Penalty on director for alleged diversion of imported goods fails absent proof of knowledge, participation, or benefit.

Penalty on a director for alleged diversion of imported goods was held unsustainable where the record did not show knowledge of, participation in, or benefit from the wrongful disposal. Mere certification in the DEEC book that the imported goods were used in manufacture was insufficient by itself; penalty required proof that the director knew the certification was false. As he had not signed the bill of entry, had not been shown to arrange the import, and there was no evidence of any technical basis to know whether the supplied goods were made from imported or indigenous material, the penalty was set aside.

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Issues: Whether penalty imposed on a director for alleged improper diversion of imported goods was sustainable in the absence of evidence showing knowledge of, or participation in, the wrongful disposal of the goods.

Analysis: The director had not signed the bill of entry and there was no material to show that he arranged the import or was involved in the diversion of the goods. The only circumstance relied upon was his certification in the DEEC book that the imported goods had been used in manufacture, but that certification could not, by itself, justify penalty unless it was shown that he knew the certification was false. The record did not show that he had any technical basis to know whether the thread protectors supplied to ONGC were made from imported steel or indigenous material, and no financial benefit or other incriminating circumstance was established against him.

Conclusion: Penalty on the director was not warranted and was set aside.

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