2026-VIL-1589-CESTAT-CHE-CU
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  2. 2026-VIL-1589-CESTAT-CHE-CU

CUSTOMS CESTAT Cases

Customs - Adjudication of Show Cause Notice - Adjudicating Authority Cannot Travel Beyond Scope – Appellant, an authorised courier under the Courier Imports and Exports (Clearance) Regulations, 2010, accepted export consignment through intermediary agents and filed Courier Shipping Bill; examination revealed pseudoephedrine hydrochloride concealed in garment embroidery; Show Cause Notice alleged unauthorised sub-contracting of courier services and non-compliance with Know Your Customer requirements for identity verification – Whether the adjudicating authority can introduce for the first time in the Order-in-Original new material facts and legal foundations not disclosed in the Show Cause Notice, including alleged violation of different regulations, treatment of the appellant as consignor, and attribution of knowledge of attempted smuggling – HELD – The adjudicating authority cannot travel beyond the scope of the Show Cause Notice by introducing new material facts which constitute the very foundation of the proposed liability; a distinction must be maintained between material facts which form the foundation of the charge and particulars which elaborate such facts; the material facts necessary to constitute a complete cause of action must be stated in the Show Cause Notice to enable the assessee to reasonably defend itself; the essential test is whether the Notice disclosed the essential factual and legal foundation of the charge so as to enable the noticee to effectively defend itself; findings based on material facts not contained in the Show Cause Notice, such as alleged violation of Regulations 13(a) and 13(c), treatment of the appellant as consignor/exporter, and attribution of knowledge or conscious participation in smuggling, are unsustainable – Impugned order set aside to the extent it rests on such travel beyond the Notice - Customs - Courier Regulations - Identity Verification - Appellant, an authorised courier, accepted an export consignment on the basis of one identity document (driving licence) which contained both identity and address particulars; Show Cause Notice alleged contravention of Regulation 13(i) of the Courier Imports and Exports (Clearance) Regulations, 2010 for failure to obtain two identity documents as required by Know Your Customer instructions – Whether acceptance of a consignment on the basis of a single genuine identity document containing both proof of identity and address particulars constitutes contravention of Regulation 13(i) of the Courier Regulations – HELD – Regulation 13(i) requires verification of the antecedents, correctness of Importer Exporter Code number, identity of the client and functioning at the declared address using reliable, independent and authentic documents and information, but does not mandate two identity documents; the requirement for two documents originated from Board's Know Your Customer instructions issued vide Circular No. 33/2010 and was subsequently relaxed by Circular No. 7/2015-Cus which accepted one document if it contained both identity and address particulars; non-production of a second identity document may constitute a procedural lapse but absent evidence that the consignor's identity or address could not be verified from the undisputedly genuine identity document, it does not establish breach of Regulation 13(i); the circular, though prospective, supports the distinction by recognising that one prescribed document serving as proof of both identity and address is sufficient – Finding of contravention of Regulation 13(i) set aside - Customs - Courier Regulations - Sub-contracting of Core Functions vs Non-core Activities – Appellant, an authorised courier, arranged for pick-up and collection of export consignments through intermediary agents without obtaining written permission of the Commissioner of Customs; SCN alleged unauthorised sub-contracting in violation of Regulation 13(j) of the Courier Imports and Exports (Clearance) Regulations, 2010 – Whether outsourcing of physical pick-up and collection of export consignments from the consignor constitutes prohibited sub-contracting of functions under Regulation 13(j) of the Courier Regulations – HELD – Regulation 13(j) prohibits sub-contracting or outsourcing of functions permitted or required to be carried out by an authorised courier only when such functions are regulatory functions contemplated by the Courier Regulations; the regulation does not prohibit all commercial outsourcing but only those functions which the Regulations themselves designate as courier functions; pick-up and collection of export consignments are not assessment or clearance functions which constitute the core regulatory functions of an authorised courier under the Courier Regulations; Circular No. 59/2016-Cus recognises pick-up as a non-core activity not requiring prior written permission but only due diligence and intimation; installation of the appellant's software at the agent's premises shows knowledge of the arrangement but does not prove that a regulatory function was outsourced; mere outsourcing of physical pick-up therefore does not violate Regulation 13(j) – Finding of contravention of Regulation 13(j) set aside - Customs - Smuggling - Courier Liability for Concealed Contents - Knowledge and Connivance Required – Appellant, an authorised courier, filed Courier Shipping Bill for export of garments; examination revealed pseudoephedrine hydrochloride concealed ingeniously within embroidered portions of the garments; Show Cause Notice alleged that appellant knowingly filed a false or incorrect declaration and aided smuggling of prohibited narcotic drugs; penalties were proposed under Sections 114(i) and 114AA of the Customs Act, 1962 – Whether an authorised courier can be held liable for concealed prohibited contents discovered in export consignments in the absence of evidence of the courier's knowledge, connivance or collusion in the misdeclaration or concealment – HELD – A courier cannot be held liable for concealed contents merely because the consignor had incorrectly declared the contents of the consignment; Section 114(i) of the Customs Act requires an act or omission rendering goods liable to confiscation while Section 114AA requires use of false or incorrect material with knowledge or intent; mere filing of the courier declaration on the consignor's information followed by discovery of prohibited goods does not establish a knowing false declaration; installation of the appellant's software at another entity's premises or receipt of the consignment through an intermediary does not by itself establish knowledge and control or failure to discharge a specific regulatory obligation; no cogent evidence has been produced to establish that the appellant knew of, participated in, or facilitated the misdeclaration or the ingenious concealment of the narcotic substance which could be detected only by cutting open the garments; neither the ingredient of knowledge nor the ingredient of intent to make a false declaration is present – Penalties under Sections 114(i) and 114AA set aside; appeal allowed.
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