1. These are four appeals filed by S/Shri Jasmine Bhogilal Shah (J.B.Shah), Yashpal Wadhera, Pramod Kumar Pahwa and Mukesh Kumar Sethi against Order-in-Original dated 30-9-1997 passed by the Commissioner of Customs, New Delhi. The impugned order directed confiscation of seized goods of foreign origin collectively valued at Rs. 14,10,000/- under Section lll(d) of the Customs Act, 1962 as also absolute confiscation of two trucks under Section 115 thereof apart from imposing penalties under Section 112, among others, on the four appellants before us. The following are the amounts of penalties against the four appellants -Shri J.B. Shah : Rs. 2 lakhsShri Yashpal Wadhera : Rs. 2 lakhsShri Pramod Kumar Pahwa : Rs. 3 lakhsShri Mukesh Sethi : Rs. 50,000/ 2. All the appellants have challenged the penalties imposed on them respectively. Since the appeals arise from a common impugned order and the facts are common, the appeals were taken up together for hearing and are being disposed of by this common order.
3. We have heard Shri S.S. Sindhi and Shri Deepak Dhingra, Advocates for Shri J.B. Shah, Shri N. Malhotra, Advocate for Shri Yashpal Wadhera, and Shri Akshay Anand, Advocate for Pramod Kumar Pahawa and Mukesh Sethi.
4. Facts common for deciding all the four appeals are: On the basis of specific intelligence, DRI officers intercepted on 5-8-90 two trucks at the Delhi-UP border. From the examination of the goods carried by the two vehicles, goods of foreign origin, namely 11,172 torches of Chinese origin, 31,944 rolls of Wonder Tape of Taiwan origin and a baggage containing 12 Scotch whisky bottles were found. The goods were found to be concealed under pineapple fruits. The occupants of the trucks could not produce any documentary evidence in support of the legal possession/acquisition/purchase/importation of the goods. The goods along with the trucks were therefore seized on the reasonable belief that they were liable to confiscation.
5. Statements were recorded from the Drivers of the trucks and the person accompanying the truck. Shri Pramod Kumar Pahwa who was escorting the truck in a scooter admitted in his statement dated 5-8-90 that he had a shop in Delhi; that he had been engaged in the sale and purchase of cars initially; that the said business had to be closed down; that he know Shri Yashpal Wadhera (one of the appellants before us) for the last two years; that Shri Ramesh Kumar Wadhera was the owner of a transport company by name, M/s. Sunny Transport at Subzi Mandi, Delhi; that Shri Ramesh Kumar had engaged him (Pramod Kumar Pahwa) as an employee at a salary of Rs. 3,500/-per month besides other expenses; that he was looking after the loading and unloading work as also delivery of smuggled goods to various persons on the instructions of Shri Ramesh Kumar; that as per directions of Ramesh Kumar he had gone to Bulandshahr on 3-8-90 and 4-8-90 in a Maruti Car carrying goods of foreign origin meant for Shri Ramesh Kumar but could not locate the truck at the appointed spot; that he came back to Delhi at 4.30 on 4-8-90 and had reported the matter to Shri Ramesh Kumar; that thereafter he had arranged to deliver 78 packages containing torches of foreign origin to Shri Mukesh Kumar Sethi (another appellant before us); that the goods were to be delivered only after inquiry of the number of packages; that at 8.30 PM some DRI officers had intercepted the truck and brought the truck to DRI office for examination; that on such examination 11,172 pieces of torches of Chinese origin were recovered by the DRI officers in the presence of two witnesses under Panchnama dated 4/5-8-1990; that he (Pramod Kumar Pahwa) could not produce any lawful document for recovered torches; he had recognised both Shri Ramesh Kumar Wadhera and Shri Mukesh Sethi at the DRI office.
