TaxTMI 
TaxTMI 
2026 (5) TMI 1039
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....r of Customs (Air Cargo), Chennai-VII Commissionerate. Since all the appeals emanate from the same Order-in-Original, involve common facts, common evidence and overlapping issues of law, they are taken up together and disposed of by this common order in respect of the undermentioned Appeals as tabulated below: - Sl. No. Appeal No. Appeal Filed By Appellant Name / Authority S/Shri Capacity / Description Duty / Penalty Involved 1 C/40309/2024 Assessee A. Mariappan CEO, M/s BSM Logistics Penalty under Customs Act (as per OIO) 2 C/40310/2024 Assessee M/s BSM Logistics Customs Broker Firm Penalty under Section 114(iii) 3 C/40336/2024 Assessee T. Sankara Kumar Partner, M/s BSM Logistics Penalty under Section 114(iii) 4 C/40365/2024 Assessee Nerella Samuel Deepak Avinash Appraiser of Customs Penalty under Sections 112(ii) / 114(iii) 5 C/40541/2024 Assessee Ashok Jain Associated Person Personal penalty 6 C/40542/2024 Assessee Narendra Sharma Associated Person Personal penalty 7 C/40543/2024 Assessee Sunil Sharma Proprietor, M/s Shree Balaji Jewellers ....
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....cing gold-coated copper bangles using only a fraction of the declared gold, thereby establishing the modus operandi of diversion. 3. The investigation has clearly brought out the involvement of Customs official and intermediaries, especially examination of the consignment by a non-rostered Appraiser and use of another officer's seal, as well as the role of the Customs Broker in facilitating such an examination. Consequently, statements recorded under Section 108 corroborated these findings. Based on the above, a show cause notice was issued proposing confiscation of fake jewellery, demand of duty on diverted gold, and imposition of penalties under various provisions of the Customs Act. The Adjudicating Authority, after due process, confirmed confiscation and duty demand, imposed penalties on the Exporter, Customs Broker, the non-rostered Appraiser and associated persons while dropping penalties against HDFC Bank and certain other noticees. 4. Being aggrieved by the findings and conclusions recorded in the impugned Order-in-Original, the Department, HDFC, exporter, certain individuals, Customs Brokers and other noticees have preferred the present appeals before this Tribunal a....
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....ipping Bill has described the export goods as necklaces, malas and chains, whereas the re-examined parcel contained bangles, thereby creating a serious doubt as to whether the same goods were examined at all. The appellants asserted that in the absence of clear and unimpeachable evidence establishing identity of goods, confiscation and penalties cannot be sustained. 6.3 The appellants further submitted that the reliance placed on statements recorded under Section 108 of the Customs Act, 1962 is legally untenable and such statements were either retracted, contradictory, or recorded under coercive circumstances, and in any event were not corroborated by independent documentary or circumstantial evidence. It was emphasised that settled law requires corroboration of confessional statements, particularly when they are used to fasten serious penal liability on co-noticees. The appellants contended that statements of co-noticees cannot be used as substantive evidence against other noticees without independent corroboration. 6.4 Specific submissions were advanced on behalf of the Customs Broker, M/s. BSM Logistics, its CEO Shri A. Mariappan, and its partner Shri T. Sankara Kumar cont....
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....er and certain Customs officer was contended to be wholly impermissible in law. 7. The Ld. Authorized Representative Shri Anoop Singh, Joint Commissioner has argued for the Revenue and his submissions / arguments are as follows: - 7.1 That the impugned Order-in-Original is based on a detailed investigation conducted by the Directorate of Revenue Intelligence and is supported by scientific evidence, expert opinion, documentary records, and statements recorded under Section 108 of the Customs Act, 1962. It was contended that the adjudicating authority has correctly appreciated the evidence in confirming confiscation, duty demand and penalties against the principal offenders and that such findings call for no interference. 7.2 The Revenue submitted that the investigation clearly established a deliberate and well-planned scheme to fraudulently export copper/brass jewellery with superficial gold coating by misdeclaring the same as 22 carat gold jewellery with inflated value, solely to falsely discharge export obligation under Notification No. 57/2000-Cus. It was argued that misdeclaration stood conclusively proved through physical examination, XRF analysis and assay reports, wh....
