Shri Jagtar Singh vs -SHILLONG(PREVENTIVE)
- Court
- Customs, Excise and Service Tax Appellate Tribunal
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA
REGIONAL BENCH – COURT NO. 2
Customs Appeal No. 75007 of 2022
(Arising out of Order-in-Appeal No. 18/CUS(A)/GHY/2021 dated 27.08.2021 passed
rd
by the Commissioner (Appeals), C.G.S.T., Central Excise and Customs, 3 Floor,
G.S.T. Bhawan, Kedar Road, Machkhowa, Guwahati – 781 001)
Shri Jagtar Singh
S/o. Late Sadhu Singh,
Bangaon, House No. 41,
Ganesh Bhawan, IT Colony, Beltala,
Guwahati – 781 028
: Appellant
VERSUS
Commissioner of Customs (Preventive)
North Eastern Region,
110, M.G. Road, Shillong,
Meghalaya -
: Respondent
APPEARANCE:
Smt. Atika Sumran Ahmed, Advocate, for the Appellant
Shri Rajarshi Chakraborty, Authorized Representative, for the Respondent
CORAM:
HON’BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON’BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO. 76571 / 2026
DATE OF HEARING: 01.09.2026
DATE OF DECISION: 30.10.2026
ORDER: [PER SHRI K. ANPAZHAKAN]
The present appeal has been preferred by
Shri Jagtar Singh [hereinafter referred to as the
“appellant”] challenging the imposition of penalty of
Rs.39,00,000/- upon him under Section 112(b)(i) of
the Customs Act, 1962 by way of the Order-in-Original
No. COM/CUS/ADDL.COMMR/55/2020 dated
09.09.2020, which came to be subsequently affirmed
by the Ld. Commissioner (Appeals), C.G.S.T., Central
Excise and Customs, Guwahati vide the Order-in-
Appeal No. 18/CUS(A)/GHY/2021 dated 27.08.2021.
Page 2 of 23
Appeal No.: C/75007/2022-DB
2. The impugned proceedings have their genesis in
an investigation undertaken by the Directorate of
Revenue Intelligence (DRI), Guwahati, pursuant to
intelligence received regarding illicit storage and
movement of foreign-origin cigarettes in the vicinity
of Beharbari, Beltola, Guwahati. Acting upon the
aforesaid intelligence, officers of the DRI, Guwahati,
proceeded on 28.11.2018 at about 13:00 hrs. to a
bamboo shed erected upon an unnamed plot of land
situated adjacent to Das Parking, National Highway-
37, Beharbari, Beltola, Guwahati. Upon arrival, the
said bamboo shed was found locked. The officers
thereafter conducted a search of the premises in
accordance with law and, during the course thereof,
recovered a substantial quantity of cigarettes of
foreign origin, which were found stored in large paper
cartons stacked in considerable quantity inside the
said shed. The cigarettes so recovered comprised
33,60,000 sticks pertaining to six different foreign
brands. The seized cigarettes comprised 36 carton
boxes of cigarettes bearing the brand name “ESSE
LIGHTS”, stated to have been manufactured in Korea;
25 carton boxes bearing the brand name “Gudang
Garam”, stated to have been manufactured in
Indonesia; 106 carton boxes bearing the brand name
“WIN”, stated to have been manufactured in China;
62 carton boxes bearing the brand name “RUILI
RIVER”, stated to have been manufactured in
Myanmar; 80 carton boxes bearing the brand name
“PARIS”, stated to have been manufactured in
Myanmar; and 16 carton boxes bearing the brand
name “BLACK”, stated to have been manufactured in
Indonesia.
Page 3 of 23
Appeal No.: C/75007/2022-DB
3. The aforesaid cigarettes, valued by the
investigating agency at an estimated value of
Rs.3,98,00,000/-, were seized under Section 110 of
the Customs Act, 1962 vide DRI Case No.
13/UCL/IMP/CIG/DRI/2018-19 dated 28.11.2018.
