Penalty u/s 112(b) not sustained in Absence of Possession of Smuggled Gold bars by Assessee: CESTAT [Read Order]

The Customs, Excise &Service Tax Appellate Tribunal (CESTAT) of Ahmedabad bench held that the penalty under section 112(b) of the Customs Act,1962 is not sustained in the absence of possession of smuggled gold bars by the assessee.

The appeal was filed by the appellant against the Order-In-Original No. dated 29.11.2021 whereby the Commissioner of Customs, Ahmedabad imposed the penalty of Rs. 2,28,00,000/- under Section 112(b)(i) of the Customs Act 1962 about his role in the alleged smuggling of Gold activity. 

The officers of the Airport Intelligence Unit, Ahmedabad found that Shri JigneshSavaliya working as Duty Officer, M/s Globe Ground India on 04.06.2019, to be behaving suspiciously with a passenger in the Aerobridge of Bay No.32 and found to be in possession with yellow metals. The officers conducted a personal search of Shri Jignesh Savaliya whereby was found to carrying 9 brown packets and found thatthe same contained 47 gold bars.

A 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.

A show cause notice was issued to the appellant, Shri Vipul Joshi whereby it was alleged that he had also financed Shri Rutugna Trivedi and imposed the penalty of Rs. 2,28,00,000/- under Section 112(b)(i) of the Customs Act 1962 on the appellant.

Shri R P Parekh, Superintendent (Authorized Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order. Shri Hardik Modh, Counsel, post-hearing, filed written submission on 20th September 2022 along with the compilation of judgments, which was taken on record.

For the imposition of penalty under Section 112(b) of the 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.

The Tribunal viewed that no offence should be established merely based on the statement of a third party and without corroborative evidence and without granting cross-examination of the person whose statement alone is relied upon. The evidence on record was not sufficient to hold that the appellant was involved in the alleged activity of smuggling gold.

A Coram of member (judicial), Mr. Ramesh Nair, and member (technical), Mr. Raju found that the appellant cannot come within the ambit of Section 112(b) because the appellants had never acquired possession or in any way concerned of the activities mentioned in the Section or any measure dealing with any goods which the appellants knew or had reason to believe are liable to confiscation.

The Tribunal held that the appellant was not liable for imposition of penalty under Section 112(b) of the Customs Act, 1962, and set aside the penalty.

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