CUSAA/29/2011 of SUDHIR SHARMA Vs COMMISSIONER OF CUSTOMS

$~28 to 35*INTHEHIGHCOURTOFDELHIATNEWDELHIReserved on: 15.09.2014Pronounced on: 27.02.2015

+CUS.A.A.38/2011, C.M. APPL.14913/2011ANIL MADAN

....Appellant

versus

UNION OF INDIAAND ANOTHER

..... RespondentsThrough: : Sh. Ashok Bhan, Sr. Advocate with Ms.Prem Lata Bansal, Sr. Advocate, Sh. ArindamMukherjee and Sh. Sumit. K. Batra, Advocates, forpetitioners in Item Nos. 28 to 30.

Sh. Sunil Kumar, Sh. Prem Ranjan Kumar and Sh.Sumit Purohit, Advocates, in Item Nos. 31, 32 and35.

Sh. Rahul Kaushik and Ms. Bhuvneshwari Pathak,Advocates, for CBEC.

CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHATHON'BLE MR. JUSTICE VIPIN SANGHI

MR. JUSTICE S. RAVINDRA BHAT

1.These appeals have been preferred against common orderof the Customs, Excise and Service Tax Appellate Tribunal(hereafter "CESTAT") dated 25.01.2011. The impugned order haddealt with batch of 35 appeals – some of them dealt with thepresent appellants. The appellants are hereafter referred to by theirnames for the sake of convenience. The appeals had arisen out ofcommon adjudication order dated 01.10.2007 by the Commissionerof Customs (hereafter referred to as the “Commissioner”).

2.The following questions of law are sought to be urged by theappellants:

(a)Whether the findings in the impugned order with regard to

abetment by the appellants are justified in law;

(b)Did the CESTAT fall into an error of law in upholding thefindings based on denial of natural justice, especially the refusal togrant cross-examination to the appellants;

(c)Whether the findings based upon mobile phone records andconfessionalstatementsofsomeindividuals,notablytheco-noticees, is sustainable in law, in the circumstances of the case,in the absence of any other corroborative material;

(d)Did the CESTAT err in its findings regarding the methodadopted in arriving at the average weight to assess liability, and theabsence of essential documents like the passenger declarations.Facts of the case:

3.On 28.08.2000, foreign national Olga Kozireva tried toillegally import and smuggle into India, quantity of 81160 yards(74212 meters) of silk textiles without declaring them, as wasrequired of her under Section 77 of the Customs Act, 1962(hereafter called the “Act”). She had landed at the Indira GandhiInternational Airport (IGIA) after travelling on KyrgyzstanAirlines flight. This incident led to investigations. Olga Kozirevawas detained and subsequently, her statement was recorded underSection 108 of the Customs Act. This led to further investigationsduring the course of which Abdul Qahar, an Afghan national,several others as well as employees of Kyrgyzstan Airlines wereasked to reply to Show Cause Notices (SCNs). The SCNs wereissued to one Dil Agha, Mamoor Khan, Sanaf Sana, Naseem, V.K.Khurana and Nazira. Abdul Qahar, the Afghan national, in hisstatement dated 30.11.2000, confirmed to knowing Olga Kozireva;

he identified her. He confirmed that she had, on previousoccasions, exported goods of Chinese origin to him. He alsorevealed the mobile telephone numbers of certain individuals.

4.On the basis of statements of several individuals (notably DilAgha,Olga,SandeepBhatia(dated13-12-2000)VirenderSehrawat (dated 08-01-2001) and Ajay Sharma (dated 23.12.2000),all security representatives of United Airlines India) – includingthose of the appellants, the investigations by the Department ofRevenue Intelligence (DRI) found that between 24.07.1997 and24.08.2000, Olga Kozireva had travelled in and out of India on 24occasions. Out of these, on 19 occasions, she was cleared through"Red Channel" and allowed to proceed after spot adjudication andpayment of redemption fine and duty. On the other five instances,she walked through the "Green Channel". Besides the statement ofOlga Kozireva, those of R.N. Zutshi, one of the appellants, wasrecorded. This statement of R.N. Zutshi mentioned the role of theother appellants, i.e. Ajay Yadav, Yashpal, V.K. Khurana, T.K.R.Reddy, Pradeep Rana and Anil Madan. In addition, Dil Agha’sstatement was recorded on 11.07.2001, which also sought toimplicate R.N. Zutshi, V.K. Khurana, T.K.R. Reddy and PradeepRana.5.On 23.08.2001, the Commissioner issued SCNs to allindividuals, including the present appellants- who were working asofficers in various capacities in the Customs Department. Theallegations against the appellants inter alia centred around theircomplicity in the smuggling of huge quantities of silk textiles on24 occasions. Based upon the quantity sought to be smuggled into

India, on 28.08.2000 by Olga, the Commissioner deduced, on thebasis of an averaging exercise, that the unseized extent of silktextiles was to the tune of 4,21,245 metres, which would haveweighed 26,485 kgs and that the Customs Duty evaded was to theextent of `1,75,78,322/-. The SCN relied upon the following table,which spelt out such details – the table is extracted below:

"175. The quantity of silk textiles imported computed on the abovebasis vis vis the quantity of textiles assessed on relevant datesprior to 28.8.2000, showed that substantial silk textiles escapedassessment resulting in the evasion of customs duty. The details arepresented below:

CUS.A.A.29/11 and connected matters

Notes: OK –Olga, NI-Nazira, SK-Shakista, SA-Shahlo, IKM-IsamuKM, V-Velichko, ML-Merkulova; Duty for 17.12.98 @ 67.4%:Weightdoesnotincludenormalbaggageweightwithco-passenger(s); Benefit of ‘textile’metres assessed in respect ofall the group passengers, extended: imputed weight of 1220 k on10.4.00, 8.5.00 and 14.8.00; impuged weight of 2364 kg instead ofreported 1235 kg on 17.7.00 and of 1914 kg instead of reported1000 kg on 21.8.00; Merkulova Liubov arrived on 14.8.00 hence14.8.00weightimputationmadeinML’sname;allfigures/calculations are rounded off.”

6.In response, all the appellants resisted the SCNs. It wascontended that the reliance placed upon the mobile phone callrecords was insufficient to render any findings and that it wasunsafe to rely upon them, as it would be inconclusive inestablishing the allegations. The statement of R.N. Zutshi couldnot, in the absence of any corroborative evidence or material, leadto finding of abetment as alleged; that in the absence ofpassengers' manifest and properly secured documents, no evidenceof their involvement had been led and that at best the materials insome of their cases were conjectural and entirely speculative. Itwas also argued that the involvement in previous incidents allegedagainst Olga could not be based on sketchy surmises, not premisedon any material or corroborative evidence but entirely uponsuspicion. Furthermore, it was submitted that the appellants acted

bona fide and were not in the normal line of their duties andfunctions expected to go into the matter as was alleged.

7.The Commissioner, after considering the appellants' defensesas well as those of the other respondents to the SCNs, by his orderin original proceeded to drop the SCN against 19 individuals, outof 35 individuals. That order, however, proceeded to imposepenalty under Section 112 of the Customs Act for differentamounts – in respect of different periods in respect of each of theappellants. These fines ranged between `75,000/- and `3,00,000/-.

8.Aggrieved, the appellants approached the CESTAT by filingappeals under Section 128 of the Customs Act, being CustomAppeals, C-775/2007 – Sudhir Sharma; C-776/2007 – Ajay Yadav;C-01/2008 – Yashpal; C-04/2008 – T.R.K. Reddy and C-07/2008 –Anil Madan; C-19/2008 – R.N. Zutshi and C-48/2008 – V.K.Khurana. The CESTAT considered the submissions of each of theappellants and after analyzing the evidence considered by theCommissioner, concluded that there was sufficient circumstantialevidence on the record to establish complicity of the appellants inthe smuggling incident which resulted in evasion of Customs Duty.The CESTAT held that even though the conversations were notrecorded, none of the appellants could explain why they were infact in contact with Dil Agha on the dates confronted to them inthe course of the adjudication proceedings. The CESTAT was alsoof the opinion that having regard to the standard of proof requiredincivilproceedings,i.e.preponderanceofevidence,theallegations leveled had in fact been established. Its observations inthis regard are to be found in paras 19.7 to 19.13. The observations

were in the context of findings with respect to the pleadings to thereversal of the adjudication order as regards 14 customs officials.They apply equally to the case of the appellants.

9.Dealing with the complaint of denial of cross-examination,the CESTAT held as follows:

“XXXXXX

XXXXXXXXXXXX

18.9 Thoughitcannotbedeniedthattherightofcross-examination in any quasi-judicial proceeding is avaluable right given to the noticee as these proceedings mayhave adverse consequences, at the same time under certaincircumstances, this right of cross-examination can be takenaway. Hon’ble High Court of Bombay while dealing with thesimilar issue in the case of Gyan Chand Sant Lal Jain v. UOIreported in 2001 (136) ELT 9 (Bom) and taking intoconsideration the applicability of concept of principles ofnatural justice in that regard quoted para 76 of Halsbury’sLaw of England, Vol. I (4[th]Edition) which reads thus:-“Natural justice does not impose on administrativeand domestic tribunals duty to observe all thetechnicalrulesofevidenceapplicabletoproceedings before courts of law. Members oftribunalsmaybeentitledtodrawontheirspecialized or local knowledge of the type of, issuebefore them in order to supplement as well asevaluate evidence to find facts by inquisitorialmethods, and inspections and to obtain informationfrom other persons; but it will generally be adenial of justice to fail to disclose to partyspecific material relevant to the decision if he isthereby deprived of any opportunity of comment onit.”[Emphasis supplied]

The Hon’ble High Court observed thus:-

“In other words, it seems to be fairly

settled position in law that it is not necessary thatpersons whose statements have been previouslyrecorded must be examined in the presence of theparty against whom such previous statements areintended to be used. The rules of natural justice dorequire that their previous statements must bemade available to the party against whom theywere intended to be used and such party must begiven fair opportunity to explain the same orcomment on them. What would amount to fairopportunity would depend upon the facts andcircumstancesofeachcase….”[Emphasissupplied]

18.10The Apex Court in Surjeet Singh Chhabra v.UOI, reported in 1997 (89) E.L.T. 646 (SC) held thatCustoms Officials are not police officers and admissionmade before them though retracted binds the deponent.In view of voluntary statements recorded and suchstatementsnotretracteddidnotwarrantcrossexaminationwhenothercircumstantialprovidedreliablebasiscorroboratingthestatements.Whennothing surfaced that the witnesses had any enmity withappellants, those were not liable to be discarded norrequired to be put to cross-examination. Relying uponthe decision of the Apex Court in Surjeet Singh Chhabracase (supra) this Tribunal in Jagdish Shanker Trivedi v.Commissioner of Customs, Kanpur – 2006 (194) ELT290 (Tri-Del) held that admission made by an assesseebinds him and, therefore, failure to give him theopportunity to cross-examine the witnesses was notviolativeofprinciplesofnaturaljustice.Itwasspecifically held that “principles of natural justice donot require that in matters like this, persons who hadgiveninformationshouldbeallowedtobecross-examined by the co-noticees on the statementsmadebeforethecustomsauthorities.Ifcross-examination is to be allowed as matter of rightthen in all cases of conspiracy and joint dealingsbetween the co-noticees in the commission of the

offences in connection with the contraband goods, theycan bring about situation of failure of natural justiceby joint strategic efforts such co-noticees by each onerefusing to be cross-examined by resorting to Article20(3) of the Constitution and simultaneously claimingcross-examination of the other co-noticees.” It is not amatter of right for any assessee to contend that thestatements of witnesses should be discarded.”

