Gujarat High Court
Kashyap A Patel vs The Commissioner Of Customs on 15 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 927 of 2007
With
R/TAX APPEAL NO. 928 of 2007
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KASHYAP A PATEL
Versus
THE COMMISSIONER OF CUSTOMS.
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Appearance:
KUNTAL A PARIKH(7757) for the Appellant(s) No. 1
MR CB GUPTA(1685) 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
COMMON ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Kuntal A. Parikh
for the appellants and learned advocate
Mr.C.B.Gupta for the respondent.
2. These Appeals are 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
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'the CESTAT') in Appeal No.C/532/531/665 of
1999.
3. By order dated 21.08.2007 the Appeals are
admitted on the following two substantial
questions of law :
"(a) Whether in the facts and
circumstances of the case it was open
to the Tribunal to have imposed Penalty
vide the Impugned Penalty Order dated
11.5.2006 and the Impugned
Rectification Order dated 9.4.2007.
(b) Whether Tribunal exceeded its
jurisdiction in not considering it self
bound by the findings in the judgment
dated 15.9.2004 passed by this Hon'ble
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Court.?"
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.
Arising from the other Appeal disposed of by
the CESTAT, Tax Appeal No.870 of 2008 was
admitted and tagged along with these Appeals,
however, the same has been disposed of
separately by order of even date as the
appellant of the same was a Doctor by
profession and was found involved in
manufacturing of contraband drugs and was
convicted by the Trial Court as well as the
Appeal filed by the him was also dismissed by
this Court and the conviction was also upheld
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by the Hon'ble Apex Court in Criminal Appeal
No.1477 of 2005 by order dated 7th September
2006.
5. The brief facts of the present Appeals are
as under:
5.1. 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.
5.2. The cartons were declared to contain
Magnesium Trisilicate U.S.P tablets. However,
on detailed examination of the contents of the
cartons, it was noticed by the DRI that carton
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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
found and random samples of such tablets
contained in carton No.2 were ascertained
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similar to the test of other contents.
5.3. 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
Narcotics 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.
5.4. Subsequently, the samples were tested at
Customs House Laboratory at Bombay and
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Forensic Science Laboratory, Ahmedabad which
confirmed the presence of Methaqualone in such
samples and Magnesium Trisilicate in the rest
of the samples.
5.5. 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
Achint Navinbhai Patel and he posed as Mahesh
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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.
5.6. On the basis of the statement of
Mr.Achint Patel that the Methaqualone tablets
were supplied by the Dr.Bipin Shantilal
Panchal, Dr.Bipin Panchal was summoned on
06.11.1993 to record his statement, where he
admitted the supply of Mandrax tables to
Mr.Achint Patel in May, 1993. It was also
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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.
5.7. 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 the appellants
herein, i.e. 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 nobody was allowed inside.
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5.8. 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 and followed his instructions
as directed by one Prahlad Patel, partner of
M/s.Ruchi Pharmaceutical. It was also admitted
by them that the factory of Coral pharma,
Kheda was hired by Dr.Bipin Panchal and they
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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.
5.9. 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.
5.10. 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,
which according to Mr.Achint Patel were the
cartons which were replaced with the
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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.
5.11. 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.
5.12. On the basis of the investigation
carried out by the DRI, a show-cause notice
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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.
5.13. 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.
5.14. However, Dr.Bipin Panchal, Bhupendra
Bhatia and Yogesh Chaudhari did not file any
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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.
5.15. The Adjudicating Authority by the order
dated 30th March, 1999 imposed penalty of
Rs.10 Lakhs upon Dr.Bipin Panchal and Rs.5
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Lakhs each on Kashyap Patel, Piyush Pandya and
Yogesh Chaudhari and Rs.30 Lakhs each on
Achint Patel and Bhupendra Bhatia.
5.16. 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
export of Narcotics Drugs which is established
by the Adjudicating Authority and therefore,
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no leniency was shown in the levy of penalty
in view of the offenses committed by the
appellants.
5.17. After the decision of the CESTAT
rendered on 11.05.2006, the appellants
preferred Rectification Application before the
Tribunal pointing out that this Court has
acquitted both the appellants and therefore,
the order dated 11.05.2006 suffers from a
mistake while rejecting the Appeals filed by
the appellants and therefore, the Tribunal
ought to have allowed the Appeals in view of
the acquittal order passed by this Court.
5.18. By the order dated 09.04.2007, the
CESTAT dismissed the Rectification Application
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on the ground that criminal proceedings for
prosecution of the appellants require higher
degree of evidence and are based on altogether
different grounds, whereas, the proceedings
before the Tribunal are quasi-judicial
proceedings and merely, because there is no
reference to the decision of the High Court in
the order of the Tribunal, it cannot be stated
to be the mistake apparent on record.
6.1. Learned advocate Mr.Kuntal Parikh
appearing for the appellants submitted that
the Tribunal has not assigned any reason for
confirming the Order-in-Original of levy of
penalty of Rs.5 Lakhs upon each of the
appellants and without considering the facts
that the appellants are acquitted by this
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Court in the Criminal Appeals filed against
the conviction, on the same set of facts, the
Tribunal could not have taken a different view
for levy of the penalty by merely reproducing
the findings of the Adjudicating Authority.
6.2. Learned advocate Mr.Kuntal Parikh
submitted that the appellants were not in
knowledge of the contraband goods being
manufactured in M/s.Coral Pharma by Dr.Bipin
Panchal as they were performing the actions
only at the instructions of Dr.Bipin Panchal.
It was submitted that on perusal of the
statements of both the appellants, the
appellants never admitted that they were in
knowledge of production of mandrax tablets at
M/s.Coral Pharma and merely, on the basis of
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the statement of Mr.Hitesh Mehta, M.D. of
M/s.Coral Pharma, the Adjudicating Authority
has come to the conclusion that the appellants
have abetted Dr.Bipin Panchal for production
of the mandrax tablets at the factory.
6.3. It was submitted that vide common
Judgment and Order dated 03.05.2004/15.09.2004
rendered in Criminal Appeal No.711 of 2002
filed by the appellants, this Court allowed
the Criminal Appeal by setting aside the
conviction and sentence recorded by the Trial
Court and the appellants were ordered to be
released from the custody. Learned advocate
Mr.Kuntal Parikh referred to and relied upon
the findings of this Court recorded in
paragraph No.127 of the said Judgment and
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Order to acquit the appellants, which read as
under:
"127. While considering the appeal of
accused Kashyap Patel (accused No. 6)
and Pivush Pandva (accused No.7) and in
light of the evidence as discussed and
considering the submission of Mr. Raju,
it transpires that both the accused
were serving and getting salary of Rs.
3, 000/- per month and the patrol
charge from Dr. Bipin Shantilal Panchal
in respect of the work of Dr. Bipin
Shantilal Panchal and even during the
pendency of the trial, they were
released on bail, though their
participations, as per the instruction
of their master Dr. Bipin Shantilal
Panchal and both have carried out the
instruction from their master. There is
no evidence on record to suggest that
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these accused persons were aware about
the nature of substance being
manufactured or the nature of the
activity being carried out by Dr.
Panchal and others. It would therefore
not be possible to base their
convictions on the available material.
