2019 (3) TMI 1149 - AT - Customs

Penalty on CHA - undervaluation by manipulation of documents - request for cross-examination denied - principles of natural justice - Held that - The request for cross-examination was denied on the ground that such could be allowed only after examination-in-chief and that the denial of permission for cross-examination does not violate the principles of natural justice. Impliedly, it was held that such cross-examination is mandated only when reliance is placed on a departmental witness. There is no evidence on record that the appellants were aware of the quality and the value of the goods; indeed, unless any person, other than importers, are clearly brought on record as having participated in the conspiracy from the placement of the order, the charge on such person will not succeed. Mere filing of documentation that may contain wrong details, unless established as deliberate act on the part of the customs house agent, cannot be held against them - the evidence against the appellants are insufficient to establish that any act of theirs had rendered the goods liable for confiscation and, therefore, liable to penalty. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Penalties imposed on M/s Parikh Clearing Agency Pvt Ltd and Director for undervaluation by manipulation of documents.

Analysis:
The primary contention raised by the appellants' counsel was that the alleged organizer of the modus operandi, Shri Jaywant Thakar, denied by the Director, could not be the basis for any detriment. The counsel argued that statements relied upon lacked validity without subjecting them to cross-examination as prescribed in section 138B of Customs Act, 1962. Reference was made to a Tribunal decision and judgments of the Supreme Court and High Court disapproving proceedings based on untested statements.

The Authorized Representative presented the course of events and material recovery indicating foreknowledge on the part of the appellants. However, the impugned order denied the request for cross-examination, stating it could be allowed only after examination-in-chief and that such denial does not violate natural justice principles. The Tribunal emphasized the necessity of cross-examination to validate statements not substantiated by facts and circumstances.

The Tribunal found that the appellants were liable to penalty under section 112 of the Customs Act, 1962, based on Shri Jaywant Thakar's statements, which were taken at face value by the adjudicating authority. The Tribunal highlighted the insufficiency of evidence against the appellants to establish their involvement in rendering the goods liable for confiscation and, consequently, liable to penalty. It was emphasized that unless clear evidence of deliberate participation in the conspiracy was presented, holding the appellants responsible for mere filing of documentation with incorrect details was unjustified.

Ultimately, the Tribunal allowed the appeals, concluding that the evidence against the appellants was insufficient to establish their liability for penalties related to undervaluation by manipulation of documents. The judgment was pronounced in court on 20/03/2019.