Asheesh Chatterjee Vs Commissioner of Customs (CESTAT Chennai)
The CESTAT Chennai examined the sustainability of a penalty of ₹15 lakh imposed under Section 112(a) of the Customs Act, 1962 on a former Chief Finance Officer of an importing company. The penalty arose from an investigation into imports of recorded media containing foreign feature films, where customs duty had been paid only on the value of the physical media, without including licence or royalty fees paid to overseas suppliers. The Directorate of Revenue Intelligence alleged intentional suppression of value and proposed penalties on both the importer and the appellant, alleging abetment of duty evasion.
The Tribunal noted that while the show cause notice sufficiently referred to the ingredients of Section 112(a) and (b), the core issue was whether the appellant had “abetted” the acts rendering the goods liable to confiscation. Relying on settled law, the Tribunal held that although mens rea is not required for persons directly committing acts or omissions under Section 112(a), abetment necessarily requires knowledge and intentional aid, instigation, or conspiracy.
On facts, the Tribunal found that neither the show cause notice nor the adjudication order demonstrated how the appellant knowingly instigated, aided, or conspired in undervaluation. The finding that the appellant failed to exercise due care and diligence amounted, at best, to negligence, which does not meet the legal threshold of abetment. The Tribunal further noted the absence of admissible evidence establishing knowledge or intentional assistance. Consequently, the penalty imposed on the appellant under Section 112(a) was held unsustainable and was set aside, while granting consequential relief.
