Shri Sanjay Shah vs Mundra
- Court
- Customs, Excise and Service Tax Appellate Tribunal
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Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO. 02
Customs Appeal No. 10996 of 2019
[Arising Out Of Order-in-Original No. MUN-CUSTM-000-COM-24-18-19 dated 25.02.2019
passed by the Pr. Commissioner of Customs, Mundra]
Shri Sanjay Shah …..Appellant
Director of Ms Somnath Metals Pvt Ltd
203, Second Floor, Nilkanth Plazo, Sahibaug
Ahmedabad, Gujarat-380004
VERSUS
Commissioner of Customs-Mundra …..Respondent
Office of the Principle Commissioner of Customs
Port User Build, Customs House, Mundra
Kachchh, Gujarat-370421
WITH
Customs Appeal No. 11174 of 2019
[Arising Out Of OIO-MNU-CUSTM-000-COM-24-18-2019 Dated- 25/02/2019 passed by the
Pr. Commissioner of Customs, Mundra]
Ramanarayan S Laddha …..Appellant
B-41, Krishna Kutir Jain, Coloney,
Nera Tera Pant Bhawan, Saihibaug,
Ahmedabad, Gujarat
VERSUS
Commissioner of Customs-Mundra …..Respondent
Office of the Principle Commissioner of Customs
Port User Build, Customs House, Mundra
Kachchh, Gujarat-370421
APPEARANCE:
Shri. Amit Laddha and Shri. Manoj Khatri Advocates for the Appellant
Shri.Rahul J Dave, Superintendent (AR) for the Respondent
CORAM: HON'BLE MR. SOMESH ARORA, MEMBER ( JUDICIAL )
Final Order No. _10816-10817/2026_
DATE OF HEARING:27.10.2026
DATE OF DECISION:05.11.2026
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SOMESH ARORA
Shri Sanjay Shah (hereinafter referred to as the “Appellant" ) is the
Director of M/s. Somnath Metals Pvt. Ltd. which is inter-alia engaged in the
business of import and trading of various types of metal scraps. M/s.
Radhika Impex alleged to be imported consignments sealed in four
containers bearing Nos.CLHU3518799, FSCU3288625, RWAU2404931 and
TGHU3380576 wherein it was found that each container was stuffed with
Jumbo P.P bags containing betel nuts concealed behind HMS Scrap. On
counting the jumbo P.P. bags, it was found that each container was stuffed
with 12 jumbo P.P. bags containing betel nuts, totalling to 48 jumbo P.P.
bags. It was alleged to be found that the aforesaid betel nuts along with
packaging material weighing 21420 kgs. having market value of Rs.
1,14,57,687/- (Rupees One Crore Fourteen Lakhs Fifty Seven Thousand Six
Hundred and Eighty Seven Only) is liable for confiscation under Section
11,118 and 120 of the Customs Act, 1962. (herein after referred as the
"Act") as the cargo was mis-declared with regard to description, quantity
and valuation of HMS weighing 59030 Kgs was liable for confiscation as the
HMS was used to conceal the said Betel Nuts.
1. During the course of investigation, statements of following persons
were recorded from time to time:
i. Statements dated 16.08.2017, 30.08.2017 and 15.06.2018 of
Shri Dipak J. Thakor, Proprietor of M/s. Bhagyoday Enterprise;
ii. Statements dated 10.08.2017, 30.08.2017, 19.12.2017 and
10.05.2016 of Shri Ramnarayan Laddha;
iii. Statement dated 01.08.2017 of Shri Rajendra Singh Rao,
Director of M/s. ASR India Pvt. Ltd.;
iv. Statement dated 08.08.2017 and 30.01.2018 of Shri Vishal G.
Patel, Manager of M/s, Sayani & Sons;
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v. Statement dated 05.01.2018 of Shri Prakash Mishra,
Proprietor of M/s. Rama Krishna Freight Carriers;
vi. Statement dated 24.08.2017 of Shri Sandeep M. Shah,
Director of M/s. Somnath Metal Pvt. Ltd.;
vii. Statements dated 25.10.2017, 26.10.2017, 07.11.2017,
08.11.2017, 31.01.2017 and 18.04.2018 of Shri Sanjay M.
Shah, Director of M/s. Somnath Metal Pvt. Ltd.;
1.1 The above investigation culminated into issuance of the captioned
Show Cause Notice whereby the Appellant was called upon to Show Cause to
the Respondent as to why penalty under Section 112(i) of Customs Act,
1962 (hereinafter referred to as the "Act") should not be imposed for the
alleged acts and omission as specifically mentioned in the notice.
Grounds in Appeal N/ C/10996/2019
2. That the Appellant had never funded M/s. Radhika Impex for the
import of alleged goods and the payment made to M/s. Radhika Impex was
against the regular business transactions.
a. That the role of Appellant was limited to act as "Clearing
and Forwarding Agent" and never played any role for the
alleged Import;
b. That the Appellant had never created the forged certificate
alleged to be issued by Axis Bank, Shahlbaug branch,
Ahmedabad in the name of Mr. Tushar Thakur and
requested the copy of such certificate;
c. That the statements of Co-Appellants ought not to have
been relied upon as per the settled law;
d. That the Appellant was inclined to cross examine the co-
Appellants and therefore, opportunity of cross-examination
was sought;
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2.1 The request of the Appellant for cross-examination was rejected with
without any reasons. However, the Revenue was pleased to provide the copy
of alleged Axis Bank Certificate dated 11.07.2017.