The seizure was effected on the reasonable belief
entertained by the officers that the cigarettes had
been illegally brought into the territory of India
through a route other than that specified under
Section 7(c) of the Customs Act, 1962, and that their
importation, possession, storage and distribution
were in contravention of the applicable statutory and
regulatory framework. The investigation also adverted
to alleged violations of the provisions of the Cigarettes
and Other Tobacco Products (Prohibition of
Advertisement and Regulation of Trade and
Commerce, Production, Supply and Distribution) Act,
2003 (COTPA, 2003) and the Rules framed
thereunder, as well as the Legal Metrology Act, 2009
and the Legal Metrology (Packaged Commodities)
Rules, 2011, which regulate packaged commodities,
including cigarettes. In this connection, reliance was
also placed upon Circular No. 09/2017-Customs dated
29.03.2017. Seizure List of the goods was prepared
and a Panchanama was also drawn on 28.11.2018.
Significantly, at the time of seizure, no person came
forward to claim ownership of the said cigarettes.
4. During the course of the seizure proceedings on
28.11.2018, the officers enquired with one Shri Bipul
Basumatary, who was found standing in the vicinity of
the bamboo shed from which the cigarettes had been
recovered. It was allegedly disclosed by Shri Bipul
Basumatary that the shed from which the cigarettes
had been recovered belonged to Shri Jagtar Singh,
Page 4 of 23
Appeal No.: C/75007/2022-DB
whereas the land upon which the said shed stood was
owned by one Shri Prakash Chand Sharma.
5. Acting on the said information, the statement of
Shri Prakash Chand Sharma was thereafter recorded
by the DRI Officers on 29.11.2018. In his statement,
Shri Prakash Chand Sharma stated, inter alia, that the
plot of land in question was jointly owned by himself
and his three brothers and that, as he resided at
Guwahati, the said property was looked after by him.
According to him, the land was otherwise vacant
except for a few bamboo-thatched sheds erected
thereon. He further stated that one portion of the land
had been taken on a monthly rent of Rs.11,000/- by
Shri Jagtar Singh, who was stated to be carrying on
transport business in the name of “AGC Transport”;
another portion had been taken by one Shri Dasai
Shah, a mechanic, on a monthly rent of Rs.4,000/-;
and another portion had been rented out to one Shri
Harihar Choudhury, who was carrying on the business
of a vehicle body repairing workshop therefrom, on a
monthly rent of Rs.5,000/-. Shri Prakash Chand
Sharma further inter alia stated that the particular
shed from which the foreign-origin cigarettes had
been recovered had been constructed and used by
Shri Jagtar Singh (the appellant herein). He further
stated that Shri Jagtar Singh had an office situated in
close proximity to the said plot of land, namely, the
office of AGC Carriers, National Highway-37 Road,
Beharbari, opposite Brahmaputra Kata, Beltola,
Guwahati – 781 029. Shri Prakash Chand Sharma also
stated that he had known Shri Jagtar Singh for
approximately ten years. At the same time, it was
stated that there was no written rent agreement
between him and Shri Jagtar Singh in respect of the
portion of the land allegedly occupied by the latter.
Page 5 of 23
Appeal No.: C/75007/2022-DB
6. The statement of Shri Bipul Basumatary, the
person who had identified Shri Prakash Chand Sharma
as the owner of the land and Shri Jagtar Singh as the
alleged owner of the shed, was also recorded on
28.11.2018 wherein he allegedly stated that the huge
consignment of foreign-origin cigarettes recovered
from the shed belonged to Shri Jagtar Singh, while the
land upon which the shed stood belonged to Shri
Prakash Chand Sharma.
7. Thereafter, summons were issued to Shri Jagtar
Singh / appellant to explain the circumstances and his
statement was recorded on 28.01.2019. In his
statement, the appellant categorically denied the
material allegations attributed to him. He stated, inter
alia, that he was neither the owner of the bamboo
shed from which the cigarettes had been recovered
nor the owner of the foreign-origin cigarettes seized
by the DRI on 28.11.2018. He further denied having
taken any shed on rent from Shri Prakash Chand
Sharma and specifically denied having paid any
amount of Rs.11,000/- per month as rent to Shri
Sharma; the circumstances relied upon by the
investigation, namely, that he was in occupation or
possession of the particular shed from which the
contraband cigarettes had been recovered was denied
by the appellant in his said statement.