Contention of the appellants

10.It was argued, by Ms. Premlata Bansal and Mr. Ashok Bhan,Senior Advocates, Mr. Balbir Singh andthe other learnedcounsel, that penalty under Section 112 of the Customs Act couldnot have possibly been imposed against the appellants. It wasurged that no attempt was to justify the penalty and that underSection 112 penalty can be levied only if the person is in actualpossession of the goods and has knowledge that they are liable toconfiscation under Section 111. It was argued that the goods in thepresent case, having been cleared after payment of redemption fineby the importer, had no co-relation to any of the appellants. Theorders of redemption based on spot assessment had attainedfinality. In the circumstances, the penalty of fine leviable under theAct could not be imposed upon someone who had nothing to dowith the importation or exportation of goods.

11.It was argued that there is no record to show that the goodsin question were imported in contravention of the Act. Therefore,the question of levying penalty did not arise. Further, for levyingpenalty under Clause (d) of Section 111, the fact that the possessor

has knowledge of the goods being liable for confiscation underSection 111 has to be proved. In the instant case no suchknowledge was proved. Importantly, it was argued that thephraseology in Section 112 - which was ultimately used in thepresent case- presupposed the existence of the goods. In thepresent case, the goods had been cleared. Section 112(a) isattracted on showing that all the ingredients of that provision aresatisfied. One such ingredient is that the prejudicial act oromission must be such which would render such goods liable toconfiscation under Section 111. Thus liability of the impugnedgoods to confiscation is pre-requisite to action under Section 112(a). In such situation it is incumbent that the impugned goods arenot only liable to confiscation, but the persons are also called uponto show cause against the proposal for confiscation. In the absenceof this essential requirement the entire proceedings in the presentcases were vitiated.

12.The appellants urged that some passengers against whomCustoms Duty evasion was confirmed, were not served SCN;consequently the charge of abetment, collusion and conspiracycould not be leveled and proved against them.It was argued thatthe findings of the Commissioner and the CESTAT that therequirements of Section 153 of the Customs Act, 1962 were metwith are erroneous. The appellants relied on the decision reportedas Collector of Central Excise vs. Electrolyfic Foils Ltd 1997 (9)ELT-543 (SC).

13.Learned counsel attacked the order of the Commissioner-and the order of CESTAT, stating that they were both based on

presumption of quantities of silk. Counsel submitted that theprevious clearances had become final; the derived value, based onaverage price and average weight, was method unknown to law,and adopted by the Commissioner; the CESTAT ought not to haveaffirmed those findings.

14.It was contended that the owner of baggage was under dutyto declare its contents, under Section 77. The lower authorities,submitted counsel, made no attempt to fix this responsibility on theowner and did not even secure authenticated copies of thepassenger manifest and the baggage loaded on to the aircraft- evenin the case of the luggage alleged to have been smuggled on28.08.2000. In these circumstances, there could have been noculpability attributed to the appellants. Their roles were notdefined and the findings in regard to violation of provisions of theAct, leading to imposition of penalties were wholly unjustified.

15.It was argued next that CESTAT went purely by surmisesand conjectures in returning adverse findings against the appellantsand imposing penalties upon them. All the learned counsel arguedthat the absence of any substantive evidence, in the form ofpassenger manifests in original, documentary proof regarding thecomplicity of the appellants with Olga and her accomplices’smuggling activities and absence of any seized material, coupledwith the finality attained by previous spot assessment orders,meant that the Customs authorities had no evidence to go by.Merely because some appellants were present at the time whensome of the previous spot assessments were made could not lead

the adjudicating authority, or CESTAT, to hold that they had beencomplicit in any wrong doing. The broad brushing nature ofallegations seeking to implicate the appellants failed to assign anydistinctive role to each of them. In fact, some of them were neverimplicated in confessional statements, like in the case of SudhirSharma. In the case of others, such as Shri R.N. Zutshi, the officialhad and could have had no role to play, considering that he was inthe Protocol and Ceremonial Wing of Customs in the airport. Hisconfessional statement could, in the absence of any corroborativematerial, not have been used to penalize him.

16.It is argued that what is alleged is the acts of omission,whichamounttoabetment.Toestablishthecharges,thedepartment had to rely on reliable, cogent legal evidence. Nopresumption in this respect can be raised on basis of anycircumstance even if the same might appear to be suspicious andexplanation given for such circumstance is not believed or is notconsidered satisfactory. The charge of abetment in the form allegedin the SCN is vague. It was argued that the appellants had pointedout in replies to the SCN that the act committed to constituteabetment had to be particularly stated, or else it was impossible togive an effective rebuttal. This was essentially required so as toaffordadequateopportunityofdefensetobegiven.Noparticular/specific act constituting abetment was however, speltout. Reliance was placed on the judgments of the Supreme Court inState of U.P. Vs Mohd. Sharif, AIR 1982 SC 937, and Sawai SinghVs State of Rajasthan, AIR 1986, SC 795. It had been observed

that the specific charges are to be framed in clearest terms andwith full particularity.

17.Besides, learned counsel submitted that the CESTAT failedto appreciate the fact that whenever an adjudication proposal is putup, the practice is that the goods brought by the passenger aresubjected to detailed examination by the Inspector of Customs.These goods are valued and if found to be mis-declared, or notdeclared as per commercial quantity, the details are incorporated ina printed format meant for adjudication by the competent authority.The Superintendent on duty countersigns the proposals andforwards the same for further adjudication. It is not conceivable forthe appellants, who are not party to above proposals to aid or abetthesaidpassengerwithoutimplicatingtheInspectorandSuperintendent, who had examined the goods and processed theproposal for adjudication. Thus, the fact that the appellants werenot involved in processing the proposal is significant. This escapedthe notice of the CESTAT altogether.

18.It was argued that the uncorroborated admission of somecharged official – which stood retracted later, could not have beenthe material used to arrive at adverse findings. In this context,reliance was placed on the judgment reported as Vinod Solanki Vs.U.O.I, JT 2009 (1) SC 1 to the following effect:

“22. It is trite law that evidences brought on record by wayof confession which stood retracted must be substantiallycorroborated by other independent and cogent evidences,which would lend adequate assurance to the court that itmay seek to rely thereupon.”

Reliance is also placed on the decision in Pon Adithan v. DeputyDirector, Narcotics Control Bureau Madras 1999 (6) SCC 01. Itwas argued that Shri R.N. Zutshi's statement contains onlyvague allegations casting adverse reflections upon the conductof the Appellants, which was not the subject matter of the SCNas distinguished from the specific allegations in Table 14 of theSCN. It was reiterated that the allegations in R.N. Zutshi'sstatementwereneithertruenorvoluntaryandarenotcorroborated by independent sources on any material pointvis-a-vis the Appellants. It was submitted that R.N. Zutshiretracted his statement at the earliest opportunity i.e. on19.01.2001 but the other appellants were not confronted withR.N.Zutshitoconfirmthetruthofhisstatement.Notwithstanding the controversy regarding retraction of R.N.Zutshi, no evidentiary value can be attached to his statementvis-a-vis the charge against the other appellants.

19.Highlighting that the charge against the appellants isabetment/for assisting the passenger in removal of goodswithout payment of duty, it is argued that goods were removedfrom the gate and it is the function and duty of the gateofficertoensure that goods removed are duly covered under dutypaying documents. All the gate officers denied unauthorizedremoval of any goods- fact accepted by the department as thegate officers were not charged in the SCN. There was noallegation that the other appellants, on duty elsewhere- in somecases at the Red Channel counter- had abandoned such duties

and gone to the gate to help in removal of goods withoutpayment of duty. Further, because there was noallegation thatalthough excess quantity was brought before the appellants atthe Red Channel counter, but papers foradjudicationwereput up by suppressing the quantity of textile actually broughtin, counsel submitted that theinferences drawn by theadjudicatingauthority,andaffirmedbyCESTAT,wereunjustified.Itwasfurtherarguedthattheprincipleofpreponderance of probability enunciated in the Commissioner’sordercouldnotabsolvetheCustomsdepartmentofitsresponsibility to provide thebasicmaterialtoenabletheappellantsto base their defense upon. As such, the charge ofabetment was unsustainable.

Contentions of the Customs Department

20.Mr.RahulKaushik,learnedcounselfortheCustomsDepartment urged that the concurrent findings of the Commissionerand the CESTAT should not be interfered with. It was submitted thatevery argument argued on behalf of the appellants concerned withfinding of fact. Pointing out that the adjudicating authority, i.e. theCommissioner’s order is based upon an intensive and meticulousanalysis of the facts, learned counsel highlighted that painstakingeffort linking the various appellants with the smuggling racket whichhad successfully evaded Customs Duty for nearly two years, had beenanalysed in respect of each date and in respect of each of theappellants.

21.With respect to the issue of the reliance placed uponconfessional statements, in the absence of other material, learnedcounsel submitted that there are several decisions highlighting thatRevenue, especially, the Customs proceedings do not involve concernswhich are to be addressed in criminal proceedings that involvedfundamental freedoms and personal liberties. Reliance was placedupon Naresh v. UOI 1996 (83) ELT 258 (SC); K.I. Pavunni v. Asst.Collector 1997 (90) ELT 241 (SC) and KTMS Mohammad v. UOI AIR1992 SC 1831. It was argued that whilst in criminal proceedings, thelaw insists upon the prosecution proving its case beyond reasonabledoubt – which is the highest threshold of proof, in quasi-judicialproceedings that involve evasion of tax law or evasion of CustomsDuty, the lower threshold of proof - preponderance of probabilities - isto be followed by the adjudicating authorities, learned counselsubmitted that retracted confession is not per se inadmissible orirrelevant in customs proceedings and can always be used as acorroborative evidence to record adverse findings.