3. The Appellant vide letter dated 15.02.2019 filed the final reply to the
Show Cause Notice dated 18.07.2018 and made the following submissions :
b. That they had not created the said forged certificate alleged to be
issued by Axis Bank, Shahibaug branch, Ahmedabad in the name
of Tushar Thakur. The said allegation has been levelled on
assumption and presumption basis and lacks any evidence to
support such allegation;
c. That the Revenue has not produced any evidence to prove that
the alleged forged certificate was prepared by the Appellant or
under Appellant's instructions;
d. That the Appellant has already retracted the said statement dated
07.11.2017 and 08.11.2017 before the Ld. Magistrate at
Ahmedabad and therefore, the statements dated 07.11.2017 and
08.11.2017 cannot be relied as the same lacks any evidentiary
value;
3.1 The above-mentioned Show Cause Notice dated 18.07.2018 was
adjudicated vide Order-in-Original No. MUN-CUSTM-000-COM-24-18-19
dated 25.02.2019 (hereinafter referred to as the "Impugned order")
whereby the Respondent discarded the submissions made by the Appellant
and imposed a harsh penalty of Rs.25,00,000/- (Rupees Twenty Five Lakhs
Only) under Section 112(a) of the Act. Hence, the present Appeal before this
Tribunal.
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4. The Respondent ought to have appreciated that the role of the
Appellant was limited for clearing and transporting the imported goods and
the Appellant has never abetted Shri Dipak Thakor or Shri Tushar Thakor in
committing the alleged offence. The Respondent failed to appreciate that
Shri Dipak Thakor and Shri Tushar Thakor was friend and neighbour of the
Appellant and since he was new in the business, the Appellant helped and
assisted him to the extent of clearing the imported consignments.
4.1 The Respondent erred in holding that the Appellant was involved in the
import of HMS scrap and various other scraps by allowing to use his Import
Export Code (IEC Code). The Respondent failed to appreciate that if that is
the case, then the DGFT also had initiated the action for cancellation of IEC
but the same being never done by DGFT and therefore, once the
authorization body of IEC has not initiated any action against the Appellant
for the alleged wrong use of IEC then in such circumstances, the Revenue
cannot allege any wrong doing on the part of the Appellant. The Respondent
also ought to have appreciated that the Revenue has not produced any
evidence to reveal the fact that the Appellant was lending his IEC code to
M/s. Radhika Impex for any alleged offence and therefore, the allegations
levelled against the Appellant are on assumption and presumption basis.
4.2 The Respondent erred in holding that Shri Ramnarayan Laddha along
with the Appellant handled/controlled day to day work of the M/s. Radhika
Impex. The Respondent failed to appreciate that the Revenue has not
produced any evidence to establish the fact that the Appellant was
handling/controlling the day-to-day work of M/s. Radhika Impex.
APPELLANT NEVER FINANCED FOR DISPUTED GOODS
5. The Respondent ought to have appreciated that the Appellant had
never funded M/s. Radhika Impex for the payment made to overseas buyers.
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It is to be appreciated that the Appellant has paid an advance payment to
M/s. Radhika Impex for the supply of goods. It is to be appreciated that on
one hand, the Respondent has not discarded the ledger and accounts
produced by the Appellant but on the other hand the Respondent failed to
consider the same while passing the impugned order. The Respondent ought
to have appreciated that the payment made by the Appellant to M/s Jay
Engineers during the period 2016-17 and 2017-18 was in respect of
purchase of SS scrap. The Appellant also submitted the copy of ledger
accounts alongwith the specimen copies of invoices, however, the
Respondent failed to consider the factual submissions and passed the non-
speaking Impugned order.
5.1 Without prejudice to above and even otherwise, it is to be appreciated
that the Appellant is only concerned with the payment made to M/s. Jay
Engineers and the Appellant cannot be made aware of such usage of fund by
M/s. Jay Engineers. If the case of the Revenue is to be found as correct,
then M/s. Jay Engineers is required to be penalized for the alleged illegal
offence and not the Appellant.
6. STATEMENTS OF CO-APPELLANTS CANNOT BE RELIED
6.1 The Respondent ought to have appreciated the settled legal position
that the statements of co-accused/co-Appellants ought not to have been
relied upon for penalizing without corroborating it with sufficient evidences
on record to prove that the Appellant was Involved in the alleged offence.
7. STATEMENTS OF SHRI DIPAK THAKOR
7.1 Statements of Shri Dipak Thakor ought not to have been relied upon
by the Respondent as the same are inconsistent in nature and lacks
evidentiary value for the following reasons:
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7.2 Shri Dipak Thakor changed his version of the statement from time to
time and never stuck to only one. Shri Thakor in his statements dated
20.07.2017 and 21.07.2017 stated that the consignments were Imported for
"Saleem" who was arranging the customs clearance work. However, in his
subsequent statements dated 16.08.2017 and 30.08.2017, he urged the
name of the Appellant for the alleged offences without producing any
documentary evidence to that effect. It is submitted that the name of
Appellant has been taken with ulterior motive and with a malafide intent to
put the Appellant as a mastermind in the alleged offence.
7.3 It is submitted that the statements of Mr. Dipak J. Thakor were in
context with the alleged import occurred in the name of M/s. Bhagyoday
Enterprise and not with M/s. Radhika Impex and therefore, the said
statement cannot be relied upon in the present case. It is submitted that the
statement of Mr. Dipak Thakor was recorded for different alleged Import
made by M/s. Bhagyoday Enterprise and the said statements have no
connection with the alleged Import made by M/s. Radhika Impex.
7.4 It is submitted that the Appellant in his statement dated 25.10.2017
has categorically stated that they had never made any business transaction
with M/s. Radhika Impex. It was also clarified that the Appellant had never
cleared cargo of M/s. Radhika Impex and therefore, the statements of Dipak
Thakor cannot be relied for Imposing penalty upon the Appellant.
8. STATEMENTS OF SHRI PRAKASH CHAND B. MISHRA
8.1 The Appellant states that Shri Prakash Mishra wrongly deposed the
name of the Appellant and their statement/allegations were made only on
the premise that the Appellant used to give instructions to Shri Prakash
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Mishra for transportation of goods imported in the name of M/s. Bhagyoday
Enterprise. It is stated that merely because the Appellant assisted in
transportation of containers from Port to Godown of M/s. Bhagyoday
Enterprise does not mean that the Appellant had knowledge about contents
of the goods in the container for M/s. Radhika Impex also. It is submitted
that Shri Prakash Mishra never deposed that the Appellant had knowledge
about contents of the goods.