8. The investigation was thereafter extended to
the other persons occupying or using different
portions of the land. The statement of Shri Dasai Shah
was recorded on 30.01.2019. Shri Shah, who was
stated to be occupying another portion of the land as
a mechanic upon payment of monthly rent, allegedly
stated that the cigarettes belonged to Shri Jagtar
Singh since the same had been found in the shed
allegedly belonging to him. The statement of Shri
Page 6 of 23
Appeal No.: C/75007/2022-DB
Harihar Choudhury was recorded on 01.04.2019. Shri
Harihar Choudhury, who was stated to be operating a
vehicle body repairing workshop upon another portion
of the land, did not furnish any conclusive statement
regarding the ownership or possession of the
cigarettes. When confronted with the statement of
Shri Prakash Chand Sharma that the cigarettes
belonged to Shri Jagtar Singh, Shri Choudhury stated,
in substance, that he had subsequently come to know
that wrong things were happening nearby and that
everybody was taking the name of Shri Jagtar Singh.
9. On the basis of the above, the Revenue came to
the conclusion that Shri Prakash Chand Sharma and
Shri Jagtar Singh were jointly involved in the illicit
importation and smuggling of foreign-origin cigarettes
into India through the porous Indo-Myanmar border
at Moreh in Manipur. It was alleged that the appellant
and Shri Prakash Chand Sharma were engaged in the
illegal acquisition, possession, harbouring and further
transportation of the contraband cigarettes and had
wilfully and knowingly misdeclared material facts with
a view to evade the payment of applicable customs
duties. Thus, proceedings were initiated against the
said persons on the premise that the cigarettes
recovered from the bamboo shed were not merely
goods stored upon land belonging to a third person,
but formed part of an illicit consignment in which the
appellant had knowingly participated and which he
had allegedly acquired, possessed, harboured and
intended to further transport.
10. Consequent upon the investigation, a Show
Cause Notice dated 24.05.2019 came to be issued
proposing confiscation of the seized foreign-origin
cigarettes and, inter alia, imposition of penalty upon
Page 7 of 23
Appeal No.: C/75007/2022-DB
Shri Jagtar Singh under Sections 112(a) and 112(b)
of the Customs Act, 1962.
10.1. The proceedings culminated in Order-in-Original
No. COM/CUS/ADDL.COMMR/55/2020 dated
09.09.2020 whereby the ld. adjudicating authority
confirmed the proposals contained in the above Show
Cause Notice, including inter alia the imposition of a
penalty of Rs.39,00,000/- upon the present appellant
under Section 112(b)(i) of the Customs Act, 1962.
10.2. Aggrieved by the aforesaid adjudication order,
Shri Jagtar Singh preferred an appeal before the Ld.
Commissioner (Appeals), C.G.S.T., Central Excise and
Customs, Guwahati. Before the appellate authority,
the appellant disputed the findings recorded against
him and contended, inter alia, that the mere fact that
Shri Prakash Chand Sharma owned or controlled the
land upon which the shed was situated could not, by
itself, establish that the appellant occupied or
controlled the particular shed from which the
cigarettes had been recovered. The Ld. Commissioner
(Appeals), however, not being satisfied by the
contentions advanced, vide the Order-in-Appeal No.
18/CUS(A)/GHY/2021 dated 27.08.2021, dismissed
the appeal and upheld the penalty of Rs.39,00,000/-
imposed under Section 112(b)(i) of the Customs Act,
1962.
10.3. Aggrieved by the confirmation of the personal
penalty imposed upon him in connection with the
seizure of the aforesaid foreign-origin cigarettes, the
appellant has preferred the instant appeal.
Page 8 of 23
Appeal No.: C/75007/2022-DB
11. During the course of hearing, the Ld. Counsel
appearing on behalf of the appellant made various
submissions, which can inter alia be summarized as
follows: -
(i) That Section 123 of the Customs Act, 1962
cannot be invoked so as to create ownership or
possession: The appellant does not dispute that
cigarettes are notified goods for the purposes of
Section 123 of the Customs Act, 1962; however,
the statutory reversal of the ordinary burden of
proof contemplated therein operates only upon
the existence of the foundational facts
prescribed by the provision, namely, seizure of
the notified goods from the possession of a
person or a claim of ownership thereto. In the
present case, the cigarettes were neither seized
from the personal possession, residence,
vehicle or established business premises of the
Appellant, nor has the appellant ever claimed
ownership thereof. It is therefore impermissible
for the Department first to presume that the
appellant was in possession or control of the
shed and thereafter to invoke Section 123
against him. Section 123 is a rule as to burden
of proof and not a deeming provision creating
ownership or possession in favour of the
Revenue.
