to the confiscation.

5.5 Penalty under Section 112(b) can be imposed when a person 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. It is submitted that it is not the case of the Revenue that the Noticee was indulged in any of the activities as mentioned under Section 112(b) of the Customs Act. As the Appellant did not acquire possession of or in any way concern with import of gold, penalty under Section 112(b) ought not to have been imposed.

5.6 Section 112(b) of the Customs Act is identical to earlier Rule 209A of the Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2002. Relevant extracts of the provisions of Customs Act, 1962 Central Excise Rules, 1944 and Central Excise Rule, 2002 are reproduced hereunder:-

“Section 112 Penalty for improper importation of goods etc.

(a) ****

(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 –

Rule 209A of the Central Excise Rules, 1944:

“Rule 209A. Penalty for certain offences. –

Any person who acquires possession of, or is 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 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 is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of Cenvat credit under the Cenvat Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater.”

The Hon’ble Bombay High Court in the case of Commissioner of Central Excise Vs. Rakesh Kumar Rajendra Kumar & Co. 2015 (325) ELT 506 while interpreting Rule 209A held as under:

“The sine qua non for a penalty on any person under the above rule is : either he has acquired possession of any excisable goods with the knowledge or belief that the goods are liable to confiscation under the Act or Rules or he has been in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or has in any other manner dealt with any excisable goods with such knowledge or belief. Acquisition of possession of goods is, indisputably, a physical act i.e. the act which could not have been done without handling or movement of excisable goods as mentioned in the rule. The words “who acquires possession” would indicate that the person sought to be penalized under this rule has to first acquire the possession and then do the activity of transportation etc. as contained in the rule. It is, thus, clear that the physical possession of the goods is a must for doing the activity of transporting referred in Rule 209A. The ratio laid down by this Court in Jayantilal Thakkar & Co. (supra) covers the issue. In the said judgment, it is held that in the given situation, if the assessee is only issuing invoices wherein there is no movement of the goods, they cannot be visited with penalty under Rule 209A.”

5.7 The Larger Bench of the Tribunal in the case of Steel Tubes of India Ltd. Vs. Commissioner of Central Excise 2007 (216) ELT 506, after referring to the decision of the Hon’ble Bombay High Court in the case of Jayantilal Thakkar and Co 2006 (195) ELT 9 (Bom.) held that for imposition of penalty under Rule 209A of the Central Excise Rules, 1944, the person must have dealt with excisable goods with knowledge that they are liable for confiscation.

5.8 Similarly, in the case of R.C. Jain Vs. Commissioner of Central Excise and Service Tax – 2016 (334) ELT 115, the Hon’ble Tribunal held that penalty under Section 112(b) of the Customs Act cannot be imposed 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 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.

6. As per our above discussion and finding, we are of the considered view that the appellant is not liable imposition of penalty under Section 112(b) of the Customs Act, 1962. Therefore, we set aside the penalty and allow the appeal with consequential relief.

(Pronounced in the open court on 12.08.2022)

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