9. Statements of Shri Ramnarayan Laddha recorded on 10.08.2017,
30.08.2017 and 19.12.2017 and 10.05.2018.
9.1 The Appellant submits that statements of Shri Ramnarayan Laddha
were recorded from time to time and nowhere he had deposed that the
Appellant had knowledge about the contents of alleged imported goods and
the Appellant has abetted in the Import of alleged goods. Thus, the
statements of Shri Ramnarayan Laddha are exculpatory in nature.
10. Statements of Shri Rajendra Singh Rao, Director of M/s. ASR India Pvt.
Ltd recorded on 01.08.2017
10.1 The Appellant submits that statement of Shri Rajendra Singh Rao was
with respect to Bill of Lading No. DUBASRMUN6515 dated 13.07.2017. It is
pertinent to note here that the present case does not fall under the above-
mentioned Bill of lading and the alleged consignments were imported in
different Bill of Entry. Further, Mr. Rajendra Singh Rao in his statement
categorically said that he doesn't know anything about the Appellant. Even
the Appellant in his statement dated 26.10.2017 categorically stated that he
don't know and never contacted Mr. Rajendra Rao and any other person of
M/s. ASR India Pvt. Ltd.
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11. Statements of Vishal G. Patel, Manager of M/s. Sayani & Sons. The
Appellant submits that he had never met with Mr. Vishal G. Patel anytime
and doesn't know him. It appears from the statement that he has wrongly
used name of the Appellant on assumption and presumption basis without
any substance of its contents. Without prejudice to above, it is submitted
that the Appellant in his statement dated 31.01.2017 even stated that he
has not given any Import papers of M/s. Radhika Impex to Shri Ajay Dutt,
employee of M/s. Sayani & Sons.
12. Statements of Shri Sanjay Shah (Appellant) recorded on 25.09.2017.
26.09.2017, 07.11.2017. 08.11.2017. 30.01.2017 and 18.04.2018
12.1 The Appellant's statements were recorded on 25.09.2017, 26.09.2017,
07.11.2017 whereby he never accepted that he had knowledge about the
contents of the goods Imported under Bill of Entry No. 2458081 dated
14.07.2017 as well as Bill of Lading No. DUBASRMUN6151 dated
13.07.2017. The Appellant categorically stated in his statements that he
assisted M/s. Bhagyoday Enterprise for customs clearance and
transportation of the containers.
12.2 The Appellant submits that after recording of his statements on
07.11.2017, the officers of DRI took him under custody (for the offence
alleged to be committed by M/s Radhika Impex) from the office of
Respondent and brought him at office of DRI located in Ahmedabad. During
the Interrogation on 07.11.2017 and 08.11.2017, the Appellant was
threatened for arrest on denying the pre-prepared statement produced
before him. Upon such threatening of arrest made by the officers of DRI, the
Appellant had no option but to sign the statements. The officers of DRI later
on arrested the Appellant and produced before the Ld. Metropolitan
Magistrate at Ahmedabad wherein the Appellant immediately retracted the
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statement and stated that his statements recorded on 07.11.2017 and
08.11.2017 were not voluntarily recorded.
12.3 The Appellant states that his statements were recorded from time to
time. The said statements were exculpatory in connection with the import of
goods in dispute and the Appellant had never accepted that he had
knowledge about the contents of goods alleged to be imported by M/s.
Radhika Impex.
13. The Respondent ought to have appreciated that the entire
investigation does not provide any single evidence except the statements of
the co-accused to lead that the Appellant was involved in the alleged
offence. Even, the Respondent in the Impugned order hold that no specific
documentary evidence has been created by the parties. It is submitted that
the Penalty cannot be imposed once, it has been admitted that there is no
documentary evidence being created by the Appellant abetting the alleged
offence.
13.1 The Respondent ought to have appreciated that the statements of the
co-accused ought not to have been relied upon for penalizing without
bringing sufficient evidences to prove that the Appellant was involved in the
smuggling activity. Reliance is placed upon following judgements:
Sushil Kumar Kanodia Vs. CC, 2007 (218) ELT 453
[Affirmed In 2015 (319) ELT A 73.
Shafeek P.K Vs C.C. reported in 2015 (325) ELT 199 (T)
Narayan Das Vs. CC, 2004 (178) ELT 554.
Ganesh Chandra Basak Vs. CC, 2002 (140) ELT 275.
Kamal Hazra Vs. CC, 2002 (148) ELT 835.
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13.2 The Respondent ought to have considered that the Appellant had not
created the said forged certificate alleged to be issued by Axis Bank,
Shahibaug branch Ahmedabad in the name of TusharThakur and the said
allegation has been levelled on assumption and presumption basis and lacks
any evidence to support such allegation. The Appellant submits that the
Revenue has not produced any evidence to prove that the alleged forged
certificate was prepared by the Appellant or under the instructions of the
Appellant.
13.3 The Respondent failed to consider that the alleged forged certificate
was seized from the computer of CHA namely M/s. Sayani & Sons and
therefore, it can't be alleged that the Appellant has created the alleged
forged certificate. It is submitted that the Appellant has no connection with
the alleged forged certificate and has no knowledge as who has prepared the
sold certificate.
13.4 The Respondent ought to have provided cross-examination of the co-
accused falling which the correct facts have not been brought on record. It is
submitted that the letter dated 21.01.2019 doesn't provide any reasons for
not providing the opportunity of cross-examination and therefore the same
is a non-speaking order and the same is required to be quashed and set
aside.
PENALTY UNDER SECTION 112(a) CANNOT BE IMPOSED
13.5 The Respondent failed to appreciate the fact that penalty under
Section 112 of the Act, can be imposed in a situation when person, who in
relation to any Imported goods, does omit or do any act which acts or
omissions would render goods liable to confiscation under Section 111 or
abets their doing or omission of such act.In the present case, there were no
evidence/documents placed by the Revenue which shows that the Appellant
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connived with M/s. Radhika Impex in committing the alleged offence. It is
submitted that Penalty under Section 112 of the Act can be Imposed only if
it proved beyond doubt that the person concerned and by his act of omission
or commission rendered the goods liable for confiscation or is held that the
said goods with the knowledge or reason to believe that the same are liable
for confiscation.
