Penalty on Customs Officer for abetting Gold Smuggling; Challenge on Not Providing Mandated Opportunity u/s 112 (a)(i)of Customs Act: Madras HC Directs to Seek Statutory Remedy [Read Order]

The Madras High Court directed the customs officer to file an appeal under the Customs Act, 1962 In the case where a one crore penalty was imposed for Abetting Gold Smuggling.

The challenge before the court was that the penalty was imposed without providing a mandated opportunity under section 112(a)(i) of the Customs Act, 1962. Vikas Sharma, the petitioner challenged the order of the Judge passed in the writ petition, insofar as rejecting the appellant’s contention that the impugned order-in-original suffered from a violation of principles of natural justice since the appellant’s request for cross-examination of parties, whose statement has been relied upon, has not been considered nor was an opportunity of personal hearing granted, thereby suffers from arbitrariness falling foul of Article 14 of the Constitution of India. The appellant was a Customs Officer at Anna International Terminal, Chennai.

The Directorate of Revenue Intelligence, Chennai (“DRI”) based on specific intelligence that 18 carriers were involved in gold smuggling from various countries such as Dubai, Malaysia, Sri Lanka and other countries, with the connivance of some Customs officers, maintained surveillance along with independent witnesses.  Intelligence input was received that one individual was co-ordinating with two Customs officers, one of them being the appellant allegedly by passing on the photographs and flight details of the carriers. On being confronted, the appellant after initial denial of his involvement, is stated to have admitted that they planned to clear some passengers. The 18 carriers on arrival by various flights were intercepted and according to the department, they were carrying gold in paste form concealed in their rectum.

The carriers/ passengers opted for personal search and voluntarily accepted to eject the concealed packets. A statement was recorded under Section 108 of the Customs Act, 1962 (“the Act”) from the appellant on 20.02.2020, wherein it is stated that the appellant agreed that the seizure of Mahazar dated 19.02.2020 was drawn at Chennai Airport and based on his admission of having secreted money in his house, search proceedings were initiated by the DRI officials at the appellant’s residence.

During the search at the appellant’s residence, huge cash is stated to have been recovered. A show cause notice dated 17.02.2021 was issued proposing to impose a penalty of Rs.1 crore on the appellant under Section 112 (a)(i) of the Act. The appellant requested that he be permitted to cross-examine the IO and SIO and further AIU Officers posted in the shift of the noticee on 19.02.2020. The appellant’s request for cross-examination has been rejected on the premise that such a request after 2 years after booking the case was only to delay and protract the proceedings.

It was further stated that the appellant had not chosen to avail of the personal hearing, which was extended to him. The appellant argued that the request for cross-examination had been rejected without the appellant being informed of such rejection and also because a personal hearing was not granted as contemplated/ mandated under  Section 122 A of the Act. A division bench of Justice R Mahadevan and Justice Mohammed Shaffiq viewed that cross-examination is also a part of/ facet of natural justice, however, there is no absolute right for cross-examination, for it would depend on the facts of each case.

The Court found that when there is an available alternate remedy, Courts would exercise restraint in entertaining the writ petitions. It was found that the Single Judge rejected the writ petition on the grounds of the existence of an alternate remedy. The Court directed the appellant to file an appeal before the Appellate Authority within 30 days.

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