Suspicion cannot be converted into
conviction. Even from their statements
recorded under Section 67 of the
N.D.P.S. Act, it suggests that they
carried out the instruction of his
master namely Dr. Bipin Shantilal
Panchal, as they have no alternative to
carry out the instruction as they were
working with him. In these statements
also the prosecution has not been able
to bring out anything self
incriminating against these accused.
Thus, apart from a strong possibility
of these statements not being totally
voluntary since both the accused have
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given verbatim identical answers to
series of questions, the statements
themselves do not link these accused
with the offences since prosecution has
not established their participation
with the knowledge that contraband
drugs were being manufactured or
transported. In our view, having
closely considered the case of these
two accused as well examined the
conviction recorded by the learned
trial Judge, we are unable to uphold
the conviction of accused Nos. 6 and
7."
6.4. Referring to the above findings, it was
submitted that when the Division Bench of this
Court has recorded that there is no evidence
on record to suggest that the appellants were
aware about the nature of the substance being
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manufactured or the nature of the activity
being carried out by Dr.Bipin Panchal and
others, it cannot be said that the appellants
have abetted Dr.Bipin Panchal in manufacture
of the mandrax tablets. It was also submitted
that when there is a finding of fact given by
this Court on the same set of facts and
statements, which was considered by the
Adjudicating Authority and Tribunal, the
findings of this Court would prevail and
therefore, the penalty levied upon the
appellants is liable to be quashed and set
aside.
6.5. In support of his submissions, reliance
was placed on the decision in case of Capt. M.
Paul Anthony Versus Bharat Gold Mines Limited
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and Another reported (1999) 3 SCC 679 wherein,
the Hon'ble Supreme Court by considering the
facts of the case held that departmental
proceedings and proceedings in criminal case
launched on the basis of same set of facts can
be continued simultaneously, however, in the
departmental proceedings the standard of proof
is one of preponderance of the probabilities,
in a criminal case, the charge has to be
proved by the prosecution beyond the
reasonable doubt and only little exception may
be where the departmental proceedings and
criminal case are based on the same set of
facts and evidence in both the proceedings is
common without there being a variance.
6.6. It was therefore submitted that in the
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facts of the present case also, on the same
set of statements and facts before the
Adjudicating Authority and before this Court
in Criminal Appeal, where conviction was
imposed by the Trail Court was set aside and
there was no variance in the set of evidence
considered by this Court for the acquittal of
the appellants, the impugned order of levy of
penalty need not be sustained.
6.7. Reliance was placed on the decision in
case of Gopaldas Udhavdas Ahuja and Another
Versus Union of India and Others reported in
(2004) 7 SCC 33 wherein, the Hon'ble Apex
Court relying upon the decision in case of
Capt. M. Paul Anthony (Supra) in the facts of
the case and in view of Section 98-B of the
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Gold (Control) Act, 1968, came to the
conclusion that the appellants had to prove
beyond reasonable doubt, which they did that
they had no knowledge of the gold hidden in
the ornamental top of the cupboard in the
eastern bedroom and therefore, it would be
unjust, unfair and oppressive to allow the
decision of the Authorised Officer in
confiscation proceedings to stand against
acquittal by the competent criminal court,
which acquittal was confirmed by the High
Court and by the Apex Court. It was further
held that merely because there was acquittal
in the trial before the Magistrate, due to
paucity of evidence or otherwise, would not
entail nullification of the order of
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confiscation of the seized articles in every
case, however, on a plain reading of Sections
8(1) and 71(1) of the Gold (Control) Act,
1968, it is clear that Authorised Officer was
required to be satisfied that the offence
under the Act had been committed and that the
confiscation proceedings were separate and
distinct from prosecution in the Act. However,
the difference did not entitle the Authorised
Officer to proceed arbitrarily in making an
order for confiscation. The Apex Court
therefore, set aside the order of confiscation
on the ground that recovery of the Gold was
not proved and appellants were held to be not
in conscious possession of the primary Gold
and they are entitled to benefit of provisio
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to Section 71(1) of the of the Gold (Control)
Act, 1968.
6.8. Referring to the above decision, it was
submitted that in the facts of the case, the
statements of the appellants and other co-
noticee recorded by the DRI do not reveal that
the appellants were having the knowledge of
manufacturing of the mandrax tablets and
Methaqualone tablets by Dr.Bipin Panchal and
therefore, on the same set of facts and
statements, when the Division Bench of this
Court has passed an order of acquittal holding
that suspicious cannot result into conviction,
the impugned orders of levy of penalty upon
the appellants would not survive.
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6.9. Reliance was also placed on the decision
in case of Maharana Pratap Singh Versus State
of Bihar reported in 2025 (0) AIJEL-SC 75144
wherein, the Hon'ble Apex Court after
considering the Bihar and Orissa Subordinate
Services (Discipline and Appeal) Rules, 1935
held that while acquittal in a criminal case
does not automatically entitle the accused to
have an order of setting aside the order of
dismissal from public service following
disciplinary proceedings, it is well-
established that when the charges, evidence,
witnesses, and circumstances in both the
departmental inquiry and the criminal
proceedings are identical or substantially
similar, the situation assumes a different
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context. It was therefore submitted that in
facts of the present case, when the charges
evidence, witnesses and circumstances relied
upon by the Adjudicating Authority and the
Trial Court as well as this Court in criminal
proceedings are identical, the entire
situation assumes different context wherein,
the order of acquittal passed by this Court
would prevail to set aside the levy of penalty
by the Adjudicating Authority confirmed by the
CESTAT.
6.10. Relying upon the decision of the Hon'ble
Madras High Court in case of M.K.S. Abubacker
Versus Secretary to Government of India,
Ministry of Finance, New Delhi and Other
reported in 1987 (32) E.L.T. 640 (Madras), it
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was submitted that acquittal of accused by
Criminal Court substantially on merits and not
on mere technical grounds have to be treated
as conclusive in proceedings before the quasi-
judicial Tribunal and therefore, levy the
penalty on the same facts and charges on which
this Court while allowing the Criminal Appeal
filed by the appellants having acquitted them,
is not permissible under the provisions of
Section 114 of the Customs Act, 1962.
6.11. Reliance was also placed on the decision
of the Hon'ble Madras High Court in case of D.
V. Kishore Versus The Commissioner of Cutoms
reported in (2017) 350 ELT 527 wherein, in the
facts of the said case, it was held that the
confessional statement given by the accused
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persons including the appellant could not have
been relied upon once the criminal prosecution
has failed to prove the case against the
appellant beyond the reasonable doubt. It was
therefore submitted that the appellants have
been acquitted and therefore, on the same set
of facts and circumstances, no penalty could
have been levied upon the appellants on the
ground that the appellants have abetted
Dr.Bipin Panchal in manufacturing the
contraband drugs.
