2025 (5) TMI 1229 - AT - Customs

Levy of penalties u/s 112(a)(i) 112(b) and 114AA of the Customs Act 1962 for improper importation of goods - appellant represented Lotus Impex (India) and Ambey Telecom in their alleged importation of the goods - using/signing false declaration - Reliability of statements ade against appellant - HELD THAT - The appellant has not filed the Bills of Entry for the importation of the goods. The appellant had no role in the importation filing of Bills of Entry documentation examination of the goods or any work whatsoever related to the import and clearance of any of the consignments of Lotus Impex (India) and Ambey Telecom. Thus the Ld. Principal Commissioner has wrongfully observed in the impugned order that the appellant represented the said firms which is factually not correct. The allegation against the appellant is that he has introduced the alleged Custom Broker Nasir Uddin to number of importers. The allegation in the Notice reveals that DC Shri. Navneet Kumar connived with various brokers to mis-declare and import the said goods. It is observed that there is no evidence brought on record to substantiate the allegation that the appellant has introduced the customs brokers to the DC Shri. Navneet Kumar. Even if it is accepted that the appellant has introduced some customs brokers to the DC it cannot automatically lead to the allegation that the appellant has connived to mis declare the goods imported. Thus the findings in the impugned order by the Ld. adjudicating authority is only on the basis of assumptions and presumptions without any evidence to support it. The appellant has been implicated in the matter by selective reading of the alleged statements purportedly made by a few named persons under Section 108 of the Act. However none of the observations in the said statements made against the appellant are corroborated by any other independent materials on record. The said persons have also not been allowed to be cross-examined in spite of specific request made by the appellant. As held by the Hon ble Courts and this Tribunal such statements are relevant and admissible only when examined by the adjudicating authority under Section 138B of the Customs Act which has not been done in the instant case. Hence such statements cannot be relied upon against the appellant - the said statements cannot be relied upon against the appellant as there is no corroborative evidence to substantiate the allegations. Penalty u/s 112(b) of the Act - HELD THAT - There is no material evidence available on record to establish that the appellant is concerned with any of the acts mentioned in the said section which make the imported goods liable to confiscation under Section 111 of the Act. The penalty under this section cannot be imposed on the basis of assumptions and presumptions. Accordingly the appellant has not fulfilled any of the conditions required for imposition of penalty under Section 112(b) of the Customs Act. 1962 and hence penalty imposed on the appellant under section 112(b) is not sustainable and hence the same is set aside. Penalty u/s 114AA of the Act - HELD THAT - The appellant had no role in the importation filing of Bills of Entry documentation examination of the goods or any work whatsoever related to the import and clearance of any of the consignments of Lotus Impex (India) and Ambey Telecom. It is observed that there is no material evidence available on record to establish that the appellant is concerned with any of the acts mentioned in the said section. It is observed that the penalty under this section cannot be imposed on the basis of assumptions and presumptions. Accordingly the appellant has not fulfilled any of the conditions required for imposition of penalty under Section 114AA of the Customs Act. 1962 and hence penalty imposed on the appellant under section 114AA is not sustainable and hence the same is set aside. Conclusion - The appellant had no direct or indirect role in the importation or clearance of the goods was not involved in handling or dealing with confiscable goods and did not make or use false declarations or documents. Therefore the penalties imposed under the respective sections were quashed. Appeal allowed.

Summary

The core legal questions considered in this judgment revolve around the imposition of penalties under Sections 112(a)(i), 112(b), and 114AA of the Customs Act, 1962 on the appellant. The principal issues include whether the appellant was involved in the improper importation of goods liable to confiscation, whether he was concerned with handling or dealing with such goods, and whether he knowingly or intentionally made, signed, or used any false or incorrect declaration or document in connection with the importation of the goods.

Regarding the penalty under Section 112(a)(i), the legal framework requires that a person must have done or omitted an act in relation to goods that renders them liable to confiscation under Section 111 of the Act or abetted such an act or omission. The Court noted that the appellant did not file the Bills of Entry, nor had any role in importation, documentation, examination, or clearance of the consignments. The adjudicating authority's reliance on assumptions and presumptions without supporting evidence was found to be legally insufficient. The Court emphasized that such surmises cannot satisfy the stringent requirements for liability under this section.

For Section 112(b), which penalizes a person who acquires possession of or is concerned with carrying, removing, harboring, or dealing with goods liable to confiscation under Section 111, the Court found no material evidence establishing the appellant's involvement in any such acts. The adjudicating authority's conclusions were based on inferences unsupported by concrete evidence, rendering the penalty untenable.

Under Section 114AA, which penalizes knowingly or intentionally making, signing, or using false or incorrect declarations or documents in business transactions for the purposes of the Act, the Court observed the absence of any evidence implicating the appellant in such conduct. The appellant had no role in the importation or related documentation of the subject consignments, and the findings against him were based on conjecture rather than facts.

Significant evidence against the appellant included statements recorded under Section 108 of the Customs Act and an alleged payment of Rs. 5,00,000/- to a firm related to the appellant. However, the Court noted that the statements were not corroborated by independent evidence and the persons making such statements were not cross-examined, violating principles of fairness and procedural safeguards. The Court relied on authoritative precedents establishing that such statements are admissible only if examined under Section 138B of the Act, which was not done here. Consequently, these statements could not be relied upon to impose penalties.

The Court also addressed the alleged nexus between the appellant and other parties involved in the importation of misdeclared goods. It was found that the appellant was implicated by selective reading of statements and assumptions about familial connections, which lacked legal basis. The Court rejected the notion that a familial relationship alone could establish liability or receipt of undue gratification.

In applying the law to the facts, the Court meticulously analyzed the allegations, evidence, and procedural history. It highlighted that the appellant was neither the importer nor the customs broker responsible for the subject consignments. The appellant's role was limited to his own independent customs broker firms, which were not involved in the case. The adjudicating authority's findings were thus based on conjecture rather than factual or documentary proof.

The Court treated competing arguments by carefully weighing the appellant's detailed replies and submissions against the findings of the adjudicating authority. It underscored the absence of any material evidence supporting the allegations and emphasized the importance of adherence to due process, including the right to cross-examine witnesses whose statements are used against a party.

Ultimately, the Court concluded that the penalties imposed under Sections 112(a)(i), 112(b), and 114AA were illegal, invalid, and unsustainable due to lack of evidence and reliance on assumptions and uncorroborated statements. The penalties were accordingly set aside.

Significant holdings include the Court's affirmation that statements recorded under Section 108 of the Customs Act require examination under Section 138B before being relied upon for penalty imposition, as stated: "such statements are relevant and admissible only when examined by the adjudicating authority under Section 138B of the Customs Act, which has not been done in the instant case. Hence, such statements cannot be relied upon against the appellant."

The Court established the core principle that penalties under Sections 112(a)(i), 112(b), and 114AA require concrete evidence of involvement in acts rendering goods liable to confiscation, or of knowingly making false declarations, and cannot be imposed on mere assumptions or familial associations.

On each issue, the Court determined that the appellant had no direct or indirect role in the importation or clearance of the goods, was not involved in handling or dealing with confiscable goods, and did not make or use false declarations or documents. Therefore, the penalties imposed under the respective sections were quashed.