2024 (5) TMI 80 - AT - Customs

Penalties upheld against active participant in prohibited goods import but set aside for others due to inadmissible statements under section 138B

Shri Sunil Aidasani @ Vicky, Shri Sushil Aggarwal and Shri Naveen Gulabani Versus Principal Commissioner of Customs (Import), New Delhi

CESTAT New Delhi upheld penalties under sections 112 and 114AA against one appellant who was found to be an active participant in importing prohibited ... Imposition of Penalties u/s 112(a) & (b) and 114AA - Each appellant denied direct involvement or knowledge of the illegal activities, claiming to have played different roles in the importation process. - import of restricted / prohibited goods - confiscation of goods - allegation for never received the summons - HELD THAT:- We have no doubts in our minds that the Sushil Aggarwal was not merely an indenting agent but was an active player involved at every stage in the entire operation from placing orders for the imported goods including the import of the prohibited goods, mis-declaration in the documents, clearance of the goods, transporting them to the godown and selling them, receiving the sale proceeds and further distributing them among various operators. We find the penalties imposed on him under Section 112 and 114AA must be sustained and they call for no interference. Sunil Aidasani - claims to have never received the summons and hence he had not appeared to give his statements - As far as the allegations that 12 of the 19 containers actually belonged to him are concerned, these are based on the statements of Bhalla. A statement made by Bhalla u/s 108 of the Customs Act will be relevant to prove the case only as per section 138B. This requires the adjudicating authority to examine the person making the statement and decide if it is to be admitted in evidence. Needless to say that if it is admitted in evidence and is proposed to be used against another person, such person should be allowed to cross examine the person making the statement. Since the procedure prescribed u/s 138B was not followed, the statement is not relevant to prove the case against Aidasani. We also find that neither section 112 nor section 114AA provide for penalty for not responding to summons or not cooperating with the investigation. Therefore, the penalties imposed on Aidasani in the impugned order cannot be sustained and need to be set aside. Naveen Gulabani - The allegation in the SCN is that he is an employee of Sunil Aidasani@ Vicky and that he had not responded to the summons and had not cooperated with the investigation. We find neither section 112 nor section 114AA makes one liable to penalty either for being an employee of the overseas supplier of goods nor for not responding to summons and not cooperating with the investigating agency. Therefore, the penalties imposed on Gulabani cannot be sustained and need to be set aside and we do so. Therefore, the penalties imposed on Gulabani in the impugned order cannot be sustained and need to be set aside. Issues Involved:1. Penalty imposed on Shri Sunil Aidasani u/s 112(a) & (b) and 114AA of the Customs Act, 1962.2. Penalty imposed on Shri Sushil Aggarwal u/s 112(a) & (b) and 114AA of the Customs Act, 1962.3. Penalty imposed on Shri Naveen Gulabani u/s 112(a) & (b) and 114AA of the Customs Act, 1962.Summary of Judgment:Issue 1: Penalty on Shri Sunil Aidasani- Submissions: Aidasani contested the penalty of Rs. 1,00,00,000/- u/s 112(a) & (b) and Rs. 50,00,000/- u/s 114AA. He argued that he was the sourcing agent in China and not the owner of the goods. He claimed he did not receive summons and denied involvement based on retracted statements of co-accused without corroborative evidence, violating principles of natural justice.- Findings: The Tribunal found that the procedure prescribed u/s 138B was not followed, making the statements against Aidasani inadmissible. It was also noted that neither section 112 nor section 114AA provide for penalties for not responding to summons or not cooperating with the investigation.- Conclusion: Penalties imposed on Aidasani were set aside.Issue 2: Penalty on Shri Sushil Aggarwal- Submissions: Aggarwal contested the penalty of Rs. 2,00,00,000/- u/s 112(a) & (b) and Rs. 1,00,00,000/- u/s 114AA. He argued that he was merely an indenting agent and not the owner or beneficiary of the goods. He claimed denial of cross-examination violated natural justice.- Findings: The Tribunal found Aggarwal was actively involved at all stages of the import process, from placing orders to distributing sale proceeds, indicating he was more than just an indenting agent.- Conclusion: Penalties imposed on Aggarwal were upheld.Issue 3: Penalty on Shri Naveen Gulabani- Submissions: Gulabani contested the penalty of Rs. 20,00,000/- u/s 112(a) & (b) and Rs. 10,00,000/- u/s 114AA. He argued he was not an employee of Aidasani and had no involvement in the import of the goods. He also claimed penalties for not responding to summons were unjustified.- Findings: The Tribunal noted that neither section 112 nor section 114AA provide for penalties for being an employee of the overseas supplier or for not responding to summons.- Conclusion: Penalties imposed on Gulabani were set aside.Final Order:- Customs Appeal No. 50194 of 2020 filed by Sushil Aggarwal is dismissed, and the impugned order is upheld.- Customs Appeal No. 50144 of 2020 filed by Sunil Aidasani is allowed, and penalties imposed on him are set aside with consequential relief.- Customs Appeal No. 50899 of 2020 filed by Naveen Gulabani is allowed, and penalties imposed on him are set aside with consequential relief.(Order pronounced in open court on 30/04/2024.)