The driver of one of the trucks, Shri Puran Chand, in his statement dated 5-8-90 stated that he was engaged by Shri Pramod Pahwa to carry some goods from a godown at Samay-pur Badli to Swaran Cinema, Shahdara, Delhi; that he had taken the truck to the said godown; that 78 packages containing certain goods were loaded in the truck of Pramod Pahwa and that Shri Pramod Pahwa had directed him to take the loaded truck to Swaran Cinema and that Shri Pramod Pahwa was escorting the truck on scooter; that Shri Framed Pahwa who was escorting the truck had told him to wait for some time as some person was expected to come and take charge of the goods; that when they were waiting in front of Swaran Cinema, some officers of the DRI had intercepted the truck and had summoned them along with the truck to DRI office in New Delhi; that the examination of the truck resulted in the recovery and seizure of 78 packages containing smuggled torches; that Shri Pramod Pahwa himself could not produce any document regarding the legal importation of the said torches of foreign origin and that the said goods along with the truck were seized by the DRI officers under Panchnama dated 4/5-8-90.
The driver of the other truck Shri Virender Singh in his statement dated 5-8-90 stated that the owner of the truck was Sardar Sukhdev and that the owner had handed over the loaded truck to him to take it to Delhi; that the truck was loaded with pineapple and some other illegal goods; that the goods were to be delivered to Ramesh Kumar Wadhera of Sunny Transport Company; that his truck was intercepted by officers of DRI at UP-Delhi border; that he along with the truck was taken to the DRI office in New Delhi; that the examination of the truck revealed that it had only one layer of pineapple and underneath there were 149 packages containing Wonder Tapes and 12 whisky bottles of foreign origin; that he could not produce any document showing legal importation of the goods. In statements recorded by the DRI officers on 5-8-90 and 6-8-90, Shri Ramesh Kumar Wadhera, inter alia, stated that he was the proprietor of the transport company by name Sunny Road Line; that he had come in contact with two persons of Siliguri by name, Shri Nimari Ghosh and Kamal Bose, who were suppliers of smuggled goods such as torches, Wonder Tapes and yarn smuggled from Nepal; that he had come in contact with one Yodani of Kathmandu whose telephone number was given to him who used to send smuggled goods to him through Nimari Ghosh; that he used to sell smuggled goods such as Torches, Wonder Tapes etc. to Shri Mukesh Sethi having shop at Sadar Bazar, New Delhi as well as to Shri Vinay Chopra owner of a Guest House in Paharganj, New Delhi; in April, 1988 two truck loads containing foreign goods were seized by the officers of DRI; that he was detained under the COFEPOSA Act, 1974 and was released from Jail in December, 1989 after a detention of 7 months; that prosecution proceedings against him were still going on in the Court of the Additional Chief Metropolitan Magistrate, New Delhi; that he had engaged Parmod Pahwa as his handling agent who was to receive and escort vehicles containing foreign origin goods to his godown and to deliver those goods to parties as per his directions; that he gave Rs. 5,000/- per month to Pramod Pahwa as his salary and other expenses; that Shri Nimari Ghosh and Kamal Bose used to inform him at his telephone about the vehicle number, description of the foreign goods, exact date, time of departure of truck as also the appointed place in Delhi where the trucks will wait and he used to instruct Parmod Pahwa to receive and escort the vehicles from the appointed place. He also stated that Wonder Tapes and Torches were easily salable in Delhi but their being not much market for yarn in Delhi he used to sell the smuggled yarn either to one Shri Vijay Sood of Ludhiana, or one Shri Jasmine B. Shah (J.B. Shah) of Bombay; that his brother, Yashpal Wadhera supervised the sale of yarn and collection of the sale proceeds in Bombay; that he had been running this business for the last four months; that on an average he was getting one truckload of contraband goods per day; that he used to send sale proceeds to his supplier at Kathmandu by Hawala, or the same was collected by some persons as per Yo-dani's direction; that on 2-8-1990 he had received a phone call from Siliguri that truck No. NLH 8327 was expected to reach Delhi on 4-8-1990 with contraband goods and that another truck bearing No. DEL 6995 was on its way to Ludhiana containing yarn of foreign origin; that he had deputed Parmod Pahwa and he himself had also gone to receive truck No. NLH 8327 at Delhi-UP Border on 3-8-1990 and 4-8-1990 and that he had sent Harpal to Ambala to receive truck No. DEL 6995; that Parmod Kumar Pahwa and he himself could locate the truck NLH 8327 and they had come back to their office and thereafter he had asked Parmod Pahwa to deliver 78 cartons of torches to Mukesh Kumar Sethi at Swaran Cinema on 4-8-1990; that he admitted to the ownership of the seized 78 cartons containing foreign origin torches and 148 packages of Wonder Tapes of foreign origin which were seized by the DRI officers. He also stated that his brother Yashpal Wadhera was a co-partner in the profit and loss of this business.
