1. In this appeal, the challenge is against the imposition, by the Commissioner of Customs, of a penalty of Rs. 75,000 on the appellant under Section H2(b) of the Customs Act.
2. The appellant was one of the three occupants of the truck which was intercepted by Customs officers in the night of 4/5 March, 2001 on the Gorakhpur-Sonauli road. The other two occupants of the truck were the driver Shiv Achal Patel and the owner Virendra Pratap. The truck was coming from Sonauli, a place within the territory of India, near the Indo-Nepal border. On a thorough check of the vehicle, the officers discovered foreign origin computer parts bearing the marking 'Made in Phillipines' in secret cavities behind the driver's seat. On interrogation, the driver stated that the cavities had been constructed for smuggling of goods from Nepal; and that the computer parts found in the cavities were brought from Nepal. The officers, believing that the goods were liable to confiscation under Section 111 (d) of the Customs Act, seized the goods alongwith the truck.
3. Statements of Virendra Pratap and the appellant were also recorded.
Later on, i.e. after about five months, a thorough search of the vehicle was again conducted by the officers when the vehicle was in the possession of one Shri O.P. Jaiswal who had purchased the same in auction. That search resulted in the recovery of miscellaneous foreign origin goods from a secret cavity discovered in the diesel tank of the vehicle. A statement of Shri Jaiswal was also recorded. The goods recovered this time were also seized.
4. On the basis of the investigative results, the Department booked a case against the afore-mentioned persons and the seized goods under the Customs Act, and accordingly issued show-cause notices. The proposal in the show-cause notices to impose penalty under Section 112 of the Act was resisted by the appellant and others. The Commissioner, who adjudicated on the dispute, ordered absolute confiscation of the seized goods and the truck under Sections 111(d) and 115(a) respectively. He also imposed a penalty of Rs. 75,000 on the appellant under Section 112(b) of the Act. Hence the present appeal.
5. Heard both the sides. The learned Counsel for the appellant submits that the Adjudicating Authority has penalised the appellant mainly on the strength of the original confessional statement made by him under Section 108 of the Customs Act, without considering the retraction thereof made later. He submits that the appellant had retracted his confession at the adjudicatory stage itself. The learned Counsel further submits that the appellant is a poor illiterate person and that the offence found against him may not be dealt with so hershly as done by the original authority.
6. The learned DR, on the other hand, submits that the Adjudicating Authority has brought out in the impugned order as very clear case for penalty under Section 112(b) against the accused-appellant. The original confessional statement was recorded in early March 2001. The so-called retraction came about as late as in August 2001. Such a belated retraction is not valid in law. The learned Commissioner has rightly rejected the retraction. The learned DR refers to the case law relied on by the Commissioner in the context of examining the penal liability of the appellant. He submits that the Department has succeeded in establishing a preponderance of evidence of the offence of the appellant, of carrying smuggled goods, which calls for penalty under Section 112(b). The DR further points out that the penalty of Rs. 75,000 imposed by the Commissioner on the appellant is disproportionately low vis-a-vis the value of the goods seized from the truck and later on confiscated. He submits that there is no reason whatsoever for any interference with the impugned order.
7. I have carefully considered the submissions. The impugned order is based mainly on the appellant's confessional statement. This statement is not on record. However, relevant extracts of the statement are perceivable in the impugned order. The veracity of this statement is not in dispute. The appellant had stated that he was carrying the goods for a reward of Rs. 5,000. This statement dated March 2001 under Section 108 of the Customs Act was not retracted before show-cause notice was issued. The appellant was arrested and jailed after that statement was recorded. He was released from Jail after three months but did not retract the confessional statement. He chose to retract it as late as in August 2001. Such a retraction is too belated to be sustained in law as a valid retraction. Whatever was contained in the confessional statement of the appellant was also corroborated by the statements given by the owner and driver of the vehicle. Even if the statements of co-noticees were to be ignored, there would have been a reasoned finding against the appellant on the strength of his own confessional statement which was not validly retracted. The case law relied on by the Commissioner (Appeals) is quite apposite in this context. The goods in question had foreign markings as noted in the relevant statements. Nothing contained in the panchnama is in dispute.
None of the accused could produce any documentary proof of lawful importation of the goods. In the circumstances, it was reasonable for the Department to infer that the goods were smuggled goods. The initial burden of proof was successfully discharged by the Department. On the other hand, the appellant has not been able to rebut the Department's evidence.
8. Section 112(b) is a provision for imposing penalty on a person who knew or believed that the goods which he was in any manner delaying with, were liable to confiscation. In this case, the person (appellant) had the knowledge that the goods were smuggled from Nepal and were foreign origin goods. He had also no evidence with him to show licit acquisition of the goods. He has also confessed that he was carrying the goods. Section 112(b) was attracted for imposing penalty. The measure of penalty has a nexus to the value of goods. The learned DR has argued that not only the value of the goods seized from the cavity in the drivers cabin of the truck but the value of the goods seized from the diesel tank can also be taken into account in this case. This argument is not acceptable. There is nothing in this case to show any nexus between the appellant and the goods found in the diesel tank when the truck was in the custody of its purchaser initially the goods seized from the cabin of the truck were valued at over Rs. 5 lakhs, which value is not under challenge. Section 112(b) penalty, on the facts of the instant case, can extend upto five times the duty on this Value of Rs. 1000 whichever is higher. The penalty of Rs. 75,000, by these standards, cannot be held to be unreasonably high. Nevertheless, I note, there is an element of discretion in the imposition of penalty under Section 112(b). That discretion could not have been exercised without examining the mitigating circumstances placed on record by the appellant before the Adjudicating authority. The impugned order, apparently, does not provide any discussion on this aspect. After examining the plea of financial hardships raised in this appeal, I am inclined to reduce the penalty to a reasonable extent, particularly since these pleadings have not been successfully rebutted. The penalty will stand reduced to Rs. 50,000. The impugned order stands confirmed, with this modification. The appeal is accordingly disposed of.