Custom, Excise & Service Tax Tribunal
Shri Sahil Moiz Zafar vs Commissioner Of Customs(Air Cargo) on 25 April, 2024
C/20310-20311/2020
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
1st Floor, WTC Building, FKCCI Complex, K. G. Road,
BANGLORE-560009
COURT-2
Customs Appeal No. 20310 of 2020
[Arising out of the Order-in-Original No.35/SA(35) ADG
(ADJ.)/DRI, Mumbai/2020-21 dated 17.06.2020 passed by
the Additional Director General (Adjudication), DRI,
Mumbai.]
Shri Dharaneesh Raju Shetty
Room No.23, Abdul Sattar Chawl,
Mogra Pada, Near Laxmi Hotel, .......Appellant
Andheri (E),
Mumbai - 400 069.
Vs.
The Commissioner of Customs
Airport Air & Cargo Complex,
Air Freight Terminal, ....Respondent
Devanahalli, Bengaluru - 560 300.
AND Customs Appeal No. 20311 of 2020 [Arising out of the Order-in-Original No.35/SA (35) ADG (ADJ.)/DRI, Mumbai/2020-21 dated 17.06.2020 passed by the Additional Director General (Adjudication), DRI, Mumbai.] Shri Sahil Moiz Zafar C-Wing, 2201, HPIL Metropolis Opposite Gurudwara, Four Bunglow, .......Appellant Andheri West, Mumbai - 400 058.
Vs.
The Commissioner of Customs
Airport Air & Cargo Complex,
Air Freight Terminal, ....Respondent
Devanahalli,
Bengaluru - 560 300.
Appearance:
.... For Appellant
Mr. N. D. George, Advocate
Mr. Neeraj Kumar, Superintendent (AR) .... For Respondent
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C/20310-20311/2020
CORAM:
HON'BLE MR. P. A. AUGUSTIAN, MEMBER (JUDICIAL) HON'BLE MRS R. BHAGYA DEVI, MEMBER (TECHNICAL) Date of Hearing: 11/07/2023 Date of Decision: 10/01/2024 INTERIM ORDER NO. __1 - _2 OF 2024 Date of Pronouncement: 25/04/2024 FINAL ORDER No.__20316 - 20317 of 2024 Per R. BHAGYA DEVI:
These appeals are filed by the appellants Shri Dharaneesh Raju Shetty and Shri Sahil Moiz Zafar, against the impugned Order-in-Original No.35/SA(35) ADG (ADJ.)/DRI, Mumbai/2020-21 dated 17.06.2020 passed by the Additional Director General (Adjudication), DRI, Mumbai. Appellants have been imposed penalties under various sections of the Customs Act, 1962. Three importers namely M/s. Maxco Traders, M/s. Samarth Enterprises and M/s. Noble Enterprises imported items declaring them as sunglasses but on investigation, it was found to be readymade garments, which fact is not under dispute and accordingly, the value for these mis-declared goods was redetermined at Rs.41,18,73,552/- and the differential duty was Rs.16,20,12,083/-. Show-cause notices issued to these three importers were not responded to because these were dummy IECS being misused without the knowledge of the IEC holders on the strength of the stolen identity and these documents were used for carrying out illegal importation of goods. The main culprits in Page 2 of 37 C/20310-20311/2020 these cases were Shri Krishna Naik, Shri Dinesh Gowda assisted by the appellants in the present appeals.
2. The appellants have defended themselves only on the ground that the goods were not liable for confiscation and therefore, the entire order is of no legal basis. It is also submitted that cross-examination of witnesses were not allowed and in view of the various decisions, the undervaluation cannot be sustained only based on statements. It is also submitted that department had investigated only two importers though there were many such cases where such instances have happened. It is also stated that the penalties imposed on them was not legally correct in as much as the goods were not liable for confiscation and there is no omission on their part. They have relied on the following decisions:
• Andaman Timber Industries versus Commissioner of Customs. Is, Kolkata-II: in 2017 (50) 8.T.I. 93 (S.C.) • Basudev Garg versus Commissioner of Customs: 2013 (294) E.LT.353 (Del) • Vinod Solanki versus Union of India: 2009 (233) E.LT.
157 (S.C) • Commissioner of Customs, Lucknow versus Sanjay Soni:
2022 (381) E.L.T. 309 (Tri.-All.) • Proprietor, Carmel Exports & Imports versus Commissioner of Customs, Cochin: 2012 (276) E.T. 505 (Ker.) • Kuber India versus Commissioner of Customs, Jaipur-I:
2016 (340) E.LT. 404 (Tri. - Del.) • Kuldeep Kaur versus commissioner of Customs., (ICD, TKD), New Delhi: 2018 (363) B.L.T. 334 (Tri. - Del.) • Syndicate Shipping Services Pvt. Ltd. vs. Commissioner or Customs:2003 (154) E.L.T. 756 (Tri. - Chennai) • M. Shashikant & Co. v. Union of India: [1987 (30) E.L.T 868(Dom.)] • Commissioner of Customs (UP) v. P.D. Manjrekar: 2009 (244) E.L.T SI (Bom.) • Harbhajan Kaur v. Collector of Customs: 1991 (36) E.L.T 273 Tri Del.Page 3 of 37
C/20310-20311/2020 • Nazir-ul-Rehman vs. Commissioner of Customs, Mumbai:
2004 (174) E.L.T. 493 (Tri.-Mumbai) • Vivek Joshi vs. Commissioner of Customs (Imports), Nhava Sheva, Mumbai: 2004 (178) E.L.T.526 (Tri.- Mumbai) • Jeevaraj vs. Collector of Customs and Central Excise, Bangalore: 1985 (22) E.L.T 44 (Kar.) • Jay Kay Exports & Industries vs. C.C. (Port), Kolkata:
2004 (163) E.L.T. 359 • Commissioner of Customs (Sea), Chennai-I versus M.R. Associates: 2013 (297) E.L.T. 504 (Mad.) • Amrit Foods versus Commissioner of Central Excise, U.P.: 2005 (190) E.L.T. 433 (S.C.) • Hindustan Steel Ltd. vs. State of Orissa reported in [1978 (2) ELT (J159) (SC)] • Cement Marketing Co. of India Ltd. v. Assistant Commissioner of Sales Tax: [1980 (6) ELT 295 (SC)] • D.S. Cargo Service vs. Commissioner of Customs, New Delhi: 2009 (247) E.L.T. 769 (Tri. - Del.) • Vetri Impex vs. Commissioner of Customs., Tuticorin:
2004 (172) E.L.T. 347 (Tri.-Chennai) • V. Esakia Pillai vs. Commissioner of Customs: 2001 (138) E.L.T. 802 (Tri.-Chennai)
