Back
2025 Supreme(Online)(Guj) 11670
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Bhargav D. Karia, Pranav Trivedi, JJ
Kashyap A Patel – Appellant
Versus
Commissioner Of Customs – Respondent
TAX APPEAL NO. 927 of 2007|TAX APPEAL NO. 928 of 2007
For the Appellants/Petitioners: Kuntal A Parikh
For the Respondents: CB Gupta
An acquittal in criminal proceedings does not automatically invalidate departmental penalty orders. Because administrative proceedings rely on the preponderance of probabilities rather than proof beyond reasonable doubt, distinct evidence of abetment or conscious facilitation can justify penalties notwithstanding a criminal acquittal based on the same facts.
Headnote:(A) Customs Act, 1962 - Section 114 - NDPS Act, 1985 - Section 67 - Penalty for abetment of illicit export - Standard of proof in departmental proceedings vs. criminal proceedings - Acquittal in a criminal case does not automatically entitle the accused to have an order of penalty set aside - Departmental proceedings operate in distinct jurisdictional areas where the standard of proof is one of preponderance of probabilities - Knowledge of a wrongful act is a necessary element for the offence of abetting - Acts of commission or omission that render goods liable for confiscation do not require proof of mens rea for penalty under Section 112(a), but abetment necessarily requires knowledge. (Paras 6.5, 6.7, 6.12, 13, 21)
(B) Appellate Jurisdiction - Scope and Ambit - A court sitting in appeal is to determine if the decision is afflicted by perversity or illegality - Mere acquittal in criminal proceedings, if based on a higher standard of proof, does not invalidate concurrent findings of fact regarding penalty in quasi-judicial proceedings if there is separate evidence and distinct rationales for the findings. (Paras 12, 18, 20)
Facts of the case:
Consignments were intercepted as being exported under the guise of medicinal products, but testing confirmed the presence of prohibited psychotropic substances. The authorities initiated proceedings against individuals involved in the production and facilitation of the contraband. Penalty orders were passed based on statements incriminating the noticees in renting factory premises, operating machinery, and delivering the goods. These individuals challenged the penalty, arguing that their subsequent acquittal from criminal charges on the same set of facts rendered the departmental penalty unjust and contradictory.
Findings of Court:
The court noted that criminal courts apply a standard of 'beyond reasonable doubt' while quasi-judicial authorities function on a 'preponderance of probabilities'. The acquittal was based on the failure of the prosecution to prove the involvement to the criminal standard. However, in the departmental proceedings, the admissions regarding the delivery of controlled substances and the orchestration of illegal night-time manufacturing activities provided sufficient evidence of abetment. The authorities were not bound by the criminal acquittal where the evidence for the administrative finding of abetment was distinct and established through the participants' own statements.
Issues: Whether the Tribunal erred by imposing penalties after a criminal court acquitted the individuals on the same set of facts, and whether the Tribunal acted outside its jurisdiction by failing to adopt the criminal court's findings.
Ratio Decidendi: The court held that departmental proceedings for penalty under the customs legislation are distinct from criminal prosecution. Where the standard of proof differs (preponderance of probabilities vs. beyond reasonable doubt) and findings of fact regarding involvement are independently supported by admissible statements and evidence of intentional aid, an acquittal in criminal proceedings does not per se nullify the administrative imposition of penalties.
Result: Appeals dismissed.
| Table of Content |
|---|
| 1. factual history regarding seizure of contraband drugs and subsequent investigations. (Para 1 , 2 , 3 , 4 , 5) |
COMMON ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Kuntal A. Parikh for the appellants and learned advocate Mr.C.B.Gupta for the respondent.
2. These Appeals are filed under Section 130 of the Customs Act, 1962 against the Judgment and Order dated 11.05.2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (for short ‘the CESTAT’) in Appeal No.C/532/531/665 of 1999.
3. By order dated 21.08.2007 the Appeals are admitted on the following two substantial questions of law :
“(a) Whether in the facts and circumstances of the case it was open to the Tribunal to have imposed Penalty vide the Impugned Penalty Order dated 11.5.2006 and the Impugned Rectification Order dated 9.4.2007.
(b) Whether Tribunal exceeded its jurisdiction in not considering it self bound by the findings in the judgment dated 15.9.2004 passed by this Hon'ble Court.?”
4. The CESTAT disposed of total three Appeals arising out of the Order-in-Original No.10/COMMR/1999 dated 30th March, 1999 passed by the Commissioner of Customs, Ahmedabad. Arising from the other Appeal disposed of by the CESTAT, Tax Appeal No.870 of 2008 was admitted and tagged along with these Appeals, however, the same has been disposed of separately by order of even date as the appellant of the same was a Doctor by profession and was found involved in manufacturing of contraband drugs and was convicted by the Trial Court as well as the Appeal filed by the him was also dismissed by this Court and the conviction was also upheld by the Hon’ble Apex Court in Criminal Appeal No.1477 of 2005 by order dated 7th September 2006.
5. The brief facts of the present Appeals are as under:
5.1. On receipt of the specific information, Office of Director of Revenue Intelligence, Bombay (for short ‘the DRI’) intercepted a consignment consisting of 10 cartons from the warehouse situated at Bombay Airport which were meant for export to Nairobi, Kenya.
5.2. The cartons were declared to contain Magnesium Trisilicate U.S.P tablets. However, on detailed examination of the contents of the cartons, it was noticed by the DRI that carton Nos.2, 3, 5, 6 and 8, out of 10 cartons which were serially numbered as 1 to 10, were found to contain 40 plastic containers in each carton and each container was found to contain light brown tablets bearing marking ‘M’ on one side and symbol of “swastik” on the other side. Therefore, some tablets were selected at random for testing with field testing kit available with DRI Officer which gave positive results for presence of Methaqualone, whereas, carton Nos.1, 4, 7, 9 and 10 were found to contain 50 plastic containers in each carton in which white colored tablets with no marking but showing a diametric line on one side were found and random samples of such tablets contained in carton No.2 were ascertained similar to the test of other contents.
5.3. Therefore, after drawing the representative samples from all 10 cartons, the same were placed under seizure under Panchnama under the provisions of the Customs Act, 1962 and NDPS Act, 1985 on the reasonable belief that the cartons contained the Narcotics tablets and Methaqualone tablets which are prohibited psychotropic substances notified at Serial No.20 in the Schedule annexed to the NDPS Act, 1985 which was being exported under guise of Magnesium Trisilicate tablets.
5.4. Subsequently, the samples were tested at Customs House Laboratory at Bombay and Forensic Science Laboratory, Ahmedabad which confirmed the presence of Methaqualone in such samples and Magnesium Trisilicate in the rest of the samples.
5.5. Since the exporter M/s.Advance Export was situated at Ahmedabad and the consignment was booked from Air Cargo Complex, Ahmedabad, the investigation was carried out by DRI, Ahmedabad. During the course of the investigation,