22.It was next argued that weight metre scale adopted by theCommissioner was rationally explained. Mr. Rahul Kaushik, learnedcounsel stated that the smuggled goods were not available forexamination and that there was lack of material evidence to showcorrelation between weights of various varieties of silk brought onvariousdatesandtherespectiveweightmetreratio.TheCommissioner had to go by the record of concerned airlines whichshowed excess baggage weight in kilos whereas the AOs showed theminmetres.Inthesecircumstances,takingintoconsideration

manipulation of quantities of silk fabrics, and the suppression andmisdeclarations of the passengers involved which were rampant, theCommissioner adopted the most reasonable and logical methodologyto arrive at approximation of metre-wise quantity by deducing themfrom the package weight reported by the airlines. It was submitted thatthe weight metre ratios were indicated in Table 3 of the notice exceptin the case of two dates, i.e. 19.06.2000 and 28.08.2000 whichappeared to be rational whereas for the quantities reported for all otherdates appeared to be eccentric. The Commissioner observed that onekilo of silk fabric reportedly varied between 0.52 metres and 7.28metres. Such wide variations were excluded and, therefore, the variousratios indicated from the materials available in respect of the quantitiesof 19.06.2000 and 28.08.2000 were taken into consideration. TheCommissioner pertinently had noted as follows:“402.Theaboveweight-metresratiosneedtobeunderstood in the right perspective. Indubitably, except forthe dates 19.6.2000 and 28.8.2000 all the remaining ratios,being illogical, are out of place. I therefore focus on theposition on these two dates. As regards 28.8.2000, thegoods – silk fabrics in six varieties based on gsm [gramsper square metre] i.e. 36, 50.1, 45.7, 52.1, 69 and 73.5 gsmare available. The requisite details of these goods i.e.variety-wise total weight in kgs, total metres, averagemetres per kg and all other relevant information asexhibited by table 2, 3 and 4 are also available. In thiscontext, I find that the proposed weight metre ratio of 17.62has been computed on the average basis of the aboveelements of the silk fabrics physically available as on date.On the other side, perusal of the weight exhibited by theAirlines and the metres assessed in AOs relating to19.6.2000 brings forth that even on this date voluminousbaggage of silk fabrics containing different varieties was

brought in by Olga Kozireva, Isamu KM, Merkulova,Shakista. K. and Vetchinkina T. As against the total weight2333 kgs as per records of Airlines and as detailed in para74 of the notice, the total meters assessed in AOs are seento be 45,600 mtrs which seem consistent, logical andreliable. The average metres per kg i.e. weight metre ratiohere works out to 19.54. As detailed in para 74(d) of thenotice, in respect of Merkulova and Shakista K, 424 kgs ofa variety of silk fabrics were assessed to 7000 mtrs on19.6.2000 producing average of 16.50 mtrs per kg. It isfairly comparable to variety of silk fabrics having 16.79mtrs per kg and 45.7 gsm brought in on 28.8.2000.Similarly, 229 kgs of variety of silk fabrics relating toOlga Kozireva were assessed to 5000 mtrs. leading toaverage of 21.83 metres per kg. This average is againrationally comparable to another variety of silk fabricswith 36 gms having average of 21.81 mtrs per kg broughtin on 28.8.2000. conjoint study of the baggage weightson 19.6.2000 and 28.8.2000 as reported by Airlinesthrough manifests or letters and the metres assessed bycustoms leads me to positive finding that these metres arereliableandrationallyco-relatabletothemanifested/reported weights of baggage brought in by therelevant passengers. Having regard to the Test Reports ofCRCL on all the six varieties of silk fabrics seized on28.8.2000,marketenquiriesconductedthereon,availability of the goods and the wider details thereof assummarized in the above said Tables, I find the weightmetres ratio of 17.62, which is duly supported by the abovevarieties of silk fabrics brought on 19.6.2000, as moreauthentic, reliable and legally maintainable for the purposeof ascertainment of metres per kg for previous clearances.”

23.Mr.Kaushik,learnedcounselalsosubmittedthattheadjudicating Commissioner also dealt with the issue of computation ofbaggage weight on the basis of vehicle capacity, i.e. the truck or trucksengaged for transportation on five dates when the airlines recordmanifest showed insignificant baggage weight, but commercial trucks

were used by relevant passenger or their groups. It was submitted thatthese were based upon objective materials in the form of correlation ofstatements of transporters and the confessional statements. Likewise,the evaluation of silk textiles had uniform rate – considering thewide variation in the declarations, i.e. `40 at the last end per metre and`100 per metre. Thus, the weighted average value of `68 per metrewas reasonable under the circumstances.

24.It was submitted next that the complaint of violation of naturaljustice on account of reliance placed upon confessional statements ofthird parties, who were not cross-examined, cannot be ground tovitiate the proceedings. It was submitted that the SCN was issued on21.08.2001. Despite the pendency of proceedings for more than fiveyears, request for cross-examination was made at the fag end ofhearing. Learned counsel relied upon the judgment reported asKanungo & Co. v. Collector of Customs Calcutta 1983 (13) ELT 1486.Similarly, it was submitted that the argument with respect to absenceof service of SCN upon several persons such as Olga, Nazira etc. ismeritless. Learned counsel relied upon Section 153 and relied uponthe findings of the Commissioner that even though personal noticecould not be effected on those individuals, the requirement of law withrespect of constructive notice had been complied with and that sincesuch individuals left the country fully aware of the possible probableconsequences,theappellantscannottakeadvantageofsuchtechnicality.

25.Learned counsel submitted that the statements of R.N. Zutshiand Dil Agha defined the role of most of the appellants, i.e. V.K.

Khurana and T.K.R. Reddy. In the case of Sudhir Sharma and R.N.Zutshi, the statement of Dil Agha dated 11.07.2001 was adverse tothem. Likewise, phone record established the link between these twoindividuals on the one hand and Dil Agha, Mammoor Khan and othersinvolved in the smuggling racket. It was submitted that the samereasoning applied in the case of T.K.R. Reddy, Pradeep Rana and V.K.Khurana. Learned counsel also invited the attention of this Court tothe various tables set out in the adjudication order, set out in the SCNand later in the adjudication order which linked the telephone numbersof the appellant with those of the foreign nationals and others, i.e.Olga, Dil Agha, Mammor Khan, Nazira, Shalu etc. Some of theappellants even admitted knowledge of their acquaintanceship withMamoor Khan or the others who placed calls or received them.However, either their explanations were not forthcoming or wereunconvincing. These, submitted learned counsel, were sufficientmaterials to establish the culpability of the appellants.

Analysis and Conclusions

26.Before analyzing the merits of the rival contentions, it would beconvenient to set out the materials which formed the basis of fixingresponsibility and imposing penalty upon the appellants. tabularstatement disclosing the foundation of each appellant’s liability-whether implicated in the statement of anyone else, phone call details,etc. is set out below:

27.The customs authorities’ apparent routine check of OlgaKozireva's (a Kyrgiz national) baggage,on 28.08.2000 anddiscovery of her illegal importation and smuggling into India, aquantity of 81160 yards (74212 meters) of silk textiles without thenecessary declaration, her detention and subsequent statementunder Section 108 of the Customs Act triggered the entireinvestigations.TheinvestigationswerecarriedoutbytheDirectorate of Revenue Intelligence (DRI) . The conspiracyunearthedshowedthatanAfghanNational,MamoorKhan,frequented and stayed at Sameer Guest House in Ballimaran, Delhi.The investigating agency also obtained photograph of Mamoor Khanfrom FRRO. One Pawan Kumar, driver of Sehrawat Goods Carrier inhisstatementsdated17/18.12.2000,and22.12.2000identifiedMamoor’s photograph, to say that he was involved in import andtransportation of silk fabrics by Uzbeki ladies from IGI Airport.Pawan Kumar had personal knowledge because hewas activelyinvolved in transportation of baggage brought in by Uzbeki ladies.Mamoor Khan’s stay at Sameer Guest House in Ballimaran, Delhi wasalso confirmed by Abdul Qayum, Manager, Sameer Guest House whoidentified that Mobile No.[REDACTED] belonged to Mamoor Khan. Inhis statement he identified the photo of Mamoor Khan. Abdul Qayumdisclosed other details regarding involvement of Mamoor Khan. Thiswas confirmed by Ajay Dhiman, Traffic Supervisor, Kyrgyzstan

Airlines in his statements dated 26/27.12.2000, 30.12.2000 and01.02.2001; he also identified Mobile No.[REDACTED] as belonging toMamoor Khan. Mamoor’s involvement in illegal import of Chinesesilk fabrics was also corroborated by Purshottam Lal Tandon in hisstatementdated30-12-2000;hetooconfirmedthatMobileNo.[REDACTED]belongedtoMamoor.Thisreceivedfurthercorroboration by Pradeep Singh Dhamija in his voluntary statementdated 03.01.2001. M/s Arun Kumar Dokania, Gopal Prasad Dokania,Nitish Kumar Kedia, Anudeep Singh and Mahender Jain, dealers inthe Chinese silk fabrics imported by Uzbeki women also confirmedthe involvement of Mamoor Khan in their statements of 05.01.2001. Itwas, therefore, apparent that Mamoor Khan’s involvement in theconspiracy was as key player, if not its ring leader. However, hecouldnotbecaught.Severalotherwitnessesconfirmedhisinvolvement in smuggling of silk textiles independently.He wasregularly in touch with various officers of Customs, passengers likeOlga K., Nazira, Shahlo etc. and buyers of silk textiles, veryfrequently.Table No.11 (in the Order in original) clearly shows thatTel.No.[REDACTED] belonging or used by MamoorKhanwasgenerally found in the vicinity of the IGI Airport on the dates whenflights carrying passengers like Olga K., Shahlo, Shahkista arrived atIGI Airport. One Dil Agha was also arrested; his statements wererecorded. This led to discovery of marked increase in frequency oftelephonic interactions between the numbers of Mamoor Khan, DilAgha, the passengers entering with the goods, and those of Customsofficers, especially the appellants accused of connivance -around thetime when the flights were being cleared. This evidence pointed to pattern disclosing Mamoor Khan’s pivotal role in this complex andmassive network of smuggling operations. He was regularly in contactwith other key players in this web of conspiracy.Mamoor Khan’scorroboration would have led to conclusive proof; yet the customsauthorities concluded that whatever emerged, through statements ofvarious individuals and materials was substantial and crucially-un-rebutted, to conclude that the appellants were in fact accomplicesand conspirators in smuggling silk textiles. The materials gathered andstatements recorded during investigation led to SCNs to the appellants,the passengers involved, other individuals like Dil Agha, traders, etc.

Re. Question Nos (a) and (c)

(a)Whether the findings in the impugned order with regard toabetment by the appellants is justified in law;(c)Whether the findings based upon mobile phone records andconfessional statements of one party are sustainable in law in thecircumstancesofthecaseintheabsenceofanyothercorroborative material.

28.These questions are inter-related and are taken together. Themain argument of the appellants was that the Commissioner and later,CESTAT could not have concluded that they had abetted in the allegedsmuggling operations, given that Mamoor Khan was not caught andthere was no corroboration on his part. Their supporting argument alsoappears to be that the absence of the non official abetters (such asOlga, Nazira, Shakista, Dil Agha etc.) in the SCN has prejudiced them,vitiating the findings.

29.Section 112 of the Customs Act, which penalizes, inter alia,abetment, reads as follows:

"112 Penalty for improper importation of goods, etc.—Any person,—

(a) who, in relation to any goods, does or omits to doany act which act or omission would render such goodsliable to confiscation under section 111, or abets thedoing or omission of such an act, or

(b) who acquires possession of or is in any wayconcernedincarrying,removing,depositing,harbouring, keeping, concealing, selling or purchasing,or in any other manner dealing with any goods whichhe knows or has reason to believe are liable toconfiscation under section 111, shall be liable,—

(i) in the case of goods in respect of which anyprohibition is in force under this Act or any other lawfor the time being in force, to penalty not exceedingthevalue of the goods or five thousand rupees,whichever is the greater;

(ii) in the case of dutiable goods, other than prohibitedgoods, to penalty not exceeding the duty sought to beevadedonsuchgoodsorfivethousandrupees,whichever is the greater;

(iii) in the case of goods in respect of which the valuestated in the entry made under this Act or in the case ofbaggage, in the declaration made under section 77 (ineither case hereafter in this section referred to as thedeclared value) is higher than the value thereof, to apenaltynotexceedingthedifferencebetweenthedeclared value and the value thereof or five thousandrupees, whichever is the greater;

(iv) in the case of goods falling both under clauses (i)and (iii), to penalty not exceeding the value of thegoods or the difference between the declared value andthe value thereof or five thousand rupees, whichever isthe highest;

(v) in the case of goods falling both under clauses (ii)

and (iii), to penalty not exceeding the duty sought tobe evaded on such goods or the difference between thedeclared value and the value thereof or five thousandrupees, whichever is the highest."