13.6 The Respondent ought to have appreciated that mens-rea is sine qua
non for imposition of penalty under Section 112(a) of the Act. In the
absence of mens-rea , penalty u/s 112(a) cannot be imposed. While the
goods are liable to confiscation, no penalties can be imposed on the
Appellant under Section 112(a) of the Act, if no evidence is adduced by the
Revenue to show that the Appellant had any knowledge or reason to believe
that the goods were liable to confiscation while dealing with goods. In the
light of the above, there is no reason whatsoever to Impose penalty on the
Appellant.
Nazir Ur Rehman Vs C.C reported in 2004 (174) ELT 493;
Imperial Trading LLC Vs C.C reported in 2004 (181) ELT 29;
C.C. Vs Kamal Kapoor reported in 2007 (216) ELT 21 (P & H)
14. Without prejudice to the aforesaid and even for sake of argument if it
is admitted that the Appellant had knowledge about the contents of the
imported consignments then also the investigation clearly lacks in pointing
out that the Appellant has abetted the offence and therefore even otherwise,
Penalty under Section 112 cannot be imposed.
15. The Appellant submits that in any case, the amount of penalty is
unfair, unjust and highly excessive in the facts and circumstances of the
case. The Respondent ought to have appreciated settled law that penalty
imposed has to be commensurate with the gravity of the offence and that in
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the facts of the present case, assuming whilst denying that any penalty was
at all imposable, the Respondent had imposed an excessively high penalty.
16. The Respondent erred in imposing harsh penalty of Rs. 25,00,000/-
(Rupees Twenty Five Lakhs Only) on the Appellant whereas the penalty
imposed on the Importer viz. Radhika Impex was Rs.10,00,000/- (Rupees
Ten Lakhs Only). It ought to be appreciated that there should be parity in
imposing penalty and the same cannot be done without providing reasons
for imposing such harsh penalty.
16.1 The Respondent ought to have appreciated that the Revenue has
already recovered the duty amount, if any, as the goods are confiscated and
lying with the Department. Since the Department has already recovered the
amount and therefore, harsh penalty on the Appellant cannot be Imposed. It
is also to be noted that there was no benefit to the Appellant for the alleged
offence and therefore, any penalty imposed on the Appellant would be grave
and put a huge financial burden upon the Appellant. Following the
Judgments Placed by the Learned Counsel as follow:-
Commissioner of Customs (Prev), Lucknow Vs. Shakil Ahmad Khan,
2019 (366) E.L.T. 634 (All.)
Narayan Das Versus Commissioner of Customs, Patna, 2004 (178)
E.L.T. 554 (Tri. - Kolkata)
Mahabir Prasad Versus Commissioner of Customs (Prev.), Patna, 2000
(126) E.L.T. 803 (Tribunal)
Kamal Hazra Vs. Commissioner of Customs (Prev.), 2002 (148) E.L.T.
835 (Tri. - Kolkata)
Pradeep Kumar Vs. Commissioner of Customs, Lucknow, 2000 (117)
E.L.T. 383 (Tribunal)
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Ashwinbhai Mohanlal Polra versus Commissioner of Customs,
Ahmedabad, 2004 (166) E.L.T. 391 (Tri. - Mumbai)
Andaman Timber Industries Versus Commissioner of Central Excise,
Kolkata-II, 2015 (324) E.L.T. 641 (S.C.)
Ummer Abdulla Versus Commr. of Central Excise, Customs & Service
Tax, Calicut, 2019 (367) E.L.T. 181 (Ker.)
Vinod Solanki Vs. UOI, 2009 (233) ELT 157 (SC)
Tajudeen Vs. UOI, 2015 (317) ELT 177 (SC)
Shafeek P.K. Vs. CC, Cochin, 2015 (325) ELT 199
Appeal No. 11174 of 2019 of Ramnarayan S. Laddha
Background Facts
17. It is the case of Customs that four containers bearing Nos.
CLHU3518799, FSCU3288625, RWAU2404931 and TGHU3380576, covered
under Bill of Lading No. ERSLSINNSA0021 showing on board on 17.07.2017,
issued in favour of M/s. Radhika Impex, were offloaded at Mundra Port.
During the examination of the cargo, the Customs officers allegedly
recovered 48 jumbo PP bags containing 21.420 MT of Betel Nuts concealed
amongst 59.030 MT of Heavy Metal Scrap (HMS). The said Betel Nuts were
confiscated under Section 111 of the Customs Act, 1962, and the HMS scrap
was confiscated under Section 119 of the said Act. It is further the case of
Customs that Mr. Tushar Thakor, in connivance with Mr. Dipak Thakor, Mr.
Sanjay Shah and the Appellant, played a crucial role in the importation of
restricted goods in the name of M/s. Radhika Impex. It is alleged that the
said persons formed part of a syndicate involved in smuggling Betel Nuts by
concealing the same amongst HMS scrap and by changing the names of
consignors and consignees in the import documents. It is also alleged that in
another consignment imported in the name of M/s. Bhagyoday Enterprises,
the shipper, M/s. Metal World FZE, approached the shipping line, M/s. ASR
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Container Line Pte. Ltd., on 21.07.2017, for amendment of the consignee
and consignor details in Bill of Lading No. DUBASRMUN6515 dated
13.07.2017, following the detection of gold in a previous consignment. The
appellant was subjected to a penalty of Rs. 25,000/-. Aggrieved, it has
preferred the present appeal.