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....d during the course of investigation, as well as the written submissions filed by the parties and the case laws cited. 9. Upon such comprehensive consideration of the factual matrix and the applicable legal provisions, the following issues arise for our determination in these appeals, namely:- i. Whether exported goods were liable to confiscation. ii. Whether diversion of duty-free gold stands established. iii. Whether duty demand on HDFC Bank is sustainable. iv. Whether penalties imposed/dropped are legally correct. v. Whether Revenue Appeals in non -imposition of redemption fine on the Importer i.e., HDFC Bank merit acceptance 10. We now proceed to consider the issues seriatim, as they arise for determination, and record our findings thereon in the paragraphs that follow: - Issue No. (i) Whether exported goods were liable to confiscation 11. The first and foremost issue that arises for our determination is whether the goods exported by M/s Shree Balaji Jewellers under Shipping Bill No. 7870940 dated 31.01.2022, declared as 22 CT plain gold jewellery, were liable to confiscation under the provisions of Section 113 of the Cus....
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....e used for manufacture and export of gold jewellery of corresponding purity. The mis-declaration was thus not accidental but was designed to create an illusion of compliance with the notification. 16. Section 113(i) of the Customs Act, 1962 provides that goods shall be liable to confiscation if they are attempted to be exported by means of mis-declaration in value or in any material particular relating to description. Further, Section 113(ja) covers cases where export goods are entered for export by means of any false or incorrect declaration or statement. In the present case, the mis-declaration pertains to description, composition, purity, and value, all of which are material particulars for the purposes of export and eligibility under the exemption notification. 17. The cumulative effect of the evidence on record leaves no manner of doubt that the present case squarely falls within the mischief contemplated under Sections 113(i) and 113(ja) of the Customs Act. The declaration was not only incorrect but fundamentally deceptive, rendering the goods liable to confiscation irrespective of whether the export ultimately succeeded or not. 18. The appellants have placed conside....
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....t of lack of mens rea is misplaced at the stage of confiscation. Mens rea is not a prerequisite for ordering confiscation of goods under Section 113. The focus is on the nature of the goods and the correctness of the declaration made to Customs. The deliberate nature of mis-declaration, however, becomes relevant for the purpose of penalty, which is addressed in detail in succeeding paras of this order. 24. We also take note of the fact that the value of the goods was grossly inflated to align with the declared purity of 22 CT gold. Such inflation of value is intrinsically linked to the mis-declaration of purity and reinforces the conclusion that the declaration was not bona fide. 25. In view of the overwhelming evidence on record, the statutory provisions, and the settled legal position governing confiscation proceedings, we are of the considered opinion that the exported goods were correctly held to be liable to confiscation under Sections 113(i) and 113(ja) of the Customs Act, 1962. 26. We therefore uphold the findings of the Adjudicating Authority on this issue and hold that the confiscation of the goods covered under Shipping Bill No. 7870940 dated 31.01.2022 is legall....
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....ld bars were actually consumed in the manufacturing process. 32. It is also relevant that no stock register, manufacturing account, melting record, wastage statement, or reconciliation statement has been produced to demonstrate consumption of the duty-free gold. In schemes involving conditional exemption, maintenance of such records is not optional but mandatory. The absence of these records gives rise to a strong adverse inference against the exporter. 33. We find that the Notification No. 57/2000-Cus is a conditional exemption notification, permitting import of gold without payment of duty subject to strict compliance with specified post-import conditions, foremost among them being that the imported gold must be used for manufacture and export of gold jewellery within the prescribed period. It is settled law that exemption notifications of this nature must be construed strictly, and the burden of proving compliance squarely rests on the beneficiary. 34. The Hon'ble Supreme Court in Commissioner of Customs v. Dilip Kumar & Co., reported in 2018 (361) ELT 577 (SC), has authoritatively held that when an assessee claims exemption under a notification, it is for the assessee ....