The principal contention was that what was seized was only thequantities of goods from Olga on particular day, i.e 28.08.2000.Those goods were available for assessment, seizure, consfiscationand penalty proceedings. If and only if, the role of the appellantsor any of them was available in respect of such consignment onlyand none else,could the Customs authorities have concluded thatthey had abetted the activities. However, such was not the position;statements of R.N. Zutshi, Dil Agha, Olga, and several otherindividualswerereliedoninrespectofentirelydifferenttransactions allegedly amounting to smuggling – on severalprevious dates. Those quantities of silk were not seized. On thecontrary, they were assessed and wherever found to be excessbaggage, differential duty was even recovered; in other cases, theywere never even seized, since the declarations as to value wereaccepted. In the circumstances, the conclusion of the appellant’scomplicity as abettors was unfounded in law.

30.The Court here observes that the SCN and findings of theAdjudicating authority have plainly brought out through variousconnecting strands of materials the interconnection between thoseinvolved in the smuggling and the present appellants. Apart fromMamoor Khan, the role of Dil Agha was highlighted; he figured timeand again on various dates when the textiles were brought in. R.N.Zutshi’s voluntary statement dated 17.01.2001 identified Dil Agha as

having introduced himself as Mamoor Khan’s brother and with effectfrom the last week of July, 2000 he had been in touch with R.N. Zutshi(as substitute of Mamoor). R.N. Zutshi confirmed that MobileNo.[REDACTED] and landline No.3930733 belonged to him (Dil Agha)and that after August, 2000, Dil Agha used No.[REDACTED].Thisstatement corroborated the statement of Dil Agha recorded on23.05.2001. Dil Agha’s unsigned statement was duly supported by twoindependent witnesses. It established close connection betweenMamoor Khan and Dil Agha on one hand, and regular passengers (orcouriers) such as Olga K, Gulia etc. on the other. Dil Agha’sassociation with Mamoor was also confirmed by Abdul Qayum,Manager of Sameer Guest House, Ballimaran, Delhi in his statement-dated 20.12.2000.Dil Agha’s further statements were recorded on11/12.07.2001, and 25.07.2001 where he gave detailed description ofhis involvement as well those of others, viz Sadullah, Zanjir Khan andSanak etc. Importantly, he spoke about involvement of the Customsofficers and his money dealings with them. Dil Agha’s role was alsoconfirmed by others such as Pawan Kumar (driver of Sehrawat GoodsCarrier), Abdul Qayum, Manager, Sameer Guest House, Ajay Dhiman,Traffic Supervisor, Krygyzstan Airlines, Pradeep Singh Dhamija,Gopal Prasad Dokania, Nitish Kumar Kedia and Anudeep Singh intheir statements under Section 108 of the Customs Act, 1962 onvarious dates.Most of these confirmed the mobile and landlinetelephone numbers of Dil Agha. The evaluation of these materials ledto the adjudicating orders’ conclusion that Dil Agha was an importantplayer in smuggling silk fabrics through Uzbeki women and that thecharges made against him for conniving, abetting and conspiring were

established.

31.The conclusions of the Customs adjudicating Commissioner didnot rest on the various statements recorded under Section 108 only. Avery crucial element which lent corroboration to those statements werethe call detail records. In this regard, the Commissioner significantlyheld as follows:

“378. Mr. R.N. Zutshi has not stated in his retraction thatany physical force was employed or that he was threatenedwith any physical harm if he refused to do the bidding of hisalleged tormentors. Considering his long experience andotherrelevantcircumstances,Iholdthatthisletterregarding retraction is nothing more than an after thoughtand I hold that the statement tendered by Mr. R.N. Zutshi isvoluntary and given by his free consent. The Judgment inthe case law of Aher Raja Khima vs. State of Saurashtrareported as AIR 1956 SC 217 [V 43C 45 MAR] cited by him,is therefore, not relevant. .

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5.Print out of telephone calls

390.In making the allegation of illegal clearance andconnivance, the DRI has relied extensively on the print outsof telephone calls made by various noticees amongst eachother.The details of these telephone calls are contained inTables No.7,8,9,10 & 11 of the show cause notice.Thesetables have been constructed on the basis of print outsobtained from various service providers and the evidenceused in the show cause notice is that passengers like OlgaK. and others, several Customs officers posted at Airpoortand facilitators like Dil Agha, Mamoor Khan were regularlyin touch with one another during the relevant period.Thequestion before me is as to what is the value of these detailsas evidence of existence of conspiracy and co-relationamongst various players in this game.

391.At the outset, I observe that the details contained in

the print outs and consolidated in these 5 tables are not inthe nature of transcript of the conversation that might havetaken place amongst the concerned parties.It onlyindicates that telephone calls were made and receivedduring these periods. What actually was said during thesetelephone calls is not known.Making or receiving oftelephone calls by itself is very harmless activity.However, it acquires certain sinister dimensions if it takesplace between known carriers of commercial goods and AirCustoms Officers on regular basis, especially if the timing issuch that the passenger is arriving by flight on aparticularoccasionwhentheofficerconcernedalsohappens to be on duty.If the circumstances surroundingsuchtelephonicexchangearesuggestiveofpossibleconnivance and the frequency and timing of the calls furtherenhances such suspicion, then it does give rise to thepossibility of existence of an unholy nexus.In the absenceof transcript or details of what happened during thesetelephone contacts, such calls by themselves do notconstitute an evidence which itself is enough to prove theexistence of conspiracy.At the most, they can be used tobuttress the force of other pieces of evidence that mightindependently exist.Again, it would make lot ofdifference if particular noticee is said to be only on thereceiving end of the calls as against another situation wherethe calls might have been made by both sides.While aperson ‘A’ may have no control over who calls him at whattime can plausibly contend that he cannot be heldresponsible for anyone making unsolicited calls to histelephone, the situation becomes quite different if ‘A’ wasfrequently returning the calls made to him and theirconversation often lasted for several minutes….xxxxxxxxxxxxxx

394.Significantly, none of the officers named in theabove para have been issued show cause notice on theground that the only evidence against them was in the formof telephonic conversation.Clearly, the investigatorssubscribe to the philosophy that telephonic conversation

alone in the absence of corroborative evidence is notenough to fasten the liability of abetment and connivance.”

Later, it was held as follows:

“419B. While analysing the evidence against the noticeescharged with abetment, I have kept in mind the abovedefinitionofabetment.Broadlyspeaking,theillegalconsequences that took place are the alleged clearances ofcommercial clearances of silk fabrics without declarationand payment of duty leading to the violation of provisions ofCustoms Act, 1962. The intention and knowledge of co-noticees has been inferred on the basis of circumstances ofthe situation. For example, if co- noticee has been in touchwith people like Mamoor Khan, Dil Agha or the passengerswhowaschargedwithimportofhugequantityofcommercial baggage on regular basis it might be possibleto impute the knowledge and intention of such co-noticees.Similarly, commonality of interest with the passengers hastobeseeninthecontextofallegationsofillegalgratification.Generallyspeaking,hugequantitiesofcommercial goods would be brought in by passengers in anorganized manner only if they have prior commitment orunderstanding with some people who can help them inclearance of such goods and such situation undoubtedlyfalls within the parameters of abetment, collusion andconspiracy. In the context of the present case, it can bemanifested in several ways –for example, preparation ofadjudication proposal means only for small fraction of thebaggage actually carried by the passenger. Turning blindeye and huge quantities being carried by the passengers andallowing them to pass through Green Channel, improperinventorization,gratificationandvaluationofgoodsbrought by them and so on, the acts of omission andcommission are illustrative in character, no exhaustive listof such illegal acts or omission can be made. Whileanalyzing the role of co- noticees in abetment, the aboveparameters have been applied to the overall facts of thegiven situation.”

32.The absence of goods or the fact that in earlier instances theyhad been cleared without dispute, or even after payment of differentialduty, in the opinion of the Court do not constitute impediments to aSCN and proceedings on the question of abetment of any of theappellants. In all such instances where conspiracy (that has achievedits objective) is unearthed, the articles – especially in the form ofgoods would be no longer available. However, that would in nomanner absolve the culpability of those involved, especially those whoplay key roles in the fulfillment of such conspiracies. The fact thatdifferential duties were paid on particular dates and the record of entryof those involved in the smuggling racket, precisely constitute theevidence which both corroborates and establishes the allegations. Inthis context, the court notices the judgment of the Supreme Court inLal Singh v State of Gujarat 2001 (3) SCC 221:

“Many facts pertaining to such activities remain in personalknowledge of the person concerned. Hence, in case ofconspiracy and particularly such activities, better evidencethan acts and statements including that of co-conspiratorsin pursuance of the conspiracy is hardly available. In suchcases, when there is confessional statement it is notnecessary for the prosecution to establish each and everylink as confessional statement gets corroboration from thelink which is proved by the prosecution. In any case, the lawrequires establishment of such degree of probability that aprudent man may on its basis, believe in the existence of thefacts in issue.”

Likewise,inStateofMaharashtra v. BharatChaganlalRaghani (2001) 9 SCC 1 the Supreme Court held that:“58. .... There is no denial of the fact that the judicialconfessionsmadeareusuallyretracted.Retracted

confessions are good confessions if held to have been madevoluntarily and in accordance with the provisions of law....Corroboration of the confessional statement is not rule oflaw but rule of prudence. Whether in given casecorroboration is sufficient would depend upon the facts andcircumstances of that case…”

InWariyam Singh v. State of U.P. (1995) 6 SCC 458 and S.N.Dube v. N.B. Bhoir and Ors (2000) 2 SCC 254, the Supreme Courtrelied upon the confession made by an accused for conviction solong as there was corroboration. The Court held that the allegationof the confession being fabricated was without any basis and theconfession could be taken into account while recording theconviction.

33.The Court is conscious that the above decisions were in thecontext of evidence which was received in regular trials during thecourse of criminal proceedings. Here, however, the printout detailsof the calls made between those accused of smuggling, such as DilAgha, Olga established the allegations of conspiracy and abetment.The statement of transporters, smuggled goods traders, thosefrequently seeing some of them like the manager of Sameer Guesthouse, lent further support to the statements of R.N. Zutshi (thoughretracted later) and Dil Agha. Last but not the least, the previousrecords maintained in the Airport also confirmed the stories of Olgaand Dil Agha about the frequency of visits and that on severaloccasions differential duty was paid; the corroboration of quantitieswas likewise founded on scrutiny of the records.

