Chemical importer's penalty reduced from Rs. 5 lakhs to Rs. 3 lakhs for fake DEPB license imports upheld

HC upheld penalty reduction from Rs. 5 lakhs to Rs. 3 lakhs for chemical imports under fake DEPB licenses. Appellant challenged penalty citing retracted statement of witness and lack of nexus between brokers and imported goods. Court found statement was properly recorded in custody before Senior Intelligence Officer with jail superintendent present, protecting against coercion. Tribunal's factual findings showed no perversity, and discretionary penalty reduction was appropriate. Appeal dismissed.

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Issues:
- Import of chemicals under bills of entry with exemption claim
- Verification of authenticity of scrips procured for exemption
- Involvement of various entities in procurement of DEPB scrips
- Imposition of penalty under Section 112(a) of the Customs Act
- Appeal before CESTAT challenging penalty amount
- Substantial questions of law raised by the appellant
- Reliance on retracted statement of a key individual
- Tribunal's findings on the appellant's involvement in DEPB scam
- Tribunal's decision to reduce penalty amount

Analysis:

The judgment pertains to the import of chemicals under bills of entry with a claim of exemption, where doubts arose regarding the authenticity of Duty Entitlement Pass Book (DEPB) scrips procured. The appellant was found to have procured fake DEPB licenses and Telegraphic Release Advice (TRA) through intermediaries, leading to the imposition of a penalty under Section 112(a) of the Customs Act. The Tribunal, acting as a fact-finding authority, reduced the penalty from Rs. 5 lakhs to Rs. 3 lakhs, prompting the appellant to challenge the decision based on substantial questions of law.

The appellant argued that the penalty was solely based on a retracted statement from a key individual, suggesting innocence due to returning the money upon discovering the fake licenses. However, the respondent contended that the Tribunal's findings were evidence-based and factual, warranting no intervention. The High Court concurred with the Revenue, emphasizing that the Tribunal had considered all relevant facts.

Regarding the retracted statement, the Court noted that it was recorded in the presence of appropriate authorities, ensuring no coercion or duress. Even if the statement was retracted later, the delay did not invalidate its reliability. The Tribunal's findings highlighted the appellant's involvement in trading fake DEPB licenses and TRAs, leading to duty-free clearance of goods, ultimately upholding the penalty imposition under Section 112(a) of the Act.

The Court affirmed the Tribunal's decision, stating that no new evidence warranted intervention in the factual findings. The Tribunal's discretion to reduce the penalty amount from Rs. 5 lakhs to Rs. 3 lakhs was upheld, and the appeal was dismissed with no costs incurred. The judgment underscores the importance of evidence-based decisions in penalty imposition cases under the Customs Act, emphasizing the need for factual substantiation in such matters.

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