Gujarat High Court
Bipin Shantilal Panchal vs Commissioner Of Customs on 15 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/870/2008 ORDER DATED: 15/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 870 of 2008
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BIPIN SHANTILAL PANCHAL
Versus
COMMISSIONER OF CUSTOMS
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Appearance:
MR BHARAT T RAO(697) for the Appellant(s) No. 1
MS HETVI H SANCHETI(5618) for the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 15/10/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Bharat T. Rao for the appellant and learned advocate Ms.Hetvi H. Sancheti for the respondent.
2. This Appeal is filed under Section 130 of the Customs Act, 1962 against the Judgment and Order dated 11.05.2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Mumbai (for short 'the CESTAT') in Appeal No.C/532/531/665 of 1999. Page 1 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025
NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined
3. This Court by order dated 17.12.2019 admitted the Appeal on the following three substantial questions of law :
"(A) Whether the Tribunal is just and right to decide the appeal of the appellant ex parte when the appellant was in jail from 1993 to 2006? (B) Whether the Tribunal is right in not considering the fact that the present appellant is in jail since November, 1993 in connection with the very case till 5.9.2006 till the Hon'ble the Supreme Court of India acquitted the present appellant and confirming the order of penalty of Rs.10 lacs imposed on the appellant in violation of the principles of natural justice?
(D) Whether the Tribunal is right in Page 2 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined the facts and circumstances of the case to impose the penalty by impugned penalty order dated 11.5.2006 relying on the statement of co-noticee which was recorded by the D.R.I. Before issuance of show cause notice under the provisions of The Customs Act, 1962?"
4. The CESTAT disposed of total three Appeals arising out of the Order-in-Original No.10/COMMR/1999 dated 30th March, 1999 passed by the Commissioner of Customs, Ahmedabad. The other two Appeals disposed of by the CESTAT i.e. Tax Appeal Nos.927 of 2007 and 928 of 2007 were also tagged along with this Appeal.
5. This Appeal is disposed of separately as the appellant, who was a Doctor by profession and was found involved in manufacturing of Page 3 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined contraband drugs, was convicted by the Trial Court and the Appeal filed by the appellant was also dismissed by this Court and the conviction was also upheld by the Hon'ble Apex Court in Criminal Appeal No.1477 of 2005 by order dated 7th September 2006.
6. The brief facts of the case are as under:
6.1. On receipt of the specific information, Office of Director of Revenue Intelligence, Bombay (for short 'the DRI') intercepted a consignment consisting of 10 cartons from the warehouse situated at Bombay Airport which were meant for export to Nairobi, Kenya. 6.2. The cartons were declared to contain Magnesium Trisilicate U.S.P tablets. However, Page 4 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined on detailed examination of the contents of the cartons, it was noticed by the DRI that carton Nos.2, 3, 5, 6 and 8, out of 10 cartons which were serially numbered as 1 to 10, were found to contain 40 plastic containers in each carton and each container was found to contain light brown tablets bearing marking 'M' on one side and symbol of swastik on the other side.
Therefore, some tablets were selected at random for testing with field testing kit available with DRI Officer which gave positive results for presence of Methaqualone, whereas, carton Nos.1, 4, 7, 9 and 10 were found to contain 50 plastic containers in each carton in which white colored tablets with no marking but showing a diametric line on one side were Page 5 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined found and random samples of such tablets contained in carton No.2 were ascertained similar to the test of other contents. 6.3. Therefore, after drawing the representative samples from all 10 cartons, the same were placed under seizure under panchnama under the provisions of the Customs Act, 1962 and NDPS Act, 1985 on the reasonable belief that the cartons contained the Narco tablets and Methaqualone tablets which are prohibited psychotropic substances notified at Serial No.20 in the Schedule annexed to the NDPS Act, 1985 which was being exported under guise of Magnesium Trisilicate tablets. 6.4. Subsequently, the samples were tested at Page 6 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined Customs House Laboratory at Bombay and Forensic Science Laboratory, Ahmedabad which confirmed the presence of Methaqualone in such samples and Magnesium Trisilicate in the rest of the samples.
