Customs, Excise and Gold Tribunal - Delhi
Liyakat Shah vs Commissioner Of C. Ex. on 12 June, 2000
Equivalent citations: 2000(120)ELT556(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. These are two appeals filed by the above mentioned appellants against penalties imposed on them by the Commissioner by his Order-in-Original dated 27-7-1998. Apart from the penalties on the appellants 230 gunny bags containing ball bearings value at Rs. 1,32,96,400/- were ordered to be confiscated absolutely under Section 111(d) of the Customs Act, 1962. Personal penalties on 12 persons (including the present appellants) were also imposed under Section 112 of the Customs Act by the said order. The present appellants are not contesting the confiscation of the goods but are only challenging the personal penalties imposed on them. Shri Sandeep Sood had been imposed a penalty of Rs. 50 lakhs and Shri Liyakat Shah had been imposed a penalty of Rs. 25 lakhs.
2. Shri S.N. Kohli, Sr. Advocate along with S/Shri Satpal Singh and K.K. Choukse, Advocates appeared for the appellants and Shri Mewa Singh, ld. SDR represented the respondent Commissioner.
3. Brief facts are: Shri Sandeep Sood, is the proprietor of M/s. Rattan Road Lines, with its headquarters at Indore and branch office at various other places. Acting on intelligence that a truck bearing registerarion No. NLO 5A 1865 coming from Nepal containing ball bearings of foreign origin had unloaded the said goods at the godown of M/s. Rattan Road Lines at New Kabadkhana at Bhopal on 13-9-96, the said premises were searched by the Customs Officers. The person incharge of the godown, Shri Ramashankar Dubey was interrogated on the spot and statement recorded from him. During the personal search of Shri Ramashankar Dubey, three bunches of keys were recovered from his pant pocket. He explained that one of the bunches of keys related to the office and the other bunch of keys was of the godown and the third bunch of keys was that of the office almirah and locker. On interrogation, he deposed that 230 gunny bags containing ball bearings were kept in the godown. However, he could not produce any valid duty paying documents relating to the said ball bearings. He disclosed that the documents which purported to accompany the ball bearings contained false description of the goods and ball bearings were never mentioned on any of those documents. On reasonable belief that the said goods were smuggled into India from outside India, the godown was opened with the keys of Shri Ramashankar Dubey and 230 gunny bags of ball bearings seized. The bags contained markings "made in China". These bags consisted of smaller plastic bags containing 10 ball bearings each. Shri Ramashankar Dubey disclosed that the goods belonged to one Har-bans Singh and that Shri Harbans Singh had come and opened one of the gunny bags and had taken some ball bearings with him. Shri Ramashankar Dubey further disclosed that the ball bearings were unloaded from truck No. NLO 5A 1865 by the driver Manta under direction from Shri Harbans Singh. Shri Ramashankar Dubey also disclosed that the driver had told him that the ball bearings were brought from Nepal. Shri Ramashankar Dubey however, could not produce any documents, Bill of Entry, or other documents showing duty payment on the said goods. In further statement given to the Superintendent of Customs, Bhopal under Section 108 of the Customs Act, Ramashankar Dubey stated that he was the manager of the Rattan Road Lines, Bhopal; that he was employed by Shri Sandeep Sood, proprietor of Rattan Road Lines; that he knew the residence and office telephone numbers of Sandeep Sood; that he was getting a monthly salary of Rs. 2,000/- from Shri Sandeep Sood; that though the godown was in the name of M/s. Rattan Road Lines, it had actually been acquired by Shri Harbans Singh and that Rs. 10,000/- mentioned in receipt for the rent was paid to Shri Mohd. Salim on instructions from Shri Sandeep Sood; that Sandeep Sood had told him (Ramashankar Dubey) that Harbans Singh needed a godown in Bhopal for unloading and loading of goods; that he (Ramashankar Dubey) had arranged for the renting of the godown from Shri Mohd. Salim at a monthly rent of Rs. 2,800/-; that he was asked to look after the loading and unloading from the aforesaid godown and therefore the goods of the godown remained with him; that Shri Harbans Singh used to come personally at the time of loading and unloading of the goods and that Shri Harbans Singh used to give instructions. Shri Dubey further stated that the first consignment of ball bearings from Nepal had arrived on 5-8-96 which was unloaded in front of his office and transferred to other branches and sent to Delhi on instructions from Harbans Singh; that ball bearings started coming from Nepal at regular intervals and these were disposed of by him on instructions from Harbans Singh. As on 5-8-96, the date of seizure, he had handed over 80 consignments, some of which were recorded by him in the note book marked as Annexure 'A'. Shri Ramashankar Dubey also stated that Shri Harbans Singh had told him that the said goods came from outside Nepal and were manufactured in China and therefore the goods did not have any Bill of Entry or any other documents. Harbans Singh had also instructed him that while despatching the goods the original description of the goods should not be mentioned in the documents for further transportation. The drivers had also told Ramashankar Dubey that the goods were brought from Nepal. On 12-9-96, when truck bearing registeration No. NLO 5A 1865 containing 230 packages of ball bearings and other packages had been brought, driver Manta had informed that he had brought these ball bearings from Nepal. Shri Ramashanakar Dubey on instructions obtained from Harbans Singh had unloaded the ball bearings in his godown near Rani Jhansi Ki Building, New Kabadkhana, Bhopal. Shri Harbans Singh had come at about 2 PM on 12-9-96 along with the trucks and the gunny bags. He had also opened one of the gunny bags and taken out some ball bearings therefrom as samples.