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....ven allowing for reasonable wastage, the difference between 9,364.86 grams and 889.08 grams is far beyond any conceivable manufacturing loss. No industry standard or expert evidence has been produced to justify such an abnormal depletion. 40. The cumulative effect of the quantitative mismatch, absence of transport and manufacturing records, corroborative statements of job workers, and scientific analysis of the exported jewellery leaves no room for doubt that the imported duty-free gold was not utilised for the intended export and was instead diverted in violation of the conditions of Notification No. 57/2000-Cus. 41. We therefore hold that the diversion of 8,475.78 grams of duty-free gold stands conclusively established. The denial of exemption, coupled with confiscation of the diverted quantity under Section 111(o) of the Customs Act, 1962, is legally sound and fully justified. 42. Accordingly, we affirm the findings of the Adjudicating Authority on this issue and uphold the order of confiscation of the diverted gold under Section 111(o), while sustaining the decision not to impose redemption fine due to non-availability of the goods. ISSUE No. (iii): Whether the Duty....
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....nvocation of Section 28(4) of the Customs Act, 1962. According to the Department, the expression "either by itself or through other exporters" occurring in Notification No.57/2000-Cus fastens ultimate responsibility upon the nominated agency importer for fulfillment of export obligation and consequently the fraud committed by the exporter becomes attributable to the importer itself. 47. We are unable to accept the aforesaid contention in the broad manner canvassed by the Department. Notification No.57/2000-Cus undoubtedly casts obligations upon the nominated agency importer and specifically requires execution of bonds, undertaking to export jewellery either by itself or through exporters within the stipulated period. The notification further binds the importer to pay customs duty on the quantity representing the shortfall in export obligation. Circular No.27/2016-Cus correspondingly provides that where proof of export is not produced within the prescribed period, the nominated agency shall deposit the customs duty together with applicable interest. The FTP and Handbook of Procedures similarly contemplate recovery of customs duty from the nominated agency importer in the event of....
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....mption notification and invocation of fraud-based proceedings under Section 28(4) and the penal provisions of the Customs Act. The Tribunal categorically held that while recovery of customs duty may independently arise under the notification, FTP framework and bond obligations, fraud, suppression or wilful misstatement cannot automatically be imputed to the nominated agency importer merely because the exporter subsequently committed fraud. The Tribunal specifically observed that once the nominated agency had deposited the customs duty together with applicable interest prior to issuance of the Show Cause Notice and the corresponding bond obligations stood discharged, "the matter should have ended there" insofar as substantive revenue recovery was concerned. 51. We find that the ratio of the aforesaid Coordinate Bench decision squarely applies to the facts of the present case. The records before us clearly establish that HDFC Bank imported the gold within the statutory framework contemplated under Notification No.57/2000-Cus, Circular No.27/2016-Cus, FTP and HBP; executed the prescribed bonds; released bullion only against export-linked documentation; and upon detection of export ....
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.... recovery of customs duty substantially remained for adjudication before us insofar as HDFC Bank is concerned. The question of penalties and other consequential liabilities are being separately dealt with in the later portion of this order. 55. Consequently, the findings recorded by the adjudicating authority treating the case as one falling under Section 28(1) and not under Section 28(4) call for no interference. The Departmental Appeal on this issue is therefore liable to be rejected. ISSUE No. (iv): Whether the Penalties Imposed, Dropped, or Not imposed upon the various noticees are legally Sustainable 56. The fourth issue for determination concerns the correctness, legality, proportionality, and sustainability of the penalties imposed by the Adjudicating Authority upon various noticees as also the legality of dropping or non-imposition of penalties against certain noticees, which has been challenged by the Department. The issue requires an independent evaluation of the role, conduct, degree of involvement, and mens rea attributable to each category of noticee in the light of the statutory requirements under Sections 112, 114, 114AA and 117 of the Customs Act, 1962. ....
