Customs penalties require proof of conscious involvement; mere suspicion or intermediary document movement is insufficient for penal liability.

Penalties under the Customs Act, 1962 for alleged overvaluation of export consignments and wrongful IGST refund were examined on the basis of alleged facilitation of fraudulent exports. The Tribunal held that penal action under Section 114(iii) and Section 114AA requires cogent proof of active participation, conscious knowledge, or deliberate involvement, and that mere suspicion, conjecture, or movement of documents through intermediaries is insufficient. Relying on its earlier decision on identical facts, it treated the absence of direct or corroborative evidence of a deliberate nexus as fatal to the Revenue's case and set aside the penalties.

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Issues: Whether penalties imposed under Section 114(iii) and Section 114AA of the Customs Act, 1962 were sustainable in the absence of cogent evidence of active participation, conscious knowledge, or deliberate involvement in the alleged overvaluation of export consignments and wrongful IGST refund claim.

Analysis: The Tribunal found that the Revenue's case rested on allegations of facilitation of fraudulent exports, but no direct or corroborative evidence established any active role, conscious knowledge, or deliberate nexus on the part of the appellant. Mere suspicion, conjecture, or movement of documents through intermediaries was held insufficient to justify penal consequences. The Tribunal also followed its earlier decision in the appellant's own case on identical facts, where similar penalties had been set aside for want of proof of knowledge and involvement.

Conclusion: The penalties under Section 114(iii) and Section 114AA of the Customs Act, 1962 were held unsustainable and were set aside in favour of the appellant.

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