Rs.10 lakh penalty upheld for abetting cigarette smuggling under Section 112(b), second appellant's penalty set aside

CESTAT Kolkata upheld penalty of Rs.10 lakhs imposed on Appellant No.1 under Section 112(b) of Customs Act, 1962 for abetting cigarette smuggling activities. Evidence showed appellant was aware of smuggling syndicate's operations, provided transportation, and helped replace smuggled cigarettes with stationery items in Nepal-bound containers. However, CESTAT set aside Rs.20 lakhs penalty imposed on Appellant No.2, finding insufficient evidence of his involvement in the smuggling activities, as he had refused clearance work and merely passed documents to another party.

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Issues Involved:

1. Imposition of penalty on Appellant No. 1 under Section 112(b) of the Customs Act, 1962.
2. Imposition of penalty on Appellant No. 2 under Section 112(b) of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Imposition of Penalty on Appellant No. 1:

The primary issue concerning Appellant No. 1, Shri Man Singh, revolves around the imposition of a penalty of Rs.10,00,000 under Section 112(b) of the Customs Act, 1962, for his alleged involvement in smuggling activities. The facts of the case indicate that the Directorate of Revenue Intelligence (DRI) intercepted a container at Kolkata Port, which was declared to contain stationery goods but was found to contain 649 cartons of foreign-origin cigarettes. It was alleged that Appellant No. 1 facilitated the transportation and storage of these goods.

The evidence against Appellant No. 1 includes his admission that he allowed the transport of a container to a godown where the goods were replaced, and his arrangement of a godown for storing stationery goods. The tribunal noted that Appellant No. 1, with 30 years of experience in transporting export and import containers, should have been aware of the illegality of opening and replacing goods in a sealed container. The tribunal found that Appellant No. 1 was aware of the smuggling activities and actively participated by providing transportation and storage facilities. Consequently, the tribunal upheld the penalty imposed on Appellant No. 1, concluding that he abetted the act of smuggling.

2. Imposition of Penalty on Appellant No. 2:

The issue concerning Appellant No. 2, Shri Pravin Kumar Singh, involves the imposition of a penalty of Rs.20,00,000 under Section 112(b) of the Customs Act, 1962. The allegation was that he was involved in the smuggling activities by facilitating the clearance of the smuggled goods. However, the tribunal found that there was no specific evidence implicating Appellant No. 2 in the smuggling activities. It was noted that Appellant No. 2, an employee of a CHA firm, had introduced the smuggling syndicate to another individual who handled the clearance of the goods. The tribunal observed that merely introducing individuals does not establish knowledge or involvement in smuggling activities.

The tribunal found that the evidence on record did not support the allegation that Appellant No. 2 played any role in the smuggling of foreign-origin cigarettes. As such, the tribunal set aside the penalty imposed on Appellant No. 2, concluding that the imposition of the penalty was not sustainable based on the available evidence.

Conclusion:

In conclusion, the tribunal upheld the penalty imposed on Appellant No. 1, Shri Man Singh, for his active role in the smuggling activities, while setting aside the penalty on Appellant No. 2, Shri Pravin Kumar Singh, due to a lack of evidence implicating him in the alleged smuggling activities. The appeals were disposed of accordingly.

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