(ii) That the decision in Ajay Saraogi v.
Commissioner of Customs (Preventive), NER,
Shillong, is directly applicable: Reliance was
placed upon Final Order dated 24.11.2025
passed by this Tribunal, Kolkata, in Customs
Appeal No. C/76438/2025, wherein, in
circumstances involving recovery of foreign-
origin cigarettes from a godown and denial of
Page 9 of 23
Appeal No.: C/75007/2022-DB
ownership and connection with the premises by
the appellant therein, the Tribunal held that the
mere fact that cigarettes are notified under
Section 123 does not, by itself, cast the
statutory burden upon every person sought to
be associated with the premises. It was
submitted that the Tribunal had found absence
of independent evidence establishing conscious
possession or control, including verification of
the godown owner and other corroborative
investigation, and consequently set aside the
penalty under Section 112(b). The ratio thereof,
according to the appellant, squarely applies in
the present case, particularly since the
contemporaneous seizure record itself did not
identify the appellant as the owner or occupier
of the shed.
(iii) That the Department has failed to establish the
appellant’s possession or control over the
particular shed: It was submitted that there is
no rent agreement, rent receipt, bank
statement evidencing payment of the alleged
monthly rent of Rs.11,000/-, electricity
connection in the Appellant’s name, GMC record
identifying him as occupier, trade licence for any
garage at the premises, municipal permission
evidencing construction of the shed, document
showing that the appellant constructed the
shed, or any other contemporaneous material
establishing his exclusive possession or control
thereof. The absence of such objective evidence
is particularly significant when the Department
itself was initially unable to ascertain the
ownership of the shed.
Page 10 of 23
Appeal No.: C/75007/2022-DB
(iv) That ownership of the land does not establish
ownership or possession of the shed: The
statement of Shri Prakash Chand Sharma
establishes, at best, his claim of ownership or
control over the underlying land and cannot,
without independent corroboration, establish
that the appellant was in possession of the
particular bamboo shed from which the
cigarettes were recovered. The allegation that
the appellant had taken a portion of the land on
rent at Rs.11,000/- per month is unsupported
by any rent agreement, rent receipt or
contemporaneous payment record. The
appellant has consistently denied the alleged
tenancy and possession, and such denial has
not been displaced by any reliable documentary
evidence.
(v) That the alleged rental arrangement itself
remains unsubstantiated: The alleged
statement of Shri Prakash Chand Sharma dated
29.11.2018 regarding the monthly rent of
Rs.11,000/- has not been corroborated by any
contemporaneous record. It was further
submitted that the assertion that rent
agreements were not ordinarily executed is
contradicted by the material concerning another
occupant, Shri Harihar Choudhury, who is
stated to have executed a written agreement
with Shri Prakash Chand Sharma. The
Department, according to the appellant, has
relied upon the favourable portion of Shri
Sharma’s statement while disregarding
circumstances which materially affect its
reliability. It was also submitted that Shri
Sharma himself was engaged in transport
Page 11 of 23
Appeal No.: C/75007/2022-DB
business and the contraband was recovered
from his plot of land, and that the possibility of
the blame having been shifted upon the
Appellant had not been properly investigated.
(vi) That the contemporaneous seizure records
materially contradict the subsequent version:
Learned Counsel drew attention to the seizure
list and panchnama dated 28.11.2018,
contending that neither contemporaneous
document identified the Appellant as owner or
occupier of the shed. While the land owner was
stated to have been ascertainable as Shri
Prakash Chand Sharma, the ownership of the
bamboo shed was recorded as not
ascertainable; that the subsequent theory that
Shri Bipul Basumatary had immediately
identified the shed as belonging to the appellant
is inconsistent with the contemporaneous
official record. The Department has not
explained why such identification was not
recorded in the seizure documents or why Shri
Basumatary’s statement was recorded only
subsequently. According to the appellant, the
subsequent version, being inconsistent with the
contemporaneous record, required independent
corroboration, which is absent.
