2022 (9) TMI 755 - AT - Customs

Penalties Upheld in Customs Act Violation Case: Burden of Proof, Compliance, Due Diligence

Sh. Vir Bahadur Versus Commissioner of Customs (General), New Delhi

Sh. Vir Bahadur Versus Commissioner of Customs (General), New Delhi - TMI Issues:1. Mis-declaration and smuggling of prohibited goods in export consignment.2. Imposition of penalties under Section 114 of the Customs Act, 1962.3. Burden of proof on the exporter to prove innocence.4. Involvement of individuals in facilitating illegal export.5. Compliance with KYC norms and verification of exporter's genuineness.Issue 1: Mis-declaration and smuggling of prohibited goods in export consignment:The case involves the mis-declaration of goods in a shipping bill for export, where wooden pallets were declared but were actually pieces of red sanders, a prohibited item. The Customs Officers found the mis-declaration during examination, leading to the detention and seizure of the goods. The exporter failed to provide a valid export permit for the red sanders, resulting in the allegation of mis-declaration and smuggling under Section 113 of the Customs Act, 1962.Issue 2: Imposition of penalties under Section 114 of the Customs Act, 1962:The appellant challenged the penalties imposed under Section 114 of the Customs Act, arguing that he was wrongly implicated and had no duty to verify KYC norms or produce the exporter before authorities. However, the authorities found that the appellant was involved in forwarding necessary documents for the illegal export, indicating his participation in the prohibited export activity. The penalties were upheld based on the appellant's involvement in the chain of events leading to the illegal export.Issue 3: Burden of proof on the exporter to prove innocence:The judgment highlighted that under Section 123 of the Customs Act, 1962, the burden of proof shifts to the exporter when goods are seized under suspicion of smuggling. In this case, the appellant failed to provide positive evidence proving his innocence beyond reasonable doubt. The appellant's inability to prove the legitimacy of the documents and failure to produce key individuals involved in the export further weakened his defense.Issue 4: Involvement of individuals in facilitating illegal export:The judgment detailed the statements of various individuals involved in the export process, highlighting their roles in facilitating the illegal export of prohibited goods. The findings indicated a coordinated effort among the individuals to smuggle contraband, emphasizing their mala fide intentions and active participation in the illegal activity. The appellant's connections and actions in forwarding documents for the export were crucial in establishing his involvement in the illegal export scheme.Issue 5: Compliance with KYC norms and verification of exporter's genuineness:The judgment underscored the importance of complying with KYC norms and verifying the genuineness of exporters to prevent illegal activities like smuggling. The authorities found that the individuals involved in the export failed to follow proper procedures and KYC norms, aiding in the illegal export of prohibited goods. Lack of due diligence and compliance with regulations contributed to the successful execution of the illegal export scheme.This detailed analysis of the judgment provides insights into the mis-declaration and smuggling of prohibited goods, imposition of penalties, burden of proof on exporters, involvement of individuals in facilitating illegal exports, and the significance of complying with KYC norms in international trade transactions.