Penalty for alleged customs abetment fails where no credible evidence shows direct involvement or undervaluation.

Penalty under customs law cannot be sustained where the show cause notice and adjudication rest on inconsistent theories and the record does not prove active participation in the import violation. The notice alleged that the appellant was the real importer through a dummy front, but the adjudication rejected that basis and shifted to abetment without supporting evidence. Normal banking payments, routing through an intermediary, and the absence of reliable material on undervaluation or direct involvement were treated as insufficient to establish liability. The valuation issue had also been remanded in connected proceedings. The penalty was therefore held unsustainable and set aside.

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Issues: Whether penalty under section 112(a) of the Customs Act, 1962 could be sustained against the appellant when the show cause notice alleged that he was the real importer through a dummy front, but the adjudication found that the importer was not a dummy and no credible evidence established abetment or undervaluation by the appellant.

Analysis: The notice proceeded on the footing that the appellant was the real importer and that Lakshan Electronics was a dummy concern. The adjudication, however, negatived that basis and held Lakshan Electronics to be the real importer, yet still fastened penalty on the appellant on a new theory of abetment. The finding of abetment was unsupported by evidence: the appellant's dealings were through an intermediary, payment was made through normal banking channels, and no material showed his direct participation in the import violation. The allegation of undervaluation was also not established by reliable corroborative evidence. In the connected proceedings, the valuation issue had already been remanded for redetermination, and a mere statement was insufficient to sustain the charge. The Tribunal also noted that the relevant import position had changed around the material period and that, on the record, no active violation by the appellant was proved.

Conclusion: The penalty under section 112(a) of the Customs Act, 1962 was not sustainable and was set aside in favour of the appellant.

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