Betel Nuts Hidden In Scrap: CESTAT Sets Aside ₹25 Lakh Each Penalty Against Two Accused, Finding Conspiracy Unproven

Customs found 21.420 MT of betel nuts concealed among HMS scrap in four containers imported in the name of M/s Radhika Impex.

The Department alleged that Sanjay Shah and Ramnarayan S. Laddha masterminded the imports, including by financing and arranging clearance; it relied on statements, financial transfers, and an alleged forged bank certificate.

The adjudicating authority imposed a penalty of ₹25 lakh on each appellant under Section 112(a) of the Customs Act, 1962.

The appellants challenged the penalties, disputing their knowledge or involvement and arguing that the case relied on uncorroborated statements and material concerning a different entity, M/s Bhagyoday Enterprises. They also complained that cross-examination had been denied.

The Tribunal noted that the named proprietor of Radhika Impex had not been interrogated and that the alleged certificate had not been forensically linked to either appellant.

Section 112(a) of the Customs Act permits a penalty where a person’s act or omission renders goods liable to confiscation, or the person abets such conduct; the Tribunal required proof of a sufficient connection between the person and the offending goods or conduct

Section 2(26), as applicable at the time of import, defined an “importer” to include an owner or a person holding himself out to be the importer; the Tribunal held that the later inclusion of “beneficial owner” did not apply to these imports

The Tribunal also applied the principles that disputed statements require cautious assessment and that a requested opportunity to cross-examine material witnesses must be afforded where required under Section 138B

It considered Section 138C in relation to the electronic certificate seized from the customs broker’s computer

The Tribunal found that the Department’s financing and operational-control allegations relied heavily on the investigation into Bhagyoday Enterprises, without a sufficiently established link to the Radhika Impex consignments.

The Radhika Impex proprietor, identified in the documents as importer, had not been examined, while the appellants’ alleged statements had been retracted and material co-noticee statements were not tested by cross-examination.

The alleged forged certificate was not supported by forensic or handwriting evidence linking its preparation to Shah; its seizure from the customs broker’s computer did not establish that either appellant created it.

In those circumstances, the Tribunal held that the evidence did not establish the appellants’ knowledge, abetment, or other sufficient connection with the goods to sustain penalties under Section 112(a).