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
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 870 of 2008
===============================================================
BIPIN SHANTILAL PANCHAL
Versus
COMMISSIONER OF CUSTOMS
===============================================================
Appearance:
MR BHARAT T RAO(697) for the Appellant(s) No. 1
MS HETVI H SANCHETI(5618) for the Opponent(s) No. 1
===============================================================
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.
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
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
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,
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
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
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
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
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
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
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,
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.
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.
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
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
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
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
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
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
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.
NEUTRAL CITATION
C/TAXAP/870/2008 ORDER DATED: 15/10/2025
undefined
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
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
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