(vii) That the statement of Shri Bipul Basumatary
cannot, by itself, establish conscious
possession: The alleged statement of Shri Bipul
Basumatary, relied upon to connect the
Appellant with the shed and the cigarettes, was
submitted to be insufficient to establish that the
Appellant was in possession or exclusive control
of the shed on the date of seizure, knew what
was stored therein, purchased or received the
Page 12 of 23
Appeal No.: C/75007/2022-DB
cigarettes, handled the cartons, or knew that
the cigarettes were smuggled. It was further
contended that Shri Basumatary was not a
seizure witness and that his subsequent
statement was not corroborated by the
contemporaneous seizure documents; that
such statement could not constitute the sole
basis for sustaining the substantial personal
penalty imposed upon him.
(viii) That the statements of Shri Dasai Shah and Shri
Harihar Choudhury do not establish conscious
possession: It was submitted that the said
persons were not present at the time of seizure
and that their statements were not based upon
direct knowledge. Shri Harihar Choudhury, in
particular, did not make any conclusive
assertion that the Appellant possessed the shed
or the cigarettes. The mere fact that the
appellant had an office in the vicinity could not
be equated with possession of the particular
shed. The appellant had, in fact, produced
material showing that his official premises in the
same area were under a proper rent agreement
with its owner, Shri Gyan Singh, which material,
according to the appellant, had not been duly
considered.
(ix) That effective cross-examination of the persons
whose statements formed the principal basis of
the case was not afforded: Learned Counsel
submitted that the persons whose statements
were relied upon to connect the appellant with
the premises were not effectively subjected to
cross-examination, despite their statements
containing material assertions concerning the
alleged identification of the shed, tenancy, rent,
Page 13 of 23
Appeal No.: C/75007/2022-DB
ownership, presence of the appellant and his
alleged connection with the cigarettes. In the
absence of an effective opportunity to test such
statements, and particularly where the same
are not supported by independent documentary
evidence, reliance thereon was contended to
cause serious prejudice to the Appellant and to
offend the principles of natural justice. It was
further emphasised that none of the persons
whose statements were relied upon had claimed
to have actually witnessed the appellant dealing
with the cartons containing the foreign-origin
cigarettes.
(x) That Section 112(b) is a personal penal
provision and cannot be invoked merely
because the goods are liable to confiscation:
The appellant submitted that the liability of the
goods to confiscation and the personal
culpability of an individual under Section 112(b)
are distinct and require separate consideration.
The mere recovery of confiscable goods from a
particular premises cannot automatically render
every person whom the Department seeks to
associate with such premises liable to personal
penalty. In the absence of cogent, reliable and
corroborated evidence establishing the
Appellant’s own conscious involvement in the
acquisition, possession, harbouring, keeping,
dealing with or otherwise facilitating the
smuggled goods, the essential ingredients for
imposition of penalty under Section 112(b)(i)
are not satisfied.
11.1. The Ld. Counsel for the appellant therefore
prayed for waiver of the penalty of Rs.39,00,000/-
imposed upon the present appellant.
Page 14 of 23
Appeal No.: C/75007/2022-DB
12. The Ld. Authorized Representative appearing
for the Revenue, on the other hand, supported the
impugned order and submitted that the evidence
collected during investigation, particularly the
statements of Shri Prakash Chand Sharma, Shri Bipul
Basumatary and other persons acquainted with the
premises, sufficiently establishes the appellant’s
connection with and control over the shed from which
the huge quantity of foreign-origin cigarettes was
recovered. It was contended that the recovery of
33,60,000 sticks of cigarettes, valued at
approximately Rs.3,98,00,000/-, coupled with the
material on record connecting the appellant with the
said premises, establishes his involvement in the
acquisition, possession and/or harbouring of the
smuggled goods, thereby attracting the provisions of
Section 112(b)(i) of the Customs Act, 1962. The
Learned Departmental Representative further
submitted that the appellant’s denial is unsupported
by any cogent documentary evidence and cannot
displace the statements and/or other material relied
upon by the Department. Accordingly, it was prayed
that the penalty of Rs.39,00,000/- imposed upon the
appellant be upheld and the appeal be rejected.