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....fiscation are knowingly attempted to be exported improperly, while Section 114AA penalises knowing use of false declarations and documents. The shipping bills, invoices and declarations filed by the exporter contained demonstrably false particulars relating to purity, composition and nature of the exported goods. The evidence further establishes nexus between export of fake jewellery and diversion of duty-free imported gold obtained under the exemption scheme. The cumulative circumstances therefore establish deliberate abuse of the export promotion scheme and conscious use of fabricated export declarations. 60. The Hon'ble Supreme Court in Collector v. D. Bhoormull, 1983 (13) E.L.T. 1546 (S.C.), has held that in customs matters mens rea can legitimately be inferred from conduct and surrounding circumstances. Applying the said principle, the sustained pattern of misdeclaration and use of fabricated export declarations conclusively establish conscious involvement on the part of the exporter. We therefore find no reason to interfere with the findings or penalties imposed in the impugned Order-in-Original against M/s. Shree Balaji Jewellers and Shri Sunil Sharma and consequently Not....
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....ellers and Shri A. Mariappan of M/s. BSM Logistics, failed to impose penalties under Sections 114AA and 112(ii) of the Customs Act, 1962. 66. However, insofar as penalty under Section 112(ii) is concerned, we find that the evidence against Shri Narendra Sharma principally relates to facilitation and coordination of export activities and not to direct dealing with the imported duty-free gold alleged to have been diverted. No recovery of imported gold was effected from him and no material has been produced establishing that he physically dealt with, possessed, transported, concealed, or handled imported gold liable to confiscation under Section 111 of the Customs Act, 1962. While the cumulative circumstances clearly justify penalties relating to the fraudulent export and use of false declarations, the evidentiary threshold necessary for sustaining penalty under Section 112(ii) is not satisfied. Accordingly, penalty under Section 112(ii) is held not invocable against Shri Narendra Sharma. 67. As regards, penalty under section 114AA of Customs Act, we have examined the contentions of the Department. The evidentiary record clearly establishes that Shri Narendra Sharma was not a pe....
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....n with manufacture of jewellery does not establish conscious involvement in export fraud or diversion of duty-free gold. 70. On careful examination of the impugned Order-in-Original, we find that Shri Ashok Jain has been specifically identified as one of the principal operational persons involved in arranging manufacture and movement of fake jewellery ultimately exported in the guise of genuine 22-carat gold jewellery. The Order-in-Original records that the gold-plated copper jewellery was manufactured through job workers under his supervision and instructions and that he maintained continuous coordination with the exporter and associated persons involved in the export chain. 71. The plea that Shri Ashok Jain did not personally file shipping bills or physically present the goods before Customs does not absolve him from liability under Section 114(iii) once active facilitation and intentional assistance stand established. The cumulative evidence discussed in the Order-in-Original, including statements of job workers, linkages with exporter entities and coordination in movement of consignments, sufficiently establishes conscious involvement on his part in the fraudulent export ....
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....s decision insofar as non-imposition of penalty under Section 112(ii) is concerned. The connected Departmental appeal therefore stands rejected. (F) Penalties on Customs Broker: M/s. BSM Logistics, Shri A. Mariappan and Shri T. Sankara Kumar (Noticee Appeals Nos. C/40546/2024, C/40547/2024 and C/40548/2024) 78. We shall now examine the appeals filed by M/s. BSM Logistics, licensed Customs Broker, Shri A. Mariappan, CEO of M/s. BSM Logistics, and Shri T. Sankara Kumar, Partner of the said Customs Broker firm, challenging the penalties imposed upon them under Section 114(iii) of the Customs Act, 1962 in terms of the impugned Order-in-Original No. 32/2024-AIR dated 03.02.2024 passed by the Principal Commissioner of Customs, Air Cargo, Chennai. The consistent contention advanced by the appellants is that they merely acted in the ordinary course of customs clearance activities as licensed Customs Brokers and that no evidence exists to establish conscious involvement, mens rea, or intentional facilitation of export of fake jewellery. It has further been contended that the appellants neither manufactured the jewellery nor had any knowledge regarding the alleged substitution of gold ....
