Delhi HC Sets Aside ₹10 Lakh Penalty On Customs Agent In Firecracker Import Case, Citing No Independent Evidence And Denied Cross-Examination

The appellant, a Customs House Agent based in Ludhiana, was penalised ₹10 lakh under Section 112(b)(i) of the Customs Act, 1962, for allegedly knowing of and facilitating the import of Chinese firecrackers concealed among declared bicycle parts.

The goods were seized at the ICD, Tughlakabad, before a Bill of Entry was filed.

The adjudicating authority found that the appellant’s role in the import was not proved but inferred his knowledge and involvement from co-noticee statements and contact details.

His request to cross-examine three persons whose statements were relied upon was refused.

The CESTAT dismissed his appeal; he appealed to the High Court under Section 130 of the Act.

Section 112(b)(i) of the Customs Act provides for penalty for specified conduct concerning goods liable to confiscation; the court considered whether evidence established the appellant’s liability under that provision.

Section 138B concerns the use of statements in proceedings under the Act.

Cross-examination is not an absolute right, but may fall within the principles of natural justice, particularly where statements are relied upon against a person.

The evidence against the appellant consisted of co-noticee statements and the presence of his contact number in correspondence relating to M/s Rahul Traders; the Department produced no independent documentary evidence establishing his role in the import, and the goods had been seized before filing of the Bill of Entry.

The court noted that the persons said to have attended the meeting arranged by the appellant were not proceeded against, and that the penalty against Rahul Sehgal—the person treated as the importer—had been set aside by the CESTAT.

This undermined the foundation of the allegation against the appellant.

The court also found that the appellant’s specific cross-examination request had been refused, and that the CESTAT proceeded on the mistaken premise that no such request had been made.

In the absence of independent evidence, and given the treatment of the co-noticees, the penalty could not be sustained.

The High Court set aside both the CESTAT’s impugned order and the penalty order, and allowed the appeal.