2026-VIL-1213-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs - Penalty under Section 114(iii) of the Customs Act, 1962 - Liability for Over-valuation of Exported Goods - The appellant was sought to be penalized for alleged over-valuation and mis-classification of goods in respect of 456 shipping bills resulting in falsely claimed drawback - Whether the appellant can be held liable under Section 114(iii) read with Section 113 of the Customs Act, 1962 when the evidence against him is confined to recorded statements only without any corroborative evidence showing his specific role in the over-valuation and mis-classification of the exported goods - HELD - The appellant merely performed the physical task of packing goods and handing them over to the CHA as instructed by the exporter and had no knowledge regarding the quality, value, or classification of the neckties - While the appellant admittedly helped in obtaining a fake driving licence, which is illegal and may attract criminal liability, this act alone cannot establish that he played a specific role in the over-valuation and mis-classification of goods across 456 shipping bills - Further, the only intercepted and seized consignments pertained to 16 shipping bills, whereas in respect of the remaining 440 shipping bills, the case relies purely on recorded statements without any corroborative evidence and without the mastermind being available for examination - The revenue has failed to bring any specific material to establish the appellant's direct involvement in the alleged contraventions and therefore sets aside the penalty imposed under Section 114(iii) - the Appeal stands allowed - Penalty under Section 114AA of the Customs Act, 1962 – Use of False and Incorrect Material – The appellant was also penalized for knowingly using false or incorrect material in the transaction of business - Whether the appellant can be held liable under Section 114AA when there is no allegation or evidence that he was responsible for filing, signing, or using any false or incorrect declaration, statement or document in respect of the impugned consignments - HELD - Section 114AA specifically pertains to a person who knowingly or intentionally makes, signs, or uses any declaration, statement, or document which is false or incorrect in any material particular. Since the appellant admittedly did not file, sign, or use any such document and was merely involved in the physical act of packing and handing over goods, and his involvement in obtaining a fake driving licence, though criminally culpable, does not fall within the category of contraventions specified under Section 114AA, the penalty imposed under this section is legally not sustainable and sets it aside - Penalty under Section 117 of the Customs Act, 1962 – The respondent contended that penalty under Section 117 for contravention not expressly mentioned elsewhere may be imposed - Whether the tribunal can entertain a prayer to impose penalty under Section 117 when the show cause notice did not propose such penalty and only proposed penalties under Section 114 and Section 114AA - HELD - In order to impose penalty under Section 117, the show cause notice must be issued seeking to impose a penalty under that section and must give the person an opportunity to defend against the charge under that specific section. Since the show cause notice in respect of the appellant only proposed penalties under Section 114 and Section 114AA, the revenue is procedurally precluded from raising the issue of penalty under Section 117 at the appellate stage - Therefore, the tribunal rejects the respondent's prayer to impose penalty under Section 117.
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