2022 (1) TMI 957 - AT - Customs

Customs Act Penalty Reversed for Company & Director due to Insufficient Evidence

Lalit Mange and Ami Clearing & Forwarding Pvt Ltd Versus Commissioner of Customs (Export) Jawarharlal Nehru Port Trust, Nhava Sheva

Lalit Mange and Ami Clearing & Forwarding Pvt Ltd Versus Commissioner of Customs (Export) Jawarharlal Nehru Port Trust, Nhava Sheva - TMI Issues:Challenge to penalty imposition under section 112 of Customs Act, 1962 for diversion of goods under DEEC scheme.Analysis:1. The appellants, a custom house agent company and its Director, were penalized for involvement in diverting nonmagnetic stainless steel/coil imported under the DEEC scheme. The investigation revealed a modus operandi of high sea sale purchase and clearance to evade customs duties. The adjudicating authority relied on statements of co-noticees to establish complicity.2. The appellants argued that as custom house agents, their role was misconstrued, and reliance on untested statements for penalty imposition was incorrect. They claimed innocence, stating their actions were merely in accordance with client instructions and did not constitute diversion. They also highlighted flaws in the evidence against them.3. The Authorized Representative defended the penalty, citing elaborate justifications in the impugned order. Monetary transactions and statements indicated the appellants' active involvement in the diversion scheme. Legal precedents were referenced to support reliance on co-accused statements and the department's burden of proof.4. The Tribunal differentiated between the appellant-company and Director, noting the company's exoneration in separate proceedings. The nature of allegations against the company did not align with its role as a custom house agent, leading to the penalty's invalidation under section 112.5. Regarding the Director, reliance on statements of a co-noticee as sole evidence was deemed inadequate. The lack of material evidence to support the statements' relevance rendered the penalty unsustainable under section 112. Legal precedents emphasized the need for corroborative evidence in such cases.6. Ultimately, due to the insufficiency of evidence linking the Director to the alleged diversion, the penalty under section 112 was set aside, and both appeals were allowed. The decision was pronounced in open court on 3rd December 2021.