Dismissed

N.Sowri, S/o.Nambikkai, v. The Commissioner of

Madras HC19 Feb 2020WP/14764/2016

Case brief

AI extract

What is this about?

The Madras High Court dismissed a writ petition challenging an order imposing customs penalties for smuggling concealed gold. The Court held that denying cross-examination of co-noticees was justified as they were accomplices, and the penalty relied on independent evidence recovered from the petitioner.

What did the court decide?

Writ Petition dismissed with liberty to file an appeal before Commissioner of Customs (Appeals) upon pre-deposit of duty under Section 129(E).

N.Sowri, S/o.Nambikkai, Vs The Commissioner of — Cheque Dishonour | Madras HC (2020)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED : 19.02.2020

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CORAM

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THE HONOURABLE MR.JUSTICE C.SARAVANAN

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W.P.NO.14764 OF 2016

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AND W.M.P.NO.12894 OF 2016

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N.Sowri ... Petitioner Vs 1. The Commissioner of Customs, Chennai II Commissionerate, Custom House, No.60, Rajaji Salai, Chennai – 600 001. 2. The Additional Commissioner of Customs Group – 5A, Commissionerate of Customs-II, Custom House, No.60, Rajaji Salai, Chennai – 600 001. ... Respondents Prayer:

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Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorari calling for the records of the Second Respondent made in Order in Original No.45505 of 2016 dated 08.03.2016 in F.No.S59/51/2015-Gr.5A.(DR1/CZU/VIII/48/ENQ1/INT-24/2014 quash the same as it is based on no material and passed in voilation of the Principles of Natural Justice and without affording reasonable and sufficient opportunity.

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The Petitioner has challenged the impugned Order-inOriginal No.45505 of 2016 dated 08.03.2016 passed by the Second Respondent-Additional Commissioner of Customs, Chennai in F.No.S59/51/2015-Gr.5A.(DR1/CZU/VIII/48/ENQ-1/ INT - 24 / 2014, pursuant to the Show Cause Notice issued under Section 124 of

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https://hcservices.ecourts.gov.in/hcservices/

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the Customs Act, 1962 by the Additional Director General, Directorate of Revenue on 24.12.2014.

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By the impugned Order, the Petitioner has been imposed with penalty of Rs.1 Crore under Section 112 (a) & (b) for his acts of omission and commission, Rs.1 Crore under Section 114AA for having signed and used false or incorrect declaration, statements and documents through one namely Arul James whose IE Code was utilized for importing LED Tvs numbering 200 from Singapore in 9 different pallets in which about 5 Kgs of golds were concealed and confiscated before the goods were cleared from the customs barrier.

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The case of the Revenue in the said show cause proceedings was that the co-noticee, namely Arul James had lent his IE Code for importing LED TVs numbering 200 in 9 different pallets for mere payment of Rs.10,000/- per TV and that the entire import was overseen by the Petitioner and that the said Arul James was merely a name lender by allowing his IE Code to be used.

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None of the import documents was available with the IE Code holder, Co-noticee namely, Arul James. He was acting as a name lender for importing the LED TVs and facilitated the import of smuggled gold. In the course of the proceedings before the First Respondent, the Petitioner and the said Arul James, were represented by the same counsel and at different point of time and request was made for cross-examining the other.

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The *** Second** Respondent ***(Additional Commissioner of Customs)** proceeded to adjudicate the Show Cause Notice and has concluded that the entire import was stage managed by the Petitioner and therefore there was no necessity to allow crossexamination of the co-noticees.

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The impugned Order passed by the *** Second** Respondent is *** defended on the** ground that though reference has been made to the statement of the co-noticees, the involvement of the Petitioner has been recorded, the finding is ultimately based on the evidences gathered during investigation which established that it was the Petitioner who had over seen the entire import and that the person who *** lent** his IE Code was not man of sufficient means.

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It is further submitted that the holder of IE Code, namely Arul James, proprietor of JMS Exports, had filed W.P. No. 5700 of 2015 for provisional release of the import consignments of 200 LED TVs and by an order dated 16.10.2015, the Court had also permitted to release the goods subject to payment of 100%

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https://hcservices.ecourts.gov.in/hcservices/

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bank guarantee duty assessed, within a week's time. However, neither the customs duty has been paid nor the Bank Guarantee was furnished.

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It is further submitted that against the impugned Order, the co-noticee had also filed W.P. No. 13671 of 2016 which came to be dismissed on 28.11.2016. The said Writ Petition was filed on similar ground by the Co-noticee. Challenging the impugned Order, Writ Appeal in W.A. No.140 of 2017 was filed which was also dismissed by an order dated 10.06.2019. Thus, the issue has attained finality. On behalf of the Petitioner, it was submitted that the Respondents ought to have first rejected the request of the Petitioner for cross examination before passing the impugned order.

