Rakesh Magoo Vs Commissioner of Customs (Port) (CESTAT Kolkata)
Financer not liable for penalty for undervaluation of imports unless involvement proved in commission of offence: CESTAT Kolkata
In the case Rakesh Magoo vs. Commissioner of Customs (Port), the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata addressed the issue of a penalty imposed on Rakesh Magoo under Section 112(a) of the Customs Act, 1962. Magoo had acted as a financier for imports made by three firms allegedly controlled by Jitin Arora. These firms were accused of undervaluing goods such as stereo speakers and car entertainment systems to evade customs duties. The Directorate of Revenue Intelligence (DRI) conducted an investigation and, relying primarily on statements from Jitin Arora, imposed a penalty of ₹50 lakhs on Magoo, claiming he was involved in the deliberate undervaluation scheme.
Magoo denied any involvement in the misdeclaration of goods, stating that his role was limited to financing the imports. He also argued that his rights were violated as he was not granted access to critical documents such as the Bills of Entry or import invoices, nor was he allowed to cross-examine Arora, whose statement formed the primary basis for the penalty. The Tribunal found that Magoo’s admissions were limited to financing and facilitating the payment of differential duties, and no concrete evidence was presented to show that he was aware of or involved in the undervaluation practice.