6.5. Since the exporter M/s.Advance Export was situated at Ahmedabad and the consignment was booked from Air Cargo Complex, Ahmedabad, the investigation was carried out by DRI, Ahmedabad. During the course of the investigation, it was found that one Shri Mahesh Shah was proprietor of M/s.Advance Export, though he did not know any other address of the M/s.Advanced Export and in course of the interrogation of Shri Mahesh Shah, he admitted that his correct name was Page 7 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined Achint Navinbhai Patel and he posed as Mahesh Shah being proprietor of M/s.Advance Export so as to escape safely in case the goods are caught and his motive to open the firm was to export Mandrax tablets in the guise of medicines. It was also admitted by him in his statement that he was working on instruction of one Yogesh Chaudhari and that one Bupendra Bhatia had fabricated the export orders in name of M/s.Pharco Kenya Limited. 6.6. On the basis of the statement of Mr.Achint Patel that the Methaqualone tablets were supplied by the appeallent-Dr.Bipin Panchal, the appellant was summoned on 06.11.1993 to record his statement, where he admitted the supply of Mandrax tables to Page 8 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined Mr.Achint Patel in May, 1993. It was also stated in his statement that the tablets were manufactured at Coral Pharma, Kheda and the same were manufactured by one Sri Kashyap Patel of Ruchi Pharma, Patan with the help of one Shri Deepak of Coral Pharma. 6.7. The Managing Director of Coral Pharma Private Limited-Mr.Hitesh Mehta in his statement stated that he rented his factory to Dr.Bipin Panchal during April, 1993 to June, 1993 for manufacture of Paracetamol tablets for export. He also stated that Kashyap Patel and Piyush Pandya were working for Dr.Bipin Panchal and he had heard from the neighbors that Kashyap Patel and Piyush Pandya were running the factory in the night hours and Page 9 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined nobody was allowed inside.
6.8. Shri Kashyap Patel and Piyush Pandya in their statements recorded on 1st February, 1994, 2nd February, 1994, 3rd February, 1994 and 2nd March, 1994 confessed that on the instruction of Dr.Bipin Panchal, they had given the delivery of 8 to 10 bags to Yogesh Chaudhary and Achint Patel from Coral Pharma, Kheda in May, 1993. It was also admitted by them that though they are employed by M/s.Ruchi Pharmaceutical, Patan, they sit in the Office of M/s.Shanti Export run by Dr.Bipin Panchal, the appellant herein and followed his instructions as directed by one Prahlad Patel, partner of M/s.Ruchi Pharmaceutical. It was also admitted by them Page 10 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined that the factory of Coral pharma, Kheda was hired by Dr.Bipin Panchal and they had done the cleaning work in night as per the instruction of Dr.Bipin Panchal. However, there was denial regarding manufacturing activities done by them.
6.9. The factory of M/s.Coral Pharma was searched on 16th February, 1994 which yielded in recovery and seizure of 22 Mandrax tablets and two pieces thereof, from different places in the factory.
6.10. The DRI also searched the premises at Ahemdabad in possession of Achint Patel on 05.11.1993 which resulted in recovery of 13 cartons of Magnesium Trisilicate tablets, Page 11 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined which according to Mr.Achint Patel were the cartons which were replaced with the Methaqualone tablets on two occasions in May, 1993 and October, 1993. Further, in addition to 13 cartons remains of Methaqualone tablets/ powders, other picking materials/instruments were also recovered and seized from the said premises.
6.11. Shri Achint Patel and Dr.Bipin Panchal were arrested on 08.11.1993 and Shri Kashyap Patel and Shri Piyush Pandya were arrested on 2nd March, 1994 under the provisions of the NDPS Act, 1985. Shri Bhupendra Bhatia and Shri Yogesh Chaudhari could not be traced out for further inquiry in the case.
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NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined 6.12. On the basis of the investigation carried out by the DRI, a show-cause notice dated 13th January, 1997 was issued upon (i) M/s.Advance Exports, (ii) Achint N. Patel @ Mahesh Sureshbhai Shah, (iii) Dr.Bipin S. Panchal, (iv) Shri Bhupendra Bhatia, (v) Shri Kashyap Patel, (vi) Yogesh Chaudhari and (vii) Piyush Pandya asking them to show cause as to why penalty should not be imposed upon them under Section 114 of the Customs Act, 1962. 6.13. In response to the show-cause notice, Achint Patel, Kashyap Patel and Piyush Pandya submitted reply dated 17th February, 1997 denying all the allegations and charges levelled against them.
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NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined 6.14. However, Dr.Bipin Panchal, Bhupendra Bhatia and Yogesh Chaudhari did not file any reply to the show-cause notice in spite of the repeated reminders issued by the Adjudicating Authority. During the personal hearing, only Kashyap Patel and Piyush Pandya appeared and submitted similar written submissions and requested for cross-examination of all the witnesses and Officers without giving any specific names and grounds/disputed facts and on being asked, they did not mention anything on this aspect and therefore, the Adjudicating Authority rejected such request on the ground that it was only to delay the adjudication proceedings.
6.15. The Adjudicating Authority by the order Page 14 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined dated 30th March, 1999 imposed penalty of Rs.10 Lakhs upon the appellant and Rs.5 Lakhs each on Kashyap Patel, Piyush Pandya and Yogesh Chaudhari and Rs.30 Lakhs each on Achint Patel and Bhupendra Bhatia. 6.16. Being aggrieved, Dr.Bipin Panchal, Kashyap Patel and Piyush Pandya preferred Appeals before the CESTAT. The CESTAT by the impugned order dated 11.05.2006 dismissed the three Appeals confirming the order passed by the Adjudicating Authority by arriving at a findings of fact that the case of the Revenue is based upon the statements made by the appellants and also by the co-accused which corroborate the allegations regarding the involvement of the appellants in illicit Page 15 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined export of Narcotics Drugs which is established by the Adjudicating Authority and therefore, no leniency was shown in the levy of penalty in view of the offenses committed by the appellants.