34.It would be worthwhile to also notice the essential findingsrendered by the Commissioner, who went into detailed analysis of

the evidence- which included the statements of R.N. Zutshi, DilAgha, Olga, etc. He also compared the passenger manifests of thedifferent dates involved, the duty roster of various Customs officers,the declarations made on those dates by those alleged to haveparticipated in the smuggling racket, the notings made by theappellants in respect of the declaration and the phone call recordsrelative to the appellants, Dil Agha, Mamoor Khan, Olga, Nazira,Shaloo, etc. Relevant extracts of the findings- which were both datewise, and in respect of each noticee who participated in thesmuggling on the relevant date are as follows. The findings inrespect of Sudhir Sharma are as follows:

“445A. Now, I proceed to analyze (sic) the role of SudhirSharma in the matter. It has been stated by Zutshi in hisstatement dated 17th Jan, 2001 that Sudhir Sharma used tonegotiate and decide the money to be charged from MamoorKhan. It has also been brought out in the show cause noticein Table No.7 that Sudhir Sharma exchanged at least 103calls with various co-noticees out of which 95 calls werewith Mamoor Khan from the period01.10.1999 to31.3.2000, 1 with Dil Agha and 7 with Shaloo A. between16.3.2000 to 12.6.2000. It is pertinent to mention here thaton 10[th]April, 2000 which is the date in question, SudhirSharma talked to Mamoor Khan 6 times between 10.26 AMand 11.17 AM whereas the flight had arrived at 9.90 AM.The written defence dated 3[rd]Dec,2004 and additionalsubmissions dated 2 Jan.,2007 have been considered by mein detail. The allegation of abetment and collusion has beendenied on different grounds, the main one being that nostatement of passenger Shalo. A. had been recorded; thatthe noticee did not know any person by the name MamoorKhan or Dil Agha; that the statement of Dil Agha is notcorroborated by any independent evidence. He has alsoquestioned the methodology adopted for working quantityand value of goods and the fact that goods were indeedtextiles. At the time of personal hearing held on 21[st]Jan,2007, the noticee, interalia, contended that show causenotice had not been served on the main noticee and hence,no proceedings could be initiated against the abettor. Heplaced reliance on the judgment of Teksons Vs AC Customs,CCE Vs Sita Electronics, CCE Vs. Electrolites Foils. Healso contended the argument of pooled baggage on the basisof U.O. Note of D.C. (Vigilance). He has further submittedthat adjudication proceedings in the present case wereinitiated by Mr. Rajender, ACO and not by him.

446. 1 have considered the evidence on record as well as thestatement of the noticee. The issue regarding description,quantity and value of the baggage brought in have alreadybeen considered and decided by me in paras above. So faras the defence argument of pooled baggage is concerned,the same has been discussed in detail in paras above. Thenoticee Sudhir Sharma has been explicitly named by R.N.Zutshi in his statement dated 17.1.2000 and the record of histelephonic conversation with Mamoor Khan is detailed inTable No7. However, I find that the noticee officer has notgiven any explanation of his frequent interaction withpeople like Mamoor Khan, Dil Agha and Shalo A. It is quiteintriguing that one hour after the arrival of flight on thesaid date, the noticee spoke to Mamoor Khan on 6occasions. This fact has neither been denied nor rebutted.The noticee has denied knowing Mamoor Khan but hasgiven no explanation or justification of his interaction,especially during the period when the flight was beingcleared. Under these circumstances, it cannot be said thatthe statement of Zutshi and others are not supported bycorroborativeevidence.Thedateandtimingofthetelephone calls matches with what has been stated by Zutshiand corroborates the allegation of connivance, abetment,collusion and conspiracy. I, therefore, hold that the chargesleveled against Sudhir Sharma are established and he isliable for penal action under Section 112 of the CustomsAct, 1962.

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484. The main evidences against Sudhir Sharma are in theform of Zutshi’s statement and his numerous telephonicinteraction with Mamoor Khan and others which have beenbrought out in detail in above paras. The defence taken bySudhir Sharma has already been discussed above and inrespect of 22.5,2000, the only additional submission ofSudhir Sharma is that the A.O. on the subject was preparedby Bishan Chand, ACO and not by him.

485. Apart from the plethora of evidences discussed above, Ifurther observe that on 22.5.2000, Sudhir Sharma was verymuch on duty when the Flight No. K2545 arrived and thereare 5 phone calls between Mamoor Khan and SudhirSharma’s mobile telephone at 8.51 AM,9.31 AM, 10.57 AM,11.11 AM and 4.24 PM. The general evaluation of evidencecoupled with the specific timing of these calls which has notbeen explained by the noticee leads me to inescapableconclusion that there ¡s enough evidence in the form of R.N.Zutshi’s statement corroborated by independent evidence inthe form of phone records to hold Sudhir Sharma liable forpenal action under Section 112 of the Customs Act, 1962under charges of abetment, connivance and conspiracy.

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494. The general evidence against Sudhir Sharma is in theform of statement of R.N. Zutshi dated 17th Jan., 2001 andthe records of his 103 calls with Mamoor Khan and DilAgha etc. It has been pointed out in the show cause noticethat Sudhir Sharma was on duty at the Airport. Thetelephone records further show that there were 4 telephoneconversations between Sudhir Sharma and Mamoor Khanafter the arrival of flight. While the general defencesubmitted by Sudhir Sharma has already been discussedhereinabove, specifically with regard to 1[st]July, 2000, it was

submitted by the noticee that the adjudication proposal inrespect of Nazira on the said date was put up by Mr.Rajinder, ACO and not by the noticee.

495. 1 have examined the defence of the noticee with duecare. It is true that the adjudication proposal with regard tothe main noticee Olga K. and abettor Nazira I. was put upby some other officer. However, the noticee has made noeffort to explain 4 interactions that took place between himand Mamoor Khan after the arrival of the flight. The detailscontained in Table No. 11 onpage 138 of show causenotice also shows that during the period of interaction,Mamoor Khan’s mobile was located at the Airport TerminalNo.2. Thus, the allegation that Sudhir Sharma conspiredand abetted in clearance of baggage that was not declaredfinds credence and is proved making him liable for penalaction under Section 112 of the Customs Act, 1962…”

The findings in respect of Shri R.N. Zutshi are as follows:

“R.N. Zutshi & V.K.Khurana

521 . R.N . Zutshi and V .K. Khurana are the departmentalofficers who have been made co-noticees on the allegationof connivance and abetment. The general evidence againstthem has already been analyzed in detail. On this datespecifically, it is seen that Dil Agha spoke with R.N. Zutshitwice on his mobile phone and 6 times from his shop Tel. No.3930733. It is very intriguing that these interactions tookp1ace between 4.47 PM and 7.31 PM whereas the flightarrived at 4.32 PM. It is further seen that immediately afterthe arrival of flight, Olga K. who was the passenger spoke 4times within span of one hour from her mobile to R.N.Zutshi’s mobile while RN. Zutshi was very much on duty.This coupled with Zutshi’s confessional statement and otherdetailed records of his frequent interactions with variousnoticees clearly show that he was very deeply involved inthis entire racket and I hold him liable for penal actionunder Section 112 of the Customs Act, 1962 for aiding and

abetting the clearance of non-bona fide baggage of Olga K.and Nazira I. on 1[st]August, 2000.

522. V.K. Khurana is another noticee in this regard. I findthat in addition to the evidence of his involvement and R.N.Zutshi’s confessional statement and details of his frequenttelephone interactions with other noticees like Dil Agha,Mamoor Khan etc., V.K. Khurana who was on night dutyspoke to Dil Agha on this date also. Further, it is seen thatAO. No. 21727 wherein Olga K declared 1,100 mtrs. of silktextiles has been prepared by V.K. Khurana, lnspector. Thisclearly shows that Olga K. was still at the Airport when V.K.Khurana reported for night duty. It has already been shownthat there was telephonic contact between him and Olga Karound that time. Olga K. was frequent and regulartraveler better known as carrier of commercial baggageand V.K..Khurana was no stranger to this fact. Khurana InAO records the fact that she had not declared any dutiablearticles and was diverted to Red Channel, Still, neither didhe inventorize her entire baggage nor the total quantitybrought was put up for assessment or adjudication. Thisspecific evidence along with other general issues analyzedalready leaves me in no doubt about the involvement of V.K.Khurana in abetment and connivance in clearance ofbaggage of Olga K. Accordingly, I hold him liable for penalaction under Section 112 of the Customs Act, 1962.

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462. 1 have carefully considered the entire gamut ofevidences against R.N. Zutshi. and his responses thereto. Sofar as the validity of his statement as evidence is concerned,the same has been discussed very minutely and in greatdetail hereinabove. It has also been analyzed why the pleaof supposed retraction was meaningless and that how such aretraction does not negate the evidentiary value of thestatement. Though in case of Zutshi himself, his statementbeing totally inculpatory might be enough to draw anadverseconclusionagainsthim;thereisfurther

corroborative evidence in the form of his interaction withpeople like Mamoor Khan, Dil Agha, Olga K. & Shahlo A.Zutshi has not denied this interaction either in his statementor in his written reply or at the time of personal hearing.His only plea is that the contents of conversation are notknown. But in the light of his admission coupled withadmitted and strong evidence of frequent interaction,non-availability of records of conversation would be aminor thing. All other arguments advanced by Zutshi havealso been discussed in detail in the previousparagraphs.Under the circumstances, absolute and deep complicity ofR.N. Zutshi in this entire drama is not in doubt. It is indeedvery intriguing that even on 15[th]May, 2000 when the flightlanded at 9.51 AM, R.N.Zutshi talked to Mamoor Khan 4times before the arrival of the flight at 9.50 AM and 3 timesafter the arrival. perusal of Table No.11 (page 136 ofSCN) would also show that cellphone of Mamoor Khan wasin vicinity of International Airport from 9.52 AM to12:36PM. His entire role therefore, stands out very clearlyand his complicity in the entire episode is fully established.I, therefore, hold that R.N. Zutshi is liable for penal actionunder Section 112 of the Customs Act, 1962 for his role inabetment, collusion and conspiracy and clearance ofirregular baggage.

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500. The evidence against R.N. Zutshi is in the form of hisinculpatory confessional statement as well as record oftelephonic conversation has already been discussed in theforegoing paragraphs. It is matter of record that R.N.Zutshi was on duty at the relevant time. It is further seenthat R.N. Zutshi had as many as 11 telephonic conversationswith Mamoor Khan - 5 times before the arrival of flight and6 times after the arrival of flight. This aspect has not beenexplained by Zutshi either in his written defence or duringthe course of personal hearing but the strong evidenceavailableonrecordinescapablypointstowardshiscomplicity in the entire affair. I, therefore, hold that R.N.

Zutshi is liable for penal action under Section 112 of theCustoms Act, 1962 for having aided and abetted in irregularclearance of commercial baggage of Olga K. on 10[th]Ju1y,2000 . ”

The findings in respect of Shri. T.R.K. Reddy are as follows:

482. The allegations against TRK Reddy regarding irregularclearance of commercial baggage are primarily based uponthe statement of R.N Zutshi and Dil Agha. There is alsoevidence of extensive interaction between Reddy andMamoor Khan on telephone. All these details have alreadybeen discussed in the above paras while discussing thechain of events that happened on 27[th]Feb., 2001. Thegenera1 argument taken in reply of TRK Reddy have alsobeen discussed above. However, regarding 22nd May, 2000,the noticee has taken an additional defence that themanifested weight on this particular date with regard to thenoticee was very minimal and that the quantity of textilebrought in had been computed by taking into account thekind of vehicle used for transport of goods.

