2010 (12) TMI 1126 - AT - Customs

Customs Act penalty set aside due to lack of evidence of appellants' knowledge. Personal involvement required.

S.K. MIGLANI Versus COMMISSIONER OF CUSTOMS (PREVENTIVE), MUMBAI

The judgment set aside the penalty imposed on the appellants under Section 112 (b) of the Customs Act, 1962 for dealing with a vehicle below market price ... - Issues Involved:Penalty under Section 112 (b) of the Customs Act, 1962 for substitution of examined packages with non-examined packages, specifically old cars with new imported cars from Unaccompanied Baggage containers at the docks.Detailed Analysis:Issue 1: Imposition of PenaltyThe judgment revolves around the imposition of a penalty of &8377; 1,00,000/- each on the appellants under Section 112 (b) of the Customs Act, 1962. The case involved a situation where new imported cars were substituted with old and junk cars from Unaccompanied Baggage containers at the docks. The investigation revealed a criminal conspiracy involving various individuals, including the consignee, who were engaged in substituting high-value cars and selling them to the public based on forged documents. The appellants were accused of dealing with a tainted vehicle, leading to the penalty imposition.Issue 2: Defense and ArgumentsThe advocates for the appellants argued that one of the appellants acted as a broker, facilitating the sale of the vehicle to another appellant. They contended that there was no corroborative evidence to prove that the appellants were aware of the vehicle's tainted nature. The absence of a statement from the original owner raised doubts about the knowledge of the appellants regarding the vehicle's status. The defense relied on legal precedents to support their argument that penalties cannot be imposed based solely on presumptions without concrete evidence.Issue 3: Department's PositionOn the contrary, the Department argued that the appellants, especially the broker, were aware of the market price of the vehicle and dealt with it at a significantly lower rate, raising suspicions about their involvement in the tainted vehicle transaction. The Department contended that the appellants could not be considered bona fide purchasers due to the discrepancy in the purchase and sale prices of the vehicle.Judgment and ConclusionAfter considering the arguments from both sides, the judgment concluded that the penalty was imposed solely on the grounds of dealing with a vehicle below its market price without substantial evidence of the appellants' knowledge about its tainted nature. The judgment highlighted the importance of personal involvement in illegal importation for penalty imposition. It emphasized that penalties cannot be imposed based on presumptions alone. As the appellants were not directly involved in the importation or registration of the vehicle, and no concrete evidence proved their knowledge of the vehicle's status, the penalty was set aside, granting the appellants the benefit of doubt.This comprehensive analysis of the judgment highlights the legal intricacies involved in the imposition of penalties under the Customs Act, 1962, based on evidence, presumptions, and personal involvement in unlawful activities.