Grounds:
18. During the investigation, statements were recorded of various persons,
including Mr. Dipak Jayantibhai Thakor, Proprietor of M/s. Bhagyoday
Enterprises, Mr. Rajendra Singh Rao, Director of M/s. ASR India Pvt. Ltd.,
Mr. Sandeep Moolchand Shah, Director of M/s. Somnath Metals Pvt. Ltd.,
and other persons connected with the shipping and transportation of the
consignments. Crucially, no documentary evidence has been produced
establishing that the Appellant was the importer or exporter of the subject
consignments or that he had financed, arranged, controlled or knowingly
participated in the importation of the alleged contraband. The Appellant was
arrested on 23.07.2017 and released on default bail on 23.09.2017. His
statements under Section 108 of the Customs Act, 1962, were recorded
whilst he was in custody and subsequently at the Customs office. The
Appellant has specifically maintained that the statements were obtained
under duress and were not voluntary.
18.1 The allegations against the Appellant are substantially based upon the
oral statements of the co-noticees, without any independent documentary
evidence corroborating his alleged involvement in the smuggling activities.
The Appellant is engaged in the business of domestic trading of scrap and
had placed several legitimate orders for HMS scrap with M/s. Bhagyoday
Enterprises in the ordinary course of his business. Ledger accounts produced
by the Appellant clearly demonstrate that the transactions were conducted
through proper banking channels and that applicable taxes and duties were
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duly paid. The Appellant had no knowledge of the alleged contraband
concealed in the subject consignments, and no documentary evidence
establishes that he financed, owned or knowingly handled the said
contraband. All banking documents and records showing transfer of funds to
M/s. Bhagyoday Enterprises were signed by its proprietor, Mr. Dipak Thakor.
No documentary evidence or communication has been produced establishing
that Mr. Dipak Thakor acted upon the instructions of the Appellant.
18.2 The Learned Commissioner has failed to appreciate that the existence
of bona fide commercial dealings between the Appellant and M/s. Bhagyoday
Enterprises cannot, by itself, establish any involvement in the alleged
smuggling activities. The Appellant had no role in the amendment of the
consignee's name from M/s. Bhagyoday Enterprises to M/s. Radhika Impex.
The said amendment was undertaken pursuant to the request of the shipper,
and no material has been produced to establish that the Appellant issued
any instructions in respect thereof. The Appellant is neither the owner nor
the operator of M/s. Bhagyoday Enterprises or M/s. Radhika Impex. There is
no documentary evidence establishing that the Appellant controlled the
business, banking, Customs clearance or transportation activities of either
concern. No correspondence, banking record or other material has been
produced establishing that the Appellant issued instructions to Mr. Dipak
Thakor or any other person for the illegal importation of goods.
18.3 The finding that the Appellant, along with Mr. Sanjay Shah, controlled
the import transactions and were the ultimate financial beneficiary of the
alleged smuggling activities is based merely upon assumptions and
presumptions, without any cogent evidence. No cogent evidence exists to
demonstrate that the Appellant intentionally or knowingly participated in the
alleged contraventions. The reliance upon statements recorded under
Section 108 of the Customs Act, 1962, which were subsequently retracted
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and disputed, is legally unsustainable in the absence of satisfactory
independent corroboration. Courts have consistently emphasised the need
for caution in appreciating retracted confessional statements:
In Union of India v. Kisan Ratan Singh , the Court considered the
evidentiary value of statements recorded under Section 108 of the
Customs Act, 1962, and the requirement of corroboration.
In Haroon Haji Abdulla v. State of Maharashtra , the Court
emphasised that retracted confessions must be scrutinised with
caution.
In K.I. Pavunny v. Assistant Collector, Cochin , the Hon'ble Supreme
Court considered the voluntariness and truthfulness of confessions
and the evidentiary value of retracted statements.
In Bharat v. State of Uttar Pradesh , the Hon'ble Supreme Court
considered the necessity of corroboration before reliance is placed
upon a retracted confession.
18.4 Further, Mr. Dipak Thakor had allegedly introduced fictitious persons
by the names of Shahazad and Salem during the investigation, thereby
raising serious doubts regarding the reliability of his statements. Applying
the above legal principles, the disputed statements of the Appellant and the
co-noticees, in the absence of independent corroborative evidence, cannot
justify the imposition of penalty under Section 112(a) of the Customs Act,
1962.
19. The Appellant had no knowledge, intention or reason to believe that
the subject consignments contained Betel Nuts concealed amongst HMS
scrap. The Appellant was neither the importer nor the exporter of the said
consignments and had no demonstrated involvement in the preparation or
amendment of import documents, concealment of goods or Customs
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clearance of the subject cargo. There is no evidence establishing that the
Appellant was involved in the alleged financing of the import transactions or
that he derived any financial benefit from the alleged smuggling activities.
19.1 The Learned Commissioner has further erred in relying upon
allegations relating to other consignments involving gold and cigarettes to
establish the Appellant's involvement in the present consignment of Betel
Nuts. The mere existence of other investigations cannot establish culpability
in the present proceedings. Consequently, the Appellant cannot be held
liable under Section 112(a) merely on the basis of alleged association with
other persons, without proof of any act, omission or abetment attributable to
him.
DEPARTMENTS SUBMISSION:
20. Four containers consigned to M/s Radhika Impex, Kathwada,
Ahmedabad from Singapore were identified. On arrival of the vessel at
Mundra Port, SIIB issued directive for holding those containers which were
shifted to Landmark Container Freight Station, Mundra, and subjected to
100% de-stuffing and physical examination in the presence of independent
panchas and shipping line representatives. Examination revealed that behind
a front layer of loose HMS Scrap, each container was packed with 12 jumbo
PP bags of Areca Nuts (Betel Nuts); in total, 48 jumbo PP bags containing
21,420 Kgs (21.42 MTs) of Betel Nuts valued at over Rs.30 Lakhs were
recovered along with 59,030 Kgs of HMS Scrap. Betel Nuts were freely
Importable only subject to CIF floor price restrictions of Rs.251/-per Kg vide
DGFT Notification No.35/2015-2020 and Tariff Value of USD 3320 per MT
vide Notification No.36/2001-Customs (NT), and the importer mis-declared
the cargo as HMS Scrap to evade high customs duties and import
prohibitions. The entire cargo was placed under seizure. Simultaneous
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searches at the registered godown of M/s Radhika Impex revealed it was
empty and non-operational, while search at the residence of dummy
proprietor Tushar Natubhai Thakor yielded digital evidence on pen drives and
DVDs. Investigation established that M/s Radhika Impex was a shadow
entity floated in Apr-2017 by Shri Sanjay M. Shah and Shri Ramnarayan S.