6.12. Reliance was also placed on the decision
of Hon'ble Delhi High Court in case of Rajeev
Khatri Versus Commissioner of Customs (Export)
reported in (2024) 133 GSTR 537 (Delhi)
wherein, the Hon'ble Delhi High Court has
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explained in detail the expression 'abet' in
Section 112(a) of the Customs Act, 1962 which
means instigating, conspiring, intentionally
aiding the acts of commission or omission that
render the goods liable for confiscation and
therefore, the knowledge of a wrongful act of
omission or commission, is a necessary element
for the offence of abetting the doing of such
an act. It was therefore submitted that in the
facts of the case, there is no finding
recorded by the Adjudicating Authority that
the appellants had knowledge of the wrongful
act of manufacture of the contraband drugs
which were sought to be exported by Achint
Patel procured from Dr.Bipin Panchal resulting
into confiscation of such goods under Section
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113 of the Customs Act, 1962. It was submitted
that the Adjudicating Authority and the CESTAT
have merely drawn the inference on the basis
of the statements of the appellants and other
witnesses including Shri Hitesh Mehta, M.D. of
Coral Pharma to come to the conclusion that
the appellants have abetted in manufacture of
the contraband drugs without there being any
involvement of the appellants in manufacturing
process of such drugs.
6.13. Reliance was also placed on the decision
of the Apex Court in case of Shri Ram Versus
The State of U.P. reported in (1975) 3 SCC 495
which was referred by the Hon'ble Delhi High
Court in case of Rajeev Khatri (Supra) to
point out that Section 107 of the Indian Penal
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Code which defines abetment provides to the
extent material that a person abets the doing
of a thing who intentionally aides, by any act
or illegal omission, the doing of that thing
and therefore, to constitute abetment, the
abettor must be shown to have intentionally
aided the commission of the crime and mere
proof that the crime charged could not have
been committed without the interposition of
the alleged abettor is not enough compliance
with the requirements of Section 107 of the
Indian Penal Code. It was submitted that in
the facts of the case, merely because the
appellants have acted upon the instruction of
Dr.Bipin Panchal, would not result into
abetment of manufacture of the mantrax tablets
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by Dr.Bipin Panchal in the factory situated at
M/s.Coral Pharma, more particularly, when on
the same set of facts and statements, this
Court acquitted the appellants from the charge
of abetment.
7.1. On the other hand, learned advocate
Mr.C.B.Gupta for the respondent-Commissioner
of Customs submitted that it is true that this
Court has acquitted the appellants, however,
the standard of proof in the criminal case is
different than the standards for levy of
penalty under the provisions of the Customs
Act, 1962.
7.2. It was pointed out from the Order-in-
Original that the Adjudicating Authority has
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arrived at a finding of fact which is upheld
by the CESTAT which clearly shows that the
appellants in their statements have admitted
that they had given delivery of eight to ten
bags of medicines/drugs to Mr.Achint Patel
from the factory of M/s.Coral Pharma as
directed by Dr.Bipin Panchal and also from the
corroborative statement of Shri Hitesh Mehta,
it is found that both the appellants were
instrumental in having the factory of
M/s.Coral Pharma on rent for the month of
April, 1993 to June, 1993 and they had brought
the tableting machines in the factory and they
were running the factory in the night time
only and no outsider was allowed inside the
factory. It was therefore submitted that on
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conjoint reading of all the statements of the
appellants as well as the co-noticee and
witnesses, involvement of the appellants in
illicit export of Narcotic Drug is established
and therefore, it cannot be said that the
appellants did not abet Dr.Bipin Panchal in
manufacture of the Narcotic Drugs.
7.3. It was submitted that this Court while
passing an order of acquittal has considered
the case of the appellants as pleaded by the
prosecution and there was a failure on part of
the prosecution to prove the case beyond all
reasonable doubt resulting into acquittal. It
was therefore submitted that no interference
is required to be made in the impugned orders
passed by the Adjudicating Authority confirmed
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by the CESTAT and both the questions may be
answered in favour of the Revenue by
dismissing the appeal.
7.4. In support of his submissions, reliance
was placed on the decision of the Hon'ble
Madras High Court in case of K.V. Rajagopal
versus Commissioner of Customs, Trichy
reported in 2015 (318) E.L.T. 48 (Madras)
wherein, Hon'ble Madras High Court after
considering the decision of the Hon'ble Apex
Court in case of Gopaldas Udhavdas Ahuja
(Supra) and the decision of the Hon'ble Madras
High Court in case of N. Jayathilakan Versus
Additional Secretary reported in 1987 (31)
E.L.T. 47 has held that the Customs Act
contemplates two separate proceedings for the
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same act or omission and therefore, there is
no question of double jeopardy and mere
acquittal in the criminal proceedings in every
case cannot result into setting aside, ipso
facto, the orders of the confiscation passed
by the competent authority under the Act and
therefore, the contention of the appellants
that the judgment of acquittal is not binding
upon the departmental authorities,
adjudicating the question under the
confiscation and levy of penalty under the
Customs Act, is not correct.
7.5. It was further submitted that the
contention raised on behalf of the appellants
that the appellants were not having the
knowledge of the manufacture of the Narcotic
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Drugs by Dr.Bipin Panchal is also without any
basis as the events narrated by the appellants
in their statements depict the intention and
knowledge of the appellants as they were
working as per the instructions given by
Dr.Bipin Panchal. It was pointed out that even
Shri Hitesh Mehta, in his statement, has
implicated the appellants by stating that the
appellants have taken the factory of M/s.Coral
Pharma on rent for Dr.Bipin Panchal and have
also paid Rs.11,000/- to him for clearance of
the outstanding electricity dues, they brought
the tableting machines and were running the
factory at night and were not allowing anyone
to enter in the factory premises.
7.6. Reference was also made to cross-
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examination of the Shri Hitesh Mehta wherein,
he has denied the suggestion that he had never
given the factory on rent at any time to the
appellants as well as M/s.Shanti Export of
Dr.Bipin Panchal and he further denied the
suggestion that he has deposed falsely that
the appellants had come to meet him in April,
1993. He also denied that he had falsely
deposed that the appellants had given an
amount of Rs.11,000/- for electricity bill and
thereafter, given Rs.15,000/- twice. It was
therefore submitted that the statements of
Shri Hitesh Mehta was proved even before the
Trial Court and reliance placed by the
appellants on findings of this Court is also
applicable to the standards of proof to be
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applied to the criminal trial as this Court
has rightly held that the suspicion cannot be
converted into conviction. However, in the
facts of the case, the Adjudicating Authority
has relied upon the statements recorded under
Section 67 of the NDPS Act which are
admissible as evidence.
7.7. It was submitted that this Court, only
relying upon the statements, has recorded that
there is nothing incriminating against the
appellants as they were carrying out the
instructions of Dr.Bipin Panchal and further
held that apart from a strong possibility of
such statements not being voluntary as both
the appellants have given verbatim identical
answers to series of questions, the statements
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themselves do not link the appellants with the
offences as prosecution has not established
their participation with the knowledge that
contraband drugs were being manufactured or
transported.
7.8. It was also submitted that the standard
of proof relied upon by this Court should not
be applied to the facts while exercising the
jurisdiction of the quasi-judicial authority
for levy of penalty as it is an admitted fact
that the appellants were carrying out the
instructions of Dr.Bipin Panchal and they have
also delivered the goods to Shri Achint Patel
which is not considered by this Court while
arriving at a conclusion of acquittal of the
appellants in the criminal case. It was
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therefore submitted that the Appeals are
liable to be dismissed.