3. The Authorised Representative on behalf of the Revenue reiterated the findings of the Commissioner.
4. Heard both sides. The fact that 3 consignments were detained from the Custodian Air India SATS and when examined were found to be branded readymade garments as against the declared items '1500 pieces of packing materials (sunglasses and 920 pieces of sunglasses (unbranded)', is not under dispute. The so-called importers M/s. Maxco Traders, Shri Mimoh Balu Bhawar, Proprietor, 24 years old and educated only up to 10th Standard when contacted informed that he was not aware of the name of the company and how his name and other details were misused was not known to him and he knew none of them whoever was Page 4 of 37 C/20310-20311/2020 involved in these illegal imports. Similar was the case of other importers who claimed that they were not aware that their documents were being misused by floating these companies. After assessment, the out of charge and other documents were found to be with Shri Krishna Naik who was a 'H-cardholder' working for the Customs House Agent (CHA) M/s. Avenue Logistix. It was also found that the bank accounts mentioned in the IEC documents were fake as confirmed from the respective banks.
5. The appellant Shri Dharaneesh Raju Shetty in his statement dated 3.1.2018 had stated that he had sent WhatsApp messages of pictures of Airway Bill IEC registration certificate invoices to Shri Krishna Naik and these facts were corroborated by Shri Krishna Naik in his statement dated 30.12.2017. Shri Krishna Naik further stated that Shri Dharaneesh Raju Shetty, broker operating in Mumbai had provided the details of importer's name, IEC number and consignment details with regard to the imports to be cleared at Customs Bangalore. Shri Dharaneesh Raju Shetty claimed that he was not knowing English and therefore, whatever is written in a statement was not known to him but however Shri T. P. Prabhakar, Partner of M/s. Trishakthi International, in his statement stated that Shri Dharaneesh Raju Shetty was Power of Attorney holder for his company and he was authorised to file documents for clearance of import and export cargo for their clients at Mumbai Customs. He was fluent in English and interacted with the client and the Customs officers in English. It is also stated that all 'G' cardholders were required to possess Page 5 of 37 C/20310-20311/2020 adequate knowledge of English since they were to be aware of the Customs Act, Rules and procedures which were in English and one had to necessarily pass the exams conducted by the customs authorities to obtain a 'G' cardholder and the exams are necessarily in English or Hindi. From the investigations, it is clear that the necessary documents for clearance of these mis-declared goods were shared by Shri Dharaneesh Raju Shetty. It is also noticed that transportation of the said goods from Mangalore to Mumbai was being arranged through M/s. Southern Travels. In view of the above, it is admittedly clear that Shri Dharaneesh Raju Shetty had in fact assisted in helping Shri Krishna Naik and Shri Dinesh Gowda in importing goods of much higher value by mis- declaring them and evading customs duty to the extent of Rs.16.20 crores and therefore, they are liable to penalty under the various Sections of the Customs Act, 1962. The call records listed at para 1.17.1 clearly establish the link between Shri Dharaneesh Raju Shetty and Shri Sahil Zafar, Shri Dinesh Gowda, Shri Dhanaraj Shetty and Shri Krishna Naik and various others including the supplier Shri Membo of China. It is also on record that during the period from 2008-2009, DRI Mumbai had made a case against the appellant for smuggling branded imported garments which culminated into levying a personal penalty on him. In yet another case, the Air preventive Unit had detained for another case of misdeclaration where penalty was imposed on him. In 2017, he was involved in a case of undervaluation and many other cases where his active involvement is found and investigations clearly proved and penalties were imposed on him. Page 6 of 37
C/20310-20311/2020 None of these have been disputed in his grounds. The appellant's claim that the goods were not liable for confiscation itself speaks the interest they have in the goods that were misdeclared. Moreover, the goods were seized from the custodian within the customs area and therefore, they were liable for confiscation. The statements of Shri Krishna Naik from whom the documents were recovered corroborated with the appellants statements and the witnesses who have corroborated the events were none other than the employees of the airways, custodian and his own colleagues who were party to the offence. Therefore, he has committed an offence under Section 112(a) and (b) by abetting and mis- declaring the goods and violated provisions of Section 114AA by knowingly and intentionally mis-declaring and giving false declaration which has resulted in confiscation of goods. Therefore, the Commissioner was right in imposing penalties for violating the above Sections. Moreover, we find that he has been a repeated offender and penalised a number of times for similar fraudulent activities.
6. The appellant Shri Sahil Moiz Zafar had assisted them to procure the imported goods from China by visiting China and by placing orders for import of branded goods which were cleared through ACC/ICD Bangalore. Shri Dharaneesh Raju Shetty in his statement has confessed that Shri Sahil Moiz Zafar was his partner and financier for the mis-declared goods that were imported. He also stated that Shri Sahil Moiz Zafar had informed him regarding his travel to China to meet the overseas supplier of Page 7 of 37 C/20310-20311/2020 branded goods Shri Membo to settle some previous payments and organise import of subsequent consignments. The call data records between Shri Sahil Moiz Zafar and his Chinese counterparts clearly show that he was in constant touch with the Chinese supplier along with Shri Dharaneesh Raju Shetty. The call records detailed in the show-cause notice for the period between June 2017 to December 2017 at para 1.16.1 clearly established the link between Shri Dharaneesh Raju Shetty and Shri Sahil Moiz Zafar with the supplier from China Shri Membo. The detail call records of Shri Sahil Moiz Zafar with different numbers which linked to the supplier in China as listed out in the show-cause notice at para 1.16.2. also proves his involvement.
