Customs Act Penalty Overturned: Lack of Evidence in Phensedyl Case

The penalty imposed on the Appellant under Section 114 of the Customs Act, 1962, amounting to Rs.5.00 Lakhs, for alleged involvement in illegal procurement, sale, purchase, and transportation of Phensedyl Cough Linctus for export to Bangladesh was set aside. The Adjudicating Authority found insufficient evidence linking the seized goods to illegal export activities and concluded that the Appellant was not directly engaged in the illicit transactions. As a result, the personal penalty on the Appellant was deemed unjustified, and the appeal was allowed with consequential relief.

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Issues involved:
The issues involved in this case are the imposition of penalty under Section 114 of the Customs Act, 1962 for alleged illegal procurement, sale, purchase, and transportation of Phensedyl Cough Linctus, as well as the involvement of the Appellant in these activities.

Imposition of Penalty under Section 114 of the Customs Act, 1962:
The Appellant challenged the penalty imposed by the Commissioner of Customs (Preventive), Patna, amounting to Rs.5.00 Lakhs. The case involved the illegal procurement, sale purchase, and transportation of Phensedyl Cough Linctus for export to Bangladesh through a truck with a fabricated number plate. The Appellant argued that there was no evidence indicating that the seized goods were destined for Bangladesh. The Appellant claimed ownership of a godown where goods were loaded and stated that the godown was lawfully rented out to another individual who was responsible for the seized goods. The Adjudicating Authority observed that while there were suspicions of illegal activities, there was no concrete evidence to prove that the goods were intended for export to Bangladesh. The Authority also noted that violations of the Drugs & Cosmetics Act could not be the basis for action under the Customs Act. Consequently, the penalty imposed on the Appellant was set aside, and the appeal was allowed.

Involvement of the Appellant in Illegal Activities:
The records and statements in the case did not show that the Appellant was directly involved in the purchase or sale of contraband goods. There was no evidence to suggest that the Appellant forged documents or aided in the illegal export of goods. The Appellant's lack of prior knowledge regarding the illegal activities, as well as the absence of corroborative proof, led to the conclusion that the personal penalty imposed on the Appellant was unwarranted. Therefore, the penalty imposed on the Appellant under Section 114 of the Customs Act, 1962 was deemed unjustified and was subsequently set aside. The appeal filed by the Appellant was allowed with consequential relief as per the law.

Separate Judgement:
No separate judgment was delivered by the judges in this case.

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