Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 1548

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Somesh Arora, Judicial Member
Somnath Chaudhary – Appellant
Versus
Commissioner of Customs – Respondent
Customs Appeal No. 10964 of 2025-SM | Customs Appeal No. 10975 of 2025-SM

Advocates:
For the Appellants/Petitioners: Anil Kumar Mishra, Vikas Mehta, M K Kothari
For the Respondents: Himanshu Nachane

Penalties for abetment or facilitation of smuggling against public officials cannot be sustained solely on untested third-party statements. Procedural fairness, specifically the right to cross-examination under the act, must be strictly observed, and charges must be supported by corroborated evidence rather than mere suspicion or hearsay.

Headnote:(A) Customs Act, 1962 - Sections 108, 110, 111, 112(b), 123(1), 124, 138B - Smuggling of gold and goods - Penalty imposed on officials - Admissibility and evidentiary value of statements recorded under Section 108 - Requirement of cross-examination under Section 138B - Constitutional and procedural safeguards.

(B) Evidence - Admissibility of statements - Reliance on statements of co-noticees and third parties - Necessity of subjecting witnesses to cross-examination - Where a statute prescribes a procedure for admission of retracted or contested testimonies, failure to provide an opportunity for cross-examination renders such evidence inadmissible and violative of principles of natural justice. (Paras 4, 4.1, 4.2)

(C) Burden of Proof - Absence of corroborative evidence - Mere suspicion and hearsay evidence do not meet the standard of preponderance of probability - Absence of transcriptions of digital evidence and failure to link arrival of passengers with official duty rosters or movement logs result in failure of the case against public officials. (Paras 4.3, 4.4, 4.5)

Facts of the case:
The matter concerns appeals filed by two public officials against an order-in-original, which imposed penalties on them for allegedly facilitating the smuggling of gold and other contraband through an international airport. The revenue department relied on statements of passengers and third parties, and on call data records, to suggest a conspiracy, while the appellants contended that no direct evidence, identification, or financial trail linked them to the alleged smuggling activities.

Findings of Court:
The court found that the adjudication was based on statements that were not tested through cross-examination, despite the statutory mandate under Section 138B. Furthermore, the absence of incriminating documentation or verifiable links between the officials’ duty periods and the alleged smuggling incidents led the court to conclude that the charges were based on conjecture rather than evidentiary proof.

Issues: The primary issues were whether penalties could be sustained based on untested statements of co-accused without cross-examination, and whether the evidence provided was sufficient to prove a conspiracy or facilitation of illegal import under the Customs Act.

Ratio Decidendi: Adjudication involving penal consequences for government officials requires strict adherence to natural justice, including the right to cross-examine witnesses whose statements form the basis of the allegation. Without corroborating evidence like verified financial trails, CCTV logs, or duty rosters that synchronize with illegal acts, reliance on hearsay and untested confessions is legally unsustainable.

Result: Appeals allowed.

SOMESH ARORA

1. Specific intelligence developed by DRI, Ahmedabad indicated that some persons based at Vapi indulged in smuggling of gold through SVPI International Airport, Ahmedabad from Dubai and Abu Dhabi by engaging carriers (air passengers). It was also gathered that gold was being smuggled by them in various forms and that two passengers ('Pax') Shri Sahidul Abdul Chowdhury & Shri Mohmad Sarfraj Mansuri of this group were due to arrive on 27.06.2019 from Abu Dhabi at SVP1 Airport, Ahmedabad. It was also gathered that they would attempt to smuggle saffron and boxes of RMD Gutka also, in addition to gold. Intelligence gathered further indicated that Vapi based persons viz. Shri Sajahan Chowdhury and his brother, of this syndicate were running a jewellery shop and also a gold refinery in Vapi and above Pax had been instructed to hand-over smuggled gold to Shri Sajahan Chowdhury at Vapi.

1.1 Acting on the above intelligence, on 27.06.2019, DRI officers intercepted the said two pax along with their baggage while exiting the green channel of the Arrival Hall of Terminal 2 of SVPI Airport, Ahmedabad. On being asked, they introduced themselves as Sahidul Abdul Chowdhury and Mohmad Sarfraj Mansuri by showing their passports and informed that they were coming from Abu Dhabi via Etihad Airways Flight No. EY 226. On being asked whether they were carrying any gold or any other dutiable goods with them, in person or in their baggage they stated that they were not carrying any such item with them or in their baggage. Thereafter, both the passengers were brought to the arrival hall of SVPI Airport, Ahmedabad for their personal search and search of their check-in baggages under panchnama dated 27.06.2019 drawn at arrival Hall of SVPI Airport, Ahmedabad.

1.2 Upon personal search of Shri Sahidul Abdul Chowdhury, a polyethene bag of white colour was found in his right pocket and another polyethene bag of white colour was found in his left pocket of his trouser (Denim blue Colour). From Inside the polyethene bags, two chains which seemed to be of gold, were recovered. Thereafter, he was taken inside a room in Customs area and asked to remove his trouser. He removed his trouser and handed over the same to the officers. On observation of the said trouser, the officers found two packets secreted / stitched between the outer and inner cloth of the trouser waist. One such packet was found inside a pocket in his underwear. The said packets were wrapped with Khaki duct / adhesive tape. On removing the said Khaki duct / adhesive tape, there was transparent Polythene containing brown colour semi solid substance, On being asked, Shri Sahidul Abdul Chowdhury Informed the officers that the said three packets were containing Gold in paste / powder form mixed with some chemical in such a way that the gold could not be detected even with metal detector. Then, upon search of his baggage (Brown Colour Trolley bag), the officers found various packets and pouches for which Shri Sahidul Abdul Chowdhury informed that the same were containing saffron, Gutkas and some clothes (Ladies suit pieces). The details of gold in chain as well as paste form and other items were inventorized.

1.3 Upon personal search of Shri Mohmad Sarfraj Mansuri, the officers recovered chains which seemed to be of gold from right and left pockets of trousers (Black in colour) and one packet secreted / stitched between the outer and inner cloth of the trouser waist. The details of gold in chains as well as paste form and other items found during the personal search of Shri Mohmad Sarfraj Mansuri and his baggage search were inventorized.

1.4 On being asked Shri Sahidul Abdul Chowdhury informed the officers that the aforesaid gold chains and Gold paste brought by them from UAE were meant for selling through his brother Shri Sajahan Chowdhury who was having a refinery and a shop at Shop No. 2 & 4, Poonambhal Ki Chawl, Joona Ram Mandir, Vapi, Vapi-396195, Gujarat and through his brother Rinkub

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2026 Supreme(Online)(CESTAT) 1548

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALSomesh Arora, Judicial MemberSomnath Chaudhary – AppellantVersusCommissioner of Customs – RespondentCustoms Appeal No. 10964 of 2025-SM | Customs Appeal No. 10975 of 2025-SM

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Somesh Arora, Judicial Member
Somnath Chaudhary – Appellant
Versus
Commissioner of Customs – Respondent
Customs Appeal No. 10964 of 2025-SM | Customs Appeal No. 10975 of 2025-SM