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....t gold jewellery. 82. The Ld. Counsel for the appellants has relied upon Fast Cargo Movers v. Commissioner of Customs [2018 (362) E.L.T. 184 (Tri.-Del.)], Guru Ispat Ltd. v. CCE [2003 (151) E.L.T. 384 (Tri.-Kol.) affirmed at 2003 (157) E.L.T. A87 (S.C.)], Sawroop Shipping Services v. Commissioner of Customs [2008 (227) E.L.T. 555 (Tri.-Chennai)], Commissioner v. Vaz Forwarding Ltd. [2011 (266) E.L.T. 39 (Guj.)], and Jeena & Co. v. Additional Collector [1992 (58) E.L.T. 276 (Tri.)] to contend absence of mens rea and to argue that intermediaries such as Customs Brokers cannot be penalised in the absence of direct evidence showing knowledge of the offending transaction. There can be no dispute regarding the legal proposition laid down in the aforesaid decisions that penalty cannot be imposed in cases involving mere routine discharge of statutory functions without evidence of conscious involvement or facilitation. 83. However, we find that the said decisions are clearly distinguishable on facts. In the present case, the evidence does not disclose passive or routine compliance with customs formalities but indicates conscious coordination of examination through a non-rostered offic....
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....egarding procedural deviation and facilitative conduct in the export clearance process. It is settled law that public office does not confer immunity from penal consequences under the Customs Act where acts or omissions facilitate export of goods liable to confiscation. Sections 112 and 114 apply to "any person" and do not carve out any blanket exception in favour of departmental officers. At the same time, the degree of culpability necessary for invoking each penal provision must independently satisfy the statutory ingredients prescribed therein. 86. The Ld. Counsel for Shri N.S.D. Avinash has relied upon Boria Ram v. Commissioner of Customs [2005 (190) E.L.T. 496 (Tri.-Del.)], Ruchika International v. Commissioner of Customs [2006 (198) E.L.T. 360 (Tri.-Del.)], A.P. Sales v. Commissioner of Customs [2007 (216) E.L.T. 161 (Tri.-Del.)], Hargovind Exports v. Commissioner of Customs [2010 (259) E.L.T. 362 (Tri.-Del.)], Commissioner v. M. Vasi [2015 (325) E.L.T. 255 (Mad.)], Fast Cargo Movers v. Commissioner of Customs [2018 (362) E.L.T. 184 (Tri.-Del.)], Gobinda Das v. Commissioner of Customs [2017 (352) E.L.T. 583 (Tri.-Kol.)] and G-Tech Industries v. Union of India [2016 (339) E....
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....escription and physical nature of goods. The controversy therefore extends beyond mere erroneous discharge of official duty and enters the realm of conscious procedural deviation facilitating export of misdeclared goods. Consequently, the statutory protection under Section 155 of the Customs Act cannot, in the facts of the present case, be extended to exclude examination of penal liability under the Customs Act where conscious procedural deviation facilitating export of mis-declared goods is prima facie established. This is particularly so when the very manner of discharge of official functions forms part of the facilitative conduct alleged by the Department 89. In the above factual background, we are of the considered view that the cumulative circumstances on record establish conscious disregard of statutory safeguards and active facilitation of export of mis-declared goods rendering the export consignments liable to confiscation. The conduct of Shri N.S.D. Avinash therefore squarely attracts penalty under Section 114(iii) of the Customs Act, 1962 and the same calls for no interference. However, insofar as penalty under Section 112(ii) is concerned, we find no evidence showing ....
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....ainst SHRI P. Thulasi Ram, Superintendent (Appeal No. C/40334/2024): 93. We have carefully considered the submissions of the Department as well as the defence taken by Shri P. Thulasi Ram Superintendent in light of the findings recorded in the Order-in-Original. The adjudicating authority itself has noted that the actual examination of the impugned consignments was carried out by Shri N.S.D. Avinash, Appraiser, and not by Shri Thulasi Ram, though the latter's name/seal appeared in the system records. It is also on record that due to heavy workload and administrative constraints in the export shed, Shri Thulasi Ram had permitted use of his brass seal by a fellow officer who was also functioning as a jewellery appraiser. The Order-in-Original, while discussing the role of various noticees, does not bring out any independent or corroborative evidence to establish that Shri Thulasi Ram had physically examined the goods or had any role in certifying the nature of the consignment. Thus, the foundational fact emerging from the record is that the alleged lapse is not one of active involvement, but at best one of procedural irregularity arising in the course of official functioning by al....
