Operational control determines customs penalty liability; penalty set aside where evidence showed another operated the vehicle.

Penalty under the Customs regime was set aside because documentary and investigative evidence showed operational control and physical handling of the vehicle rested with the putative buyer/lessee; the adjudicating authority failed to corroborate seller/buyer documents or to prove the appellant's continuing ownership, control of number plates, or active participation in transporting smuggled goods, and investigative statements implicated the operator rather than the appellant. Consequently the monetary/penal liability was removed while the confiscation order against the vehicle itself was left intact.

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Issues: Whether the penalty imposed under Section 112(1) of the Customs Act, 1962 on the noticee (appellant) for transportation of smuggled goods is justified where documentary evidence and investigative statements indicate that operational control of the vehicle rested with another person.

Analysis: The record includes a finance-cum-sale agreement dated 13.08.2009 asserting sale/transfer and contemporaneous investigative material including a statement recorded under Section 14 of the Central Excise Act, 1944 indicating that the vehicle was hired and operated by the putative buyer/lessee. The adjudicatory record shows that operational activities (loading, unloading, transportation) were carried out by the person who had physical control of the vehicle and who did not implicate the appellant. The adjudicating authority did not undertake exhaustive verification of the seller/buyer documents nor seek corroborative evidence to establish that the appellant retained effective control or was responsible for changing number plates or moving the smuggled goods. The asserted sale/transfer was not rebutted by adequate evidence proving appellant's continuing ownership or active participation in the offence.

Conclusion: Penalty under Section 112(1) of the Customs Act, 1962 set aside in favour of the appellant; the confiscation order in respect of the vehicle is not interfered with.

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