4. On the basis of statements given by Ramashanakar Dubey, the residential and office premises of Shri Sandeep Sood, proprietor of Rattan Road Lines was searched on 14-9-96 as also the residential premises of Shri Harbans Singh.
5. On the basis of information collected, show cause notice dated 22-2-97 was issued to 12 noticees including the present appellants charging them with the smuggling of 230 gunny bags of ball bearings of foreign origin and asking them to show cause why the ball bearings should not be confiscated and penalties imposed on them.
6. The matter was adjudicated and by the impugned order the Commissioner found that penalties were imposable on the two appellants among others. As regards Shri Sandeep Sood, the Commissioner gave the following findings "Shri Sandeep Sood is the owner of the Rattan Road Lines. From the statement of Ramashankar Dubey, it is clear that he was introduced to one Shri Harbans Singh by Sandeep Sood himself and all the activities of smuggling and warehousing of the goods of smuggled origin were at the clear directions, connivance and guidance of Sandeep Sood. In short, Shri Sandeep Sood had played the role of kingpin in warehousing the smuggled goods in his godown from time to time. For the role played by him it would be difficult for me to absolve him from the charges..."
7. As regards appellant Shri Liyakat Shah, the show cause notice alleged that he had abetted in the smuggling activities, but it did not spell out in what way and in what manner Liyakat Shah was involved in the smuggling activities. The Commissioner also did not rely on any specific evidence against Shri Liyakat Shah.
8. Ld. Counsel for Shri Liyakat Shah has submitted that neither the show cause notice nor the impugned order had discussed any specific instance or evidence showing the involvement of Shri Liyakat Shah. He has submitted that the Commissioner has committed serious error in imposing a penalty of Rs. 25 lakhs on him without assigning any reason and without adducing any evidence against Shri Liyakat Shah. The Commissioner had also declined to allow cross-examination of the witness who had given the statements in spite of the request made by the appellants. He submitted that the denial to appellant of an opportunity of cross-examination the witnesses would amount to violation of principles of natural justice. Reliance was placed on V.K. Soni v. Commissioner reported in 1996 (84) E.L.T. 520 (Trib.). He also submitted that statements of co-accused cannot be relied on for imposing penalty and relied on the Tribunal's decision in Sadhan Chandra Mallick v. Collector of Customs (Preventive) 1993 (66) E.L.T. 112 (Tri.).
9. Ld. SDR reiterated the findings in the impugned order and submitted that the statements given by the various persons showed that Shri Murari Lal Gupta, resident of Indore (as well as Nepal) had masterminded the smuggling operations of ball bearings and he was supported in his activities by Shri Binod Singh of Kisanganj, Shri Sandeep Sood and Shri Gurmeet Singh, Sita-ram, Dhiren, Prety Gupta, Ramashankar Dubey, Shukhdev Singh, Lalan Prasad, Liyakat Shah and others. Shri Liyakat Shah had also gone into absconding and did not participate in the proceedings.
10. As regards Shri Sandeep Sood, in his reply to the show cause notice, he had maintained that all the allegations levelled against him were false and baseless and he had also sought the cross-examination of the investigating officers who recorded the statement from various persons. During the adjudication proceedings, ld. Counsel for Shri Sandeep Sood and Liyakat Shah had sought cross-examination of the seizing officers which was initially allowed by the Commissioner but was not allowed to be carried out later. Ld. Counsel submitted that the show cause notice does not even specifically mention any act of commission or omisison by the appellants which made them liable to penal action. For example, there was nothing in the show cause notice to show as to which act, whether of obtaining or concealing the smuggled goods was the act of commission/omission which attracted penal action against them.
