2023 (5) TMI 571 - AT - Customs

Penalty u/s 114 of the Customs Act, 1962 - Penalty on the owner of the godown where goods were reportedly loaded - illegal procurement, sale purchase, fabrication of documents and illegal transportation of Phensedyl Cough Linctus of Indian origin in attempt to export the same illegally - HELD THAT - The method of concealment and preparation of fake vouchers/invoices no doubt creates suspicion regarding illegal activities being undertaken by the C F Agents. However, there is nothing on record that these activities suggest that the Phensedyl Cough Linctus was meant for export to Bangladesh. The manner of concealment and documentations could also be adopted to overcome the restrictions imposed under the Drugs Cosmetics Act during movements within India. For violation of any of the procedures prescribed under the Drugs Cosmetics Act, a person could be punished under the relevant provisions of Drugs Cosmetics Act but these violations cannot be made as the basis for taking action under the Customs Act, 1962. It is also observed by the adjudicating authority, that Phensedyl Cough Linctus is a specified goods under Section 11-I of the Customs Act, 1962. As per Notification No. 31/2008-CUS. (N.T.), dated 25-3-2008, an area of 50 kms. in width from the land border with Bangladesh is treated as a specified area . In the absence of any documentary evidence, suggesting that seized goods were meant for export to Bangladesh, it cannot be held that the appellant can be visited with penalty under Section 114 of the Customs Act, 1962. Accordingly appeals filed by the appellant is required to be allowed. It is also evident from the records of the present case and from the statement of the Appellant herein which nowhere shows that the Appellant was involved in purchase/sale of contraband goods. There is nothing on record to suggest that the Appellant has forged or fabricated documents and/or aided Shri Pappu Jaiswal in illegal export of the said goods. In absence of any cogent evidence, penalty imposed in terms of Section 114 is uncalled for - No evidence has been adduced against the Appellant to show his prior knowledge with regard to illegal export of the seized goods. In absence of any corroborative proof, the personal penalty imposed on the Appellant cannot be sustained and is therefore set aside. Appeal allowed.

Summary

Issues involved:
The issues involved in this case are the imposition of penalty under Section 114 of the Customs Act, 1962 for alleged illegal procurement, sale, purchase, and transportation of Phensedyl Cough Linctus, as well as the involvement of the Appellant in these activities.

Imposition of Penalty under Section 114 of the Customs Act, 1962:
The Appellant challenged the penalty imposed by the Commissioner of Customs (Preventive), Patna, amounting to Rs.5.00 Lakhs. The case involved the illegal procurement, sale purchase, and transportation of Phensedyl Cough Linctus for export to Bangladesh through a truck with a fabricated number plate. The Appellant argued that there was no evidence indicating that the seized goods were destined for Bangladesh. The Appellant claimed ownership of a godown where goods were loaded and stated that the godown was lawfully rented out to another individual who was responsible for the seized goods. The Adjudicating Authority observed that while there were suspicions of illegal activities, there was no concrete evidence to prove that the goods were intended for export to Bangladesh. The Authority also noted that violations of the Drugs & Cosmetics Act could not be the basis for action under the Customs Act. Consequently, the penalty imposed on the Appellant was set aside, and the appeal was allowed.

Involvement of the Appellant in Illegal Activities:
The records and statements in the case did not show that the Appellant was directly involved in the purchase or sale of contraband goods. There was no evidence to suggest that the Appellant forged documents or aided in the illegal export of goods. The Appellant's lack of prior knowledge regarding the illegal activities, as well as the absence of corroborative proof, led to the conclusion that the personal penalty imposed on the Appellant was unwarranted. Therefore, the penalty imposed on the Appellant under Section 114 of the Customs Act, 1962 was deemed unjustified and was subsequently set aside. The appeal filed by the Appellant was allowed with consequential relief as per the law.

Separate Judgement:
No separate judgment was delivered by the judges in this case.