2021 (11) TMI 962 - AT - Customs

Levy of penalty u/s 112 of Customs Act - illicit import of Gold and silver - misdeclaration of goods - no valid permit / licence / documents for the licit import of goods - Courier Imports and Exports (Clearance) Amendment Regulations, 1998 - HELD THAT - Apparently, nothing is placed on record as to any investigation on the role of one Salman to link his alleged smuggling activities with the appellants, to establish their connivance in smuggling gold into India through courier - Nothing is placed on record as to how the appellants are treated as importers, to fit in under the mischief of Section 112 of the Customs Act, 1962, like the prior agreements, contracts, etc., to justify the penalty under Section 112 ibid. Section 112 ibid. has two limbs either (a) or (b); no specific averment is made as to the role of the appellants to justify the levy of penalty. The two limbs under the above Section are specific and hence, the Revenue has to invariably specify the guilt as to whether the same is under (a) or (b). The Revenue, having alleged one Salman as the mastermind, has not bothered to place anything on record, which has left innumerable doubts and questions unanswered, like the above. Penalty, therefore, cannot be imposed on surmises, assumptions and presumptions and there is not even any circumstantial evidence brought on record against these appellants, to justify penalty under Section 112 . The one and only allegation against these appellants is that they knew one Salman, the alleged mastermind. They have not even bothered to make proper investigation, and not even of the courier agency who is responsible for couriering the parcel without proper verification, at its end - the penalty levied under Section 112 of the Customs Act, 1962 is arbitrary and unjustifiable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against penalty imposed under Section 112 of the Customs Act, 1962.

Analysis:
The case involved two appeals against the penalty imposed on the appellants under Section 112 of the Customs Act, 1962. The dispute arose from the arrival of a courier parcel from Dubai containing gold rings concealed in kids' panties. A Show Cause Notice was issued proposing confiscation of the gold and imposing a personal penalty on the appellants. The appellants pleaded innocence, stating they were unaware of the parcel's contents but knew the sender. The penalty under Section 112 is attracted for improper importation of goods, making them liable for confiscation. The Order-in-Original confirming the proposals was challenged in the appeals.

The tribunal noted vital doubts unanswered by the Revenue before imposing the penalty. These doubts included the responsibility of the consignor in properly declaring goods, the role of the courier agency, lack of investigation linking the alleged mastermind with the appellants, absence of evidence establishing the appellants as importers under Section 112, and ambiguity in specifying the guilt under the two limbs of Section 112. The tribunal questioned the role of the second appellant and criticized the lack of evidence against the appellants, emphasizing the need for proper investigation before imposing penalties based on assumptions.

Ultimately, the tribunal found the penalty under Section 112 arbitrary and unjustifiable due to the Revenue's failure to address the doubts and provide substantial evidence against the appellants. Consequently, the impugned order and the penalty under Section 112 were set aside, and the appeals were allowed. The tribunal emphasized that penalties cannot be imposed on surmises and assumptions, highlighting the importance of proper investigation and evidence in customs cases.

(Order pronounced in the open court on 26.11.2021)