13. Heard both the sides and perused the records
available before us.
14. Having examined the records available before
us, we find that the issue in the present appeal is
confined to the sustainability of the personal penalty
imposed upon the appellant under Section 112(b)(i)
of the Customs Act, 1962.
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Appeal No.: C/75007/2022-DB
15. At the outset, we find that the very foundation
of the case against the appellant rests upon the
allegation that the bamboo shed from which the
foreign-origin cigarettes were recovered, was under
his possession or control. The said cigarettes,
however, were admittedly not recovered from the
personal possession of the appellant, his vehicle, his
residence or any established business premises
belonging to him. The appellant has, throughout the
proceedings, denied ownership, possession or control
of either the said shed or the seized cigarettes,
including in his statement dated 28.01.2019. In such
circumstances. The Revenue, on the other hand,
contends that the evidences brought on record during
the investigation are sufficient for sustaining the
penalty imposed against the appellant, which have
established his role in the alleged offence.
Therefore, it is required to be examined as to whether
the evidences on record establish, with a degree of
certainty, that the appellant had the requisite
possession, control, knowledge or involvement in
respect of the foreign-origin cigarettes recovered from
the bamboo shed in question, for the purpose of
imposition of penalty under Section 112(b) of the
Customs Act, 1962.
I. Evidence establishing possession or control of the
bamboo shed
16. We find that the case of the Revenue against the
appellant proceeds principally on the premise that the
bamboo shed from which the cigarettes in question
were recovered was in his possession or under his
control. Such possession or control, however, is
Page 16 of 23
Appeal No.: C/75007/2022-DB
required to be established from the material on record
before any consequential penal liability can be
fastened upon him. As already noted hereinabove, in
the present case, the appellant has consistently
denied having occupied, possessed or exercised
control over the said shed, as also having any
connection with the cigarettes recovered therefrom,
including in his statement recorded on 28.01.2019.
16.1. The alleged tenancy of the appellant thus in
effect rests substantially upon the statement of Shri
Prakash Chand Sharma, who stated that a portion of
the land had been given to the appellant on rent for
Rs.11,000/- per month. However, no evidence in the
form of rent agreement, rent receipt, bank record or
other contemporaneous material evidencing payment
or receipt of the alleged rent has been brought on
record. Equally, there is no electricity record,
municipal record, trade licence, permission, or other
objective material available on record demonstrating
that the appellant was the occupier or person
exercising control over the particular bamboo shed
from which the cigarettes were recovered. In the
absence of such material, the identity of the person
owning or occupying the shed at the time of seizure
cannot be said to have been factually established.
16.2. We are, therefore, unable to accept the
contentions of the Revenue which are based on a
mere assertion of an alleged rental arrangement,
unsupported by any contemporaneous documentary
material. Even the other materials relied upon by the
Revenue do not independently establish such
possession or control. The alleged rental
arrangement, therefore, remains essentially an
assertion unsupported by contemporaneous or
objective material, which aspect assumes significance
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Appeal No.: C/75007/2022-DB
particularly because the appellant has throughout
denied the alleged tenancy and the contemporaneous
seizure record itself did not identify him as the
occupier of the shed. In these circumstances, we find
that the foundational fact of the appellant's
possession or control over the particular premises has
not been established with sufficient cogency.
II. Statements relied upon by the Department require
independent corroboration
16. The case of the Revenue, insofar as the present
appellant is concerned, is essentially built upon
statements of Shri Prakash Chand Sharma, Shri Bipul
Basumatary, Shri Dasai Shah and Shri Harihar Das. It
is imperative to note that in cases where such
statements constitute the principal, and substantially,
the only material connecting an individual with the
premises and the goods, their probative value
necessarily falls to be assessed in the context of the
surrounding circumstances and the availability or
otherwise of independent corroboration.
16.1. In the present case, Shri Bipul Basumatary is
the person who is stated to have verbally informed the
officers at the time of search operations that the shed
belonged to the appellant. However, such alleged
identification is conspicuously absent from the
contemporaneous seizure documents prepared on the
date of recovery. Further, Shri Bipul Basumatary was
not shown as a seizure witness, but merely denoted
as a person present 'near the shed'. The evidentiary
significance of his subsequent statement must,
therefore, be considered with due circumspection,
particularly when it is sought to be employed as the
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principal connecting link between the appellant and
the seized goods.
