2018 (4) TMI 1701 - AT - Customs

Imposition of penalty u/s 112 of Customs Act, 1962 and section 114AA of Customs Act, 1962 - smuggling of gold - contravention of the prohibition on import of gold through the courier mode - HELD THAT - It is ironical that a proceeding for imposition of penalties under section 112 and section 114AA of Customs Act, 1962 has travelled beyond the ingredients mandating such penalties to render a finding on adherence to obligations and requirements under Courier Imports and Exports (Clearance) Regulations, 1998 which, contrary to a validation in accord with the prescriptions of section 112 and 114AA of Customs Act, 1962, are entirely outside the jurisdiction of the original authority and the first appellate authority. Reliance on those provisions and the rendering of a finding that would, in the hands of the appropriate jurisdiction authority, lead to penal action under the Regulations supra vitiates the invoking of the penal provisions under Customs Act, 1962. Indeed, note cannot but be taken of the categorical finding by the original authority that the transgression of M/s Poonam Courier Pvt Ltd was a manifestation of folly rather than deliberate connivance with the smuggling. Note is also taken of the absence of evidence that would justify the finding of deliberate involvement on the part of the various noticees - an integral requirement for invoking of section 112 and section 114AA of Customs Act, 1962. Admittedly, the statements are bereft of such indictment. Considering the lack of any evidence other than statements that that are also not inculpatory, the penalties under section 112 and section 114AA are not sustainable - penalties do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenging penalties under section 112 and 114AA of Customs Act, 1962 for smuggling goods through courier mode and contravention of regulations.

Analysis:
1. The case involved four appeals challenging penalties imposed under section 112 and 114AA of the Customs Act, 1962. The penalties were a consequence of intercepting a package from Dubai at the International Airport Mumbai, falsely declared as 'kaftan sample' but containing clothing with gold beads. The consignment was booked by one individual but intended for another in Mumbai through an Authorized Courier, M/s Poonam Courier Pvt Ltd.

2. Lower authorities found that the Authorized Courier had abdicated its functions to another entity, M/s Accord Global Express Pvt Ltd, which was involved in smuggling activities. The penalties were based on statements during investigations, leading to the present proceedings challenging the penalties.

3. The appellants contested the penalties, arguing that the statements lacked evidentiary value due to the denial of cross-examination. They also questioned the penalties on individual-Directors without evidence of their involvement. Reference was made to previous Tribunal decisions to support their arguments.

4. The Authorized Representative supported upholding the penalties, emphasizing the failure of the Authorized Courier to fulfill obligations and the involvement of the delegate operator in the smuggling activities. The misuse of the courier route for smuggling was acknowledged, but the knowledge and intentional contravention of regulations by the appellants were disputed.

5. The judgment highlighted that penalties under the Customs Act, 1962 were invoked based on violations of the Courier Imports and Exports (Clearance) Regulations, 1998, which were outside the jurisdiction of the authorities. The absence of evidence justifying deliberate involvement of the noticees was noted, questioning the basis for imposing penalties.

6. The judgment concluded that the penalties imposed were not sustainable due to the lack of incriminating evidence beyond statements and the failure to show individual-Directors' involvement. Citing previous Tribunal decisions, the penalties were set aside, and the appeals were allowed.