7. Shri Ajay, Air Cargo Operation, Manager Etihad Airways in his statement dated 15.2.2018 admitted that the Airway Bill with mobile number of Shri Sahil Moiz Zafar was mentioned, which has been corroborated by Mr. Kiran Kumar, Cargo Handling Officer of Etihad Airways in his statement. In view of the above evidences, the appellant is liable for penalty under Section 112(b) of the Customs Act, 1962. None of the detail call records shown in the show-cause notice has been disputed by the appellants in their reply to the show-cause notice or in the grounds of appeals filed before us. The only plea taken by the appellant is that they were not allowed to cross-examine the witnesses and some of the persons who were accused were not being summoned or investigated. They have also submitted that the goods were not liable for confiscation. There is no iota of evidence to prove that Page 8 of 37 C/20310-20311/2020 the goods were not mis-declared and there were no attempts made by them to evade customs duty by mis-declaring the goods. Therefore, the investigations which culminated to prove that dummy IECs were arranged by Shri Dharaneesh Raju Shetty with the assistance of Shri Nasir which was admitted by Shri Krishna Naik in his statement cannot be ignored. The records show that the payments for actual goods as per Airway Bill and invoices were arranged by Shri Dharaneesh Raju Shetty and Shri Sahil Moiz Zafar is also not disproved with any evidences on record. Shri Dharaneesh Raju Shetty's involvement in Mumbai has been proved by various witnesses as discussed above. From the records and various statements and from the detailed call records, it is very clear that Shri Shail Moiz Zafar was partner along with the Shri Dharaneesh Raju Shetty in mis-declaring the goods and misusing the names of unknown persons for importing the mis- declared goods. Accordingly, he is also liable for penalty under Section 112(a) and under Section 114AA of the Customs Act, 1962.
8. The Hon'ble High Court in the case of Rama Nagappa Shetty Vs. Commissioner of Customs: 2020 (374) E.L.T. 683 (Guj.) decided on 12-3-2020 held that:
"45. Another facet of arguments that the statements made by the co-accused cannot be made admissible in evidence to establish the guilt of other co-accused even though the statement under Section 108 of the Customs Act is made admissible is also misconceived. As discussed above, the statement recorded under Section 108 of the Customs Act is not a statement under Section 164 of the Criminal Procedure Code as it is not a statement of the accused and still on the basis of such statement or admission made, further evidence is collected, which would be evidence for all the accused and if such independent evidence is there, Page 9 of 37 C/20310-20311/2020 it cannot be said that other co-accused are implicated merely on the basis of the statements of other co-accused recorded under Section 108 of the Customs Act. In fact, it is on the basis of such revelation, further evidence has been collected like in the present case on the basis of the statement of the co-accused when search has been made and the contraband articles (watches and money) have been recovered from the other co-accused would in fact be a evidence against them. Further, there is no explanation with regard to this aspect in further statements under Section 313 of the Criminal Procedure Code. Therefore, cumulative effect of the entire evidence has to be considered and particularly when there is no explanation coming forth from the accused or the concerned accused with regard to the incriminating evidence against him. Therefore, it cannot be said that the impugned judgment and order recording conviction, which has been confirmed, is perverse or resulted into miscarriage of justice. It is also well settled that the provisions of Section 313 of the Criminal Procedure Code is specific for the purpose of pointing out circumstances with regard to the relevant evidence or incriminating evidence against him, which can be considered and opportunity is offered to give explanation or rebuttal even by preponderance of the probability."
9. The Supreme Court of India in the case of Naresh J. Sukhawani vs. Union of India: 1996 (83) E.L.T. 258 (S.C.) dated On 6-11-1995 observed that:
"4. It must be remembered that the statement made before the Customs officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973. Therefore it is a material piece of evidence collected by Customs officials under Section 108 of the Customs Act. That material incriminates the petitioner inculpating him in the contravention of the provisions of the Customs Act. The material can certainly be used to connect the petitioner in the contravention inasmuch as Mr. Dudani's statement clearly inculpates not only himself but also the petitioner. It can, therefore, be used as substantive evidence connecting the petitioner with the contravention by exporting foreign currency out of India. Therefore, we do not think that there is any illegality in the order of confiscation of foreign currency and imposition of penalty. There is no ground warranting reduction of fine."
10. The Supreme Court of India in the case of K.I. Pavunny vs. Asstt. Collr. (Hq.), C. Ex. Collectorate, Cochin Dated 3-2- 1997. 1997 (90) E.L.T. 241 (S.C.) held that:
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C/20310-20311/2020 "17. It would thus be clear that the object of the Act empowering Customs Officers to record the evidence under Section 108 is to collect information of the contravention of the provisions of the Act or concealment of the contraband or avoidance of the duty of excise so as to enable them to collect the evidence of the proof of contravention of the provisions of the Act so as to take proceedings for further action of confiscation of the contraband or imposition of the penalty under the Act etc. By virtue of authority of law, the officer exercising the powers under the Act is an authority within the meaning of Section 24 of the Evidence Act.
(1) Though the authority/officer on suspecting a person of having committed the crime under the Act can record his statement, such a person per force is not a person accused under the Act. (2) He becomes accused of the offence under the Act only when a [complaint] is laid by the competent Customs Officer in the Court of competent jurisdiction or Magistrate to take cognizance of the offence and summons are issued. Thereafter, he becomes a person accused of the offence. (3) A statement recorded or given by the person suspected of having committed an offence during the inquiry under Section 108 of the Act or during confiscation proceedings is not a person accused of the offence within the meaning of Section 24 of the Evidence Act. (4) Though the Customs Officer is an authority within the meaning of Section 24 of the Evidence Act, by reason of statutory compulsion of recording the statement or the accused giving voluntary statement pursuant to his appearing either after issuance of summons or after the appellant's surrender, such statement cannot be characterised to have been obtained by threat, inducement or promise. (5) The collection of evidence under Section 108 and other relevant provisions relating to search and seizure are only for the purpose of taking further steps for confiscation of contraband and imposition of penalty. (6) The self-same evidence is admissible in evidence on the complaint laid by the Customs Officer for prosecution under Section 135 or other relevant statutes.
11. In view of the above decisions, all the statements recorded by the Customs Officers and corroborated by other employees and staff and other accomplices cannot be brushed aside only for the reason that cross-examination was not given. Moreover, the corroborated statements of those persons who were witness to the offence committed, the appellants have nowhere have taken a plea that the goods were not mis-declared and therefore, based on the facts, call records, bank details, statements and other Page 11 of 37 C/20310-20311/2020 circumstantial evidences are enough evidence to prove the culpability of the appellants.
12. Taking into consideration duty evasion to the extent of Rs.6.68 crores and in view of the above observations, the penalties imposed on Shri Dharaneesh Raju Shetty and Shri Shail Moiz Zafar is upheld. Accordingly, the impugned order is upheld and the appeals are dismissed.