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In this connection, reliance was placed on the decision of the Gujarat High Court in the case of Vulcan Industrial Engineering Co. Ltd., Vs Union of India, 2013 (297) E.L.T 190 (Guj.) and that of the decision of this Court in W.P. Nos. 1477 to 1479 of 2015 vide an order dated 01.06.2015 in the case of Veetrag Enterprises, Chennai Vs The Commissioner of Customs (Seaport Exports), Chennai and that of the decision of the Madurai Bench of this Court rendered in the case of Rajkumar Gowthaman Vs Joint Commissioner of Customs (Preventive), Cantonment, Tiruchirappalli – 620 001 in W.P. No. 10345 of 2018 vide Order dated 18.12.2018, wherein, it has been held that, denial of an opportunity of cross-examination, amounts to a serious violation of Principles of Natural Justice and therefore, the impugned orders passed were liable to be quashed.

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Reference was also made to another decision of the Hon'ble Supreme Court in the case of Andaman Timber Industries Vs Commissioner of Central Excise, 2016 (15) SCC 785 wherein the Hon'ble Supreme Court held as under:-

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“8. In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the showcause notice.”

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The learned counsel for the Respondents, drew my attention to several paragraphs from the impugned Orders, which according to him shows that the penalty that has been imposed on the Petitioner is not solely based on the submission of the conoticees, but is based on the independent evidences gathered during investigation by the Second Respondent in the form statement of documents, E-mail correspondence, which were

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https://hcservices.ecourts.gov.in/hcservices/

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recovered from the Petitioner, statement of documents pertaining to the imports seized from the Petitioner's car and frantic calls made by the Petitioner to IE Code holder Arul James.

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I have considered the arguments of the learned Counsel for the Petitioner and the Respondents.

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This is a case where the consignment, consisting of 200 LED TVs in 9 pallets were sought to be imported and in two of the pallets it was noticed that there were 2 ½ Kgs of gold each hidden, which led to the investigation by the customs and eventually, investigated by the Second Respondent-DRI.

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In the course of investigation, statements were recorded not only from the Petitioner but also from the conoticee, namely Arul James, holder of IE Code and customs house, namely Binesh Kumar proprietor of M/s.Cresent Shipping, Chennai and his employee, namely Dinesh. All the 3 persons have involvement with the Petitioner. This led to the issue of the Show Cause Notice dated 24.12.2014 and ultimately the impugned Order dated 08.03.2016.

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The question, that arises for consideration in the present Writ Petition is, whether the Petitioner is entitled to ask for cross-examination of customs official and co-noticees whether the impugned order passed, without affording an opportunity of cross-examination of co-noticee and customs official, was liable to be quashed as having violated the Principles of Natural Justice.

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The decision relied on by the Petitioner in the case of Andaman Timber Industries does not apply to the case of conoticee but independent witnesses. These statements of third parties were relied upon to conclude that denial of crossexamination would violate the Principles of Natural Justice.

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In the facts of the present case, the Petitioner was involved in the actual import and IE Code holder merely lent his name for commission. Therefore, the role of the Petitioner in the import, cannot be ruled out. It is neither open for the Petitioner to insist on cross-examining of his co-accomplice nor open for the customs department to rely on such statement to confirm the proposal in the Show Cause Notice proceedings.

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In any event, the impugned Order has not relied only on the statements of the co-noticees. On the other hand, there are discussions in the impugned Order, which indicates that the finding has been given against the Petitioner, based on the materials, which were recovered from his car, residence and place of business and the statements of the Petitioner himself.

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https://hcservices.ecourts.gov.in/hcservices/

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In view of the above discussion, I find no merits in the present Writ Petition. The present Writ Petition deserves to be dismissed with a liberty to the Petitioner to file an appeal before the *** Commissioner of Customs (Appeals)** within a period of two weeks from the date of receipt of a copy of this order. All the Revenue Recovery Proceedings shall be kept in abeyance, pending disposal of the appeal, by the Respondents provided the Petitioner pre-deposits the amount under Section 129 (E) of the Customs Act, 1962. Since the Petitioner has been given liberty to file a statutory appeal before *** The Commissioner of Customs (Appeals), The Commissioner of Customs (Appeals)** is requested to decide the case on merits uninfluenced by any observation of this Court in this order touching on the merits of the case.

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With the above observation, this Writ Petition is
dismissed. No costs. Consequently, the connected Writ
Miscellaneous Petition is closed.
Sd/-
Assistant Registrar(CCC)
20.05.2020
* Corrected as per the Order of this
Court for being mentioned date 21.09.2020
made in W.P.No.14764 of 2016 and
W.M.P.No.12894 of 2016
Sd/-
Assistant Registrar (CCC)
12.10.2020
//True copy//
Sub Assistant Registrar
arb
To
1. The Commissioner of Customs,
Chennai II Commissionerate, To be Substituted
Custom House, No.60, for the order
Rajaji Salai, Chennai – 600 001. Already
Despatched on
2. The Additional Commissioner of Customs 23.07.2020
Groups – 5A,
Commissionerate of Customs-II,
Custom House, No.60,
Rajaji Salai, Chennai – 600 001.