8. Having heard the learned advocates for the
respective parties and considering the
submissions made by them and on perusal of the
impugned Order-in-Original as well as the
order passed by the CESTAT together with the
Judgment and Order passed by this Court in
Criminal Appeals whereby, the appellants have
been acquitted, it appears that this Court
while arriving at a conclusion that the
appellants are not liable to be convicted,
though it based upon the same set of evidence
in form of the statements of the appellants
and the co-noticee and other witnesses, has
not taken into consideration that the
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participation of the appellants was admitted
in their statements for delivery of the goods
to Achint Patel as per the instructions of
Dr.Bipin Panchal resulting into the abetment
of the appellants in exporting the contraband
Narcotic Drugs.
9. It is true that this Court while
considering the case of the appellants has
recorded that the prosecution has not
established the participation of the
appellants with the knowledge that the
contraband drugs were being manufactured or
transported but at the same time, the
statements of the appellants with regard to
their involvement in delivery of the drugs to
Shri Achint Patel, who exported by
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impersonation as Shri Mahesh Shah, was not
pleaded by the prosecution and which has
resulted into the acquittal. However, the
Adjudicating Authority as well as the CESTAT
in the impugned orders have arrived at a
findings of fact that the appellants have not
carried out the instructions of Dr.Bipin
Panchal in hiring the factory of M/s.Coral
Pharma but have brought the tableting machines
and have running the factory at night and have
also participated in delivery of the
contraband drugs to Achint Patel for the
export. Thus, the link from the place of
manufacture till the export of the goods is
established in the impugned orders.
10. Reliance was placed by learned advocate
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for the appellants to canvass that the CESTAT
could not have upheld the decision of levy of
penalty in view of the order of acquittal
passed by this Court in same set of facts and
statements but the fine distinction in facts
of the case has been missed by the appellants
to the effect that the statements which are
relied upon by the Adjudicating Authority for
levy of penalty also include the statements of
Dr.Bipin Panchal and other co-noticee while
recording the acquittal by this Court. It also
appears that the levy of penalty with regard
to the abetment of the appellants as provided
under Section 114 of the Act has rightly been
considered by the Adjudicating Authority
considering the statements of the appellants
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which are admissible under the provisions of
the Customs Act and the NDPS Act.
11. Considering the facts of the case, the
statements made available on record and cross-
examination of the witnesses, it appears that
this Court has come to the conclusion that the
prosecution has failed to prove beyond
reasonable doubt about the involvement of the
appellants in manufacture and transport of the
Narcotic Drugs, however, the Adjudicating
Authority has rightly exercised the
preponderance of probability on the basis of
the statements recorded by the Investigating
Agency to hold that the appellants have
abetted Dr.Bipin Panchal in manufacture and
transport of the Narcotic Drugs.
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12. In that view of the matter, when there is
a concurrent findings of fact arrived at by
the CESTAT, we are of the opinion that in the
facts and circumstances of the case, the
Tribunal has rightly upheld the levy of
penalty and it cannot be said that the
Tribunal has exceeded its jurisdiction in not
considering the findings recorded in the
Judgment dated 15.09.2004 passed by this Court
resulting into the acquittal of the appellants
in the criminal case.
13. It would also be germane to refer to the
findings recorded by the Hon'ble Apex Court in
case of Capt. M. Paul Anthony (Supra), which
read as under :
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"13. As we shall presently see, there is
a consensus of judicial opinion amongst
the High Courts whose decisions we do
not intend to refer in this case, and
the various pronouncements of this
Court, which shall be copiously
referred to, on the basic principle
that proceedings in a criminal case and
the departmental proceedings can
proceed simultaneously with a little
exception. As we understand, the basis
for this proposition is that
proceedings in a criminal case and the
departmental proceedings operate in
distinct and different jurisdictional
areas. Whereas in the departmental
proceedings, where a charge relating to
misconduct is being investigated, the
factors operating in the mind of the
Disciplinary Authority may be many such
as enforcement of discipline or to
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investigate the level of integrity of
the delinquent or the other staff, the
standard of proof required in the those
proceedings is also different than that
required in a criminal case. While in
the departmental proceedings the
standard of proof is one of
preponderance of the probabilities, in
a criminal case, the charge has to be
proved by the prosecution beyond
reasonable doubts. The little exception
may be where the departmental
procedings and the criminal case are
based on the same set of facts and the
evidence in both the proceedings is
common without there being a variance."
14. The Hon'ble Apex Court, after recording
the above findings, concluded as under :
"34. There is yet another reason for
discarding the whole of the case of the
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respondents. As pointed out earlier,
the criminal case as also the
departmental proceedings were based on
identical set of facts, namely, 'the
raid conducted at the appellant's
residence and recovery of incriminating
articles therefrom.' The findings
recorded by the Inquiry Officer, a copy
of which has been placed before us,
indicate that the charges framed
against the appellant were sought to be
proved by Police Officers and Panch
witnesses, who had raided the house of
the appellant and had effected
recovery. They were the only witnesses
examined by the Inquiry Officer and the
Inquiry Officer, relying upon their
statements, came to the conclusion that
the charges were established against
the appellant. The same witnesses were
examined in the criminal case but the
court, on a consideration of the entire
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evidence, came to the conclusion that
no search was conducted nor was any
recovery made from the residence of the
appellant. The whole case of the
prosecution was thrown out and the
appellant was acquitted. In this
situation, therefore, where the
appellant is acquitted by a judicial
pronouncement with the finding that the
"raid and recovery" at the residence of
the appellant were not proved, it would
be unjust, unfair and rather oppressive
to allow the findings recorded at the
ex-parte departmental proceedings, to
stand.
35. Since the facts and the evidence in
both the proceedings, namely, the
departmental proceedings and the
criminal case were the same without
there being any iota of difference, the
distinction, which is usually drawn as
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between the departmental proceedings
and the criminal case on the basis of
approach and burden of proof, would not
be applicable to the instant case."
15. However, in the facts of the present case,
the Adjudicating Authority while passing the
Order-in-Original has only considered the
statements recorded by the DRI during the
course of the investigation to conclude, on
the basis of the defense which was taken by
the appellants, which read as under:
"They have disputed the contentions and
verasity of the statement and
panchanama of various persons and other
documents relied upon in the SCN.
They have claimed the SCN to be time
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barred under the provisions of Customs
Act, 1962.
They have not been provided with all
the documents, account papers and other
papers confiscated by the department.
The burden is on the department to show
that there was material suppression
with an intent to evade duty.
The SCN does not mention that the
cartons were transferred by them out of
India and that they were involved in
the manufacturing of any type of goods
directly or indirectly.
They were not aware about the consignee
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as well as the consigned and the
movements of the goods for export.
They have not admitted the correctness
of the said Panchanama since the
cartons No.2,3,5,6 & 8 totally weighing
162 Kgs. Of tablet (under seizure) were
not sealed in presence of them. They
are not aware of the replacement of
cartons by Shri Achint Patel. The
Methaquolone were manufactured at M/s
Alps Pharma, Mehsana. Shri Bhupendra
Bhatia and Lalitbhai had participated
in manufacturing of these tablets and
Shri Bhatia and Yogesh Chaudhary
prepared and sealed identical cartons.