(Order pronounced in open court on 10.01.2024.)
-separate order-
(P. A. AUGUSTIAN) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 12 of 37 C/20310-20311/2020 Per: P. A. AUGUSTIAN
13. Appellants in the present appeals are challenging the penalties imposed under various provisions of the Customs Act, 1962. Appellant in Appeal No. C/20310/2020 hereinafter referred as "First appellant", is a commission agent and purchasing consumer goods on wholesale basis from various importers. Appellant in Appeal No. C/20311/2020 hereinafter referred as "Second appellant" is an indenting agent who places orders for various importers. Alleging that various importers including M/s. Maxco Traders, M/s. Samrath Enterprises and M/s. Noble Enterprise had imported goods by mis-declaring the value, proceedings were initiated. Show-cause notices were issued to various persons including Appellants herein and thereafter, Adjudicating Authority vide impugned order imposed penalties on appellants. Aggrieved by said order, present appeals are filed.
14. When the matter came up for hearing. Learned counsel for the Appellant submits that the First appellant was summoned by Directorate of Revenue Intelligence (DRI) and after recording the statement on 03.01.2018, he was arrested and remanded to judicial custody and thereafter, detained under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act (COFEPOSA). While in judicial custody, First Appellant had retracted the statement on 20.02.2018. DRI issued rebuttal to the same on 23.03.2018. Learned Counsel for the Appellant further submits that the allegation against the Appellants is that Appellants had abetted illegal import and admitted the same while Page 13 of 37 C/20310-20311/2020 recording First appellant's statement on 03.01.2018. Further alleged that First appellant had sent WhatsApp messages and pictures of Airway bills, invoices, etc., to Mr. Krishna Naik for clearance of the imported goods. It is further alleged that the First appellant had procured dummy IE code for facilitating import. The learned counsel for the Appellant draws our attention to the finding given by Adjudication Authority regarding role of the Appellant in the impugned order and submits that in spite of giving request, no opportunity for cross-examination extended and the impugned order is in violation of principal of natural justice. The Learned Counsel for the Appellant further submits that though an allegation was made that the Appellant had used the IE code of Shri. Nissar @ Nazir, during investigation, no summons was issued to him and there is no corroborative evidence to allege that the First Appellant had mis used the IE code of Shri. Nissar @ Nazir or any other person.
15. Regarding Second Appellant, he had appeared before the investigating officer on 05.01.2018 and no statement was recorded from him. His arrest was recorded on 14.03.2018 and subsequently released on bail. Thereafter, Adjudication Authority imposed penalty on him. Learned Counsel for the Appellant draws our attention to the findings of the Adjudicating Authority and submits that there is no evidence on record to prove that the second appellant is involved in illegal import of goods as alleged. Learned counsel further submits that in the impugned order, the proceedings were initiated against 11 noticees and Adjudicating Page 14 of 37 C/20310-20311/2020 Authority in its findings against most of the noticees held that they are major players in the syndicate. It is admitted that Second Appellant had procured goods from China but he was not involved in illegal import of branded goods as alleged. The Learned Counsel for the Second Appellant further submits that he had appeared before the DRI office on 05.01.2018 and no statement was recorded as there was no substantial evidence against him though he was detained under COFEPOSA and the detention order was quashed by Hon'ble High Court. In the absence of any statement recorded from the Appellant or any specific question regarding his involvement in alleged illegal activities, only based on the statement of co-accused which was retracted later, no presumption could be drawn that he had abetted illegal import as held by Adjudication Authority.
16. The Learned Counsel for the Appellants also draws our attention to the findings of the Adjudicating Authority that the correlation of the statement of the First appellant from the statement of other co-noticees was not a mere coincidence but clinching evidences gathered during investigation against the appellants. Such finding is given only based on the statements recorded from him on 03.01.2018 which was retracted later, based on the statements recorded from co-noticees and evidence recovered from WhatsApp messages of the co-noticees.
17. Ld. Counsel submits that the Adjudicating Authority has reached the finding by relying on the document allegedly retracted from WhatsApp messages and said documents cannot be Page 15 of 37 C/20310-20311/2020 considered as admissible evidence, since it is not in accordance with Section 138(c) of the Customs Act, 1962 read with Section 65(B) of the Evidence Act, 1872. To substantiate the same, learned counsel relied on following judgments.
(i) Andaman Timber Industries versus Commissioner of Customs. Ex., Kolkata-II reported in 2017 (50) S.T.R. 93 (S.C.)
(ii) Basudev Garg versus Commissioner of Customs reported in 2013 (294) E.L.T. 353 (Del)
(iii) S.N. Agrotech Versus Commissioner of Customs, New Delhi reported in 2018 (361) E.L.T. 761 (Tri.
- Del.)
18. Regarding statement recorded from the first appellant, learned counsel draws our attention to the Exhibit "C" medical Certificate issued by Hiranandani Hospital and submits that appellant appeared before the officers of DRI on 01.01.2018 and the statement came to be recorded on 03.01.2018 which is after more than 24 hours in DRI custody. On this ground alone the statement is illegal and bad in law. It is further submitted that the statement of the appellant was typed by the officers of DRI Bangalore and only the signature of the appellant was taken, which can be seen from the said statement. The appellant was physically beaten on his legs with sticks and mentally tortured due to which the appellant had to undergo knee surgery. That being so, the statement cannot be relied upon as evidence. Further submits that even while in judicial custody, First appellant had retracted the statement and as per the law laid down by Apex court, once statement is retracted, it can be considered as Page 16 of 37 C/20310-20311/2020 admissible evidence only if corroborated by other independent and cogent evidences. The Learned Counsel for the Appellant also draws our attention to the decision of the Apex court in the matter of M/s. Vinod Solanki Vs Union of India reported in 2009 (233) E.L.T 157 (SC) wherein it was held that:
"22. It is a trite law that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences, which would lend adequate assurance to the court that it may seek to rely thereupon. We are not oblivious of some decisions of this Court wherein reliance has been placed for supporting such contention but we must also notice that in some of the cases retracted confession has been used as a piece of corroborative evidence and not as the evidence on the basis whereof alone a judgment of conviction and sentence has been recorded. {See Pon Adithan v. Deputy Director, Narcotics Control Bureau, Madras [(1999) 6 SCC 1]}
34. A person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. With a view to arrive at a finding as regards the voluntary nature of statement or otherwise of a confession which has since been retracted, the Court must bear in mind the attending circumstances which would include the time of retraction, the nature thereof, the manner in which such retraction has been made and other relevant factors. Law does not say that the accused has to prove that retraction of confession made by him was because of threat, coercion, etc. but the requirement is that it may appear to the court as such."
