2024 (5) TMI 1158 - AT - Customs

Illegal exports - Export of non-basmati rice to Nepal - Penalty - lack of evidence for illegal export - HELD THAT - In the present case we do not find any evidence which has been adduced in the course of proceedings before any Authority which shows that the goods sold/ cleared by the Appellant 1 have been exported or any preparation for the export of the said non-basmati rice has been made by any of the appellant by taking the goods to the border/port. In fact no evidence in the form of any shipping bill or any document required for exportation has been produced at any time. The entire case is based upon certain Bill of Entries which have been noted by the Enforcement Directorate during the course of investigation which have been filed with Nepal Customs. None of these Bill of Entries refer to any documents issued by any of the appellant. Further how can it be that goods were being illegally exported through unidentified routes be subject matter of the Bill of Entries filed with Nepal Customs. We are at loss to understand how the Bill of Entries could have been filed without any export documents from the exporter from India. As there is no evidence to establish that even a single gram of the goods allegedly to be exported illegally have been recovered/ seized/ confiscated or any document to that effect found we do not find that the appellants could have been proceeded against under the provisions of Section 114 of the Customs Act. The entire case made against the appellants for imposing penalty u/s 114 cannot be upheld even on merits. Appeals are allowed.

Summary

Issues Involved:
The judgment involves issues related to illegal export of non-basmati rice to Nepal, imposition of penalties under section 114 of the Customs Act, 1962, violation of natural justice principle, lack of evidence for illegal export, and the basis for imposing penalties.

Details of the Judgment:

Issue 1: Illegal Export of Non-Basmati Rice
The judgment highlighted that a significant quantity of non-basmati rice was illegally exported to Nepal through off routes at the Indo Nepal border, involving commission agents and bogus VAT licensees. The Enforcement Directorate's investigation revealed the illegal activities of the appellants in exporting rice to Nepal and routing money through multiple bank accounts.

Issue 2: Imposition of Penalties under Section 114
The appellants were imposed penalties under section 114 of the Customs Act, 1962, for their involvement in the illegal export of rice. The penalties were upheld by the Commissioner (Appeals) based on evidence showing the appellants' awareness of the smuggling activities and their role in facilitating the export through false documentation.

Issue 3: Violation of Natural Justice
The judgment pointed out a violation of the principle of natural justice, as the person who issued the show cause notice also passed the order, creating a conflict of interest. This contravention of the "Nemo judex in causa sua" principle raised concerns about the fairness of the proceedings.

Issue 4: Lack of Evidence for Illegal Export
The judgment emphasized the lack of concrete evidence supporting the claim of illegal export by the appellants. No documentation related to actual export preparations or shipping bills was presented, casting doubt on the basis for imposing penalties under section 114. The absence of direct proof and reliance on suspicion were deemed insufficient for penal action.

Conclusion:
Ultimately, the appeals were allowed, indicating that the case against the appellants for penalty imposition under section 114 could not be sustained due to the lack of evidence and the failure to establish their involvement in the illegal export of non-basmati rice.