Mere call records and social familiarity cannot prove connivance in export fraud without independent corroborative evidence.

Penalty under Section 114(i) and Section 114(iii) of the Customs Act was held unsustainable where the Department relied only on call records, social familiarity, travel or hospitality links, and other surrounding circumstances to allege connivance in fraudulent exports. The Tribunal found no independent corroborative evidence of conspiracy or active participation in overvaluation or export fraud, noted that no call transcripts or details of any incriminating discussion were produced, and observed that mere suspicion could not establish knowledge of a benami operator or receipt of illegal gratification. The fact that exports were provisionally assessed, samples drawn, and drawback released after laboratory verification and realization of export proceeds further weakened the allegation of intentional wrongdoing.

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Issues: Whether penalty under Section 114(i) and Section 114(iii) of the Customs Act, 1962 was sustainable against the departmental officers on the basis of call records, social familiarity, and surrounding circumstances alleged to show connivance in fraudulent exports.

Analysis: The Tribunal found that the material relied upon by the Department, namely telephonic contact, attendance at a marriage function, travel and hospitality expenses, and alleged use of a guest house, did not establish a conspiracy or active participation in overvaluation or fraudulent export. No transcript of the calls was produced, and the record did not show what was discussed. The Tribunal held that mere familiarity, call detail records, or suspicion cannot substitute for independent corroborative evidence, particularly when there was no proof that the appellants knew that the exporter was a benami operator or that they received any illegal gratification or benefit. It also noted that the exports were provisionally assessed, samples were drawn, and drawback was granted only after laboratory report and realization of export proceeds, which further weakened the allegation of intentional wrongdoing.

Conclusion: Penalty under Section 114(i) and Section 114(iii) of the Customs Act, 1962 was not sustainable against the appellants.

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