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....sion, or active facilitation on his part in the fraudulent export of mis-declared jewellery. The acts attributed to him, even if accepted in entirety, are in the nature of procedural or administrative lapses arising in the course of discharge of official duties and do not satisfy the essential statutory ingredients necessary for imposition of penalty under Sections 114(iii) or 112(ii) of the Customs Act, 1962. We therefore find no infirmity in the conclusion reached by the adjudicating authority in declining to impose penalties upon Shri P. Thulasi Ram. Consequently, Departmental Appeal No. C/40334/2024 filed by the Revenue against Shri P. Thulasi Ram is liable to be rejected and accordingly stands dismissed. (J) Penalties on Goldsmiths / Job Workers (Departmental Appeal No. C/40331/2024) 97. We shall now examine Departmental Appeal No. C/40331/2024 whereby the Revenue has challenged the decision of the adjudicating authority dropping penal proceedings against Shri Zillur Rehman Mondal and Shri Mainuddin Rehman Mondal. The impugned Order-in-Original records that both the said noticees were engaged as goldsmiths/job workers in relation to manufacture of gold-plated imitation j....
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....case. Mere manufacture of imitation jewellery, by itself, cannot automatically lead to the inference that the goldsmiths were aware of diversion of imported duty-free gold or of the subsequent fraudulent export of such imitation jewellery under the guise of genuine gold jewellery. The evidentiary record does not disclose any pecuniary benefit linked to export incentives, any financial flow-back, any recovery of diverted imported gold from them, or any material showing that they knowingly participated in the export fraud. The Department has also not produced any evidence establishing that the said noticees were aware that the goods manufactured by them would ultimately be exported by mis-declaring them as genuine 22-carat gold jewellery. 101. It is well settled that penal liability under Sections 117 of the Customs Act, 1962, being quasi-criminal in nature, necessarily requires existence of conscious knowledge, intentional involvement, collusion, or active abetment. Mere labour-oriented participation in a manufacturing process, absent evidence of mens rea or conscious facilitation of customs fraud, cannot by itself justify imposition of penalties under the Customs Act. The adjudi....
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....f the Customs Act. However, we find no statutory basis, factual foundation, or evidentiary material to attribute mens rea, abetment, conscious omission, collusion, or knowing facilitation to HDFC Bank. Penal provisions under Sections 112, 114 and 114A necessarily require conscious involvement, intentional facilitation, wilful suppression, or knowing participation in the offending acts. None of these essential ingredients stand established against the Bank. 105. The Department has contended that being the importer and nominated agency under Notification No.57/2000-Cus, HDFC Bank remained absolutely liable for all consequences arising from export of fake jewellery and diversion of duty-free gold. We are unable to accept the said contention in the broad manner canvassed by the Revenue. While a nominated agency may remain answerable for discharge of customs duty flowing from the exemption notification and the executed bond obligations, the Customs Act does not create automatic penal or vicarious liability upon a nominated agency for every subsequent fraudulent act independently committed by exporters, job workers, intermediaries, or examining personnel unless knowledge, collusion, w....
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.... Customs (Adjudication), Delhi Zone, 2025 (10) TMI 825 (CESTAT-New Delhi), wherein it was held that a nominated agency cannot be penalised for fraudulent acts independently committed by exporters in the absence of evidence establishing knowledge, connivance, or conscious involvement of the importer. The factual matrix in the present case stands materially similar. The Bank had no role in manufacture of jewellery, export processing, or diversion of gold and no evidence of collusion or wilful breach of statutory obligation has been brought on record. Accordingly, we hold that no penalty is imposable upon HDFC Bank Ltd. under Sections 112, 114 or 114AA of the Customs Act, 1962 and the Departmental appeal seeking imposition of penalty upon the Bank is rejected. Conclusion on Issue No.(iv) Penalties 108. We also find that the adjudicating authority has correctly distinguished between principal participants in the fraudulent scheme and those against whom the evidence merely establishes procedural lapse, labour-oriented activity, or absence of conscious involvement. Accordingly, the exoneration/dropping of penalties in respect of Shri P. Thulasi Ram, Shri Zillur Rehman Mondal, Shri ....