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They have never done manufacturing of
medicine tablets on behalf M/s Coral
Pharma since they are employee of M/s
Ruchi Pharma. They had never done any
manufacturing of any type of
drug/medicine at M/s Coral Pharma
factory in the night time."
16. The appellants have not taken any other
defense except what is reproduced herein above
whereas, in the criminal trial, the appellants
have cross-examined the various witnesses and
on the basis of such cross-examination and
conducting of full-fledged trial, the
conviction was made by the Trial Court which
was reversed by this Court on appreciation of
the evidence, giving a benefit of doubt to the
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appellants that suspicion cannot be converted
into the conviction by observing as under :
"There is no evidence on record to
suggest that these accused persons were
aware about the nature of substance
being manufactured or the nature of the
activity being carried out by Dr.
Panchal and others. It would therefore
not be possible to base their
convictions on the available material.
Suspicion cannot be converted into
conviction. Even from their statements
recorded under Section 67 of the
N.D.P.S. Act, it suggests that they
carried out the instruction of his
master namely Dr.Bipin Shantilal
Panchal, as they have no alternative to
carry out the instruction as they were
working with him. In these statements
also the prosecution has not been able
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to bring out anything self incriminating
against these accused. Thus, apart from
a strong possibility of these statements
not being totally voluntary since both
the accused have given verbatim
identical answers to series of
questions, the statements themselves do
not link these accused with the offences
since prosecution has not established
their participation with the knowledge
that contraband drugs were being
manufactured or transported."
17. The above observations and findings of
this Court while recording the acquittal of
the appellants were not available before the
Adjudicating Authority. However, it is a
matter of fact that the appellants had relied
upon this findings before the CESTAT and have
also preferred an application for
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rectification, which was dismissed by the
CESTAT on the ground that in criminal
proceedings for prosecution of the appellants,
higher degree of evidence was required
whereas, the Tribunal which is a quasi-
judicial authority has taken into
consideration the findings of the Adjudicating
Authority to hold that involvement of the
appellants in illicit exports of Narcotic
Drugs is fully established as per the
discussion made by the Adjudicating Authority
in the Order-in-Original. The Tribunal has
recorded the facts of the case as well as the
findings of the Adjudicating Authority as
under :
"2. As per facts on record, officers of
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DRI intercepted a consignment at EIV
Air India Warehouse, Airport, on
4.11.1993. The said consignment
consisting of 10 cartons, was declared
as containing Magnesium Trisilicate
U.S.P. Tablets. However, on testing, 5
of the cartons gave positive results
for the presence of 'Methaqualone'. The
test results received from the Custom
House Laboratory at Mumbai and Forensic
Science Laboratory, Ahmedabad,
confirmed the presence of Methaqualone
in the goods under seizure.
3. Post seizure investigation were
conducted by the officers in detail,
which resulted in exposure of fact that
the factory premises of M/s.Coral
Pharma were rented by its Managing
Director Shri Hitesh Mehta to Dr.Bipin
Panchal for the manufacture of
Paracetamol Tablets. However, the said
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factory was actually being run by Shri
Kashyap Patel and Shri Piyush Pandya
for Dr.Panchal at night hours, Mandrax
Tablets were being manufactured by them
but cleared at night only. Search of
the said factory premises on 16.2.1994
yielded in recovery and seizure of 22
Mandrax Tablets.
4. Statements of Shi Kashyap and Shir
Piyush Pandya were recorded where under
they confessed the delivery of 8-10
bags of Methaquclone Tables to Yogesh
Chaudhari and Achint Patel.
5. Based upon the above investigation
proceedings were initiated inter alia,
against the appellant by way of
issuance of show cause notice. The said
proceedings resulted in imposition of
penalties upon the present appellant.
6. While discussing their role, the
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adjudicating authority has observed as
under :
"As regards Noticees No.5 and 6 viz.
Shri Kashyap Arunbhai Patel and
Piyush Mulshankar Pandya, I find
that Shri Kashyap Patel in his
statements dt. 1.2.1994, 2.2.94 and
2.3.94 interalia stated that he
alongwith one Shri Piyush Pandya had
given the delivery of 8-10 bags of
medicine/drug to Shri Achint Patel
from the factory of M/s. Coral
Pharma as directed by Dr.Bipin
Panchal. It is further evident from
the statement of Shri Hitesh Metha
M.D. of M/s. Coral Pharma that the
factory was taken on rent by Shri
Bipin Pachal, Kashyap Patel and
Piyush Pandya for the period from
April to June 1993 and they had
brought a tabletting machine in the
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factory and the said Shri Kashyap
Patel and Piyush Pandya were running
the factory in the night time only
and no outsider was allowed inside
the factory. In their various
statements Shri Kayshap Patel &
Piyush Pandya have confessed that
they were employed by M/s. Ruchi
Pharma & they used to sit in the
office of M/s. Shanti exports run by
Dr. Bipin Panchal and followed his
instructions, as directed by Shri
Prahlad Patel, partner of M/s. Ruchi
Pharma. Though they denied any
manufacturing activities of
narcotics drug by them the search of
the factory i.e. M/s. Coral Pharma
on 16.2.94 resulted in recovery and
seizure of 22 mandrax tablets and 2
pieces thereof from the factory.
Hence the denial of Shri Kashyap
Patel and Piyush Pandya are also
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baseless. Shri Kashyap Patel and
Piyush Pandya in reply to SCN denied
their connection with the said
seizure of narcotic drugs. However,
I find that all these defence
arguments of both the noticees are
vague and unclear. They did not
produce any evidence to support
their stand. Their involvement in
the illicit export of narcotic drugs
is corroborated in the statements of
other co-accuse like Shri Achint
Hitesh Mehta. The facts narrated by
other co-accusse regarding the
abatement of Shri Kashyap Patel and
Piyush Pandya in their respective
statements are corroborated with
other evidences where it has been
admitted that the mandrax tablets
were manufactured at M/s. Coral
Pharma by Dr. Bipin Panchal, Shri
Kashyap Patel etc. and it was they
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who delivered the goods to Shri
Achint Patel. Moreover, Shri Kashyap
Patel and Piyush Pandya are silent
in their defence reply on their
suspicious activities carried out
during the night hours at M/s. Coral
Pharma as confirmed by various
persons in their statements.
Moreover, Shri Kashyap Patel and Shr
Piyush Pandya had confessed their
involvement in the said operation
with other co-accused, in their
various statement which were never
retracted till the date of filing
their reply to the SCN. In light of
Supreme Court's decision in the case
reported at 1996 (CPN) P No. 76 I
find that statements of both the
noticees as well as other co-accuse
are a fundamental evidence against
them. Though Shri Kashyap Patel and
Piyush Pandya asked for cross
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examination of all the officers,
test laboratory persons, panchas,
witnesses I find that they requested
for the same without giving any
specific name and grounds. Even
during the personal hearing on
17.12.98 when they were specifically
asked the names of persons to be
cross-examined as well as the
disputed contentions they chose to
remain silent on this aspect and
therefore, the request for cross
examination at the time of personal
hearing was not granted, as it was
only to delay the adjudicating
proceedings. The facts narrated
above prove beyond doubt that Shri
Kashyap Patel and Piyush Pandya had
knowingly conspired and abetted in
the manufacturing and exporting of
the Mandrax Tablets, in
contravention of the provisions of
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Section 11 of Customs Act, 1962 read
with Section 3 of import and Export
(Control) Act, 1985, and have
rendered themselves liable for penal
action under Section 114 of Customs
Act, 1962 since the goods were
liable for confiscation under
Section 113 of Customs Act, 1962. I
therefore, hold that Shri Kashyap
Patel and Piyush Pandya are liable
for penalty under Section 114 of the
Customs, Act, 1962".