6. On the basis of further investigations, statements were recorded from J.B. Shah at Bombay and Yashpal Wadhera at Jam Nagar. Shri J.B.Shah in his statement dated 5-8-1990 and 6-8-1990 given to DRI Officers stated that he knows Yashpal Wadhera personally and had talked with Shri Ramesh K. Wadhera on several occassions; that he had transferred money to Shri Yashpal Wadhera and Shri Ramesh Kumar Wadhera by hawala transfer. He however denied having anything to do with the smuggled yarn or any other smuggled goods. Investigations disclosed that the telephone number mentioned by Shri Ramesh Wadhera in his statement was the same which was installed at the residence of Shri J.B. Shah. In the statement given by Shri Ramesh Wadhera stated that he used to sell smuggled yarn either to Vijay Sood of Ludhiana or J.B. Shah of Bombay.
Shri Ramesh Wadhera further stated that he had sent 5 loads of yarn of foreign origin containing 140 cartons of yarn to Shri J.B. Shah of Bombay and that J.B. Shah informed few days later that the said yarn could not be sold due to fall in price and less demand. Investigations showed that Shri Yashpal Wadhera of Jam Nagar (and elder brother of Shri Ramesh Wadhera) was found to be staying in Bombay on the night of 5/6-8-1990. The room in which he was found staying was booked in the name of J.B. Shah. Shri Yashpal Wadhera was summoned to DRI office in Bombay and in his statement dated 6-8-1990, he inter alia, stated that he used to go to Bombay on the instructions communicated to him, on phone from Ramesh Wadhera to meet J.B. Shah to collect the sale proceeds of smuggled yarn and to take the accounts of amounts transferred by J.B. Shah to Ramesh Wadhera out of the sale proceeds of smuggled yarn. He however denied having anything to do with the smuggled yarn, such as taking delivery, sale, storing, transfer, etc.
Shri Ramesh Wadhera however, in his statement had stated that his brother Yashpal Wadhera supervised the sale of yarn and collection of sale proceeds in Bombay. In a statement recorded by DRI officers on 5-8-1990, Shri Mukesh Sethi stated that he was doing business of sale/purchase of looking glass; that besides this he was also dealing in smuggled goods and used to earn commission by disposing of the same that he had come in contact with Shri Ramesh Wadhera about 1 1/2 years earlier; that Ramesh Wadhera used to manage to obtain smuggled goods from Nepal and for its transport and disposal in Delhi; that the smuggled goods were mainly torches of Chinese make and toys of Japan and Hong Kong origin; that he used to dispose of torches of Chinese make on commission basis at the rate of 25 paise per piece. In this business Shri Vinay Chopra was his partner; that on 14-8-1990 he had bargained the selling of 78 packages containing 144 pieces of torches of Chinese make belonging to Ramesh Wadhera and for this purpose he had gone to a place near Swaran Cinema, Delhi to take delivery of the goods; that Shri Parmod Pahwa had brought the goods loaded on truck No.DEL 6995; that he did not take delivery of the goods as he became apprehensive after seeing some unknown persons roaming in the area; that DRI officers had shown him one person in the DRI office whom he recognised as Ramesh Wadhera who used to give him torches of foreign origin. He also recognised Parmod Pahwa as the person who was to deliver the torches to him.
7. On the basis of further investigation show cause notices were issued, among others to the four appellants before us asking them to show cause why the goods as well as the trucks should not be confiscated and penalties should not be imposed on them under Section 112 of the Customs Act, 1962.