Laddha using the IEC of Tushar Thakor, a photographer with no financial
capacity or scrap experience, and that the Rent Agreement dated
13.02.2017 for the godown was witnessed by Sandeep Moolchandbhai Shah,
younger brother and co-director of Sanjay Shah. Inquiries with Customs
Broker M/s Sayani & Sons (CHA) revealed that Shri Sanjay M. Shah @
Sanjay Khatod personally visited Marketing Manager Ajay Dutt and Manager
Vishal Patel at their Ahmedabad office in June 2017 to offer import clearance
work for M/s Radhika Impex and M/s Bhagyoday Enterprise, explicitly stating
that both firms were owned and controlled by him; e-mail records confirmed
that all import documents, invoices, packing lists and clearance instructions
were transmitted directly from Sanjay Shah's office e-mail address.
20.1 Financial trails established that M/s Radhika Impex had no
independent financial standing. Axis Bank (Shahibaug Branch) records
proved that on 17.07.2017 and 18.07.2017, M/s Somnath Metals Pvt Ltd
(controlled by Sanjay Shah) transferred Rs.4,50,000/- and Rs.4,00,000/- to
M/s Jay Engineers, Himmatnagar, which immediately transferred the
identical sums into M/s Radhika Impex's Axis Bank Account No
917020025386537; these were immediately drawn to pay customs duties
and agency charges to M/s Sayani & Sons, establishing circular routing of
funds by Sanjay Shah to finance the illegal imports. To facilitate clearances,
Shri Sanjay M. Shah fabricated a forged Axis Bank Signature Verification
Certificate on his office computer, fraudulently showing that Axis Bank
Shahibaug Branch verified the signature and account operation of Tushar
Thakor/Dipak Thakor, the forged certificate was delivered to CHA M/s Sayani
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& Sons by Sanjay Shah's office employee Dharmesh Surti. Following
detection of gold smuggling in another container (TTNU 2689561) Imported
by M/s Bhagyoday Enterprise on 14.07.2017, Shri Sanjay M. Shah sent
urgent SMS communications at 11:43 PM on 19.07.2017 to Transporter
Prakash Chandra Mishra (M/s Shree Rama Krishna Freight Carriers),
pleading with him not to disclose Sanjay Shah's name to Customs, and then
absconded from Ahmedabad, fleeing on foot to Ambaji from 21.07.2017 to
28.07.2017 without mobile devices to evade arrest.
20.2 Statements recorded under Section 108 of the Customs Act, 1962
from co-noticees Dipak Jayantibhai Thakor (Proprietor, M/s Bhagyoday
Enterprise), Ramnarayan S. Laddha, Prakash Chandra Mishra (Transporter)
and Vishal Patel (CHA Manager) uniformly established that Sanjay Shah and
Ramnarayan Laddha were the masterminds and financial beneficiaries who
operated both shadow entities; Dipak Thakor confessed that "Saleem' was a
fictitious character created by Sanjay Shah to mislead the probe, and that
Sanjay Shah paid him Rs.50,000-60,000 per container for signing blank
papers. Shri Sanjay M. Shah appeared pursuant to Gujarat High Court
anticipatory bail orders on 25.10.2017, 26.10.2017, 07.11.2017 and
08.11.2017, and in his handwritten voluntary statements under Section 108
before the Senior Intelligence Officer, DRI Zonal Unit, Ahmedabad, explicitly
admitted managing import, banking, CHA and transport operations for M/s
Radhika Impex, funding clearances through M/s Somnath Metals Pvt Ltd,
sending e-mails from his office computer, and creating the forged Axis Bank
certificate, although he filed a retraction before the Magistrate on
08.11.2017, it was a stereotyped afterthought unsupported by evidence.
SCN was issued. The seized Betel Nuts (21.420 MTs) were auctioned through
MSTC Ltd under Section 110(18) due to their perishable nature, realizing
Rs.29,87,998/- deposited in SBI Mundra. Following due process, the
Adjudicating Authority passed order directing absolute confiscation of the
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smuggled goods and imposing a personal penalty of Rs.25,00,000/- each on
Shri Sanjay Moolchand Shah and Shri. Ramnarayan Laddha under Section
112(a) (i) of the Customs Act, 1962.
Findings:
21. This Court has gone through various submissions made by either side
to the litigation. This court finds that in the instant case, the department
has termed Shri Ramnarayan S Laddha and Shri Sanjay Shah as two
masterminds. In this case, there have been subjected to penalties of Rs. 25
lakh each whereas, Radhika Impex whose proprietor Shri Tushar Nathubhai
Thakor was the importer on record has been subjected to penalty of Rs 10
lakh only under section 1129(a). He is not an appellant before this court. It
is departmental allegation that the consignment imported by M/s. Radhika
Impex was declared as jumbo PP bags but contained Betel Buts, the same
was subjected to confiscation as department found that instead of declared
HMS Scrap, the Betel Buts were the misdeclared goods. Shri Sanjay Shah
and Ramnarayan Laddha both were held to be the masterminds behind the
import. Department has alleged that Shri Sanjay M Shah prepared a forged
certificate alleged to be issued by Axis Bank Shahibaug Branch in the name
of Tushar Thakor. The department has mainly relied upon various
statements and documents in relation to another investigation conducted
against M/s Bhagyoday Enterprises and the same has been relied upon in
this case, through incorrectly. Shri Tushar Thakor was alleged to be the
importer on documents being proprietor of M/s. Radhika Impex. He was not
subjected to any interrogation nor his statement was recorded and it was
alleged that he was absconding. Therefore, whole investigation in this case,
remains incomplete and half baked. In view of the main importer on
documents and on record not being subjected to investigation or
interrogation, the department has alleged that some funding was done of
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M/s. Radhika Impex by Shri Sanjay Shah and therefore being a financer, he
was the mastermind. Similarly, the same allegation has been made against
Ramnarayan S Laddha and even he has been alleged as mastermind co-
accused. This court finds that the evidence relied upon by the department
regarding financing and other allegations against the above two accused,
primarily pertains to M/s. Bhagyoday Enterprises. Therefore, the evidentiary
basis, the evidence of forged certificate issued by Shri Sanjay M Shah, said
to be issued by Axis Bank in the name of Shri Tushar Thakor has been
alleged to have been made by Shri Sanjay Shah, but same has not been
established on the basis of any forensic evidence relating to computers or by
any evidence of handwriting experts. As against these allegations made by
the department, the parties have made the following defense:
The role of Sanjay Shah was limited to clearing and transporting
imported goods. He had no involvement in the procurement,
packing, stuffing or loading of the goods into the container and,
therefore, he had no knowledge of the actual nature, description
or quantity of the goods contained therein.