16.2. Likewise, the statement of Shri Prakash Chand
Sharma, the co-accused, inter alia alleged that the
appellant had taken a portion of the land on rent, but
does not receive the necessary corroboration from any
documentary evidence establishing the alleged
tenancy or payment of Rs.11,000/- per month. It is
well settled that suspicions, howsoever strong, cannot
take the place of proof. Further, we find substance in
the appellant’s contention that Shri Prakash Chand
Sharma himself being proceeded against in
connection with the very transaction, his statements
cannot be relied upon independently in these
proceedings.
16.3. Furthermore, we find that the statements of
Shri Dasai Shah and Shri Harihar Das do not
materially improve the position of the Revenue either.
It is a fact that neither of them was present at the
time of seizure. Equally, the fact that the appellant
may have had a garage or office in the vicinity, as
stated by the deponents, cannot, by itself, establish
that he was in possession or control of the particular
bamboo shed from which the cigarettes were
recovered. Proximity of an admittedly separate
business establishment cannot be transmuted into
possession of another premises in the absence of
evidence establishing the intervening link.
16.4. More importantly, none of the aforesaid
statements, even taken at their highest, furnishes
direct evidence that the appellant had handled the
cartons, received or stored the cigarettes, exercised
conscious possession over them, or had knowledge of
their illicit character. In the absence of independent
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corroboration connecting the appellant with the
particular goods, the said statements, viewed
collectively, do not in our considered opinion
constitute sufficient grounds for sustaining a
substantial personal penalty under Section 112(b) as
imposed in this case.
III. Significance of the Panchnama and other seizure
records
21. It would also be relevant to take note of the
records prepared at the very inception of the
proceedings. The Panchnama drawn on 28.11.2018
records that the owner of the land could be
ascertained as Shri Prakash Sharma, whereas the
ownership of the bamboo shed could not be
ascertained. For ease of reference, the relevant
portion of the said Panchnama is reproduced below: -
“On being called upon by some persons who
identified themselves as DRI officers from Guwahati
on 28.11.2018 at around 1300 hrs, we the above
named Panchas presented ourselves near a plot of
land which was being used as truck parking. The
officers informed us that they have received specific
information that certain sheds within that truck
parking contains huge quantity of smuggled goods.
The officers further told us that they intend to
conduct an inspection of the said sheds and to be
the witness to the proceedings. As we acceded to
their request, the officers entered the plot of land
and on preliminary scrutiny a shed made of bamboo
thatch was identified. The officers asked certain
people who were in the compound as to who the
owner of the shed is. No one could shed any light
on the ownership of the sheds. However on
enquiry with a garage owner who was found in that
parking yard, 'it was ascertained that the owner of
the land is one Shri Prakash Sharma who hardly
visits the land and that the entire land has been
rented out to many persons……..”
[Emphasis supplied]
Page 20 of 23
Appeal No.: C/75007/2022-DB
21.1. This contemporaneous record assumes
importance. The seizure proceedings were undertaken
on 28.11.2018, and the documents prepared in the
immediate course thereof constitute the earliest
record of what the investigating officers themselves
were able to ascertain regarding the premises. The
subsequent emergence of a version identifying the
appellant as the person to whom the shed allegedly
belonged, therefore, cannot be viewed in isolation
from the fact that the seizure records themselves did
not identify him either as the owner or occupier of the
shed.
21.2. The investigation itself thus suffers from a
lacuna as there was, in our considered view, nothing
which precluded the Revenue from bringing on record
cogent or independent material establishing such
identification, possession or control, which would be
crucial to sufficiently establish the role of the appellant
from the genesis of the case. In such circumstances,
some independent corroborative material would
ordinarily be required before such statements can be
elevated to the status of conclusive proof of
possession or control. However, in the present case,
we find that no such independent material of sufficient
probative value has been brought on record by the
Revenue.
