The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has reduced the penalty against passengers under Customs Act for smuggling Cigarettes.
The bench of M.M. Parthiban (Technical Member) has observed that the imported goods in the present case though having contravened the provisions of Section 111(d) and Section 111(i), it cannot be said that the appellants are the ‘passengers’ to saddle with the penalty for having done any act or omission to do any act under Section 112(a) of the Customs Act. On the other hand, since the appellants have received the foreign origin cigarettes in the past cases and were about to receive the same for distribution or sale in an illegal manner, they are rightly liable for imposition of penalty under Section 112(b). The order confirming the adjudged demands of penalty under Section 112(a) ibid on the appellants is legally not sustainable.
The bench reduced the penalty to the extent of Rs.1,75,000 on Shri Sunil Subrammanian, and Rs.75,000 on Suneesh A.K., imposable under Section 112(b) of the Customs Act, 1962 for their role played in relation to the illegal import of foreign origin cigarettes.
The Air Intelligence Unit (AIU) of CSI Airport Customs Commissionerate, Mumbai had developed an intelligence that some unknown persons are bringing consignments of foreign brand cigarettes from North-East to Mumbai, which were earlier smuggled into India from Myanmar, and these cigarettes do not conform with the legal requirements under Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003 (COPTA) and the relevant rules made under such Act of 2003.
On the above basis, AIU Customs had intercepted one consignment covered under airway bill No.098-30900284 consisting of 10 packages weighing 450 Kgs. which had arrived at Mumbai by flight number Air India 676 from Kolkata and was lying at Air India Domestic Terminal. The name of the consignee for said consignment was shown as ‘Shri Sarup Singh’.
On close monitoring of the consignment, the AIU Customs had intercepted one Shri Sarup Singh and Shri Manish Naobat Ram Gupta, owner of Shri Om Sai Logistics, who had come to receive the said imported consignment. In presence of panch witnesses and Shri Sandesh Narkar, Deputy Manager of Commercial department of Air India, the imported consignment was physically examined on 06.10.2016.
The examination revealed that the imported consignment comprising of 10 white plastic bags had 30 card board boxes containing total 1500 cigarette cartons which had 15000 cigarette packs in it, thereby containing a total of 300000 cigarette sticks (15000X20=300000 cigarette sticks) totally valued at Rs.15,00,000. The cigarette carton boxes were having the marking as ‘New Light Cigarettes WIN’ and ‘Made under the authority of Hongyunhonghe Tobacco Group Co. Ltd.’ Since S/Shri Sarup Singh and Shri Manish Naobat Ram Gupta could not produce any documents for licit import of the cigarettes, the AIU Customs had on reasonable belief that the same were smuggled into India in violation of the Customs Act, 1962 read with COPTA, had seized the said consignment imported cigarettes for further investigation.
Statements were recorded from various persons involved in the said import including S/Shri Sarup Singh (alias Shri Shibi) driver of Shri Manish Naobatram Gupta, Sunil Subramanian, owner of the shop M/s Megha Collection dealing with sale of cigarettes, among other items perfumes, chocolates, ladies hand bags, gift items etc., Suneesh A.K., employee of Sunil Subramanian.
The investigation revealed that on the instructions of Shri Manish Naobatram Gupta, his driver/assistant Shri Sarup Singh on whose name the cargo was sent, would collect the foreign brand cigarettes from the airlines/ Air India warehouse and further hand over the same to Shri A.K. Suneesh, who would in turn book the same parcel, on the instructions of Shri Sunil Subramanian for onward transportation through buses bound to Pune/Goa. In this manner, they had transported six to seven consignments of foreign cigarettes in the past.
The department had proposed for confiscation of the Imported foreign origin cigarettes illegally brought into India under Section 111(d) and 111(i) of the Customs Act, 1962 along with the packaging material under Section 118; and for imposition of penalty on various persons involved in such smuggling, including S/Shri Shri Sunil Subramaniam and his employee Shri Suneesh A.K. under section 112 of the Act of 1962 by issue of Show Cause Notice (SCN) dated 05.04.2017.
In adjudication of the said SCN, learned Additional Commissioner of Customs, CSI Airport, Mumbai had absolutely confiscated the imported foreign cigarettes along with its packing material and imposed penalty of Rs.3,50,000/- on Shri Sunil Subrammanian, as a passenger under Section 112(a) and 112(b) of the Customs Act, 1962. Further, he imposed penalty of Rs.1,50,000/- on Shri Suneesh A.K.; Rs.50,000/- on Shri Sarup Singh, Rs.2,00,000/- on Shri Manish Naobatram Gupta; Rs.1,50,000/- on Shri Mahendra Shaw; Rs.1,50,000/- on Shri Bharat Ram, as passengers under Section 112(a) and 112(b) of the Act of 1962, vide Order-in-Original.
The issue raised was whether the imposition of penalty on the appellants consequent to confiscation of imported goods in the present case, on the ground that the foreign origin cigarettes have been smuggled, and that the appellants are liable for penalty as ‘passengers’ under Section 112(a) and 112(b) of the Customs Act, 1962, is legally sustainable or not?
‘Cigarettes’ have been specified vide Notification No. 103/2016- Customs (N.T.) dated 25.07.2016, as one of the goods for which Section 123(2) ibid would apply. It is also a fact on record that the appellants did not produce any valid documents, for licit import of such cigarettes. Therefore, it is clearly held that the appellants had not discharged their responsibility for proving that the impugned goods are not smuggled foreign origin cigarettes.
The CESTAT while reducing the penalty held that the appellants have not provided any credential evidence to prove their innocence to state that they are not in any way concerned with the smuggling of foreign origin cigarettes in violation of the COPTA.
Case Details
Case Title: Suneesh A.K. Versus Commissioner of Customs Mumbai Customs-CSI Airport Commissionerate
Case No.: Customs Appeal No. 87171 Of 2019
Date: 30.04.2025
Counsel For Appellant: Bharat Raichandani
Counsel For Respondent: Rajiv Ranjan
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