Fraudulent DEPB transactions can sustain customs penalty on preponderance of probability where conscious participation in the scheme is shown.

Fraudulent procurement and trading of DEPB scrips through false shipping bills, forged bank realisation certificates and other fabricated documents can attract customs penalty where the evidence shows conscious participation in the scheme. In customs adjudication, liability may be established on the preponderance of probability rather than strict criminal proof, and uncontroverted findings not rebutted by the appellant may be relied on. On those facts, the article states that a person involved in the fraudulent chain cannot avoid penal consequences merely because intermediaries or forged documents were used, and penalty under Section 112(a) of the Customs Act, 1962 was sustained.

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Issues: Whether the appellant was liable to penalty for his active involvement in fraudulently obtaining and trading DEPB scrips used for duty-free import, and whether the penalty imposed under the Customs Act was sustainable.

Analysis: The record showed that the DEPB scrips were obtained on the basis of false shipping bills, fake bank realisation certificates, and other forged documents, and that the appellant was consciously involved in the chain of events leading to their procurement and sale. In customs adjudication, strict proof in the criminal sense is not required; the matter may be decided on the preponderance of probability. The evidence on record remained uncontroverted, and the appellant failed to rebut the findings of the adjudicating authority. Fraudulent conduct designed to defeat revenue and secure unlawful fiscal benefit attracts penal consequences, and a person who participates in such fraudulent activity cannot claim immunity merely because the act was carried out through intermediaries or forged documentation.

Conclusion: The appellant was held liable to penalty under Section 112(a) of the Customs Act, 1962, and the challenge to the penalty failed.

Final Conclusion: The appeal was rejected because the fraudulent nature of the DEPB transactions and the appellant's conscious involvement were found proved on the evidence and on the civil standard applicable to customs adjudication.

Ratio Decidendi: In customs penalty proceedings arising from fraudulent DEPB transactions, liability can be sustained on the preponderance of probability where the evidence shows conscious participation in the fraud and the findings are not rebutted.

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