Customs penalty for export fraud upheld where Section 108 statements and cross-border participation proved abetment on probabilities.
Statements recorded under Section 108 of the Customs Act, 1962 and connected circumstantial evidence were treated as admissible material to prove abetment in customs penalty proceedings on a preponderance of probabilities, not beyond reasonable doubt. Penalty under Section 114 was upheld because the respondent was found to have aided the export fraud and illegal remittance scheme, making the goods liable to confiscation. Physical absence from India did not defeat liability, as the Act applied to conduct with a substantial nexus to India and acts done through an agent could bind the principal. The penalty was restored and the questions of law were answered for the Revenue.
Issues: (i) whether statements recorded under Section 108 of the Customs Act, 1962 and the surrounding evidence were sufficient to establish the respondent's involvement in the export fraud and abetment; (ii) whether penalty under Section 114 of the Customs Act, 1962 was rightly imposed for abetment of acts rendering the goods liable to confiscation; (iii) whether the Customs Act, 1962 was inapplicable because the respondent was not physically present in India.
Issue (i): Whether statements recorded under Section 108 of the Customs Act, 1962 and the surrounding evidence were sufficient to establish the respondent's involvement in the export fraud and abetment.
Analysis: Statements recorded by customs officers under Section 108 are admissible and are not treated as statements of a co-accused merely because the maker is later proceeded against. The evidence showed that the respondent was connected with the movement of money and remittances linked to the export transactions, and the statements of co-noticees and the recorded material were treated as independent evidence. The standard in penalty proceedings is not proof beyond reasonable doubt but proof on a preponderance of probabilities.
Conclusion: The respondent's involvement and abetment were established.
Issue (ii): Whether penalty under Section 114 of the Customs Act, 1962 was rightly imposed for abetment of acts rendering the goods liable to confiscation.
Analysis: Section 114 extends to any person who does or omits to do an act that renders goods liable to confiscation or abets such act or omission. Abetment was understood in the sense recognised by Section 107 of the Indian Penal Code, 1860. On the facts found, the respondent aided the illegal remittance and export scheme, and the adjudicating authority's penalty order was supported by the material on record.
Conclusion: Penalty under Section 114 was justified and the Tribunal's deletion of the penalty was unsustainable.
Issue (iii): Whether the Customs Act, 1962 was inapplicable because the respondent was not physically present in India.
Analysis: Section 1(2) of the Customs Act, 1962 makes the Act applicable to the whole of India. The Court applied the protective principle and the law on continuing offences and cross-border participation, and also relied on Section 147 to hold that acts done through an agent bind the principal. Since a substantial part of the illegal activity and its effect occurred in India, physical absence from India did not exclude liability.
Conclusion: The Customs Act, 1962 applied to the respondent notwithstanding his absence from India.
Final Conclusion: The appeal succeeded, the penalty was restored, and the substantial questions of law were answered in favour of the Revenue.
Ratio Decidendi: In customs penalty proceedings, admissible statements under Section 108 and connected circumstantial material may establish abetment on a preponderance of probabilities, and liability under the Customs Act is not avoided merely because the participant acted from outside India when the prohibited transaction had a substantial nexus with India.
TaxTMI 
AI Drafter ✕
TaxTMI 