19. Regarding evidentiary value of statements recorded from others relied by adjudication authority to substantiate the retracted statement of the appellant, Learned Counsel further submits that as per the statement of the appellant, one Shri Nisar alias Nasir arranged for the IEC who was neither summoned nor investigated. Similarly, one Shri Bagilal and Shri Jagilal who were alleged to have made payments were neither summoned nor Page 17 of 37 C/20310-20311/2020 investigated. The said persons were not produced for cross- examinations. Thus, the impugned order is unsustainable since it is issued in violation of principal of natural justice. Learned Counsel for the Appellant draws our attention to the judgment of Hon'ble Supreme Court in the matter of M/s. Andaman Timber Industries Vs Commissioner of C. Excise, Kolkata-II reported in 2017 (50) STR 93(SC) wherein it was held that:
"6. According to us, not allowing the assessee to cross- examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross- examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those dealers and what extraction the appellant wanted from them."
20. Learned counsel for the Appellants further submits that in the matter of M/s. Basudev Garg vs. Commissioner of Customs reported in 2013 (294) E.L.T 353 (Del), it is held that:
"14. The Division Bench also observed that though it cannot be denied that the right of cross-examination in any quasi judicial proceeding is a valuable right given to Page 18 of 37 C/20310-20311/2020 the accused/Noticee, as these proceedings may have adverse consequences to the accused, at the same time, under certain circumstances, this right of cross- examination can be taken away. The court also observed that such circumstances have to be exceptional and that those circumstances have been stipulated in Section 9D of the Central Excise Act, 1944. The circumstances referred to in Section 9D, as also in Section 138B, included circumstances where the person who had given a statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay and expense which, under the circumstances of the case, the Court considers unreasonable. It is clear that unless such circumstances exist, the Noticee would have a right to cross-examine the persons whose statements are being relied upon even in quasi judicial proceedings. The Division Bench also observed as under :-
"29. Thus, when we examine the provision as to whether the provision confers unguided powers or not, the conclusion is irresistible, namely, the provision is not uncanalised or uncontrolled and does not confer arbitrary powers upon the quasi judicial authority. The very fact that the statement of such a person can be treated as relevant only when the specified ground is established, it is obvious that there has to be objective formation of opinion based on sufficient material on record to come to the conclusion that such a ground exists. Before forming such an opinion, the quasi judicial authority would confront the assessee as well, during the proceedings, which shall give the assessee a chance to make his submissions in this behalf. It goes without saying that the authority would record reasons, based upon the said material, for such a decision effectively. Therefore, the elements of giving opportunity and recording of reasons are inherent in the exercise of powers. The aggrieved party is not remediless. This order/opinion formed by the quasi-judicial authority is subject to judicial review by the appellate authority. The aggrieved party can always challenge that in a particular case invocation of such a provision was not warranted."
21. Regarding allegation of lending the IE Code to third person, learned Counsel for the Appellants submitted that even if it is assumed for arguendo that the Appellant's used the IE code of the importer as alleged, goods are not prohibited or restricted. The issue was considered by Hon'ble High Court of Kerala in the matter of M/s. Carmel Exporters: 2012 (276) E.L.T 505 (Ker) held that:
Page 19 of 37
C/20310-20311/2020 "15. Coming to the submission that the appellant is only a "name lender" for the import of goods by one Anwar, we shall presume for the time being that the appellant is only a name lender, but the actual beneficiary of the import is one Anwar. We called upon learned counsel for the respondents to place the relevant provision which prohibits such an activity on the part of an Import Export Code Number holder. Learned counsel for the respondents categorically made a statement that he is not able to place any such prohibition in law except Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, which reads as follows :-
"7. Importer-exporter Code Number. - No person shall make any import or export except under an Importer- exporter Code Number granted by the Director General or the officer authorised by the Director General in this behalf, in accordance with the procedure specified in this behalf by the Director General".
The expression "import" occurring in the said section means bringing into India of goods as defined under Section 2(e). There is nothing in the law which requires an importer to be either the consumer or even the buyer of the goods also. Even otherwise, we are of the opinion that it is a matter of common sense that no importer would consume all the materials imported. Necessarily, the goods imported are meant for sale to the consumer, in which case, if an importer, who enjoys the facility of I.E. Code imports certain goods in the normal course of business on the strength of a contract entered by such importer with either a consumer or a trader who eventually sells the imported goods to consumers. We do not understand what can be the legal objection for such a transaction especially where the import of such goods is otherwise not prohibited by law. At any rate, if the respondents have any tenable legal objection on that count, the respondents must pass an appropriate order indicating the legal basis on which the action is proposed and also the nature of the action proposed for such perceived violation of law on the part of the respondents after giving a reasonable opportunity to the importer to meet the case against him. Instead of proceeding to determine the duty leviable on the imported goods by following the appropriate procedure or passing an order of confiscation if they believe that they are justified in the facts and circumstances, the respondents, it appears, are indefinitely detaining the goods without any appropriate order being passed thereon. Such a course of action, in our opinion, is absolutely illegal."
22. The Learned Counsel for the Appellant also draws our attention to the finding of the Hon'ble Hight Court of Bombay in the matter of CC (EP) vs. P.D Manjrekar: 2009 (244) E.L.T 51 Page 20 of 37 C/20310-20311/2020 (Bom.) wherein it is held that once charge against the accused on abetment, it was on the part of the Department to prove the knowledge on the part of the accused herein regarding alleged omission. The Learned Counsel for the Appellant also draws our attention to the finding of the Tribunal, New Delhi in the matter of Harbhajan Kaur vs. Collector of Customs: 1991 (56) E.L.T 273 (Tri.) wherein it is held that:
"23. Be that as it may, there is a reference to the appellant's husband and some other persons said to be known to her but there is no specific charge of abetment or conspiracy as such; And yet the Additional Collector has recorded a finding of 'conspiracy'.
