Father, Employee Can't Be Penalised Solely For Relationship With Gold Smuggling Accused: CESTAT Kolkata

The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has recently held that a person cannot be penalised for allegedly aiding or facilitating gold smuggling merely because he is the father or an employee of the principal noticee.

The tribunal said such penalties can be imposed only where the Revenue produces cogent and independent evidence showing that the person consciously participated in or abetted the alleged smuggling.

"The relationship of appellant no. 1 with the principal noticee, howsoever close, cannot ipso facto furnish a legal basis for fastening penal liability in the absence of evidence demonstrating conscious participation in the offending transaction," the bench observed.

The ruling came from a bench of Judicial Member Ashok Jindal and Technical Member K. Anpazhakan, which partly allowed three connected customs appeals arising from the seizure of 42 gold biscuits weighing 6,882.84 grams and Indian currency worth ₹88.17 lakh.

According to the department, officers of the Directorate of Revenue Intelligence (DRI) intercepted Vikram Jhunjhunwala on October 29, 2020, while he was travelling in a car. They recovered 42 gold biscuits believed to be of foreign origin and ₹53 lakh in cash from the vehicle. Follow-up searches at two premises led to the recovery of another ₹35.17 lakh, taking the total cash seizure to ₹88.17 lakh.

The department alleged that the gold had been smuggled into India and sought confiscation of the gold and currency, besides penalties against Vikram Jhunjhunwala, his father Bijay Kumar Jhunjhunwala, and employee Sudip Parui for their alleged role in the smuggling operation.

The tribunal upheld the confiscation of both the gold and the cash. It noted that the gold was recovered from Vikram Jhunjhunwala's conscious possession and that he had failed to produce any documents showing its lawful import, acquisition, or possession. The bench also relied on his statements recorded under Section 108 of the Customs Act, the investigation material, and other circumstances brought on record, finding that they supported the Revenue's case. It therefore upheld the ₹15 lakh penalty imposed on him.

The tribunal, however, found no independent or corroborative evidence linking Bijay Kumar Jhunjhunwala to the alleged smuggling activities. It said the revenue had failed to show that he had actively participated in transporting, possessing, concealing, purchasing, or selling the seized gold or its alleged sale proceeds. Simply being the father of the principal noticee, or even being aware of his activities, was not enough to attract penal liability, the bench held.

It reached the same conclusion in the case of Sudip Parui. The bench said merely carrying out instructions as an employee did not establish that he knowingly participated in the alleged smuggling. No gold was recovered from his possession, and the Revenue failed to produce any independent or corroborative evidence showing that he had consciously facilitated the alleged smuggling or had any proprietary interest in the seized gold or cash. The penalty imposed on him, therefore, could not be sustained.

While upholding the confiscation of the seized gold and cash and the penalty imposed on Vikram Jhunjhunwala, the tribunal set aside the penalties imposed on Bijay Kumar Jhunjhunwala and Sudip Parui.

For Appellants: Advocate H.K. Pandey, 

For Respondent: F. Ahmed, Authorized Representative