2026-VIL-1896-CESTAT-AHM-CU
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CUSTOMS CESTAT Cases

Customs - Penalty on alleged masterminds - Section 112(a) of Customs Act, 1962 - Betel nuts were found concealed behind HMS scrap in four containers imported in the name of the importer firm and were confiscated. The Appellants were alleged to be masterminds and financiers of the importer firm, and penalty was imposed on each under Section 112(a) as abettors. The case rested on statements of co-noticees recorded in a separate investigation and on the Appellants' own statements, which were retracted before the Magistrate. Cross-examination was not allowed - Whether penalty under Section 112(a) is imposable on the Appellants on the basis of such evidence - HELD - The Department relied upon statements and documents relating to a separate investigation against another firm, without a proper connect being established. The proprietor of the importer firm, the most crucial witness, was not interrogated as he is alleged to be absconding, so the investigation remains incomplete and half baked. The co-accused were not subjected to cross-examination, which is a right of the party as per Section 138B. The Appellants have made no culpatory statement till date, as the earlier statements were retracted. The forged certificate attributed to the Appellant was not established by any forensic, handwriting or computer expert evidence. It was seized from the computer of the Customs Broker, and as per Section 138C it is presumed to be in the Customs Broker's possession. There was also no logical basis for imposing a higher penalty on the Appellants than on the importer on record. The case of the Department is far from proved, and the mens rea or the connect required to establish conspiracy is not established - The penalties under Section 112(a) are set aside and the appeals are allowed - Financing of imports - Section 2(26) of Customs Act, 1962 - The Appellants were alleged to have financed the importer firm and to be its owners and beneficiaries. The Appellants denied funding it and stated that the payment was made by a third-party firm - Whether the Appellants can be treated as importer under Section 2(26) and penalised for financing the import - HELD - At the time of import, the definition of importer under Section 2(26) did not include the expression beneficial owner. The importer could only be the owner as per documents or a person who holds himself out to be the importer. The proprietor of the importer firm held himself out as the importer, which is not disputed. The Appellants never held themselves out as the owner of the consignment, so ownership cannot be imposed upon them. The allegation of financial benefit was denied, as the payment was made by the third-party firm. Financing directly or indirectly someone cannot be an offence - The Appellants cannot be treated as importer or owner of the goods, the penalties are not sustainable and the appeals are allowed.
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