8. The matter was adjudicated after affording opportunities of personal hearing and after considering the replies to the show cause notice and the submissions made before the adjudicating authority.Appeal No.C/26/98 J.B. Shah v. CCE, New Delhi 10. Arguing the appeal of Shri J.B. Shah, ld. Counsel referred to para 56 of the impugned order wherein the Commissioner had given his finding against the J.B. Shah. The Commissioner had observed that Shri J.B Shah's name had not been linked with the seizure of Torches, Wonder Tapes/rolls and Scotch whisky but he had been linked with the disposal of smuggled yarn in Bombay which was sent by Ramesh Wadhera. The Commissioner had relied on the statements given by Ramesh Wadhera and Yashpal Wadhera recorded under Section 108 of the Customs Act linking J.B Shah with the smuggling activities of Ramesh Wadhera and his part in the smuggling syndicate. Shri Yashpal Wadhera's statement had clearly mentioned J.B Shah as the person from whom the sale proceeds of smuggled yarn had been collected by Yashpal Wadhera. Further, the room in which Yashpal Wadhera was staying was booked in the name of J.B.Shah. Shri J.B Shah had refused to appear before the adjudicating authorities, ld. Counsel submitted that even to begin with there was no charge against Shri J.B. Shah about his involvement in the smuggling of Torches, Wonder Tapes, etc., the goods seized from the trucks. Even in the findings in the impugned order in para 48, the name of J.B. Shah had not been mentioned as a person engaged in purchasing, acquiring, possessing, storing, carrying, selling, removing or harbouring of smuggled goods of foreign origin. The only basis for alleging Shri J.B Shah are the statements given by Shri Ramesh Kumar Wadhera and Yashpal Wadhera as a person to whom yarn had been sold on some earlier occassions. Ld. Counsel drew attention to the fact that no yarn had been seized from either of the two trucks. There was also no material to hold that the money transferred from Bombay to Delhi to Shri Ramesh Wadhera was the sale proceeds of any smuggled yarn. The adjudicating authority had relied entirely on the statements of co-noticees without any documentary evidence. Further, the said co-noticees had also retracted their statements. Besides, the appellant Shri J.B. Shah had in his statement specifically stated that he had never discussed about yarn with Ramesh Wadhera on phone or in any other manner and he had also denied helping Yashpal Wadhera or Ramesh Wadhera in the selling of any goods including smuggled goods. Ld. Counsel therefore submitted that entire finding against the appellant Shri J.B. Shah was based on surmises and unsubstantiated allegations. He also relied on the following case law in support of his submissions : 11. Defending the order, ld. JDR submitted that the Department's case was based on the fact of seizure of the smuggled goods and the statements of the persons concerned in the smuggling of the goods and other circumstantial evidence. There was no doubt that the present appellant, among others were part of a smuggling syndicate. Shri Ramesh Wadhera had in his statement admitted to the smuggling of various goods like torches, Wonder Tapes and yarn from Nepal. He had mentioned Shri J.B. Shah as one of the persons to whom smuggled yarn was sent. Shri Yashpal Wadhera who was a brother of Ramesh Wadhera and a partner in the business, had stated that J.B. Shah was the person from whom he had collected the sale proceeds. The additional circumstance of Shri Yashpal Wadhera staying in a hotel room in Bombay booked by Shri J.B.Shah and the telephone number mentioned by Shri Ramesh Wadhera in his statement being the residential telephone of Shri J.B. Shah were clear circumstancial evidence which connected Shri J.B. Shah in the disposal of smuggled yarn. He relied on the Supreme Court decision in Naresh J.Sukhawani v. UOI [1996 (83) E.L.T. 258 (S.C.)] in which it was held that the statement of co-accused can be relied upon even without further corroborative evidence. He also relied on the following case law in support of his submissions for upholding the finding of the adjudicating authority: (1) 1996 (87) E.L.T. 478 (Tribunal) S.K. Asraf Hossain v. CCE, Calcutta(Tribunal) Gobind Lal v. CC, Jaipur.