The impugned order has been passed primarily on the basis of
the investigation conducted against M/s. Bhagyoday Enterprise.
However, no separate inquiry was initiated nor statements of any
persons were recorded in relation to the import consignment
pertaining to M/s. Radhika Impex. In the absence of any
independent investigation or statements specifically relating to
the present import, the statements recorded during the
investigation concerning M/s. Bhagyoday Enterprise ought not to
have been relied upon to establish the alleged involvement or
liability of Sanjay Shah in the present proceedings.
The statement of Shri Tushar Thakor, Proprietor of M/s. Radhika
Impex was not recorded during the investigation in the present
case on the ground that he was allegedly absconding. In the
absence of his statement or any independent investigation
establishing the specific role and involvement of the Sanjay Shah
in the alleged offence, the Department ought not have merely
relied upon the investigation conducted in the separate case of
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M/s. Bhagyoday Enterprise. The law prescribes mechanism to
ensure presence of any witness or person whose oral evidence
are required to complete the investigation. The entire cost is
silent on this aspect.
The statements of Sanjay Shah recorded on 07.11.2017 and
08.11.2017 were immediately retracted on 09.11.2017 before
the Ld. Metropolitan Magistrate, Ahmedabad and therefore, the
retracted statement has no evidentiary value. Reliance is placed
upon the following decisions:
a) Vinod Solanki Vs. UOI, 2009 (233) ELT 157 (SC)
b) A. Tajudeen Vs. UOI, 2015 (317) ELT 177 (SC)
c) Shafeek P.K. Vs. CC, Cochin, 2015 (325) ELT 199
Sanjay Shah never funded M/s. Radhika Impex for import of
goods. He purchased SS Scrap from M/s. Jay Engineers during
the period 2016-17 and 2017-18 in the regular course of
business against which the payment was made to M/s. Jay
Engineers who in turn made payment to M/s. Radhika Impex for
clearing, forwarding charges and for transportation of goods.
Sanjay Shah is not concerned with the payment made by M/s.
Jay Engineers to M/s. Radhika Impex.
Entire case of department is on the basis of Statements of co-
noticee /co-accused without any corroborative documentary
evidence. It is a settled position of law that the case cannot be
booked on the basis of statement of co-noticee/ co-accused.
Reliance is placed upon the following decisions:
a. Mahabir Prasad Versus Commissioner of Customs (Prev.),
Patna, 2000 (126) E.L.T. 803 (Tribunal)
b. Kamal Hazra Vs. Commissioner of Customs (Prev.), 2002
(148) E.L.T. 835 (Tri. - Kolkata)
c. Pradeep Kumar Vs. Commissioner of Customs, Lucknow, 2000
(117) E.L.T. 383 (Tribunal)
The request for cross examination of Shri Vishal G. Patel,
Manager of Sayani & Sons and Shri Prakash Mishra, Proprietor of
Rama Krishna Freight Carriers was rejected without any basis
and the same is in clear violation to the principles of Natural
Justice. Reliance is placed upon the following decisions:
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a. Andaman Timber Industries Vs. Commissioner of Central Excise,
Kolkata-II, 2015 (324) E.L.T. 641 (S.C.)
b. Ummer Abdulla Vs. Commr. of Central Excise, Customs & Service
Tax, Calicut, 2019 (367) E.L.T. 181 (Ker.)
c. Surya Wires Pvt. Ltd. Vs. Principal Commissoner, CGST, Raipur,
2025 (4) TMI 441 - CESTAT New Delhi
Sanjay Shah did not create the alleged forged certificate of Axis
Bank and the said forged certificate was seized from the
computer of CHA viz. M/s. Sayani & Sons. Sanjay Shah has no
connection with the alleged forged certificate and has no
knowledge about the alleged forged certificate.
The department has not produced any cogent evidence to show
that Sanjay Shah has abetted the alleged offence and therefore,
penalty under Section 112(a) cannot be imposed.
The said Appellant did not appear and represented before this
Tribunal during the hearing on 27.10.2026.
The Appellant is engaged in domestic trading of scrap and placed
legitimate orders for HMS scrap with M/s. Bhagyoday Enterprises
in the ordinary course of business. Ledger accounts show
transactions through banking channels with applicable taxes and
duties paid.
The Appellant was neither importer nor exporter of the subject
consignments and was neither owner nor operator of M/s.
Bhagyoday Enterprises or M/s. Radhika Impex. No documentary
evidence establishes that he financed, arranged, controlled or
knowingly participated in the import of the alleged contraband,
or controlled banking, Customs clearance or transportation for
either concern.
All banking documents and fund-transfer records concerning
M/s. Bhagyoday Enterprises were signed by its proprietor, Shri
Dipak Thakor. There is no correspondence, banking record or
other material proving that Shri Dipak Thakor acted on the
Appellant's instructions.
