2026 (3) TMI 1469 - AT - Customs

Customs penalties need evidentiary linkage and cooperation can defeat penalty for non-appearance to summons.

Penalty under Section 112 of the Customs Act cannot be sustained without evidence linking the person to the alleged offence; the record showed only a ... Validity of the penalty imposed under Section 112 of the Customs Act, 1962, in the absence of evidence linking the appellant to the offence - Penalty for non-compliance with summons - abetment or improper import. Penalty for abetment or improper import - Requirement of supporting evidence - HELD THAT:- The Tribunal found that, though the appellant was engaged in business dealings with the consignor, no evidence had been brought on record to establish any offence committed by him so as to attract penalty. Mere business relationship with the consignor was not treated as sufficient to sustain the penalty in the absence of substantiating material. [Paras 11] The penalty imposed on the appellant under Section 112 of the Customs Act was held to be unsubstantiated and was set aside. Penalty for non-compliance with summons - Cooperation with investigation - HELD THAT: - The Tribunal noted that, although summons had been issued on multiple dates and the appellant had not appeared in response thereto, his statement had been recorded during the course of investigation. On that basis, it held that the appellant had cooperated with the investigation, and in such circumstances the penalty for non-compliance with summons was not warranted. [Paras 12] The penalty imposed under Section 117 of the Customs Act was held to be unwarranted and was set aside. Final Conclusion: The Tribunal set aside both penalties imposed on the appellant, holding that there was no evidence to justify the customs penalty and that the separate penalty for non-appearance was also not warranted in view of his cooperation in the investigation. The appeal was accordingly allowed with consequential relief as per law. Issues: (i) Whether the penalty imposed under Section 112 of the Customs Act, 1962 was sustainable in the absence of evidence linking the appellant to the offence. (ii) Whether the penalty imposed under Section 117 of the Customs Act, 1962 was justified when the appellant had recorded a statement and cooperated with the investigation despite not appearing to the summons.Issue (i): Whether the penalty imposed under Section 112 of the Customs Act, 1962 was sustainable in the absence of evidence linking the appellant to the offence.Analysis: The record showed that the appellant was engaged in business in foodgrains and pulses and had a business relationship with the consignor. No material was brought on record to establish that the appellant had committed any offence attracting penal liability under Section 112.Conclusion: The penalty under Section 112 of the Customs Act, 1962 was not substantiated and was set aside.Issue (ii): Whether the penalty imposed under Section 117 of the Customs Act, 1962 was justified when the appellant had recorded a statement and cooperated with the investigation despite not appearing to the summons.Analysis: Though summons had been issued on more than one date, the appellant's statement was recorded during the investigation. The recorded statement established cooperation, and the circumstances did not justify penal action solely on the ground of non-appearance.Conclusion: The penalty under Section 117 of the Customs Act, 1962 was not warranted and was set aside.Final Conclusion: Both penalties were annulled, and the appeal succeeded with consequential relief as permissible in law.Ratio Decidendi: A penalty cannot be sustained without evidentiary linkage to the alleged offence, and non-appearance to summons does not justify penalty where the person has otherwise cooperated with the investigation.