12. We have considered the rival submissions and have perused the record and the case law. We note that the finding on Shri J.B. Shah is based on the statements given by Yashpal Wadhera and Ramesh Wadhera as one of the persons to whom smuggled yarn had been sold. Shri Ramesh Wadhera had stated that since yarn was not much in demand in Delhi, it used to be sent to Bombay and Shri J.B. Shah was the person to whom it was sent. Shri Yashpal Wadhera had stated that it was from J.B. Shah that he had collected the sale proceeds and transfer the amount to Ramesh Wadhera in Delhi. Ld. Counsel for the appellants had drawn attention to the fact that no yarn had been seized from two trucks and the seized goods had, even as per the statements of the other co-noticees anything to do with Shri J.B. Shah. In our view, therefore, the seized goods has nothing to do with Shri J.B. Shah. We also note that the statements given by Ramesh Wadhera and Shri Yashpal Wadhera have been subsequently retracted by them. Even in his initial statements to the DRI officers on 7-8-90 appellant Shri J.B. Shah had denied receiving of any yarn from Ramesh Wadhera and he had denied any discussion about yarn with Ramesh Wadhera on phone or in any other manner. Having regard to these facts, which have not been controverted, we are of the view that the allegations against Shri J.B. Shah of his involvement in the smuggling activity remains unsubstantiated.
13. The penalty imposed on him is therefore, set aside and his appeal allowed.
14. Shri Naveen Mullick, ld. advocate for Shri Yashpal Wadhera adopted the arguments of the Counsel for Shri J.B. Shah on the main allegations against Yashpal Wadhera. ld. Counsel submitted that the allegation against Shri Yashpal Vadhera was that he was to receive the sale proceeds of yarn from J.B. Shah in Bombay. He invites attention to the show cause notice at page 10 where the name of J.B. Shah has been placed along with other co-noticees and in connection with the seizure of torches, Wonder Tapes and Whisky bottles. Since the allegation against Shri Yashpal Wadhera was in connection with the sale proceeds of yarn, which was not one of the goods seized from the two trucks and in relation to which the show cause notices had been initiated, the mere mention by Shri Ramesh Wadhera in connection with certain another transactions in yarn cannot form the basis for imposing penalty on Yashpal Wadhera. Further, Yashpal Wadhera himself had in his statement dated 6-8-90 denied any involvement in receiving of yarn. Further, by letter dated 28-2-92, Yashpal Wadhera had requested the cross-examination of the panch witnesses implicating him. The impugned order does not deal with the request for cross-examination at all.
Counsel drew attention to the fact that the appellant Shri Yashpal Wadhera had retracted his statement and the statements which have been relied upon by the adjudicating authority were that co-noticee. The impugned order also does not spell out the reason why personal penalty has been imposed on the appellant and which act of commission or omission rendered the goods liable to confiscation and the appellant became liable to penalty. He submits that the allegation against Shri Yashpal Wadhera was in relation to the sale of yarn. It was an admitted fact that no yarn was seized from the trucks and seized goods did not, even as per the Department's case, related to appellant Shri Yashpal Wadhera. Since penalty under Section 112(a) of the Customs Act is attracted only when the person does or omitted to do any act which would render the goods liable for confiscation under Section 112, the impugned order is liable to be set aside in the facts of the case so far as Yashpal Wadhera is concerned.
15. Ld. JDR reiterated the finding in the impugned order and submitted that there was enough circumstancial evidence to show that Shri Yashpal Wadhera was involved in the smuggling syndicate and his own statement as well as that of Shri Ramesh Wadhera clearly corroborated in material particulars showing his involvement in the smuggling operations.
16. On consideration of the rival submissions and the material on record and the case law, we find that the penalty imposed on Shri Yashpal Wadhera cannot sustain for the reason that goods which have been held liable for confiscation in the present case under Section 112 such as Tapes, Wonder Tapes and Scotch Whisky bottles of foreign origin are not goods relatable to appellant Shri Yashpal Wadhera in relation to which he had done or omitted to do any act under Section 112(a) of the Customs Act.
