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2025 (5) TMI 415 - AT - CustomsLevy of penalty on the appellant under Section 114 of the Customs Act 1962 - prohibited goods were being attempted to be exported by mis-declaring them as unaccompanied baggage through Malaysian Airlines - HELD THAT - Having considered the submissions made by both sides and the role of the Nishant Kumar Singh as recorded in the impugned order we find that there is nothing in the impugned order to show that Shri Nishant Kumar Singh had any role in the attempted smuggling of red sanders other than the fact that he was a friend of Shri Krishna Chandra Jha. In view of the above it is found that Shri Nishant Kumar Singh the appellant had no role in the attempted smuggling of red sanders. The penalty imposed on him therefore cannot be sustained. The impugned order is set aside insofar as it pertains to imposition of penalty of Rs. 5 lakhs on the appellant - Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Tribunal in this appeal are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Liability of the appellant under Section 114 of the Customs Act for attempted smuggling of red sanders Relevant legal framework and precedents: Section 114 of the Customs Act, 1962 empowers the authorities to impose penalty on persons who abet or are involved in the commission of customs offences, including smuggling of prohibited goods. The imposition of penalty requires establishing a clear link or role of the accused in the offence. Mere suspicion or association is generally insufficient. Precedents emphasize the need for concrete evidence demonstrating active participation or abetment. Court's interpretation and reasoning: The Tribunal examined the factual matrix and the impugned order passed by the Commissioner of Customs. The Commissioner had imposed a penalty of Rs. 5 lakhs on the appellant on the basis that he was a friend of Shri Krishna Chandra Jha, who was directly involved in the smuggling attempt, and that certain documents pertaining to Krishna Chandra Jha and another individual, Shri Brijesh Kumar Saini, were found in the appellant's possession or office premises. The Commissioner concluded that the appellant was "inextricably linked as abettor in the entire fraud." Key evidence and findings: The evidence against the appellant primarily consisted of:
However, no direct evidence linked the appellant to the actual smuggling attempt or to the handling, transportation, or concealment of the prohibited goods. Application of law to facts: The Tribunal noted that while the appellant's connection with Krishna Chandra Jha was established by friendship and possession of some documents, this alone did not amount to abetment or active participation in smuggling under the Customs Act. The appellant was not shown to have knowledge of or involvement in the fraudulent export of red sanders. The Tribunal emphasized that penalty under Section 114 requires more than mere association or possession of documents; there must be a demonstrable role in the offence. Treatment of competing arguments: The Revenue argued that since the smuggling was a conspiracy involving multiple persons, the appellant should not be treated differently merely because of his association with Krishna Chandra Jha. The appellant's representative contended that no evidence linked the appellant to the offence beyond friendship and possession of documents. The Tribunal found the appellant's submissions persuasive, holding that the impugned order lacked any material to establish the appellant's complicity beyond association. Conclusions: The Tribunal concluded that the penalty imposed on the appellant could not be sustained in the absence of evidence showing his role in the smuggling attempt. Issue 2: Sufficiency of evidence to impose penalty on individuals in a conspiracy to smuggle Relevant legal framework and precedents: In cases involving multiple accused persons, the law requires that each accused's specific role and involvement be established to impose penalties. Conspiracy or abetment must be proved by evidence indicating active participation or facilitation. Mere association or presence in the same organization does not suffice. Court's interpretation and reasoning: The Tribunal reviewed the findings in related appeals involving other accused persons, where penalties were imposed or dismissed based on their respective roles. It noted that the appellant's case was distinct because the evidence did not show his involvement in the smuggling operation, unlike others whose roles were clearly established. Key evidence and findings: The Tribunal referred to the Final Order dated 18.10.2024, which disposed of appeals by other accused persons after detailed consideration of their involvement. The appellant's case was differentiated on facts. Application of law to facts: The Tribunal applied the principle that each accused must be judged on individual evidence. The appellant's mere friendship and possession of documents were insufficient to prove conspiracy or abetment. Treatment of competing arguments: The Revenue's contention that the appellant should be treated on par with others was rejected due to lack of evidence. The appellant's right to be penalized only on proven involvement was upheld. Conclusions: The Tribunal held that the penalty on the appellant was not justified on the basis of conspiracy without evidence of his active role. 3. SIGNIFICANT HOLDINGS The Tribunal held: "We find that there is nothing in the impugned order to show that Shri Nishant Kumar Singh had any role in the attempted smuggling of red sanders other than the fact that he was a friend of Shri Krishna Chandra Jha. In view of the above, we find that Shri Nishant Kumar Singh, the appellant, had no role in the attempted smuggling of red sanders. The penalty imposed on him, therefore, cannot be sustained." Core principles established include:
Final determination on the issue of penalty on the appellant was that the penalty of Rs. 5 lakhs imposed by the Commissioner was set aside and quashed, with consequential relief granted to the appellant.
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