11. The main argument pressed on behalf of Shri Sandeep Sood was that the failure to provide opportunity for cross-examination of the seizing officers had violated the principles of natural justice. He had relied on various decisions of the Tribunal in support of this contention. We find that in Jai Narain Verma v. Collector of Customs 1995 (76) E.L.T. 421, the Tribunal had in its majority opinion dealt with the same question i.e. whether failure to allow the assessee to cross-examine the officers who seized the smuggled goods would be a failure of principles of natural justice. In the said case it was held that statement of co-accused alone cannot be relied upon to implicate an assessee unless corroborated by independent evidence. It was observed by the Third Member to whom the difference of opinion was referred that even if cross-examination of co-noticees is permitted for complying with the observance of principles of natural justice, the fact remained that evidence of co-noticees was tainted evidence and in the absence of independent corroborative evidence the position will remain the same. We find that the aforesaid decision of the Tribunal in Jai Narain case does not help the appellant's case since the opinion of the third Member does not specifically deal with the aspect of failure to provide opportunity of cross-examination of co-noticees as amounting to failure to observe the principles of natural justice though it is true that para 10 of the ld. Judicial Member's order in the said case dealt with this question and held that opportunity for cross-examination should have been extended to the assessee. We also note that in the said case the request was for cross-examination of co-noticees who had given statements implicating the assessee. In the instant case the cross-examination sought by the appellant was of seizing officers and not co-noticees who had given statements implicating the appellant. In the Orissa High Court judgment in Ram Kishan Agarwala v. CCE 1981 E.L.T. 217 (Orissa) refusal of opportunity to cross-examine the witness, who effected the seizure of silver was held to amount violation of principles of natural justice and the stand that the opinion of the adjudicating officer would be final as to what would be relevant for the defence of the assessee, was not sustainable in law. The said case apparently supports the contention of the appellant that failure to allow cross-examination of seizing officers would amount to violation of principles of natural justice. In the Tribunal judgment in Navnit Shah v. Collector of Customs 1993 (67) E.L.T. 426 the Tribunal had held that the adjudicating officer should have stated the reasons for not allowing the witnesses to be cross-examined. In the absence of any such finding the matter was remanded in that case for re-adjudication and for allowing the cross-examination of witnesses sought by the assessee. In the other Tribunal's decision relied on by the appellants namely M.P. Jain v. CCE 1988 (37) E.L.T. 577 the Tribunal had observed that the Deputy Collector who adjudicated the matter initially was wrong in holding that cross-examination was not a part of the requirement of natural justice. However, the adjudicating authority using its discretion on the facts of the case has to examine the assessee's request for cross-examination to see whether the request was with a view to protract the proceedings or to malign or browbeat the witnesses. The matter was remanded to the adjudicating authority for allowing an opportunity to cross-examine the witness and to pass orders in accordance with the law.
12. We find from the above examination of the case law relied on by the ld. Counsel that it has not been held that cross-examination is a mandatory procedure to be accepted in all cases and failure to allow cross-examination would result in miscarriage of justice or non-observance of principles of natural justice in all cases. What has been held in these cases is that the adjudicating authority should not dismiss the request for cross-examination arbitrarily or without exercising its discretion in the facts of each case. In the case of M.P Jain v. Collector of Customs, the Tribunal has clearly observed in para 15 that the adjudicating authority may refuse cross-examination for justifiable reasons and consider whether the request for cross-examination was justified as genuine or whether it was made just to protract the proceedings or to malign or browbeat the witnesses. In the instant case we find that the adjudicating authority had dealt with the request for cross-examination in detail and had taken the view that cross-examination of the seizing officer in a case where goods have been seized from the godown of the appellant did not warrant cross-examination of the seizing officer. He had taken the view that this request was nothing more than a delaying tactics to avoid justice especially when there was no allegation from the assessees that the officers had not followed the proper procedure for effecting the seizure.
13. In the facts and circumstances of the case we therefore find that refusal to allow cross-examination of the seizing officers did not amount to any failure of principles of natural justice and in view of the detailed reasons given by the adjudicating officer for rejecting the said request, it cannot be said that he had arbitrarily dismissed the prayer for cross examination of the seizing officers.
14. In the above view of the matter we do not find that the failure to cross examination of the seizing officer has resulted in any mis-carriage of justice or contravention of the principles of natural justice as far as appellants Shri Sandeep Sood is concerned. Further having regard to the fact that there is no dispute that the smuggled goods were found in the godown which has been taken in the name of Rattan Road Lines owned by Shri Sandeep Sood and the detailed corroborative statements of Shri Ramashankar Dubey implicating Shri Sandeep Sood in the smuggling operations, the imposition of penalty on him does not warrant interference. His connivance in storing and handling of smuggled goods is fully established. However, since the evidence on record does not show Shri Sandeep Sood as the owner of the goods, the penalty on him is reduced from Rs. 50 lakhs to Rs. 5 lakhs. His appeal is allowed to the said extent.
15. For the reasons given in paras 7 & 8 above, we also hold that the allegations against Shri Liyakat Shah has not been established. The penalty of Rs. 25 lakhs on him is therefore set aside.
16. Both the appeals are disposed of in the above terms.