2023 (10) TMI 1178 - AT - Customs

Levy of penalty u/s 112 114 of the Customs Act, 1962 - abating the importer to import goods illegally by resorting to undervaluation - Proxy importer or not - HELD THAT - The investigation was conducted alleging illegality by way of undervaluation of the goods. During investigation statements were recorded and during the pendency of the investigation, the importer approached the Hon ble High Court of Kerala and as directed by the Hon ble High Court, goods were released to importer. The Adjudication Authority has concluded the findings against the appellant on the ground that documents pertaining to the import was handed over to clearing agent by the appellant. However, there is no admissible evidence forthcoming in the impugned order that appellants had resorted to undervaluation of goods. Moreover as per the order issued by Adjudicating Authority, goods were released to the Proprietor of the importer M/s Pushpa Telecom. Once the importer itself appears before the Hon ble High Court by filing an affidavit and when the Hon ble High Court find the proprietor of the firm M/s Pushpa Telecom Shri R. Mohandas Rangasamy as bona fide importer to order release of goods, there is no reason to consider him as proxy importer as held by the adjudication authority. In present import, there is no evidence to allege that appellants were actively involved in illegal import of goods by communicating with overseas agencies or by transferring any amount though illegal channel. Merely if the documents pertaining to the import is handed over through the appellants to clearing agent, no conclusion can be drawn that appellants are involved in illegal import. Appeal allowed.

Summary

Issues involved: Challenge to penalty under Section 112 & 114 of the Customs Act, 1962 for alleged abetment of illegal import through undervaluation.

Summary:

Issue 1: Challenge to penalty under Section 112 & 114 of the Customs Act, 1962
The appellants contested the penalty imposed by the Adjudication Authority under Section 112 & 114 of the Customs Act, 1962, alleging abetment of illegal import through undervaluation. The appellants argued that there was a lack of admissible evidence to support the findings of the Adjudication Authority. It was emphasized that no act of omission on the part of the appellants was proven to suggest their involvement in abetting the importer to illegally import goods. The proceedings were initiated based on a statement by Shri Xavier, which did not implicate the appellants in using the importer's license. The absence of evidence linking the appellants to undervaluation or illegal import led to the conclusion that the penalty under Section 112 was not justified. The Tribunal's previous judgment highlighted the requirement for corroborative evidence and the insufficiency of hearsay evidence for imposing penalties under the Customs Act.

Issue 2: Sufficiency of evidence to establish appellants' involvement in illegal import
The findings of the Adjudication/Appellate Authority were scrutinized, revealing that the investigation alleged undervaluation of goods but lacked conclusive evidence implicating the appellants. Despite claims that the appellants used the importer's license for illegal imports, no admissible evidence supported this assertion. The release of goods to the importer by the Hon'ble High Court of Kerala indicated the importer's legitimacy, negating the notion of the appellants acting as proxy importers. The retracted statement of the importer could not be deemed as sufficient evidence to implicate the appellants in illegal import activities. The absence of evidence showing direct involvement of the appellants in communicating with overseas agencies or transferring funds through illegal channels further weakened the case against them. Merely handing over import documents to a clearing agent was deemed insufficient to establish the appellants' active participation in illegal import activities.

Conclusion:
After thorough consideration, the appeals were allowed, granting consequential reliefs if applicable.