2018 (7) TMI 1225 - AT - Customs

Appeals Allowed: Penalties Set Aside Due to Lack of Legal Proof

The Tribunal allowed the appeals, setting aside the penalties imposed, as there was no legal proof of smuggling, and the case was based on assumptions. ... Smuggling - Export of Dal/pulses to Nepal - It was alleged that huge quantity of pulses has been exported to Nepal on tractor trolleys and trucks illegally through off routes, located at the Indo Nepal border - Whether there was any activity of Smuggling on the part of appellant or not? Held that:- There is no seizure of the pulses, even in small quantity. It is nowhere on record that either the Dal Mill owner or the broker or the said Sushil Kumar Agarwal, Siliguri have indulged in activity amounting to smuggling - It is admitted fact on record that the pulses have been dispatched to a place in India and the same ultimately reached a place in India. There is no allegation that post delivery of Dal to a dealer located near the Indo Nepal Border, within India, was in violation of the provisions of the Customs Act or the appellants herein were involved in the presumed smuggling. The whole case is based on presumptions and assumptions and lacking any corroboration. Suspicion how so ever strong cannot take place of legal proof. Appeal allowed - decided in favor of appellant. Issues Involved:1. Legality of export of pulses to Nepal.2. Role of commission agents and brokers.3. Confiscation and penalty under the Customs Act, 1962.4. Adjudication of show cause notices.5. Appeals against penalties imposed by the Commissioner (Appeals).Issue-wise Detailed Analysis:1. Legality of Export of Pulses to Nepal:The case revolves around the prohibition of exporting pulses/lentils from India as per DGFT Notification No.15 (RE–2006)/2004–09 dated 27/06/2006. Intelligence indicated illegal export of pulses to Nepal via off routes at the Indo-Nepal border. Investigations revealed that pulses were dispatched from Kanpur under invoices to Siliguri-based traders but were unloaded at the Indo-Nepal border. The commission agent, Ajay Gupta, admitted to procuring pulses for Bihar/Nepal dealers and dispatching them under invoices to VAT registered dealers in Siliguri, who did not physically receive the goods.2. Role of Commission Agents and Brokers:Ajay Gupta, a commission agent, was identified as a key player. His office was searched, and documents were recovered. Statements from various parties, including Sushil Kumar Agarwal of M/s Shiv Dutt Sushil Kumar, Siliguri, revealed that they received only papers for transactions and not the actual goods. These arrangements were made to facilitate the movement of pulses to the Indo-Nepal border, with payments often made in cash or through banking channels.3. Confiscation and Penalty under the Customs Act, 1962:Revenue proposed the confiscation of pulses under Section 113(d) of the Customs Act, 1962, and penalties under Section 114(i) on various parties, including Dal Mill owners and brokers. The modus operandi involved procuring orders from Nepal-based customers, issuing invoices in the name of Siliguri-based dealers, and arranging transport to deliver consignments near the Indo-Nepal border. The goods were then allegedly smuggled into Nepal.4. Adjudication of Show Cause Notices:Show cause notices were issued, and adjudicated by Orders-in-Original, holding the consignments liable to confiscation and imposing penalties. The Commissioner (Appeals) set aside the redemption fine on Annapurna Udyog, stating that Dal Mill owners were not engaged in smuggling and did not gain monetarily from the activities. Penalties on individuals like Sushil Kumar Agarwal and Ajay Gupta were reduced based on their presumed involvement and financial gains.5. Appeals Against Penalties Imposed by the Commissioner (Appeals):The appellants, including Ajay Gupta, appealed against the penalties. The Tribunal noted that there was no seizure of pulses and no evidence of smuggling. The pulses were dispatched and delivered within India, and the case was based on presumptions without corroboration. The Tribunal relied on a precedent decision (Final Order No.71353-71361/2017 dated 28/07/2017) and found that neither the Dal Mill owners nor the brokers were involved in smuggling. Consequently, the penalties were set aside.Conclusion:The Tribunal allowed the appeals, setting aside the penalties imposed, as the case lacked legal proof of smuggling and was based on assumptions. The judgment emphasized that suspicion, however strong, cannot replace legal proof.