7. Learned advocate Mr.Bharat Rao for the appellant submitted that appropriate order may be passed in view of the dismissal of the Criminal Appeal by the Hon'ble Apex Court, where the conviction made upon the appellants is upheld considering the facts of the case.
8. The Adjudicating Authority after considering the statements of the appellant- Dr.Bipin Panchal and other co-accused has come to the conclusion that the appellant was Page 16 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined responsible for manufacture of the Mandrax tablets as per the admission made in his statement recorded under Section 67 of the NDPS Act as well as under Section 108 of the Customs Act. The Division Bench of this Court while dismissing the Criminal Appeal vide Judgment and Order dated 03.05.2004/15.09.2004 dismissed the Criminal Appeal No.760 of 2002 filed by the appellant confirming the order of conviction and sentence recorded by the Trial Court on all counts. The Hon'ble Apex Court, by the Judgment and Order dated 7th September, 2006 disposed of the Appeal filed by the Appellant being Criminal Appeal No.1477 of 2005 along with Criminal Appeal No.852 of 2006 filed by Achint Patel wherein, it was held as Page 17 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined under :
"The appellants herein were convicted for commission of offences under Section 22, 23 and 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985, read with Section 120B of the Indian Penal Code.
Having regard to the order proposed to be passed by us, it is not necessary to go into either the factual matrix of the matter or the reasons assigned by the learned Trial Court of the High Court in arriving at their conclusions. We may, however, notice that seven persons were charge-sheeted for commission of the aforementionad offences. Indisputably, each one of them was charged with section 29 of the NDPS Act and Section 120B of the Indian Penal Code. Whereas accused Nos.4 & 5 were acquitted by the learned Trial Court, accused Nos. 6 & 7 Page 18 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined have since been acquitted by the High Court.
Although conviction of accused No.3 has been upheld by the High Court but he has been sentenced to the period already undergone. He is not before us. The State did not prefer any appeal against the judgment of acquittal passed by the learned Trial Court against accused Nos.4 & 5. The State has not preferred any appeal against the orders of acquittal passed by the High Court so far as accused Nos.6 & 7 are concerned. Even no appeal has been filed in regard to the quantum of sentence imposed upon accused No.3.
Learned counsel appearing on behalf of the appellants states that the appellants, who are original accused Nos.1 & 2, have already undergone an Page 19 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined incarceration for about 13 years. Keeping in view the aforementioned facts and circumstances and particularly as the period of sentence undergone by accused No.3 has been found to be adequate by the High Court, we are of the opinion that interest of justice would be subserved if these appeals are allowed in part,. i.e. while upholding the conviction of the appellants, it is directed that both the appellants are sentenced to the period already undergone by them. The appellants are directed to be released forthwith unless required in connection with any other case."
9. The Hon'ble Supreme Court upheld the conviction by reducing the sentence for the period already undergone.
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10. Considering the facts of the case and concurrent findings of facts recorded by the Tribunal, we are of the opinion that the Tribunal was right in deciding the Appeal in absence of the appellant, though he was in jail, as the appellant was able to persuade the criminal prosecution before the Court, then the appellant ought to have acted before the Adjudicating Authority as well as the Tribunal. Therefore, the question No.(A) is answered in favour of the Revenue and against the appellant.
11. So far as question No.(B) is concerned, the Hon'ble Supreme Court has upheld the conviction and has reduced the sentence to the time of undergone by the appellant and Page 21 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined therefore, there is no acquittal of the appellant and therefore, no interference is called for in confirming the levy of penalty of Rs.10 Lakhs imposed upon the appellant as there is no violation of principles of natural justice. Question No.(B) is therefore answered in favour of the Revenue and against the appellant.
12. So far as question No.(D) is concerned, it appears that after considering the facts of the case as recorded by the Adjudicating Authority, the Tribunal has passed the impugned order relying upon the statement of co-noticee recorded by the DRI which is required to be considered by the Customs Authority under the provisions of the Customs Page 22 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025 NEUTRAL CITATION C/TAXAP/870/2008 ORDER DATED: 15/10/2025 undefined Act as the investigation was carried out by DRI and in view of the decision of the Hon'ble Apex Court in case of Commissioner of Customs Versus M/s.Canon India Pvt. Ltd. reported in 2024 (11) TMI 391 - Supreme Court (LB), now the issues regarding the difference of investigation carried out b`y DRI and issuance of notice are no more res-integra. Therefore, question No.(D) is also answered in favor of the Revenue and against the appellant.
13. The Appeal therefore, being devoid of any merit, is accordingly, dismissed.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) PALAK Page 23 of 23 Uploaded by PALAK BRAHMBHATT(HC01391) on Thu Oct 16 2025 Downloaded on : Fri Oct 17 01:27:19 IST 2025