7. As is clear from the above findings,
the Revenue's case is based upon the
statements made by the appellants
themselves as also by the co-accused,
which corroborate the allegations. The
appellants involvement in the illicit
export of narcotic drugs is fully
establish discussed by the
Commissioner. No leniency in the
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quantum of penalties is also required
for, in view of the offences committed
by the appellants. As such, we are not
inclined to interfere with the impugned
order, imposed penalties upon the
appellants. All the appeals are
accordingly rejected."
18. The decision of the Hon'ble Apex Court in
case of Capt. M. Paul Anthony (Supra) which
was further referred to and relied upon by the
Madras High Court in case of D. V. Kishore
(Supra) and decision of the Hon'ble Supreme
Court in case of Maharana Pratap Singh (Supra)
would not be applicable in the facts of the
case because while arriving at a conclusion of
acquittal by this Court, the standard of proof
beyond all reasonable doubts was applied as
against the preponderance of probability
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applied by the CESTAT being the quasi-judicial
authority.
19. The Hon'ble Apex Court in case of Gopaldas
Udhavdas Ahuja and Another (Supra) after
referring to the decision of Captain M.Paul
Anthony (Supra) has held as under :
"20. In the case of Capt. M. Paul Anthony
v. Bharat Gold Mines Ltd. it has been
held that where department and criminal
proceedings are based on identical facts
and where charges were sought to be
proved by the policy officers and the
panchas who raided the house and
effected recovery and where same set of
witnesses were examined in both the
proceedings but the criminal court on
examination of the evidence came to the
conclusion that no recovery was made
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from the house and that raid was not
proved it would be unjust, unfair and
oppressive to allow the findings
recorded by the enquiry officer to stand
against acquittal by judicial
pronouncement. The present case is on
the stronger footing than the case of
Capt. M. Paul Anthony (supra). In the
present case, in view of section 98B, a
very heavy burden was placed on the
appellants in the criminal proceedings.
It was for the appellants to rebut the
statutory presumption of the culpable
mental state placed on them by section
98B. Under section 98B, the appellants
had to prove beyond reasonable doubt,
which they did. that they had no
knowledge of the gold hidden in the
ornamental top of the cupboard in the
eastern bedroom. Hence, it would be
unjust, unfair and oppressive to allow
the decision of the Authorised Officer
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in confiscation proceedings to stand
against acquittal by the competent
criminal court, which acquittal was
confirmed by the High Court and by this
Court.
21. We may clarify that our above
observation should not be taken to mean
that there is no difference between
departmental proceedings under Section
71(1) and prosecution for illegal
possession under Section 85(1). A
combined reading of Sections 8(1), 71(1)
and 85 of the 1968 Act made it clear
that the legislature intended to provide
for two separate proceedings before two
different forums and there is no
conflict of jurisdictions between the
Authorised Officer acting under Section
71(1) to direct confiscation on being
satisfied that an offence has been
committed and the magistrate making an
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order on conviction of an accused under
Section 85(1) and that mere acquittal in
the trial before the Magistrate, in
every case, cannot result in setting
aside, ipso facto, of the orders of
confiscation passed by the competent
authority under the Act. That merely
because there was acquittal in the trial
before the Magistrate, due to paucity of
evidence or otherwise, would not entail
nullification of the order of
confiscation of the seized articles in
every case. (See Divl. Forest Officer v.
G. V. Sudhakar Rao). In any event, on a
plain reading of Sections 8(1) and 71(1)
it is clear that the Authorised Officer
was required to be satisfied that an
offence under the Act had been
committed. That the confiscation
proceedings were separate and distinct
from prosecution under the Act. However,
that difference did not entitle the
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Authorised Office to proceed arbitrarily
in making an order for confiscation.
22. In the light of the above
discussion, the first point for
determination is whether from the
circumstances one can say that the
appellants were in conscious possession
of primary gold. As indicated above, the
adjudication proceedings under section
71(1) concluded before the criminal
case. The judgment of the criminal court
was not before the Authorised Officer.
However, the basic controversy before
the Authorised Officer was whether the
entire primary gold (bars) was recovered
from the ornamental top of the cupboard
in the eastern bedroom as alleged by the
appellants, or whether some of the gold
bars were also recovered from the
cupboards in the western bedroom and the
room in which the telephone was placed
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as alleged by the department. According
to the department, appellants were in
conscious possession of the gold bars
because some of the bars were found from
the cupboards in the western room which
were opened with the keys handed over by
Ishwaribai, appellant No. 2 herein.
According to the department, since
primary gold was recorded from western
bedroom and telephone room in addition
to the recovery from the ornamental top
of the cupboard in the eastern bedroom,
the appellants were in conscious
possession. The orders of the Authorised
Officer and the Gold Control
Administrator show that even according
to the department, gold bars hidden in
the ornamental top of the cupboard in
the eastern bedroom were not apparently
visible but the fact that some of the
remaining gold bars were recovered from
the other rooms proved that the
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appellants had knowledge of the gold
bars. Therefore, the key question to be
answered is whether recovery of the gold
from western bedroom and telephone room
was proved by the department. At the
outset, it may be stated that the
evidence on record shows that the
officers who took part in the raid were
officers from Income-tax department.
They saw the collection of gold and not
the place from which the gold was
recovered. There was no exact record to
show from where the items of gold were
found. Each witness gave different
versions. Their versions are self-
contradictory and conflicting with each
other. The original panchnama was not
produced. The copy of the panchnama did
not indicate the place from which the
items were recovered. Even the specific
key supplied by appellant No.2 herein,
Ishwaribai, with which the locker in the
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western bedroom was allegedly opened,
was not separately seized. There was no
contemporaneous record to show from
which place what was recovered. In all,
eight gold bars were seized. According
to Mahadeshwar, one of the key witnesses
from the Income- tax department, five of
the bars were recovered from the
ornamental top of the cupboard in the
eastern bedroom. This statement was made
before the Authorised Officer. However,
later on in the criminal trial he has
deposed that two to three bars were
recovered from that place. Before the
Authorised Officer, Mahadeshwar stated
that two gold bars were recovered from
the western bedroom whereas in the
criminal trial he has deposed that one
gold bar was recovered from the western
bedroom. Before the criminal court, he
deposed that two bars were found in the
telephone room, whereas before the
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Authorised Officer he deposed that he
was not sure. According to Ms.Thadani,
one of the witnesses in the raiding
party from the Income-tax department,
only one gold bar was recovered from the
telephone room. No recovery memo was
prepared by her. According to
Kundalgaonkar, one of the witnesses to
the recovery, one gold bar was recovered
from the western bedroom. However, in
his confidential record, he stated that
two gold bars were recovered from that
room. Similarly, in his report to Shri
Vaidya, Kundalgaonkar has stated that
Ishwaribai gave the keys to him whereas
in the criminal trial he has deposed
that she gave the keys to Mahadeshwar.