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3. In this context it is necessary to remember that "mere presence at the time of commission of a crime cannot amount to intentional aid unless it was intended to have that effect". Similarly "A mere giving of an aid will not make the act an abetment of an offence, if the person who gives the aid did not know that an offence was being committed or contemplated"; for it is the act of "intentional aiding and therefore active complicity" which "is the gist of the offence of abetment" made punishable by law. Further even mere "awareness that a crime was being committed is not in itself an intentional aid". However, a person could be punished as aider or abettor "if he knew all the circumstances which constituted the offence" and "his intention was to aid an offence or to facilitate the commission of an offence"; In other words "if the person who lends his support does not know or has no reason to believe that the act which he was aiding or supporting was in itself a criminal act, it cannot be said that he intentionally aids or facilitates the doing of the offence".
23. Learned Counsel for the Appellant further submits that as per the judgment of Hon'ble High Court of Madras in the matter of CC (Sea) Chennai-I vs. M/s. M R Associates (2013 (297) E.L.T 504 (Mad.), it is held that:
"13. We do not accept such contention of the learned counsel for the assessee. Even if such concession made by the assessee, was for the purpose of clearance, yet, the fact remains that the assessee had not produced contemporaneous documents to substantiate the value. However, for the purpose of invoking penal provisions, we do not think such a concession made would in any way Page 21 of 37 C/20310-20311/2020 provide a good ground to invoke the penal provision. In the circumstances, we direct the Adjudicating Authority to complete the assessment taking note of the value agreed for enhancement in respect of calculators with cartons by 50% and the calculators without cartons by 25%, but without penal action therein. In the light of the order made, there shall not be any order to confiscate the goods leading to levy of redemption fine."
24. Regarding valuation, Learned Counsel submits that the though the appellants are not challenging the valuation adopted by the respondent since the only reason alleged in impugned order is to impose penalties on appellants was due to alleged undervaluation, Ld Counsel submits that serious allegations were made against the importers regarding the undervaluation of goods imported by them. But the goods were still lying with the Customs authority. Learned counsel also draws our attention to following table:
Sl. B/E & Date Name of the Declared Re-determined Differential No. Importer value value duty
1. 4548614 dt. M/s Maxco 1,85,920/- 3,34,36,726/- 77,80,771/-
26.12.2017 Traders
2. 4549963 dt. M/s Maxco 11,99,682/- 18,79,40,880/- 7,86,07,736/-
26.12.2017 Traders
3. 4569857 dt. M/s Samarth 84,574/- 2,52,97,946/- 87,34,968/-
27.12.2017 Enterprises
4. No Bill of M/s Noble N.A 16,51,98,000/- 6,68,88,608/-
Entry filed Enterprises
25. Learned Authorised Representative reiterated the findings in the impugned order and submits that Appellants herein are the keypersons in abetting illegal import of goods through various ports and was involved in similar offences in other ports. Hence evidence available on record is sufficient to impose penalties on Page 22 of 37 C/20310-20311/2020 appellants under Section 112(a), 112(b) and 114AA of the Customs Act, 1962 as held by adjudication authority.
26. Heard both sides. I have gone through the submissions. As per the impugned order, findings were made against both the Appellants based on the statement recorded from the first appellant on 03.01.2018, on the statements recorded from co- noticees and evidences recovered from WhatsApp messages of the co-noticees. As regards request for cross-examination, it is noticed that to deny the request of cross examination, adjudication authority categorically held that "is not justifiable in view of the facts of the instant case, where allegations levelled in the SCN are proved by examination of consignments itself and various other corroborative evidences". It is further held that "Noticees failed to provide any cogent and valid reason for the cross-examination of statements of persons/co-noticees/officers which were recorded under Section 108 of the Customs Act, 1962." Law is well settled that cross-examination in any quasi- judicial proceeding is a valuable right given to the accused/Noticee as these proceedings may have adverse consequences to the accused. In the present appeal, no cogent and valid reasons have been brought out by Adjudication Authority to deny cross- examination.
27. Regarding evidentiary value of the WhatsApp messages retracted during investigation, in spite of specific contention taken by the appellants, there is no finding given by adjudication authority as why it can be considered as admissible evidence. Page 23 of 37
C/20310-20311/2020 Regarding evidentiary value of such documents in the matter of S.N. Agrotech (supra), after considering the statutory provision and judgments of Hon'ble Supreme court, Tribunal held that unless the requirement of Section 65B of the Evidence Act is satisfied, such evidence cannot be admitted in any proceeding. Since Section 138C of the Customs Act is pari materia to Section 65B of the Evidence Act, the evidence in the form of computer printouts, etc., recovered during the course of investigation can be admitted only subject to the satisfaction of the sub-section (2) of Section 138C. This refers to the certificate from a responsible person in relation to the operation of the relevant laptop/computer. In the absence of such certificate, in view of the unambiguous language in the judgment of the Hon'ble Supreme Court, the said electronic documents cannot be relied upon by the Revenue for imposing penalties on appellants.
28. With reference to the reliance of the confessional statement, First appellant was arrested on 03.01.2018 and immediately after release from judicial custody, he had retracted the same. Law is well settled that abetment involved a mental process of instigating a person or intentionally aiding that person in doing of a thing. In cases of conspiracy also, it would involve that mental process of entering into conspiracy for the doing of that thing. More active role which can be described as instigating or aiding the doing of a thing is required before a person can be said to be abetting the commission of offence. It is an admitted fact that no attempt was made by the investigating officer to issue summons to the IE code holder to substantiate the allegation regarding dummy importer. Page 24 of 37
C/20310-20311/2020 Even if it is proved that the documents were forwarded from the mobile of the First Appellant, no presumption can be drawn that the IE code holder is only a dummy importer and appellants are the persons behind such import.
29. Regarding the Second Appellant, he had appeared before the investigating officer on 05.01.2018 and no statement was recorded from him. In the absence of any statement recorded from Second Appellant or any specific question regarding his involvement in alleged illegal activities, only based on the statement of First Appellant which was retracted later, no presumption can be drawn that Second Appellant had abetted illegal import. On this ground also, the impugned order suffers from uncurable error and hence, is liable to be set aside.