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....4 : - 110. We have carefully examined whether redemption fine under Section 125 of the Customs Act, 1962 can be sustained in respect of goods which are admittedly not available for physical confiscation, having already been cleared and utilised. We find merit in the appellants' contention that redemption fine is not legally leviable in such circumstances. Section 125 contemplates an option to redeem confiscated goods in lieu of confiscation. The statutory precondition for exercise of such option is the physical availability of goods which can either be confiscated or released on payment of fine. Where confiscation itself is incapable of execution due to non-availability of goods, the legal foundation for offering redemption necessarily fails. 111. The Department has placed reliance on the decisions in Weston Components Ltd. v. Commissioner of Customs (Supreme Court), Visteon Automotive Systems India Ltd. v. CESTAT (Madras High Court) to contend that, even though the goods are not physically available, confiscation and consequential proceedings are sustainable. 112. The learned counsel for the appellants has relied upon the decisions in Commissioner of Customs (Import), Mum....
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....ii) and (iv), we have drawn a clear distinction between the liability arising under Notification No.57/2000-Cus and the bond obligations executed by HDFC Bank Ltd. on the one hand and the fraud-based allegations raised by the Department on the other. The records clearly establish that HDFC Bank Ltd., functioning as the nominated agency importer, discharged the entire customs duty together with applicable interest prior to issuance of the Show Cause Notice and the adjudicating authority itself recorded absence of collusion, conscious involvement, or wilful suppression on the part of the Bank in the fraudulent export transactions undertaken by M/s Shree Balaji Jewellers. We have therefore upheld the findings of the adjudicating authority insofar as HDFC Bank Ltd. is concerned and found no justification to interfere with the dropping of further proceedings against the Bank. 117. With regard to penalties, we have undertaken a role-specific analysis of the conduct attributable to each noticee and have confirmed penalties only where the evidence establishes conscious involvement, active facilitation, deliberate procedural deviation, intentional misdeclaration, or knowing use of false ....
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.... or intentional facilitation and therefore the adjudicating authority was justified in declining to impose penalties upon him. Likewise, in the case of the goldsmiths/job workers and HDFC Bank Ltd., the evidence falls short of establishing the statutory threshold necessary for imposition of penal consequences under the Customs Act, 1962. 120. We have also remained conscious of the settled principle that penal provisions under fiscal statutes, being quasi-criminal in nature, require strict construction and cannot be invoked merely on the basis of suspicion, institutional association, or retrospective inference unsupported by legally sustainable evidence. The conclusions recorded herein therefore represent a careful balance between enforcement of fiscal discipline and protection against unwarranted penalisation. 121. Taken as a whole, the present case reveals a carefully orchestrated attempt to misuse a beneficial export promotion scheme intended for genuine exports, resulting in loss to the exchequer and erosion of regulatory trust. Such conduct warrants firm action under the Customs Act, 1962 both to neutralise the economic advantage derived through misuse of the scheme and t....
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....on 114AA is allowed and penalty of Rs.20,00,000/- (Rupees Twenty Lakhs only) is imposed upon Shri Narendra Sharma under Section 114AA of the Customs Act, 1962. However, the Departmental Appeal seeking imposition of penalty under Section 112(ii) against Shri Narendra Sharma is rejected. Consequently, Noticee Appeal No. C/40544/2024 stands dismissed and the connected Departmental Appeal stands partly allowed to the above extent. v. The penalty imposed upon Shri Ashok Jain under Section 114(iii) of the Customs Act, 1962 is upheld. However, the Departmental Appeal seeking imposition of penalty under Section 112(ii) against Shri Ashok Jain is rejected. Consequently, Noticee Appeal No. C/40545/2024 stands dismissed and the connected Departmental Appeal stands rejected. vi. The penalties imposed upon M/s BSM Logistics, Shri A. Mariappan and Shri T. Sankara Kumar under Section 114(iii) of the Customs Act, 1962 are upheld and consequently Noticee Appeal Nos. C/40546/2024, C/40547/2024 and C/40548/2024 stand dismissed. vii. The penalty imposed upon Shri N.S.D. Avinash under Section 114(iii) of the Customs Act, 1962 is upheld. However, the penalty imposed upon him u....