All these contradictions have taken
place because there was no
contemporaneous record to prove the
recovery and the panchnama prepared was
faulty as it did not indicate the place
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from which the gold was recovered, in
conclusion, none of the witnesses were
able to give a coherent story as to
where the primary gold was found.
Therefore, recovery of three gold bars
from the telephone room and western
bedroom was not proved."
20. The Hon'ble Madras High Court in case of K.
V. Rajagopal (Supra) after referring to the
decision in case of Gopaldas Udhavdas Ahuja
and Another (Supra) has come to the conclusion
as under :
"22. From the above said law laid down
by the Hon'ble Supreme Court and finding
of this Court, we are of the view that
the Act contemplates two separate
proceedings for the same act or omission
and therefore, there is no question of
double jeopardy involved, as rightly
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pointed out by the learned counsel
appearing for the first respondent. The
Hon'ble Supreme Court also considered
various provisions of the Act and
finally held that mere acquittal in the
criminal proceedings before Magistrate
court in every case cannot result in
setting aside, ipso facto, the orders of
the confiscation passed by the competent
authority under the Act. Therefore, the
contention of the appellant that the
judgment of the Judicial Magistrate
acquitting the appellant was binding on
the Departmental Authorities,
adjudicating the question of
confiscation is not correct. As rightly
pointed out by the learned counsel
appearing for the first respondent, the
fact of seizure of gold and silver bars
recovered from the appellant's residence
is not in dispute. In the criminal
proceedings, it is the duty of the
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prosecution to prove the case beyond any
reasonable doubt and also to prove the
mensrea for the above said criminal act
by adducing reliable evidence. In the
instant case, the respondents have
discussed in detail about the seizure of
gold and silver bars from the residence
of the appellant and the above said fact
was not disputed by the appellant.
Therefore, the appellant cannot be
exonerated from adjudication
proceedings."
21. The Hon'ble Delhi High Court in case of
Rajeev Khatri (Supra) has analysed the word
'abet' as appearing in Section 112(A) of the
Customs Act as under:
"30. Thus, indisputably, persons who
have committed the acts of omission or
commission in relation to goods that
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rendered them liable for confiscation,
are liable to pay the penalty as
stipulated under Section 112(a) of the
Customs Act, without any requirement to
establish their mal intent. However,
the same principle would not apply to
persons who are alleged to have abetted
such acts of omission or commission.
This is because, abetment, necessarily
requires, at the minimum, knowledge of
the offending Act.
31. The use of the expression 'abet' in
Section 112(a) of the Customs Act,
makes it implicit that the person
charged, who is alleged to have abetted
the acts of omission or commission, has
knowledge and is aware of the said
acts. A plain meaning of the word
'abet' means instigation, aid,
encouragement of an offence2. It
necessarily involves the knowledge that
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the act being abetted is wrong.
32. The Black's Law Dictionary defines
the expression 'abet' as under:
"1. To aid, encourage, or assist
(someone), esp. in the commission of
a crime <abet a known felon>. 2. To
support (a crime) by active
assistance <abet a burglary>."
33. In Queen v Coney: the Court for
Crowned Cases Reserved held as under:
"To constitute an aider or abettor,
some active steps must be taken, by
word or action, with intent to
instigate the principal or
principals. Encouragement does not,
or necessity, amount to aiding and
abetting. It may be intentional or
unintentional. A man may unwittingly
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encourage another in fact by his
presence, by misinterpreted gestures,
or by his silence or non-
interference-or he may encourage
intentionally by expressions,
gestures, or actions, intended to
signify approval. In the latter case,
he aids and abets; in the former he
does not. It is no criminal offence
to stand by a mere passive spectator
of a crime, even of a murder.
Noninterference to prevent a crime is
not itself a crime. But the fact that
a person was voluntarily and
purposely present witnessing the
commission of a crime, and offered no
opposition to it, though he might
reasonably be expected to present it,
and had the power so to do or at
least to express his dissent, might,
under some circumstances, afford
cogent evidence upon which a jury
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would be justified in finding that he
willfully encouraged, and so aided
and abetted. But it would be purely a
question for the jury whether he did
so or not."
34. Section 3(1) of the General Clauses
Act, 1897 expressly provides that the
expression 'abet' would have the same
meaning as in the Indian Penal Code,
1860 (hereafter 'the IPC').
35. Section 107 of the IPC explains the
meaning of the expression 'abetment of
a thing'. The said Section of the IPC
reads as under:
"107. Abetment of a thing.-A person
abets the doing of a thing, who-
First-Instigates any person to do
that thing; or
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Secondly-Engages with one or more
other person or persons in any
conspiracy for the doing of that
thing, if an act or illegal omission
takes place in pursuance of that
conspiracy, and in order to the
doing of that thing; or
Thirdly.-Intentionally aids, by any
act or illegal omission, the doing
of that thing.
Explanation 1.-A person who, by
wilful misrepresentation, or by
wilful concealment of a material
fact which he is bound to disclose,
voluntarily causes or procures, or
attempts to cause or procure, a
thing to be done, is said to
instigate the doing of that thing.
Illustration-A, a public officer, is
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authorised by a warrant from a Court
of Justice to apprehend Z, B,
knowing that fact and also that C is
not Z, wilfully represents to A that
C is Z, and thereby intentionally
causes A to apprehend C. Here B
abets by instigation the
apprehension of C.
Explanation 2.-Whoever, either prior
to or at the time of the commission
of an act, does anything in order to
facilitate the commission of that
act, and thereby facilitates the
commission thereof, is said to aid
the doing of that act."
36. Thus, in the context of Section
112(a) of the Customs Act, by
definition, the expression 'abet' means
instigating, conspiring, intentionally
aiding the acts of commission or
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omission that render the goods liable
for confiscation.
37. It is apparent from the above that
the knowledge of a wrongful act of
omission or commission, which rendered
the goods liable for confiscation under
Section 111 of the Customs Act, is a
necessary element for the offence of
abetting the doing of such an act.
38. In Shree Ram v. State of U.P., the
Supreme Court held as under:
"6........Section 107 of the Penal
Code which defines abetment provides
to the extent material that a person
abets the doing of a thing who
"Intentionally aids, by any act or
illegal omission, the doing of that
thing". Explanation 2 to the section
says that "whoever, either prior to
or at the time of the commission of
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an act, does anything in order to
facilitate the commission of that
act, and thereby facilitates the
commission thereof, is said to aid
the doing of that act". Thus, in
order to constitute abetment, the
abettor must be shown to have
"intentionally" aided the commission
of the crime. Mere proof that the
crime charged could not have been
committed without the interposition
of the alleged abettor is not enough
compliance with the requirements of
Section 107. A person may, for
example, invite another casually or
for a friendly purpose and that may
facilitate the murder of the
invitee. But unless the invitation
was extended with intent to
facilitate the commission of the
murder, the person inviting cannot
be said to have abetted the murder.
