Customs penalties cannot stand without evidence of knowing participation in the illegal importation.

DRI investigated imports of branded glass chatons allegedly undervalued and cleared using genuine or fictitious IECs.

The appellant, an Assistant Manager at a logistics company, was alleged to have introduced an importer to a customs-clearance agent and provided a contact who could arrange an IEC.

The Commissioner imposed a consolidated penalty of ₹1 lakh on him under Sections 112(a) and 114AA of the Customs Act, 1962.

The appellant appealed, contending that there was no evidence that he owned the goods, procured the IEC, or knowingly participated in undervaluation.

1. Whether the appellant’s alleged introduction of an importer to a freight forwarder and provision of a contact who could arrange an IEC established knowing participation in an unlawful import arrangement sufficient to sustain the penalty.

2. Whether the penalty under Sections 112(a) and 114AA of the Customs Act was sustainable in the absence of evidence that the appellant procured the IEC, imported the goods, or otherwise committed a culpable act with knowledge of illegality.

Sections 112(a) and 114AA of the Customs Act, 1962 were the provisions under which the penalty had been imposed; the Tribunal assessed whether the evidence established blameworthy conduct by the appellant.

Section 7 of the Foreign Trade (Development and Regulation) Act, 1992, read with Rule 12 of the Foreign Trade (Regulation) Rules, 1993 and paragraph 2.9.2 of the Handbook of Procedures, was described in DGFT Policy Circular No. 6 (RE-2013)/2009-2014 as requiring importers to use their own IEC, subject to stated exceptions.

The Tribunal noted that Proprietor, Carmel Exports & Imports v. Commissioner of Customs, Cochin, 2012 (276) E.L.T. 505 (Ker.), treated acting as a name-lender as not, by itself, prohibited where the import was otherwise lawful, while Bhaskar Logistics Services Pvt. Ltd. v. Union of India, 2016 (34) E.L.T. 17 (Pat.), took a contrary view on IEC use; it held that the IEC issue was not determinative here.

The Tribunal referred to the definition of criminal conspiracy in Section 120-A of the erstwhile IPC, now Section 61(1) of the BNS, as an aid to understanding the allegation, while expressly treating it as not directly applicable.

The Tribunal found that the order did not establish that the appellant himself imported goods using another person’s IEC, nor did the evidence show that he actually procured the IEC or knew of an illegal activity.

His alleged conduct—introducing an importer to a freight forwarder and supplying a contact said to be able to arrange an IEC—did not, without evidence of knowing participation in illegality, establish a culpable act under the Customs Act.

The Tribunal therefore considered the broader dispute over whether an IEC may be used by someone other than its holder irrelevant to the appellant’s case.

It set aside the impugned order, including the penalty imposed on the appellant, and allowed consequential relief, if any, in accordance with law.