2025-VIL-2014-CESTAT-CHE-CU
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CUSTOMS CESTAT Cases

Customs – Section 114(iii) of Customs Act, 1962 – Imposition of penalty – Sustainability – Investigation conducted by Directorate of Revenue Intelligence (DRI) unearthed a network of exports allegedly effected in fictitious names, inflated export values, non-realisation of export proceeds and encashment of drawback proceeds through newly opened bank accounts – Since department could not trace purported exporters, Commissioner imposed penalties upon Appellants/Liner and its Employee under Section 114(iii) of the Act – Whether penalties imposed on Appellants under Section 114(iii) of the Act are sustainable – HELD – Shipping line or its employee cannot have direct knowledge of contents of goods covered in Shipping Bills, as they are in final leg of shipment. Container was stuffed and sealed in presence of Customs officials. Appellants have not been named as abettors or co-conspirators in any statements recorded by Investigation. Shipping Bills were assessed and Let Export Orders are accorded by Customs Officers. There is no evidence of Customs Supervision and this had contributed to fraud not being detected ab initio. Allegation of under valuation should have been detected by Customs officers at time of examination, which was not done so. There is total systemic failure on part of Examination Staff. There is no direct link/interface between Appellants and exporters. Appellants are not beneficiaries of fraudulent drawback. Material available on record does not establish requisite knowledge, intent or active facilitation by liner or its employee to justify imposition of penalty. Penalties imposed on all Appellants are set aside – Appeals allowed
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