The change of consignee from M/s. Bhagyoday Enterprises to
M/s. Radhika Impex was made at the shipper's request. No
material establishes that the Appellant directed the amendment
or participated in preparing or altering import documents.
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The Appellant had no knowledge or reason to believe that Betel
Nuts were concealed amongst HMS scrap, and there is no proof
that he owned or handled the contraband or derived any benefit
from the alleged smuggling.
The Appellant was arrested on 23.07.2017 and released on
default bail on 23.09.2017. His statements under Section 108
were recorded during custody and subsequently at the Customs
office; he maintains that they were obtained under duress and
were not voluntary. The case rests substantially on disputed
statements of co-noticees without independent documentary
corroboration.
Allegations relating to other consignments involving gold or
cigarettes cannot, without evidence linking the Appellant to this
particular consignment, establish his culpability.
Reliance is placed upon the following decisions:
a. Union of India v. Kisan Ratan Singh & Ors., Criminal Appeal
No. 621 of 2021 (Bombay High Court, Order dated 7th January,
2020) (Paras 7, 8 and 10).
b. Lalit Jain v. C.C., Ahmedabad, Customs, Excise and Service
Tax Appellate Tribunal, Ahmedabad, Customs Appeal No. 10061
of 2022 (Para 5 onwards).
c. Dharanidhar Ghosh v. Commissioner of Customs, Customs
Appeal No. 75242 of 2022 (CESTAT, Kolkata, order dated 9
December 2025, (Para 6.1 and 6.3, 6.4 6.5), Statement of Co
Accused.
d. P.N. Shipping Agency v. Commissioner of Customs, Nhava
Sheva-I, Customs, Excise and Service Tax Appellate Tribunal,
Customs Appeal No. 88063 of 2018 (Paras 6 and 7) dated 7th
May, 2019.
21.1 This Court finds that in the view of allegations made and defense
provided that the goods as per bill of lading were examined after due report
on the Indian port vide panchnama dated 29/30 July 2017. This court finds
that the definition as contained in Section 2(26) of the term importer
provides as follows:
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Section-2(26):
"importer", in relation to any goods at any time between their
importation and the time when they are cleared for home
consumption, includes any owner, beneficial owner or any
person holding himself out to be the importer .
21.2 It also finds that the term any owner as in one above was substituted
by the term any owner by the Finance Act, 2017 w.e.f 31.03.2017.
Therefore, at the time of the import, in the above definition only the
expression “any owner” was appearing and not the term “beneficial owner”.
Even examining the issue legally, it is found that absconding proprietor of
M/s. Radhika Impex i.e. Shri Deepak Jayantibhai Thakor had held himself as
the importer and the consignment was imported by M/s. Radhika Impex, is
not disputed. Both Shri Sanjay Shah as well as Shri. Ramnarayan Laddha
never held themselves or claimed themselves to be the owner of the
consignment. Therefore, ownership cannot be imposed upon them. It is also
seen that the importer i.e. Radhika Impex has been subjected to penalty of
10 lakh whereas in both the appellants before this Court have been
subjected to penalty of Section 112(a) as abettor of the goods liable to
confiscation and for various acts done by them. As till date both have not
made any culpability statement and the culpatory statement which was
initially taken by the department, has been retracted. This court also find
that it has been alleged that Shri Sanjay Shah financially benefited out of
the transaction out of the transaction. A fact which has been denied, as ever
having been done in relation to M/s Radhika Impex or its proprietor by
Sanjay Shah as the payment was made by M/s. Jay Engineers to M/s
Radhika Impex. The co-accused have not been subjected to cross-
examination which is the right of the party to avail from the adjudicating
authority as per present trend of case law, as per requirements of Section
138B which presently hold the field and by virtue of which barring the three
situation mentioned in section 138A, the cross examination has been held as
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the right to be provided by various High Courts and is a trite law. Financing
directly or indirectly someone cannot be an offence and since as at the time
when import took place the concept of “beneficial owner” had not been
brought into law, therefore, either the person who is owner as per
documents can only be held as importer or person who holds himself to be
the importer as per the definition of Section 2(26) as it appeared at the time
of import. There was also no logical basis in subjecting Shri Sanjay Shah and
Shri. Ramnarayan S Laddha to higher penalty than the proprietor of M/s.
Radhika Impex. The department case of conspiracy and therefore penalty
under section 112(a) is not established for the reasons:
The statement of most crucial witness M/s. Deepak Jayantibhai Thakor
is not on record and he is alleged to be an absconder.
The chain of evidence relied upon by the department heavily depends
upon the investigation of M/s. Bhagyoday Enterprises and that to
without a proper connect having been established and statements not
having been subjected to cross-examination, which is highly improper.
The forgery alleged and stated to be attributed to Shri Sanjay Shah is
not forensically established and is not certified by any handwriting
expert or computer expert.
21.3 The documentary evidences indicate that Shri Shri. Dipak Jayantibhai
Thakor was importer and is presently absconding. Therefore, investigation at
this stage, in any case, cannot be said to be conclusive. Even, for the forged
certificate, same was seized from the computer of CHA is M/s. Sanyani &
Sons. Therefore, even as per Section 138C, the presumption is the
documents having been seized from the possession of M/s. Sanyani & Sons
were in his possession and he is owner of such documents. This also falsifies
the allegation of the department.
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22. In view of the aforesaid infirmities, as well as various other
shortcoming, pointed by the appellants, it is clear that the case of the
department is far from proved and mens rea required or the connect
required to establish conspiracy has not been established by the
department.
22.1 In view of the forging penalties against both above accused i.e. Shri
Sanjay Shah and Shri Ramnarayan S Laddha are liable to be set aside, the
same are set aside in the peculiar facts, brought on record in respect of both
of them.
23. Appeals allowed of Shri Sanjay Shah and Shri. Ramnarayan S Laddha.
24. Appeals allowed as above.
(Pronounced in the open court on 05.11.2026)
(SOMESH ARORA)
MEMBER ( JUDICIAL )
Prachi