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It is not enough that an act on the
part of the alleged abettor happens
to facilitate the commission of the
crime. Intentional aiding and
therefore active complicity is the
gist of the offence of abetment
under the third para of Section
107."
39. In Amritlakshmi Machine Works v.
The Commissioner of Customs (Import),
Mumbai, a Full Bench of the Bombay High
Court had considered the aforesaid
issue and held that the word 'abetment'
is required to be assigned the same
meaning as under Section 3(1) of the
General Clauses Act, 1897. The court
further opined as under:
"31. .....Mere facilitation without
knowledge would not amount to
abetting an offence. Parliament has
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specifically included abetment in
Section 112(a) of the Act, to include
acts done with knowledge, otherwise
the first portion thereof "Any person
- (a) who in relation to any goods
does or omits to do any act ...."
would cover acts done or omitted to
be done on account of instigation
and/or encouragement without
knowledge. However, the first portion
of Section 112(a) of the Act is only
to make person of first degree in
relation to the act or omission
strictly liable. Persons who are not
directly involved in the act or
omission to act, which has led the
goods becoming liable for
confiscation cannot be made liable
unless some knowledge is attributed
to them. Therefore, it is to cover
such cases that Section 112(a) of the
Act also includes a person who abets
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the act or omission to act which has
rendered the goods liable to
confiscation. Imposing penalty upon
an abettor without any mens rea on
his part would bring all business to
a half as even innocent facilitation
provided by a person which has made
possible the act or omission to act
possible could result in imposing of
penalty."
40. We respectfully concur with the
aforesaid view. This view has also been
consistently followed by the Tribunal.
41. In Commissioner of Customs (Import)
v. Trinetra Impex Pvt. Ltd, a Co-
ordinate Bench of this Court had
rejected the Revenue's appeal against
an order of the Tribunal setting aside
the levy of penalty on a CHA under
Section 112(a) of the Customs Act. This
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Court had referred to the decision of
the Bombay High Court in Amritlakshmi
Machine Works v. The Commissioner of
Customs (Import), Mumbai (supra) and
held as under:
"11. In respect of the show cause
notice dated 8-7-2011, the
imposition of the penalty has been
made under Section 112(a) of the Act
in respect of the goods which have
been held to be liable to be
confiscated under Section 111 of the
Act. Here, the imposition of the
penalty on the CHA is founded on the
ground that he has abetted the
offence. Though, for imposition of
penalty in respect of the cases
falling under Section 112(a) of the
Act, mens rea may not be required to
be provided as condition precedent,
however, when it comes to imposition
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of the penalty on an abettor, it is
necessary to show that the said
essential element/ingredient is
present.""
22. Applying the above decisions in the facts
of the case, it is apparent that the
appellants were the employees of the Ruchi
Pharmaceuticals and at the instance of the
partner of the said firm, Shri Prahlad Patel,
the appellants were sitting in the Office of
Shanti Exports of Dr.Bipin Panchal and were
carrying out the work of Dr.Bipin Panchal as
per his instructions. The appellants have
taken on rent the factory of M/s.Coral Pharma
from Shri Hitesh Mehta from April, 1993 to
June, 1993. The appellants have brought
tableting machines in the factory and as per
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the statements of the appellants, they also
called the electrician to start the machines.
It is very significant to note that the
appellants have stated in the statements that
they had gone to the factory of M/s.Coral
Pharma at night time only for cleaning purpose
as per the instructions of the Dr.Bipin
Panchal and they have pleaded ignorance about
the activity being carried out in the factory
at night time though Shri Hitesh Mehta, in his
statement, has categorically stated and has
stuck to the same in his cross-examination
that the appellants were running the factory
at night and nobody was permitted to enter in
the factory premises. The appellants have also
accepted in their statements about the fact
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that they had gone to the factory at night for
the cleaning purpose. Such statements of the
appellants were rightly not considered by the
CESTAT for the purpose of not believing the
fact that the appellants had abetted into
Dr.Bipin Panchal for manufacturing of the
Narcotic Drugs as the factory is not required
to be cleaned at night time.
23. Moreover, it is also admitted by the
appellants that they had gone to the factory
with Shri Achint Patel for delivery of the
goods of eight to ten cartons. It is also
admitted by the appellants that they had also
delivered fifty cartons, which were identified
in the goods seized by the DRI containing the
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Narcotic Drugs. In view of such undisputed
facts emerging from the record which could not
have been taken into consideration by this
Court while applying strict proof of beyond
all reasonable doubt for arriving at a
conclusion to acquit the appellants, it cannot
be said that only because on the Adjudicating
Authority as well as this Court considered the
same set of facts, no penalty can be levied in
view of acquittal from criminal offences
granted to the appellants by the Division
bench of this Court.
24. The facts recorded in the statements of
the appellants were considered only from the
point of view of manufacture and
transportation of the Narcotic Drugs by this
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Court whereas, the facts emerging from the
record clearly show that the appellants have
also accepted that the cartons, which were
found by the DRI in the month of January,
1994, were the same cartons which were
delivered by the appellants at the
instructions of Dr.Bipin Panchal at Ahmedabad.
In such circumstances, reliance placed by the
learned advocate for the appellants on the
decision of the Hon'ble Apex Court in case of
Capt. M. Paul Anthony (Supra) that on the same
set of facts, once the acquittal is granted,
the same would also apply to the quasi-
judicial proceedings would not apply in the
facts of the case.
25. From the order of the Adjudicating
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Authority, it is also revealed that the
statement of Dr.Bipin Panchal has also
implicated the appellants for manufacture of
the Narcotic Drugs. It is also confessed by
Dr.Bipin Panchal in his statement dated
08.11.1993 that one Kashyap Patel of Ruchi
Pharma with assistance of one Shri Deepak of
M/s.Coral Pharma had manufactured these
tablets in the factory of M/s.Coral Pharma and
delivery of these tablets was taken directly
by Achint Patel and Yogesh Chaudhari whereas,
the appellants have admitted that they
accompanied them for delivery as per the
instructions of Dr.Bipin Panchal.
26. It also emerges from the statements of the
appellants, which are read exhaustively by
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learned advocate for the appellants before us,
that the appellants were manufacturing the
tablets in a partnership firm prior to joining
M/s.Ruchi Pharmaceuticals as sales persons. It
also appears from the statements that in the
year 1985, the appellants had dealt with Shri
Hitesh Mehta for purchase of the goods. Thus,
on perusal of the statements of the
appellants, it cannot be said that the
appellants were not having the knowledge of
manufacture and transport of the Narcotic
Drugs which were meant for export. It also
emerges from the statements that after the
production of the Narcotic Drugs, the
appellants had shifted the tableting machines
to the original supplier of the machine as per
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the instructions of Dr.Bipin Panchal.
27. In view of foregoing reasons, we are of
the opinion that the CESTAT has not committed
any error in arriving finding of facts. We
therefore, answer both the questions in favour
of the Revenue and against the appellants. The
Appeals therefore, being devoid of any merit,
are accordingly dismissed.
(BHARGAV D. KARIA, J)
(PRANAV TRIVEDI,J)
PALAK