16. The penalty imposed on Yashpal Wadhera is therefore set aside. Re: Appeal No. 34/98-NB Pramod Kumar Pahwa v. CC 17. Shri Akshay Anand, ld. advocate representing Shri Pramod Pahwa submitted that two co-noticees, namely, Shri Mukesh Sethi and Ramesh Kumar Wadhera had retracted the statements given by them as admissions recorded under duress and coercion. Further, Shri Pahwa, even as per the statement given by the other noticees was only a paid employee and he had not claimed the goods. He was also not concerned with the goods in any manner other than that of an employee carrying out the instructions of his employer. He also draw, attention to the fact that penalty of Rs. 3 lakhs imposed on Shri Pramod Pahwa was highly disproportionate since the value of the goods seized from truck No. DEL 6955 in the transport of which Shri Pahwa was allegedly involved was valued at less than Rs. 4.5 lakhs. Even as per his statement dated 5-8-90, appellant Shri Pahwa had clearly stated that he was only carrying out the directions of his employer. In these circumstances, ld. Counsel submitted that even if it is held that penalty was imposable, the quantum thereof has to be substantially reduced having regard to the fact that the value of the goods was only less than Rs. 4.5 lakhs and that the appellant was a paid employee. The appellant had also submitted before the adjudicating authority that his statement had not been voluntary and that he was forced to write as per the dictation of the Customs Officer under duress. He had complained about this before the Court.
18. Ld. JDR reiterated the finding against the appellant Shri Pahwa and submitted that it had been clearly proved by the statement of Ramesh Wadhera and the appellant himself that he was fully aware of the smuggling activities indulged in by his employer and he had knowingly carried out the directions given by Shri Ramesh Wadhera in escorting the truck carrying the smuggled goods and in distributing the said goods to various persons. In the circumstances, he submitted that there was no scope for interfering with the penalty imposed on Shri Pahwa under the impugned order.
19. On consideration of the arguments and the material on record we find that the allegation against appellant Shri Pramod K. Pahwa is fully established. He was found to be escorting the truck carrying the contraband goods. He had also admitted to carrying out the said job under instructions from his employer. He was also well aware of the smuggled nature of the goods. However, having regard to the fact that he was only a low paid employee of Shri Ramesh Wadhera, we reduce the penalty on him from Rs. 3 lakhs to Rs. 50,000/-. His appeal is disposed of in the above terms.
20. Shri Akshay Anand arguing the appeal of Shri Mukesh Sethi submitted that the allegation against his client was that Shri Mukesh Sethi was engaged in the selling of smuggled goods on commission basis on behalf of Shri Ramesh Wadhera. He submitted that no specific act of commission or omission under Section 112(a) or (b) under the Customs Act has been mentioned in the impugned order in relation to the appellant. It was to be noted that the goods were neither in the possession or control of the appellant. He had not taken possession of any of the seized goods.
Even in the statement given by the appellant, he had stated that he had come back without receiving the goods. The appellant had therefore, nothing to do with the seized goods since he had neither acquired or possessed the allegedly smuggled goods. Fu ther, Shri Ramesh Wadhera who had implicated the appellant had retracted his statement. Ld.
Counsel also draw attention to the fact that the appellant had neither claimed the goods nor had he acquired the same. He was therefore, not concerned with the seized goods in any manner. Ld. Counsel also submitted that the point needs to be noted that the commission which the appellant was to get even by his own admission was Rs. 3,000/- whereas a penalty of Rs. 50,000/- has been imposed on him.
21. Ld. JDR submitted that appellant Shri Mukesh Sethi had clearly admitted that he was in contact with Shri Ramesh Wadhera who was engaged in the smuggling of the goods from Nepal and he used to dispose of the said goods on commission basis. On 4-8-90 if the DRI officer, had not intercepted the truck carrying the smuggled goods Shri Mukesh Sethi would have taken delivery of the goods and disposed them of. Shri Mukesh Sethi was therefore, fully aware of the smuggled nature of the goods and he was actively involved in the acquisition and possession and sale of the smuggled goods. The penalty of Rs. 50,000/- was therefore clearly imposable on him.
22. On consideration of the submissions and the material on file, we observe that appellant Shri Mukesh Sethi had not come in possession of the smuggled goods though as per his own statement and that of Pramod Pahwa and Ramesh Wadhera he was to take delivery of the same for further disposal, there is enough evidence to say that he was aware of the illegal nature of his activity. However, since he has not been proved to have taken any action which render the goods liable for confiscation under Section 112 of to prove that he had, acquired/possessed the goods under Section 112, imposition of penalty on him cannot be held to be sustainable under that Section.
23. In this view of the matter, we set aside the penalty of Rs. 50,000/-imposed on Shri Mukesh Sethi.