30. Regarding undervaluation, Customs Act provides for the levy and collection of duty of customs and the power vested on the Customs Authority is to put an end to smuggling which was an effect on disturbing the National economy. In the present case, 3 importers declared the goods as sunglasses and other unbranded dress material whereas on investigation, it is found that branded sunglasses, garment accessories, lady tops, T-shirts, etc. It is an admitted fact that none of the goods were found prohibited/restricted to import. Even after alleging that the goods consisting branded products which are regularly imported, no attempt was made to ascertain the value of lowest among contemporaneous import. Against the declared value of Rs. 14,70,176/-, based on statement and WhatsApp messages, Page 25 of 37 C/20310-20311/2020 the value was loaded to Rs. 24,66,75,552/- and duty demanded accordingly. As against the importer M/s. Noble Enterprises, though there is no declaration made by the importer, presuming that the importer will resort undervaluation at the time of filing the Bill of Entry, goods were seized and loaded the value as Rs. 16,51,98,000/-, thus the total assessable value of the goods is more than Rs. 41 crore and duty evasion alleged is more than Rs. 6 crores. Considering the findings in the impugned order, the market value of the goods should have been more than Rs. 60 crores. The said goods were imported in December 2017 and while issuing the impugned order in 2020, the Adjudicating Authority admits that the goods were still lying unclaimed. When a specific question was put up regarding the disposal of the goods, learned counsel for the Appellants submits that it is still in Respondent's custody. The goods were seized and when there was no claimant even after extending opportunity for provisional release of the goods, concerned authority ought to have auctioned the goods than holding the goods for more than 6 years without initiating any steps to dispose the goods. Merely by loading the value and confiscating the goods, no Revenue interest is protected. In present case, there is no payment made by the importers or the defacto importers on whose behalf good are imported and it is a fit case for initiating appropriate action against the person who had violated the guidelines issued by Revenue Board for timely disposal of the seized/confiscated goods and consequential revenue loss. The responsibility against the investigating agency as well as the Customs authority is not only Page 26 of 37 C/20310-20311/2020 to initiate prosecution proceedings and confiscation of offending goods but also to protect revenue interest by timely disposal of the goods. In present case, there is no claimant for such goods and reasonable period after extending opportunity for provisional release of the goods, it should have been disposed. It is not expected for an offender to abandon the goods having market value of Rs. 60 crore if it can be released on payment of around Rs.10 cores as duty, fine and penalty as per the impugned order since there is no other illegality alleged than undervaluation.
31. Thus, no presumption can be drawn that evidences brought on record by way of confession which stood retracted is substantially corroborated by other independent and cogent evidences. Considering the above, appeals are allowed. Penalty imposed on appellants are set aside.
(Order pronounced in open court on 10.01.2024.) (P. A. AUGUSTIAN) MEMBER (JUDICIAL) Page 27 of 37 C/20310-20311/2020 DIFFERENCE OF OPINION On going through the order signed by the learned Member (Technical), it is seen that following differences of opinion emerge:-
(i) Whether the evidence relied by the adjudicating authority regarding the WhatsApp messages retrieved during investigation can be considered as admissible evidence in view of the provisions under Section 138(c) of the Customs Act, 1962 read with Section 65(B) of the Evidence Act, 1872.
(ii) Whether denial of cross-examination as sought by the appellants is considered as violation of natural justice.
(iii) Whether the confession statement of first appellant under Section 108 of the Customs Act, 1962 which stood retracted is substantially corroborated by other independent and cogent evidences to sustain the allegation against first appellant.
(iv) Whether the findings of the adjudicating authority regarding role of second appellant in illegal import is sustainable considering the fact that during investigation, in spite of appearing before the investigating officer, no statement is recorded from the second appellant under Section 108 of the Customs Ac, 1962.Page 28 of 37
C/20310-20311/2020 The above Differences of Opinion are referred to the Hon'ble President for referring the same to Third Member to be appointed by him.
(P. A. AUGUSTIAN) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 29 of 37 C/20310-20311/2020 ORDER [Per : Ms. Sulekha Beevi. C.S] The above matter was heard as per the reference made by the Hon'ble President dated 20.02.2024. I have perused the orders recorded by sister Ms. R. Bhagya Devi, Member (Technical) as well as brother Sri P. A. Augustian, Member (Judicial).
2. The issue involved in these appeals is the penalty imposed on the appellants under Section 112 (a) and (b) and 114AA of the Customs Act, 1962. The Member (Technical) has upheld the penalties imposed and dismissed the appeals whereas, the Member (Judicial) has set aside the penalties and allowed the appeals. The points of difference are noted in page 28 of the order and I do not wish to repeat the same.
3. From the facts narrated, it is seen that the main allegation is misdeclaration of goods. The department has rejected the declared value and enhanced the value of goods imported. The goods declared as per Bill of Entry Nos.4548614 and B/E No.4549963 both dated 26.12.2017 was 1500 pieces of packing materials (sunglasses) and 920 pieces of sunglasses (unbranded). On examination, it was found to contain branded readymade garments viz. Denim Pants, Bermuda, T-shirt, Caps etc. and not even a single piece of sunglass was found. On examination of B/E dt. 10.12.2017, the goods were found to be 'branded sunglasses, garment accessories, lady's top, T-shirts sportwear etc. as against declared goods as 'Ladies top'. The goods of various B/E are Page 30 of 37 C/20310-20311/2020 detailed in Annexure I, II, III and IV of SCN. The department has rejected the transaction value on the ground of misdeclaration of goods and has enhanced the value. It is alleged that on examination, all goods were branded readymade garments, footwear etc. 3.1. It also needs to be stated that while considering the evidence put forward by department, the enhancement of value of the imported goods is glaringly dubious. The appellants have declared the goods as 'readymade garments' and 'sun glasses'. The allegation in the show cause notice is that they had imported branded goods in the guise of unbranded goods. On perusal of the entire impugned order, it is not seen as to what is the 'brand' of these goods imported by the appellants. Mere mention in Annexure to SCN if any is not sufficient. The adjudicating authority should render a finding as to the nature of goods being branded. So also, there should be discussion of value of each type of goods and the basis for enhancement. The value declared in the Bill of Entry of Annexure-I is Rs.1,85,920/- and the department has enhanced the same by redetermining under Rule 12 of Customs Valuation (Determination of value of Imported Goods) Rules, 2007 to Rs.3,34,36,726/-. The differential duty of Rs.77,80,771/- has been then demanded on account of the goods imported being branded under Annexure-I. Similarly, in respect of Annexure-III, the declared value is Rs.11,99,682/-. This has been enhanced to Rs.18,79,40,880/- by the department alleging that the goods are branded in nature. However, it is not stated in the order as to what is the brand of the each type goods or the Page 31 of 37 C/20310-20311/2020 readymade garments or the sun glasses. So also, there is no steps taken by the department to check the brand by calling the representatives of the respective brand or to ascertain whether these goods belong to the brand of the company. Generally, the department has to take such steps to check whether there is IPR violation. In the impugned order, the adjudicating authority has stated that the value has been enhanced on the basis of price available from website. However, there is nothing forthcoming from the adjudication order as to what is the model of the brand and the difference in the price for enhancement of the value. The entire enhancement of value as well as the confirmation of duty demand stands under shadow of doubt, as these are adopted from internet and not on the basis of contemporaneous imports. It is to be noted that no Bill of Entry was filed in respect of goods mentioned in Annexure IV. In other words, there is no declaration as to the description of goods, value etc. There cannot be misdeclaration of goods unless there is declaration. However, the value of goods in Annexure IV also has been enhanced.
