Penalties on Alleged Masterminds Fail Without Corroboration of Co‑Accused Statements: CESTAT Ahmedabad

CESTAT Ahmedabad set aside ₹25 lakh penalties each on two persons accused of masterminding betel nut imports concealed behind scrap, finding no corroborated evidence of their role or of the alleged forgery.

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad, has set aside penalties of ₹25 lakh each on two persons described by the Department as masterminds of a smuggling operation. It held that the case against them was far from proved, and that the mens rea and connection needed to establish a conspiracy were missing [Sanjay Shah & Ors. v. Commissioner of Customs-Mundra, 2026-juristway.com-3320-CESTAT(Ahmedabad)-Customs].

The appeals were decided by Somesh Arora, Member (Judicial). Four containers imported in the name of Radhika Impex were found to hold jumbo PP bags of betel nuts concealed behind heavy melting scrap. Sanjay Shah, a director of a metal scrap trading company, and Ramnarayan S. Laddha were penalised. The importer on record was penalised ₹10 lakh and was not before the Tribunal.

The appellants argued that the case rested on statements of co-noticees, some retracted, with no documentary corroboration. They said the investigation of another firm, Bhagyoday Enterprise, had been used without linking it to this import, and that cross-examination of key witnesses had been refused. They also denied financing or arranging the import, or creating a forged Axis Bank certificate.

The Tribunal found several infirmities. The statement of the importer’s proprietor, the most crucial witness, was not on record because he was absconding, so the investigation could not be called conclusive. The chain of evidence depended heavily on the Bhagyoday investigation without a proper connection, and the statements had not been tested by cross-examination. The alleged forgery was not established by any handwriting or computer expert. The certificate had been seized from the customs broker’s computer, so under Section 138C the presumption was that it belonged to the broker.

Neither appellant had held himself out as the owner or importer of the consignment. The penalties were set aside and both appeals were allowed.

2026-juristway.com-3320-CESTAT(Ahmedabad)-Customs