Red Sanders Replaced Part Of Excise-Sealed Wire Cargo En Route; CESTAT Sets Aside Exporter’s Penalty For Lack Of Evidence

Panel Pin Manufacturing Company Pvt. Ltd. arranged to export steel wire to a Chinese buyer through Bipul Saha, who undertook export logistics.

The wire was loaded into a container and sealed at the company’s factory under the supervision of Central Excise officers. When the container was intercepted en route to the port, it contained 7,260 kg of wire and 8,940 kg of red sanders logs; the balance of the wire was missing.

The company and its director, Rakesh Doshi, said they had been defrauded and had filed an FIR against Saha and others.

The Customs adjudicating authority imposed penalties on the company and Doshi, and on Pradip Deb and Amar Chandra Roy, and confiscated the wire under Section 119 of the Customs Act, 1962, subject to a redemption fine of ₹3,15,000.

The appellants challenged those findings before the Tribunal.

Under Section 114(i) of the Customs Act, a penalty requires proof that a person did or omitted to do an act in relation to goods that rendered them liable to confiscation under Section 113, or abetted such an act.

Section 114AA applies where a person knowingly or intentionally makes, signs, uses, or causes the use of a declaration, statement, or document that is false or incorrect in a material particular.

Section 119 makes goods used to conceal smuggled goods liable to confiscation, while Section 125 provides for redemption of confiscated goods on payment of fine.

The Tribunal relied on these statutory provisions and the evidence on record; it did not base its decision on a cited precedent.

The Tribunal found that the wire was loaded and the container sealed under Central Excise supervision at the factory, and that the replacement of some of the wire with red sanders occurred during transport. It found no evidence connecting the company or Doshi to that substitution or establishing their connivance; the adjudicating authority’s findings that Doshi had dealt imprudently with Saha did not establish the acts or abetment required by Section 114(i).

Nor was there evidence that Doshi knowingly or intentionally used a false purchase order, as required by Section 114AA.

The Tribunal also found no evidence that Deb or Roy knowingly participated in the smuggling or belonged to the smuggling syndicate; their roles as intermediaries in the export arrangements did not, on this record, establish liability under Section 114(i).

Because the wire was exported from the factory under official supervision and was not shown to have been used to conceal the red sanders, the Tribunal held that the wire was not liable to confiscation under Section 119 and that the related redemption fine could not stand.

It also set aside the redemption fine imposed on the wire.

The order does not expressly set aside the confiscation of the red sanders; the relief stated concerns the appellants’ penalties and the fine relating to the wire.