4. The first point of difference for consideration is whether evidence relied by the adjudicating authority regarding the WhatsApp messages retrieved during investigation is admissible in law. On perusal of the impugned order, it can be seen that the adjudicating authority has not followed the procedure under Section 138C of the Customs Act, 1962 read with Section 65B of Indian Evidence Act, 1872. It is concluded by the adjudicating authority that the WhatsApp messages retrieved from the mobile Page 32 of 37 C/20310-20311/2020 phone as well as call records would establish that the appellants had abetted the import of misdeclared goods. Undisputedly, the WhatsApp messages have not been retrieved by complying the provisions of Section 138C of the Customs Act, 1962. The Tribunal in the case of Commissioner of Customs, Lucknow Vs Sanjay Soni - 2022 (381) ELT 509 (Tri.-All.) had occasion to consider the admissibility of evidence in the nature of WhatsApp messages. It was held that messages retrieved from phone is not reliable or admissible in evidence if provisions of Section 138C of Customs Act, 1962 are not complied. Section 138C is pari materia to Section 36B of Central Excise Act, 1944. While analysing the issue of admissibility of evidence retrieved from electronic items, the Hon'ble Supreme Court in the case of Anwar PV Vs P.K. Basheer & Others - (2014) 10 SCC had held that the compliance of conditions in Section 138C is mandatory. Similar view was taken in the case of S.N. Agrotech Vs Commissioner of Customs, New Delhi - 2018 (361) ELT 761 (Tri.). In a recent decision, the Mumbai Bench of the Tribunal in the case of M/s.Jeen Bhavani International Vs CC, Nhava Seva, vide F.O. No.A/85674- 85675/2022 dt. 1.8.2022 had occasion to analyse similar issue and held that without complying with conditions of Section 138C of Customs Act, 1962, the contents retrieved from electronic items are not admissible in evidence. The evidence in the nature WhatsApp retrieved from phones cannot be considered in evidence without complying the provisions under Section 138C. The law contained in Section 36B of Central Excise Act, 1944, as well as Section 138C of Customs Act, 1962 are safeguards against Page 33 of 37 C/20310-20311/2020 arbitrary actions for the reason that it is very easy to fabricate or tamper with material contained in electronic items.
5. The second point of difference is whether the denial of cross examination amounts to violation of natural justice. Section 138B of the Customs Act, 1962 provides for examination in chief as well as cross examination of the witnesses. This provision is pari materia to Section 9D of Central Excise, 1944. Though the statement recorded before the Customs Officer may be admissible in evidence, it has to be noted that in the present case all the noticees have retracted their statements at the earliest. Further, the statement of Sahil Moiz Zafar was not recorded at all. Even though he is a co-noticee the said appellant has been implicated on the basis of call records and the statement of other noticees. When the noticees have retracted their statement it was incumbent upon the adjudicating authority to allow cross examination when requested for by the appellants. The rejection of the request for cross examination has caused prejudice to the appellants as they were not able to bring out the credibility of the witnesses and statements recorded before Customs Officers. 5.1 In the case of J & K Cigarettes Ltd. Vs Collector of Central Excise - 2009 (242) ELT 189 (Del.) the Hon'ble High Court held that reliance cannot be placed on the statements unless an opportunity is granted to the assessee for cross examining the deponents. If the appellants wanted to discredit the testimony of Page 34 of 37 C/20310-20311/2020 the witness and the truthfulness of the statements by cross examination, the adjudicating authority ought to have allowed it. 5.2 The Hon'ble Supreme Court in the case of Andaman Timber Industries Vs CC Kolkata - 2017 (50) S.T.R. 93 (S.C) observed that the department ought not to shy away from granting an opportunity to the noticees to cross examine witnesses. I have to hold that denial of opportunity to cross examine has vitiated the proceedings.
6. The third point of difference is whether statement of the first appellant made under Section 108 of Customs Act, 1962 when stood retracted is corroborated by other independent evidences to sustain the allegation against the first appellant. I have already held that the evidence in the nature of WhatsApp messages, call records cannot be relied in evidence unless the conditions under Section 138C of Customs Act, 1962 are followed. So also, the denial of cross examination has taken away the right from the appellant to establish their defence. Therefore, there is no independent corroborative evidence. In absence of independent corroborative evidence, the statement which has been retracted cannot be the sole basis to sustain the penalties against either of the appellants.
7. The fourth issue is regarding the role of second appellant in the import of misdeclared goods. It has to be noted that in spite of appearing before the investigating officer no statement was recorded from him. The statement of the co-noticees having been Page 35 of 37 C/20310-20311/2020 retracted and cross examination of all other witnesses been denied, there is absolutely no evidence to uphold the confirmation of penalty on second appellant.
8. From the above I agree with all the four points of difference as recorded by Member (Judicial).
9. From the foregoing, I hold that the penalties imposed on both the appellants requires to be set aside. The appeals are to be allowed as held by Member (Judicial).
The reference is answered and the difference of opinion stands resolved as above. The matter may be placed before the Division Bench for deciding the appeals.
(pronounced in court on 22.03.2024) (SULEKHA BEEVI. C.S.) MEMBER (JUDICIAL) gs Page 36 of 37 C/20310-20311/2020 MAJORITY ORDER In view of the majority opinion, the penalties imposed on the appellants are set aside. Consequently, the impugned order is set aside and the appeals are allowed.
(Dictated and pronounced in Open Court on 25.04.2024.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 37 of 37