Personal customs penalty can follow knowing use of false invoices for import undervaluation, even with foreign-origin conduct.

Knowing participation in preparation and use of suppressed or false invoices for customs clearance in India attracts personal penalty liability under the Customs Act, even where the conduct begins outside India and the foreign company is not separately proceeded against. The territorial nexus is satisfied when the scheme culminates in undervalued import declarations and presentation of false documents before Indian Customs authorities. Documentary evidence of active coordination, dual invoices, and deliberate undervaluation was treated as sufficient to establish abetment and conscious involvement, supporting penalties under Sections 112(a) and 114AA.

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Issues: (i) Whether penalty under the Customs Act could be sustained against a director of a foreign company for acts allegedly originating outside India but culminating in import undervaluation and customs clearance in India; (ii) Whether the evidence established conscious participation in undervaluation and use of false invoices so as to attract penalty under Sections 112(a) and 114AA of the Customs Act, 1962.

Issue (i): Whether penalty under the Customs Act could be sustained against a director of a foreign company for acts allegedly originating outside India but culminating in import undervaluation and customs clearance in India.

Analysis: The record showed that the appellant actively coordinated procurement, facilitated imports, arranged manufacture and export, and caused preparation and use of dual invoices. The acts complained of were not isolated foreign acts but part of a scheme that culminated in presentation of suppressed invoices before Indian Customs authorities and clearance of goods in India. The Tribunal held that such conduct created a direct territorial nexus with India and that personal liability was not excluded merely because the company was incorporated outside India or because the company itself was not proceeded against.

Conclusion: The challenge to jurisdiction and territorial applicability failed; the appellant was held personally liable notwithstanding the foreign incorporation of the company.

Issue (ii): Whether the evidence established conscious participation in undervaluation and use of false invoices so as to attract penalty under Sections 112(a) and 114AA of the Customs Act, 1962.

Analysis: The Tribunal found the allegations specific and supported by documentary material, including actual invoices and suppressed commercial invoices. The evidence established deliberate participation in the undervaluation mechanism, preparation and use of false documents for customs assessment, and abetment of importation liable to confiscation. On that basis, the ingredients of both penalty provisions were satisfied.

Conclusion: Penalty under Sections 112(a) and 114AA was upheld.

Final Conclusion: The appeal was rejected, and the impugned penalty order was sustained in full.

Ratio Decidendi: A person who knowingly participates in preparation and use of false or suppressed invoices for customs clearance in India incurs personal penalty liability under the Customs Act, even if the acts originated outside India and the foreign company itself was not separately proceeded against.

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