Evidentiary Value of Retracted Statements in Customs Proceedings: CESTAT Quashes Rs. 10 Lakh Penalty in Gold Smuggling Case

The adjudication of customs offences frequently hinges on the delicate balance between statements recorded during investigations and the necessity for independent, corroborative evidence. In a significant judicial pronouncement, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, has delivered a crucial ruling regarding the imposition of penalties based solely on the uncorroborated testimony of a co-noticee.

In the matter of Suresh Maruti Patil Vs Commissioner of Customs (Preventive), the Tribunal decisively set aside a penalty amounting to Rs. 10,00,000 levied under Section 112(a) and Section 112(b) of the Customs Act, 1962. The judgment underscores a fundamental principle of jurisprudence: a statement retracted during cross-examination loses its evidentiary weight unless supported by concrete, independent material on record.

This comprehensive analysis delves into the factual matrix of the dispute, the arguments presented, the statutory provisions invoked, and the broader implications of the Tribunal's reliance on established legal precedents to safeguard the rights of the assessee.

The Factual Matrix of the Dispute

The genesis of this legal battle traces back to an interception carried out by the Directorate of Revenue Intelligence (DRI). As per the documented order, on April 6, 2018, DRI officers from the Siliguri Regional Unit intercepted a specific vehicle—a white Maruti Wagon R—in the Hakimpara area of Siliguri.

The Initial Seizure

The vehicle was being operated by an individual named Rajesh Bhagat. Upon conducting a search, the investigating officers recovered two bars of foreign-origin gold. Each of these bars weighed exactly 1000 grams. Subsequent assaying procedures conducted by a local jeweler confirmed that the seized bullion was of 24-carat purity.

Because the driver could not produce any legitimate documentation proving the lawful acquisition or importation of the gold, the authorities formed a reasonable belief that the precious metal had been illicitly smuggled into Indian territory from China, routed through the Indo-Bhutan border at Jaigaon.

The Follow-up Investigation

During preliminary interrogations, the driver indicated that the contraband was slated for delivery to another individual, Ashish Lakhotia, a resident of Siliguri. Acting on this intelligence, the authorities executed a search at Lakhotia's premises. This operation resulted in the recovery of Indian currency totaling Rs. 39,83,000. The department alleged that this substantial cash reserve was specifically earmarked for purchasing the smuggled gold bars. Consequently, the currency was seized under the provisions of Section 110 of the Customs Act, 1962.

Implication of the Assessee

The investigation took a critical turn when statements were recorded under Section 108 of the Customs Act, 1962. Ashish Lakhotia, in his initial statement, alleged that the ultimate intended recipient of the gold bars was the assessee, Suresh Maruti Patil.