483. 1 have carefully considered the evidence availableagainst the noticee as well as their submissions in defence.He was admittedly in touch with Mamoor Khan on regularbasis and this fact very strongly corroborates what has beenstated by R.N. Zutshi in his voluntary statement dated 17thJan., 2001. Even on 22[nd]May, 2000 there was telephonecontact between Mamoor Khan and TRK Reddy at 7.59 AMon 5513999 of TR.K Reddy. The flight arrived at 9.22 AMand TRK Reddy who was on duty spoke with Mamoor Khanagain on 6 different occasions i.e. 9.14 AM; 09.15 AM,09.41 AM; 10.54 AM; 4.19 PM and 4.25 PM as listed onpage 173 of the show cause notice. The above facts whichhave been discussed in great detail in foregoing parasclearly establish the complicity of Reddy in clearance ofbaggage in league with Mamoor Khan and the passengers.So far as his argument that the manifested weight on22.5.2000 was minimal does not help his defence much and

the acceptability of methodology adopted for working outquantity on those dates when declared quantities were farmore than the manifested weight has already been discussedinforegoingparas.Keepinginviewtheentirecircumstances of the case, evidence available and defencepleaded, I hold that the charges of connivance, abetmentand conspiracy against TRK Reddy are proved and I holdhim liable for penal action under Section 112 of theCustoms Act, 1962.*************************************503. The show cause notice has made the allegation ofconnivance and abetment against Mamoor Khan and Sanakwhich need not be discussed again. The show cause noticehas also levelled the charges of abetment and connivanceagainst T.R.K. Reddy. The general evidence availableagainst Reddy has already been discussed in foregoingparas. In addition, it is on the record that T.R.K. Reddy wasin fact on duty on the date in question and had 8 telephonicconversations with Mamoor Khan from his Cell No.981102318, once before the arrival of flight and 7 timesafter the flight was landed. T.R.K. Reddy has not clarifiedthis aspect satisfactorily and it further strengthens theevidence of conspiracy available against him. Under thecircumstances, I hold that the allegations of connivance,abetmentandconspiracyagainstT.R.K.Reddyareestablished for 17.7.2000.

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505. The deep involvement of T.R.K. Reddy on the basis ofstatement of R.N. Zutshi duly corroborated by independentevidence in the form of record of telephonic conversationhas been analyzed in detail. In addition, it is found that on24.7.2000, T.R.K. Reddy was on duty and he has spokenwith Dil Agha once in the morning from his residentialtelephone and 5 times during the day from his mobile

telephone.Similarly,theevidenceintheformofconfessional statement of R.N. Zutshi duly corroborated byrecordoftelephonicconversationhasalreadybeenanalyzed. On the relevant date, R.N. Zutshi was also on dutyand there were as many as 11 telephonic conversationsbetween Zutshi and Dil Agha on the telephone numbersbelonging to Mamoor Khan. I am, therefore, not in anydoubt that both the noticees have rendered themselves liablefor penal action under Section 112 of the Customs Act, 1962for conniving and abetting in the clearance of commercialbaggage of Merkulova L .”

The findings against Mr. V.K. Khurana are as follows:

“526. The show cause notice has named V K. Khurana as aco-noticee. The evidence against V.K. Khurana is in theform of inulpatory statement of R.N. Zutshi, records oftelephonic conversation with Mamoor Khan, Dil Agha, OlgaK. etc. at different points of times has already beendiscussed. On ‘this date particularly, there is evidence toshow that DilAgha with his mobile phone No, [REDACTED]was present at the Airport Terminal No.2 from 4.45 PM to7.52 PM and spoke with V.K. Khurana who was on duty on4 different occasions during this period. In addition tostrong evidence already on record, the time and nature ofthese phone calls which have not been explained by V.K.Khurana in his reply clearly leads to the conclusion that theallegation of abetment and connivance is duly provedagainst V.K. Khurana rendering him liable for penal actionunder Section 112 of the Act ibid.*********************

****************

555. The evidence of complicity and collusion againstV.K.Khurana is both substantial as well as strong. VK.Khurana has been specifically named by Dil Agha as aKhaas Admi and this role has also been described by R.N.Zutshi in his voluntary statement dated 17.1.2001. Theevidentiary value of both these pieces of evidence has beendiscussed already in great detail. It has been clearly brought

out in the show cause notice that on 28th August, 2000 hugequantities of textile was brought in after taking priorclearance from V.K. Khurana . It is corroborated by the factthat though Olga K. was carrying silk textiles valued at overRs.50 lakhs involving Customs duty of over Rs.30 lakhs, shedid not have any currency to pay duty on it nor there isanything to suggest that she had any arrangement or desireto pay this duty by arranging funds after arriva1. On theotherhand,evenonthisparticulardate,thereisdocumentary evidence to show interaction between V.K.Khurana on his Mobile No.[REDACTED] with Dil Agha,passengers Nazira. I.and Olga K. Though V.K. Khuranahas disowned the ownership of the mobile number inquestion, this aspect has already been discussed anddecided by me in para 440 above. When all thesecircumstances and evidences are seen in the totality, there isnot even slightest doubt that Khurana was actively inleague with Olga K, Dil Agha and Nazira I. and, they hadhis prior word and commitment to carry out this scandalousclearance without declartion and payment of duty. In thelight of findings above, I hold VK. Khurana liable for penalaction under Section 112A of Customs Act, 1962 for his rolein abetting and colluding with Olga. K., Nazira I; and DilAghá. .”

The findings recorded against Pradeep Rana are as follows:

“531. The allegation of abetment and connivance has beenmade against Preventive Officer Pradeep Rana, primarilyon the basis of statement dated 17.1.2001 of R.N. Zutshi anddated 11.7.2001 tendered by Dil Agha under Section 108 ofthe Customs Act, 1962 as also his frequent telephonicconversations with Dil Agha. I find that in his statementreferred above, Dil Agha had pointedly mentioned the nameof Pradeep Rana as an important (khas) conduit of MamoorKhan along with, Zutshi and Reddy. R.N. Zutshi has accusedPradep Rana of negotiations of money to be charged fromMamoor Khan and carried out its distribution amongbaggage officers. I have gone through the contents of Table

No.7 of show cause notice and I find that there were 19telephonicinteractionsbetweentelephoneadmittedlybelonging to Pradeep Rana and Dil Agha between 7th July,2000 and 28[th]August, 2000. The allegation of bribery hasbeen further reiterated by Dil Agha in his statement dated25.7.2001. The DRI have also brought out on page 56 to 58certain instances wherein he has prepared the adjudicationproposal on different dates indicating lesser quantity oftextiles than what was actually manifested and brought in bythe passengers. I have examined the written defence dated19th Sept., 2006 filed on behalf of the noticee. The mainargument raised in defence is that in respect of 3 dates whenPradeep Rana is accused of abetment, no goods wereseized; that the details in Table No. 11 do not indicate of theconversations took place during the alleged telephone calls;that there is no evidence that goods were silk fabrics; thatthe quantification had not been carried out correctly; thatthe reliance on Manifest for working out quantity was notaccurate; that the value was not correctly determined. TheAdvocate of the noticee, A.K. Bhasin appeared for personalhearing on 12th Jan 2007 and in addition to the oralavermentsalsosubmitted13additionalpointsforconsideration in writing which are duly considered. Thenoticee Pradeep Rana requested for further time for makingmore submissions vide his letter dated 1st Feb., 2007. Eventhough six months have elapsed, no further submissionshave been received on his behalf.532. Ï now proceed to evaluate the evidence availableagainst the noticee Pradeep Rana in the light of defenceoffered by him. It is matter of record that Dil Agha hasrepeatedly named Pradeep Rana in his incriminatingstatement. I observe that statement of Dil Agha and R.N.Zutshi by itself might not really be enough to hold PradeepRana liable for penal action but as it happens, there iscorroborative evidence in the form of frequent telephonicconversations betweenPradeepRana andDilAgha.Pradeep Rana has not denied these conversations in hisstatement dated 23[rd]Jan, 2001 and 18th July, 2001 . He hastried to give justification for these calls which is far fromconvincing or acceptable. It is matter of record that OlgaK. and Nazira had arrived on 11/12th August, 2000 with 10pieces of manifested baggage weighing 1,400 kgs whichtranslated into 24,668 mtrs. However, they only declared1,000 metres each on arrival and Pradeep Rana preparedthe adjudication proposal in respect of Olga K. vide A.O.No. 18407 dated 12[th]August, 2000. It is matter of recordthat Olga K. was frequent passenger. Once she hasreported to his counter, it is obvious that Pradeep Ranashould have taken extra care to make sure that she bringsout her entire baggage to the table and then it is examinedin minute detail. Such thing obviously did not happen. Ihave observed elsewhere in this order that this lapse byitself has not been recognized in the show cause notice asamounting to abetment and connivance. However, whatdistinguishes the action of Pradeep Rana from others is thefact that on these different dates, there were as many as 4telephone interactions between Tel. No [REDACTED]of DilAgha and No. [REDACTED] of Pradeep Rana. While the flightNo. HY-429, arrived at 3.39 AM, the telephonic contact tookplace at 1.36 AM, 4.44 AM, 4.46 AM and 8.59 AM whilePradeepRanawasondutyandwashandlingtheadjudication proposal in respect of Olga K. Keeping in viewthe totality of the circumstances and the timing of callsexchanged between Dil Agha and Pradeep Rena on onehand and Dil Agha and Olga K. on the other hand (at 3.39AM, 4.42AM, 4.54 AM, 5.42AM, 6.47 AM & 7.10 AM, Iobserve that this is not simple case of ineptitute orcarelessness but of active connivance and abetment whichlead to preparation of such an adjudication proposal. Thisaltogether with the statement of Dil Agha and frequentexchange of telephonic calls with Dil Agua leads to me tounavoidable conclusion that the charge of abetment,conapiracy, and connivance is proved against PradeepRana and he is liable for penal action under Section 112 ofthe Customs Act, 1962.”

Likewise, the findings regarding Yashpal were as follows:

“447. The charges of collusion, abetment and conspiracy

against Yashpal is proposed to be established on the basis offollowing two pieces of evidence:

(a) R .N. Zutshi in his statement dated 17[th]July 2001 hasdescribedthatYashpalusedtospeaktoProtocolSuperintendents and Officers regarding smooth clearance ofthe textiles brought in on behalf of Mamoor Khan.(b) The computer print outs show that between 1.4.2000 to25.7.2000, Yashpal spoke to Mamoor Khan 34 times ontelephone while once he was found to be in contact with DilAgha and twice with Shahlo A.

448. The noticee has filed his written reply vide his letterdated NIL received in the Office of the Comnissioner ofCustoms, New Custom House, New Delhi, on 17th March,2005 . He made further written submissions at the time ofhearing on 4th Jan.,2007. While denying the charges in toto,the main arguments advanced by the noticee were that hecould not be said to have abetted irregular clearance in thelight of order of Supreme Court in the case of Shriram Vs.UOI; that the statement of R.N. Zutshi on the basis of whichthe charges were made had been retracted by Zutshi; thatShahlo on the relevant date had no excess baggage asconveyed by Krygystan Airlines vide their letter dated 26thApril, 2001 which was imputed to be carrying 1,220 kgs. ofbaggage; that the methodology adopted for working out themeterage and value of textiles supposedly brought by ShahloA. was not correct. The noticee was granted personalhearing on 4th Jan., 2007wherein it was contended that:(i) Offence committed by Customs officers during dischargeof their official duties ought to be dealt with in accordancewith the provisions of Section 136 of the Customs Act, 1962

(ii) Disembarkation Card had not been made

available

(iii) The passenger manifest submitted by the Airlines didnot contain details retarding baggage carried by passenger(iii) That on 10 April, 2000, the noticee was posted on HandX-Ray Machine (EXL Right Side) as is evident from the copy

of duty Róster produced by him.

