The tribunal's reliance on witness statements was found flawed due to procedural non-compliance, leading to the dismissal of appeals against penalties under the Customs Act.

JUDGMENT :

Harisankar V. Menon, J.

1. These four appeals have been instituted by the revenue seeking to challenge the common order dated 29.03.2022, of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, setting aside the penalty imposed on the respondents herein under the provisions of the Customs Act, 1962 (hereinafter referred to as the “Act”).

2. The short facts leading to the imposition of the penalty as above are required to be noticed as under:

On 19.09.2013, two lady passengers, accompanied by a girl child, were found near the car park area outside the Cochin International Airport. They were identified as Arifa Haris, Asifa Veerappoyil, as well as the minor daughter of Arifa. After being brought back to the arrival hall, they denied carrying gold or other articles, on being questioned. Thereupon, a personal search was conducted, which revealed that both the ladies were wearing black coloured jackets containing pouches where gold bars were kept hidden. One of the ladies also stated that an LG brand television brought by her was handed over to an officer. Ten gold bars, each weighing one kg, were recovered from the respective ladies, which were seized under the provisions of the Act, along with the materials used for concealing the gold bars as above. The television referred to above was also seized. On the basis of the seizure as above, proceedings were initiated, leading to the revenue recording statements from as many as 33 persons. Arifa also stated that on three earlier occasions – 20.08.2013, 27.08.2013, and 12.09.2013 - gold bars were brought undeclared through the Cochin International Airport and were handed over to a person. It is alleged that one T.K. Faiz handed over the gold bars and arranged for the tickets as well as the materials used for concealing the gold bars. The quantity of gold allegedly smuggled on the three earlier occasions was stated to be 36 gold bars, each weighing one kg. On the basis of the statements recorded under Section 108 of the Act, common show cause notices were issued to various persons, including the respondents herein. The show cause notice to Arifa proposed to confiscate the 10 kgs of gold referred to above, apart from proposing penalty under various provisions of the statute. A similar notice was issued to Asifa. One Shanavas was also proceeded against with reference to six pieces of gold seized from a shop – M/s.Ashida Jewellery - proposing to confiscate the same and to impose penalty. These proceedings were initiated against Shanavas essentially on the basis of the allegation that he had acquired possession and sold the gold bars, brought on earlier occasions. As regards the respondents in these cases, the following steps were taken:

i. Subair Kallungal (Respondent in Cus. Appeal No.1 of 2023)

It is alleged that the afore person had transported the smuggled gold to the premises of Shanavas. A penalty of Rs.20,00,000/- is imposed upon him under Section 112 (b) of the Act.

ii. Thondandavida Kaniyan Kandi Faizal (Respondent in Cus. Appeal No. 2 of 2023)

He was alleged to have obtained the gold smuggled as above on the earlier three occasions, though there was no actual seizure of gold involved, and transported the afore ladies to a hotel at Kochi. A penalty of Rs.20,00,000/- was imposed upon him under Section 112 (b) of the Act.

iii. Ashraf Kallungal (Respondent in Cus. Appeal No.3 of 2023) Steps were taken leading to the imposition of penalty of Rs.15 crores under Section 112 (a) and (b) of the Act on the allegation that it is he who financed the entire smuggling activities.

iv. Thondandavida Kaniyan Kandi Faiz (Respondent