TaxTMI 
TaxTMI 
The Hon'ble CESTAT, Eastern Zonal Bench, Kolkata, in Shri Anupam Mondal Versus Commissioner of Customs (Airport & ACC), Kolkata - 2026 (7) TMI 733 - CESTAT KOLKATA held that personal penalties under Sections 114(iii) and 114AA cannot be sustained on an individual for peripheral illegalities, such as procuring a fake driving license for a mastermind, when there is no corroborative evidence linking them to the actual over-valuation or misclassification of exported goods.
Facts:
An investigation was initiated regarding the fraudulent export of 'Neckties of silk' by M/s. Singh Trading Company, M/s. Sam Merchandisers Pvt. Ltd., and later M/s. Cosmos Impex, where a massive duty drawback of Rs. 3,57,33,582/- was claimed and granted. Following the investigation, a Show Cause Notice ('SCN') was issued to the exporting firms, their mastermind Ajay Madan and other noticees, including Shri Anupam Mondal ('the Appellant'), the proprietor of M/S East India Impex.
The Adjudicating Authority rejected the declared value of the exported goods, re-determined the valuation, and ordered the recovery of the sanctioned drawback. Specifically, the appellant was penalised Rs. 25.00 Lakhs under Section 114(iii) and another Rs. 25.00 Lakhs under Section 114AA of the Customs Act, 1962('the Act'). While the other noticees did not contest the adjudication, the appellant appealed to the Commissioner (Appeals), who dismissed the appeal ('impugned order') and upheld the penalties, leading to the current appeal before the Tribunal.
Issues:
- Whether the penalties under Section 114(iii) and Section 114AA of the Customs Act, 1962 can be sustained without direct evidence linking them to improper export of goods?
- Whether the Revenue can impose a penalty under Section 117 of the Act at the appellate stage without proposing it in SCN?
Held:
The Hon'ble CESTAT, Kolkata, in [Shri Anupam Mondal Versus Commissioner of Customs (Airport & ACC), Kolkata - 2026 (7) TMI 733 - CESTAT KOLKATA], held as under:
- Observed that out of 456 total Shipping Bills involved in the scheme, only 16 live consignments were actually intercepted and tested, meaning the Revenue's case for the remaining 440 previously cleared shipments relied entirely on uncorroborated recorded statements, which cannot be blindly applied to past transactions.
- Noted that while helping a mastermind obtain a fake driving license to open a bank account is a serious illegality that may render the appellant liable for independent criminal proceedings, this act alone does not prove that the appellant played a specific or active role in the over-valuation or misclassification of the exported neckties.
- Held that in the absolute absence of any specific material or corroborative evidence brought by the Revenue to prove the appellant was responsible for inflating the value of the goods, a penalty under Section 114(iii) cannot be sustained and must be set aside.
- Found that the appellant did not sign, make, file, or use any false declaration, statement, or document in the transaction of business for the purposes of the Act, meaning his peripheral actions fail to satisfy the statutory prerequisites required to trigger a penalty under Section 114AA.
- Rejected the Revenue's alternative plea to impose a penalty under Section 117, ruling that because the Show Cause Notice failed to propose any penalty under this section, the Revenue is legally precluded from introducing it at the appellate stage.
Hence, the tribunal allowed the appeal and granted consequential relief to the appellant.
Relevant Sections & Regulations:
Section 114AA of the Act. Penalty for use of false and incorrect material.-
If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods.]
Section 114. Penalty for attempt to export goods improperly, etc.-
Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable,-
[(iii) in the case of any other goods, to a penalty not exceeding the value of the goods, as declared by the exporter or the value as determined under this Act, whichever is the greater.]