449.I have examined the evidence against the noticee aswell as the argument advanced by him in defence. I find thatZutshi had categorically named him in his statement dated17 Jan., 2001 and the issue regarding retraction of the samehas already been discussed in paras above. I further findthat in his entire defence, the noticee has not given anyreasonab1e or plausible explanation regarding frequenttelephonicconversationwithMamoorKhán.Inhisstatement recorded on 19.1.2001, he has not challenged thefact that he was in touch with the telephone numbers whichwere found to be belonging to Mamoor Khan, DilAgha andShahlo A. He tried to explain this as conversation with aninformer which is not plausible explanation under thecircumstances of the case. No suitable defence has comeforth either in writing at the time of personal hearing. So faras his argument that his case should be dealt with underSection 136 of the Customs Act, 1962 is concerned,conspiring to clear commercial baggage while causing lossto exchequer by no stretch of imagination could be said tobe part of the Official duties of Customs officers. Theprovisions of Section 136 are attracted only where theoffence is committed during discharge of official duties. Thisprovisionofthecaselawscited,therefore,hasnoapplication in the present case. The other arguments of thenoticee have already been dealt with in foregoing paras.

450. In the light of circumstances of the case and evidenceas discussed above, I hold that charges of abetment,collusion and conspiracy against Yashpal are establishedand he is liable for penal action under Section 112 of theCustoms Act, 1962.*********************

****************

463. So far as the evidence against Yashpal is concerned,what is discussed above with regard to 10th April, 2000holds good for this date also. In addition to the generalarguments taken in defence, for this particular date, Yashpal

has taken plea that he was on duty on Baggage X-ray ofBelt No.6 and he has placed reliance on Duty Rosteravailable as RUD No.E42. He further contended that thename of Shahlo A. did not figure in the passenger manifestof Flight No.545 whereas another passenger Nazira I. hadcleared 800 mtrs. of textile after adjudication vide A.O. No.20317. On perusal of manifest dated 15th May, 2000 ofFlight No. K2545 from Bishkek to Delhi, I find that thename of Shahlo is mentioned at Sl.No.44, though it iswritten in manner that surname has been written first. Theplea taken by the noticee is, therefore, not valid.

464. 1 have examined the additional arguments of Yashpalin respect of 15th May, 2000. He has conveniently taken astand that he was posted on Baggage X-ray Belt but has notbeen able to cite any reason which could justify his speakingwith Mamoor Khan at 9.52 AM and 12.32 PM. As alreadydiscussed, Mamoor Khan with his cellphone was present atthe International Airport during this time. In the light ofvarious pieces of evidence discussed in paragraph aboveand after taking into account additional arguments indefence as well as evidence on 15.5.2000, I have nohesitation in holding that the charges of connivance,abetment and conspiracy stand proved against Yashpal andthat he is liable for penal action under Section 1 12 of theCustoms Act, 1962.”

The findings against Ajay Yadav are as follows:

“441. The charge of abetment against Ajay Yadav has beenmade on the basis of statement tendered by R.N. Zutshi. Inhis statement dated 17.1.2001, Zutshi has stated that AjayYadav was involved in the negotiating and deciding themoney to be charged from Mamoor Khan and also in thedistribution of the same amongst the baggage officers indifferent shifts. Further evidence is in the form of A.O. No.17730 dated 27.2.2000 in which Olga K. was allowed toclear her baggage by adjudicatating 800 mtrs,, though shewas carrying baggage weighing 1530kgs. which works

out to 26,958.60 mtrs. The defence offered by the notice isprimarily on the same lines as done by V.K. Khurana andvarious aspects of the same have been anaylized in thepreceding paragraphs. The noticee appeared for personalhearing on 20th Dec., 2006 along with his Advocate R.L.Lamba and in addition to the written submissions, he tookthe plea that the statement of R.N . Zutshi had beenretracted; that the disembarkation card had not been madeavailable; that the passenger manifest as given in theCustoms Manual as Customs SI. No.70 did not have thecolumnfor description/quantityof baggage.Healsorequested for cross examination of 20 persons. All theseaspects have been commented upon and analyzed elsewhere.

442. On analyzing the evidence available against AjayYadav vis-à-vis defence offered by him, I find that theprimary evidence is in the form of statement of R.N. Zutshi. Ifurther observe that there is no allegation against AjayYadav that he was in touch with any other noticee like DilAgha, Mamoor Khan, Olga K., Nazira I. etc. on mobile orlandline telephone. There is no charge that he spoke toconcerned passengers on the their arrival . There is,however, the issue of forwarding the adjudication proposalprepared by VK. Khurana to the shift Dy. Commissioner.Ajay Yadav in his statement dated 16th Feb., 2001 hasadmitted having handled this adjudication proposal but inhis defence, he has stated that the job of examination anddetermination of quantity/value of baggage was performedbyV.K.Khuranaandhehadonlyforwardedtheadjudication proposal to the shift Dy. Commissioner.

443 It is, thus seen that apart from the statement of Zutshi,there is this AO which points towards complicity of AjayYadav in the clearance of non-bonafide baggage. Thoughthe quantification/ measurement of baggage in the firstinstance is the duty of Baggage Officer, which in this casewas V.K. Khurana, it does not absolve the Supdt. of hisresponsibility. In fact, when passenger reports to RedChannel counter, he first makes declaration to the Supdt.who deputes one of the Inspectors working under him to

examine thebaggage.Inthiscase, at thetime ofdeclaration, the fact that Olga K. was frequent passengerwould have immediately come to the notice of Ajay Yadav.Under these circumstances, it was expected of him to ensurethat the baggage of Olga K. was examined in minute detailwhich obviously was not done. This is major lapse on hispart which gives rise to the presumption of abetment andconnivance.Novalidoracceptableexplanationhascomeforth on behalf of Ajay Yadav as to how the baggage ofaregularcarriercouldescapeproperexamination,inventorisation and adjudication of only 800 mtrs. out of thetotal of 26,958.60 mtrs. This major lapse/omission coupledwith the statement of R.N. Zutshi form sufficient basis forarriving at the conclusion of abetment and collusion on thepart of Ajay Yadav and I hold him liable for penal actionunder Section 112(a) of the Customs Act,1962. ”

The findings against the last appellant, Anil Madan, are as follows:

“508..................The show cause notice has also named AnilMadan and Vinod Kumar (Kain) and Kamal Suman, AirÇustoms Officers as co-noticee for abetment. It has beenmentioned in Table No. 13 (page 157 of show cause notice)that Anil Madan was named by RN Zutshi for participatingand negotiating the money to be charged from MamoorKhan during the period July, 2000. Zutshi has also allegedthat Anil Madan distributed the shares of baggage officersin April to July, 2000. Further evidence against Anil Madanisintheform of AO No.14262whereinpassengerMerculovawasallowedtoclearherbaggageafteradjudication of only 800 mtrs. of textiles, though shé hadcome in with 14 pieces of baggage weighing 1,500 kgs.which translated into 26,430 mtrs.

509. In his defence, Anil Madan has not denied dealing withthis adjudication. I find that he has confirmed in hisvoluntary statement dated 6.2.2001 that he was on duty on24.7.2000 an AO No. 14262 which accounted for only 800metres of baggage brought by Merkulova though she wasactually carrying 26430 mtrs. had been put up by BC

Gogna through him. One look at the passport of Merculovawould be enough for any Customs officer to conclude thatshe was regular and non-bona fìde passenger. There isdocumentary evidence that she was on this day wascarrying 1,500 kgs. of excess baggage but Anil Madan hasfailed in his duty to ensure proper inventorisation of herbaggage. This coupled with the statement of R.N. Zutshi isadequate to conclude that there was an element ofconnivance in clearance of such heavy baggage and I holdthe noticee liable for penal action under Section 112 (a) ofthe Customs Act, 1962…."

35.In the light of the above discussion, it is apparent that theCommissioner did not go by only the statement of R.N. Zutshi tohold the other appellants guilty; he had lot of other corroborativematerials to support his findings. It is, therefore, held that theAppellants’ submissions that the charge of abetment could not havebeen made against them for past transactions in the absence of thegoods, or that many of them were not involved or present at theAirport when the actual lone consignment was seized in August2000, are meritless. Questions of law (a) and (c) as framed areanswered against the appellants and in favour of the revenue.

Re Question (b): Violation of principles of natural justice due to denialof cross examination

36.All the appellants had argued that the Commissioner erred in hisfindings inasmuch, as, no opportunity was given to them to crossexamine any of the witnesses' whose depositions were relied upon.The Commissioner stated that several appellants had sought for crossexamination of R.N. Zutshi and of Sh. U.K. Mishra, SIO of DRI. The

Commissioner held that:

"… all the documents on which reliance has been placed inmaking the allegations against different noticees have beensupplied to them. In this case, I find that if the request forcross-examination is acceded to, then the proceedings willhave to continue for long period of time. The SCN wasissued as early as in 21.8.2001 and over 6 years haveelapsedsincetheproceedingsbegan.Underthecircumstances, prolonging it as result of numerousrequests of cross examination would not only hurt theinterestofjusticebutalsotheinterestofnoticeesthemselves. The decision of the Hon’ble SC in the case ofKanungo and Co. V. Collector of Customs, Calcuttareported as 1983 (13) ELT 1486 (SC) covers the issue underconsideration. In the latest case of Jagdish Shankar Trivediv. CC, Kanpur, the Principal Bench of CESTAT at NewDelhi has also relied upon this judgment and ruled thatcross examination cannot be claimed as matter of rightunder Section 124 of Customs Act. Once the material reliedupon against the noticees referred in the SCN have beenprovided, denial of cross examination is not violative of theprinciples of natural justice."

In Kanungo (supra) the Supreme Court, through three judge Benchdecision held that:

"The complaint of the appellant now is that all the personsfrom whom enquiries were alleged to have been made by theauthorities should have been produced to enable it tocross-examine them. In our-opinion, the principles ofnatural justice do not require that in matters like this thepersons who have given information should be examined inthe presence of the appellant or should be allowed to becross-examined by them on the statements made before theCustoms Authorities. Accordingly we hold that there is noforce in the third contention of the appellant."

similar view had been expressed earlier in Issardas Daulat Ram andors. v. The Union of India & Ors. [1962] Supp. (1) S.C.R. 355. It was

alsofollowedinCollectorofCustoms,Madras&Ors,vs.D.Bhoormul (1974) 2 SCC 544.

37.Bhoormul (supra) is also authority for the view that the lawdoes not insist upon an impossible threshold of proof to establishallegations in Customs proceedings and that if on probabilities thestatutory authorities can establish evasion, the legal standards areadequately met with. Here, each of the appellants were implicated fortheir complicity not on the basis of solitary evidence only, such asconfessional statement of R.N. Zutshi, but also other materials: phonecall records during the various past occasions when the passengercouriers had landed; the presence and role of the concerned appellantsin helping the clearance of consignments, corroboration throughstatement of others, etc. The chain of circumstances to prove theallegations they had to answer, therefore, had been explained. Theappellants, significantly did not seek cross examination for over 5years, though they were aware that the statements were to be usedduring the proceedings that had been put to them in the SCNs.Furthermore, they had also not given any convincing or reasonableexplanation for the phone calls received from Mamoor Khan, DilAgha, Olga, etc. In the circumstances, the findings of the lowerauthorities that they were not prejudiced, and that principles of naturaljustice were not violated, cannot be interfered with.