21.3. The above aspect assumes significance since
the question before us is not merely whether the
cigarettes were of foreign origin or were liable to
confiscation; nor is the question whether the
Department was justified in investigating the persons
connected with the premises. The narrower question
is whether the material on record establishes the
appellant's own culpable connection with the goods so
as to attract the personal penal consequences
Page 21 of 23
Appeal No.: C/75007/2022-DB
contemplated under Section 112(b) of the Act. A
finding of such liability cannot rest merely upon an
inference of association with the premises
unsupported by reliable evidence of possession,
control or conscious involvement on record.
22. We also take note of the decision of this Tribunal
in Ajay Sarawagi v. Commissioner of Customs
(Preventive), NER, Shillong [Final Order 77758 of
2025 dated 24.11.2025 in Customs Appeal No. 76438
of 2025], wherein, under similar circumstances
concerning foreign-origin cigarettes recovered from a
godown, the Tribunal set aside the penalty imposed
under Section 112(b) observing as under: -
“5.2. A perusal of section 123 of the Customs Act,
1962, reproduced above reveals that in respect of
the goods notified under the said section, the onus
to prove that the said goods are not smuggled rests
with the person who claims the ownership of the
goods. Cigarettes is a notified item, which is also
under seizure in this case. Thus, the ownership to
prove that the said goods are not smuggled rests
with the Appellant, if he claims the ownership of the
goods. In the present case, we find that the
Appellant categorically said that he was not the
owner of the said goods. It is on record that the
Appellant admitted that he was the owner of the
goods in his statement recorded under Section 107
of the Customs Act on 03.03.2019, when he was
under custody of the Customs officers. He was
formally arrested on 03.03.2019 and no further
statement was recorded thereafter that could qualify
as voluntary. In this regard, we agree with the
submission of the Appellant that the statement
obtained while an accused is in custody are
inherently involuntary. In the absence of any
independent corroboration, they are inadmissible in
law. Thus, we find that other than his own statement
and the statement of the co-accused Shri, Amarjit
Sahu, there is no other evidence to implicate that
the Appellant was the owner of the goods. Thus, we
observe that the ownership of the goods has not
been claimed by the Appellant. On the contrary, the
ownership has been thrust on him. Thus, we hold
that the provisions of section 123 of the Customs Act
are not applicable in this case, as the Appellant has
not claimed the ownership of the impugned goods.
.....
Page 22 of 23
Appeal No.: C/75007/2022-DB
6.4. Thus, we hold that mere inculpatory statement
of the co-accused about ownership of the goods
cannot be the basis for implicating the Appellant in
the alleged offence and imposing penalty on him
under Section 112(b) of the Customs Act, 1962. In
view of the above decisions, we hold that the
statement of the co-accused cannot be relied upon
to implicate the appellant in the alleged offence,
without any independent corroborative evidence.”
23. In view of the foregoing and applying the ratio
of the above decision to the facts before us, we find
that the essential factual link between the appellant
and the bamboo shed has not been established by
cogent and independent evidence. In the facts before
us, the alleged tenancy of the shed has not been
substantiated by any contemporaneous documentary
material; the statements relied upon by the Revenue
do not receive sufficient independent corroboration;
and, significantly, the contemporaneous Panchnama
and seizure records do not identify the appellant as
the owner or occupier of the shed. In such
circumstances, the requisite ingredients for fastening
a personal penalty under Section 112(b) cannot be
said to have been established merely on the basis of
an inferred association with the premises.
24. Viewed cumulatively, therefore, the material on
record does not establish, with the requisite degree of
certainty, that the appellant was in possession or
control of the bamboo shed, much less that he had
conscious knowledge of, or any active involvement
with, the foreign-origin cigarettes recovered
therefrom. The essential ingredients necessary for
fastening penalty under Section 112(b)(i) of the Act
are consequently not established against the
appellant.
Page 23 of 23
Appeal No.: C/75007/2022-DB
25. Consequently, the penalty of Rs.39,00,000/-
imposed upon Shri Jagtar Singh under Section
112(b)(i) of the Customs Act, 1962 cannot be
sustained and is accordingly set aside.
26. The appeal is disposed of in the above terms.
(Order pronounced in the open court on 30.10.2026 )
(R. MURALIDHAR)
MEMBER (JUDICIAL)
(K. ANPAZHAKAN)
MEMBER (TECHNICAL)
Sd/-
Sd/-
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