Absence of Knowledge of Smuggling: CESTAT Quashes Vehicle Confiscation and Penalty u/s 117 [Read Order]
The Tribunal held that ownership alone does not attract customs penalty and a valid proof of conscious knowledge is mandatory for confiscation and any penal action
The Customs, Excise, and ServiceTax Appellate Tribunal (CESTAT), New Delhi Principal Bench has set aside the confiscation of a vehicle under Section 115 and the penalty imposed under Section 117 of the Customs Act, 1962 because penal proceedings cannot be initiated in the absence of evidence that will prove the knowledge of the owner of the vehicle regarding any smuggling activities.
The appeal was filed by Piyush Mahendra Jain whose car was seized by the Directorate of Revenue Intelligence (DRI) during an operation that led to the seizure of smuggled gold weighing around 6.9 kilograms.
The revenue department claimed that the car which was allegedly fitted with a hidden cavity was deliberately given by the appellant to his brother for carrying smuggled gold.
The Adjudicating authority directed the confiscation of the car under Section 115(2) of the Customs Act and imposed a penalty under Section 117 holding that the appellant abetted the smuggling of goods.
The appellant argued that he was only the registered owner of the car and had no knowledge of the smuggling activities. It was also stated that mere ownership does not fulfill the requirement of knowledge as required under Sections 115 and 117. Hence,there was no independent evidence of statements, surveillance, or any corroborative evidence that linked him to the act of smuggling.
However, the department of revenue on the other hand, relied on the existence of the hidden cavity and the connection between the appellant and the principal accused.
The Tribunal dismissed the Revenue’s claim holding that the confiscation of the conveyance under Section 115 is conditional upon establishing the owner’s conscious knowledge or connivance and any such mere assumptions on the basis of ownership or relationship cannot be a substitute for the legal evidence.
The Bench comprising Justice Dilip Gupta [Judicial Member] and Hemambika R Priya [Technical Member] held that the Department did not produce any corroborative evidence to establish that the appellant was aware of the use of the vehicle for smuggling activities.It further held that the penalty under Section 117 is consequential in nature and the confiscation itself is also held unsustainable.
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