Question No. (d) Did the CESTAT err in its findings regarding themethod adopted in arriving at the average weight to assessliability and the absence of essential documents like the passengerdeclarations

38.All the appellants had objected to the methodology adopted by

the Commissioner to arrive at the weight, for the purpose ofcalculating penalty. The Commissioner observed that the weightdeclaredforthematerialvarieddrasticallyintheseveralconsignments. He adopted method of averaging, as is evident fromthe following discussion:

"400.......................The Show Cause Notice proposes weightmetre ratio of 17.62 i.e. 17.62 metres per kg.whereas thenoticees have advanced the argument that it was purelybased on presumptions and guess work and therefore notfair and reasonable. It may be noted that this dispute hasarisen due to the fact that firstly, the goods are not availablefor examination and secondly there is no material evidenceon record to show the correlation between the weight ofvarious qualities of the silk fabrics brought in on differentdates and the respective meters per kg. thereof except therecord of Airlines showing only the excess baggage weightin Kgs. and AOs showing only the meters and not the Kgs.In view of the foregoing position, although the accuratemeters of silk fabrics can in no way be ascertained but wecan reach the proximity thereof. Under the circumstances,wheremanipulationsofquantitiesofsilkfabrics,suppressions and misdeclarations, both weight wise andmeter-wise, have been alleged to be rampant during thematerial period, I consider it important to devise the mostadaptable and logical methodologytoarriveat theapproximation of meter-wise quantity deducing the samefrom the baggage weights reported by Airlines.401.On study of weight-metre ratios presented byvarious AOs and encapsulated in Table-3 of the notice, Inote that except the two ratios i.e. 19.54 and 17.62 inrespect of 19.6.2000 and 28.8.2000, the other ratios areimmensely eccentric, irrational and unbelievable. It isinconvincible that one k.g. of any quality of silk fabrics cancontain just 0.52 mtrs or 1.42 mtrs or 2.2 mtrs. All suchratios range between absurd 0.52 mtrs to 7.28 mtrs per kg.These ratios thus have to be excluded from consideration.

402.Theaboveweight-metresratiosneedtobeunderstood in the right perspective. Indubitably, except forthe dates 19.6.2000 and 28.8.2000, all the remaining ratios,being illogical, are out of place. I therefore focus on theposition on these two dates. As regards 28.8.2000, the goods– silk fabrics in six varieties based on gsm [grams persquare metre] i.e. 36, 50.1, 45.7, 52.1, 69 and 73.5 gsm areavailable.Therequisitedetailsofthesegoodsi.e.variety-wise total weight in kgs, total metres, averagemetres per kg and all other relevant information asexhibited by table 2, 3 and 4 are also available. In thiscontext, I find that the proposed weight metre ratio of 17.62has been computed on the average basis of the aboveelements of the silk fabrics physically available as on date.On the other side, perusal of the weight exhibited by theAirlines and the metres assessed in AOs relating to19.6.2000 brings forth that even on this date voluminousbaggage of silk fabrics containing different varieties wasbrought in by Olga Kozireva, Isamu KM, Merkulova,Shakista. K. and Vetchinkina T. As against the total weight2333 kgs as per records of Airlines and as detailed in para74 of the notice, the total meters assessed in AOs are seen tobe 45,600 mtrs which seem consistent, logical and reliable.The average metres per kg i.e. weight metre ratio hereworks out to 19.54. As detailed in para 74(d) of the notice,in respect of Merkulova and Shakista K, 424 kgs of varietyof silk fabrics were assessed to 7000 mtrs on 19.6.2000producing average of 16.50 mtrs per kg. It is fairlycomparable to variety of silk fabrics having 16.79 mtrsper kg and 45.7 gsm brought in on 28.8.2000. Similarly, 229kgs of variety of silk fabrics relating to Olga Kozirevawere assessed to 5000 mtrs. leading to average of 21.83metres per kg. This average is again rationally comparableto another variety of silk fabrics with 36 gsm havingaverage of 21.81 mtrs per kg brought in on 28.8.2000. Aconjoint study of the baggage weights on 19.6.2000 and28.8.2000 as reported by Airlines through manifests orletters and the metres assessed by customs leads me topositive finding that these metres are reliable and rationallyco-relatable to the manifested/reported weights of baggage

brought in by the relevant passengers. Having regard to theTest Reports of CRCL on all the six varieties of silk fabricsseized on 28.8.2000, market enquiries conducted thereon,availability of the goods and the wider details thereof assummarized in the above said Tables, I find the weightmetres ratio of 17.62, which is duly supported by the abovevarieties of silk fabrics brought on 19.6.2000, as moreauthentic, reliable and legally maintainable for the purposeof ascertainment of metres per kg for previous clearances.

403.In view of the reasons stated hereinabove, I come tothe conclusion that contentions canvassed by the noticees onweight metre ratio are devoid of substance and thus notsustainable. I accept the proposed ratio of 17.62 as the truerepresentative weight – metre ratio fairly and squarelyapplicable to the unassessed silk fabrics brought in on 24occasions during 17.8.97 to 21.8.2000."

As is evident from the above extract, the weights per metre varied inpast instances from 16.79 metre per kg; 16.50 mtrs per kg; 19.54metre per kg, to 21.81 metre per kg and 21.83 metre per kg.

39.This Court also notices that the Commissioner did not rely onlyon the weight metre ratio, but also considered another criterion: thebaggage weight on the basis of vehicle capacity on five dates. For thispurpose, he took up the issue date-wise, noticing that on 10.04.2000,22.05.2000 and 14.08.2000, the baggage weight of group passengers,as reported by Airlines was ‘Zero’ but an MMV Canter with 3750 kgcapacity of transporter was used on all the three occasions. Onseveral occasions, the group passengers had hired commercial vehicleof lower capacity, i.e. Tata 407 with loading capacity of 2200 kgswhen the baggage weight was not that substantial. The passengers hadthen chosen to go in for higher capacity vehicle each time. It was heldthat there was no other reason for hiring commercial vehicle MMV

Canter of 3750 kgs instead of Tata 407 of 2200 kgs except to carrysuch volume and weight of baggage as could not be carried in lowercapacity vehicle but was accommodable in higher capacity vehicle.The Commissioner proposed baggage weight of 1220 kgs on each ofthe three occasions on the basis of the lowest manifested weight whensingle MMV Canter was used instead of proposing some higheraverage figure. For two other dates, i.e. 17.7.2000 and 21.8.2000 whenthe manifested/reported weights were 1235 kgs and 1000 kgsrespectively, two trucks – MMV canter of 3750 kgs capacity wereused for goods transportation. On 28.8.2000 when the baggage weightwas 4211.7 kgs, the internal record of transporter and other evidenceon record showed that two MMV canters of 3750 kgs capacity werehired. An inference was drawn from this instance that when thebaggage weight was touching 2000 kgs or beyond it, one MMVCanter of 3350 kgs was preferred to Tata 407 of 2200 kgs capacity. On28.8.2000, to carry 4211.7 kgs, two trucks of 3750 kgs capacity werehired and they reached Airport but could not be used due to seizure. Itwas, therefore, concluded that on each of the dates, the weight of thebaggage was around 4000 kgs when two trucks of 3750 kgs capacitywere hired on each occasion. The investigation calculated the baggageweight on the lowest and safest side as 2364 kgs on 17.7.2000 and1914 kgs on 21.8.2000 and proposed the same for assessment. Theweights were proportionately worked out on the basis of the ratio ofactual weight and recorded weight as on 28.8.2000 i.e. 1.9144 timesthe recorded weight. Here the figure of 2364 kgs was computed bymultiplying the recorded weight of 1235 kgs by 1.9144 and the figureof 1914 kgs has been worked out by multiplying the recorded weight

of 1000 kgs by 1.9144. This clearly shows application of mind to thematerial available. The CESTAT too had occasion to consider thesefindings. Besides stating that the figures were arbitrarily worked out,the appellants were unable to show any intrinsic inaccuracy, given thatthe past transactions were noticed; wherever the Green Channel wasused, the Commissioner endeavored to co-relate the quantities broughtin clandestinely with the truck weight relative to that date. The Courtdoes not find any infirmity with this approach warranting interferencewith pure finding of fact.

40.Furthermore,theCourtnoticesthattheDRI,duringinvestigations,hadobtainedpassengermanifestcopiesfromKrygystan Airlines to determine the quantity of silk fabrics brought inon different dates, by various passengers.Many noticees hadquestioned this, alleging firstly that Customs Form Serial No.70 inCustoms Manual does not indicate any column requiring disclosure ofthe number of packages or weight of baggage carried by passenger;secondly that copy of passenger manifest relied upon by DRI wasnot made available to the Customs officers at the time of clearance.Itwas argued that as to what was the quantity or description of goodsbrought in by passenger, the manifest relied upon by the DRI couldnot be inferred. The Commissioner dealt with this aspect in paras396-397 of his order. Noticing that while the form did not requiredisclosure, he stated that -

"A passenger manifest is created in several formats andfiled with different agencies by the Airlines depending uponwhat are the requirements indicated by that particularauthority.If the Airlines copy of the passenger manifest

does have the details of number of packages and weight ofbaggage booked by each passenger, it does not becomewrong or invalid simply because these details are notrequired under Customs Form No.70.It is obviously apre-existing system in the Airlines to record the number andweight of packages booked by individual passenger underthe passenger manifest and in fact it can be verylegitimate and conclusive way of ascertaining whether apassenger carried any excess baggage booked on aparticular date or not.It does not get invalidated simplybecause it does not tally with Customs Form No.70."

Dealing with the weight determined by multiplying 1.9144 on certainoccasions, the Commissioner noted that on 28.08.2000, the totalexcess baggage booked in the name of Olga K. was 2,200 Kgs. whichon actual weighment was found to be 4,211.70 Kgs. The internalinquiry conducted by the Airlines, found that their staff at Bishkek andother places were hand in glove with passengers in recording lesserexcess weight of baggage than actual in return of illegal gratificationfrom passengers and that several officials of Krygystan Airlines inBishkek were sacked because of their involvement in not recording theweight of excess baggage to benefit the passengers.These facts wereconfirmed by the statement of Krygystan Airlines Manager, Shri H.S.Dugal recorded on 3.8.2001 that: “We have taken the matter up withH.Q. and as informed earlier to Customs vide our letter dated27.12.2000, this matter has been investigated and services of staffresponsible including that of Mr. Dusheev, Head of Manas Airport,has been suspended.”The Commissioner therefore held that therewas no infirmity in arriving at the actual weight of excess baggagebrought in, based upon the position of 28.8.2000 and its applicationfor part clearances, based upon practical logic. Acknowledging

margin for accuracy, it was held that since the issue concerned pastclearances for which no other documents were available, it was heldthat it is reasonable and acceptable methodology and the resultsthereof cannot be far from truth, though they cannot be absolutelyexact. Again, we see no infirmity or question of law with thisapproach, warranting interference.

41.As far as the question of non-service of notice upon the mainculprits is concerned, the Commissioner rendered his findings in Para418, holding that some of those foreign nationals could not bepersonally served; yet notice was issued and published in knownmanner. The Appellants were, however issued notice; there was clearevidence of their culpability. Therefore, the Customs authorities wereentitled to proceed and impose the penalties and make adverse orders.

42.In view of the above findings, this Court holds that the appealsare liable to fail; they are accordingly dismissed, without any order asto costs.

S. RAVINDRA BHAT(JUDGE)

FEBRUARY 27, 2015

VIPIN SANGHI(JUDGE)