2020 (9) TMI 604 - AT - Customs

Levy of personal penalty for abetment - Quantum of Penalty - Section 114 of the Customs Act - Smuggling - illegal export - red sanders wood logs - HELD THAT - The appellant Sachin Kumar was a transport agent who arranged the truck for the exporter and appellant No. (2) Venugopal acted as a CHA for clearance of the goods at the NMPT, Mangalore and appellant No. (3) Ravichandra arranged the CHA and the container. Further, the goods were stuffed at the KSDL factory, Bangalore in the presence of Mr. Hashim, Director of the exporter company and Superintendent of Central Excise and thereafter it was sent to Mangalore and from Mangalore it was exported. During the investigation DRI recorded the statement of Mr. Hashim, Director of exporter company and also the appellants. In the statement of Mr. Hashim, he has clearly stated that he was responsible for smuggling of red sander wood logs and the appellants were not knowing about their smuggling plan - further, both the authorities in their orders have admitted that there is no direct proof of the complicity of the appellants and there is suspicion against each of the appellant and on the basis of that suspicion, the appellants have been imposed penalties. It is pertinent to note that the Tribunal in various decisions consistently held that for imposing the personal penalty under Section 114(i) of the Customs Act, 1962, there should be acceptable legal evidence on record about the acts of commission or omission by the appellant. Further in order to hold that the appellant has abetted in the commission of the offence, there has to be a knowledge on the part of the appellant regarding the illegal activities of the exporter whereas in the present case no corroborative evidence has come on record which pinpoint that the appellant had the knowledge of the illegal activities of the exporter company. The impugned order is not sustainable in law - penalty also set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Reduction of penalty under Section 114 of the Customs Act, 1962 based on common impugned order dated 23/10/2019 passed by the Commissioner of Customs (Appeals) for three appellants involved in the illegal export of red sanders concealed as 'Mysore Detergent Cakes'.

Analysis:
The judgment involves three appeals arising from the same facts and common impugned order reducing penalties under Section 114 of the Customs Act, 1962. The appellants, a transport agent, a CHA, and an individual arranging the CHA and container, were involved in the illegal export of red sanders concealed as 'Mysore Detergent Cakes'. The impugned order reduced penalties imposed on the appellants based on their roles in the transaction. The appellants challenged the order, arguing that penalties were imposed without proper appreciation of facts and evidence. They contended that they were not aware of the smuggling plan and did not have direct involvement in the illegal export. The appellants highlighted that penalties were imposed based on suspicion and preponderance of probability without concrete evidence linking them to the illegal activities.

The appellants' counsel argued that penalties should only be imposed for contumacious acts supported by evidence, emphasizing that the appellants were merely performing routine functions as per their trade. The counsel cited various decisions supporting the requirement of legal evidence for imposing personal penalties under Section 114(i) of the Customs Act, 1962. On the other hand, the Departmental Representative defended the impugned order, asserting that the appellants were complicit in the illegal activities based on their conduct during the transaction. The Department relied on precedents stating that suspicion alone is sufficient to impose penalties under the Customs Act, 1962.

After considering submissions and evidence, the Tribunal found that there was no direct proof of the appellants' complicity in the illegal export. The Tribunal noted that suspicion alone cannot replace legal evidence for imposing penalties. Citing precedents, the Tribunal emphasized the necessity of concrete evidence to establish acts of commission or omission for penalty imposition under Section 114(i). The Tribunal concluded that penalties imposed solely on suspicion were not sustainable in law. Consequently, the impugned order was set aside, and penalties on the appellants were revoked.

In conclusion, the Tribunal's detailed analysis focused on the requirement of legal evidence to support penalty imposition under the Customs Act, 1962. The judgment emphasized the importance of concrete proof of involvement in illegal activities rather than relying on suspicion alone. The decision highlighted the need for a prudent basis of belief in the existence of facts in issue to justify penalties under the Customs Act, ensuring a fair and evidence-based approach in such cases.