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2026 Supreme(Online)(CESTAT) 2040

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Vikash Kumar – Appellant
Versus
Commissioner of Customs (Airport & A.C.C.) – Respondent
Customs Appeal No. 76686 of 2025 | Customs Appeal No. 76751 of 2025

Advocates:
For the Appellants/Petitioners: A.K. Patnaik
For the Respondents: S. Chitkara, S. Debnath

Penalties under the Customs Act require establishing active involvement, mens rea, and knowledge of the illegal act through cogent, admissible evidence. Allegations based on untested statements or vague associations are insufficient for penal liability, as suspicion cannot substitute for the strict legal proof required for civil consequences.

Headnote:(A) Customs Act, 1962 - Sections 111, 112(a), 112(b), and 138B - Penalty for improper importation - Imposition of penalty on public officer purely on basis of unsubstantiated statements and alleged association - Necessity of establishing mens rea and active involvement - Whether penalty under Section 112 is sustainable in absence of cogent evidence and non-compliance with Section 138B regarding cross-examination of witnesses. (Paras 12.5, 13.6, 15.1, 15.4)

(B) Evidence - Admissibility - Requirement of cross-examination under Section 138B of the Customs Act - Statements of witnesses not affirmed through cross-examination cannot serve as sole basis for penal action - Suspicion, however grave, cannot replace legal proof. (Paras 13.6, 15.5)

Facts of the case:
The appellant, a public official, challenged the imposition of penalties under Section 112 of the Customs Act, 1962. The Revenue alleged his involvement in a smuggling syndicate based on statements from a third party and the supposed discovery of personal items belonging to a co-noticee near smuggled goods. The appellant contended he had no connection to the imports, was not posted at the cargo facility, and that the Revenue failed to prove any nexus through legal evidence.

Findings of Court:
The Court observed that the Revenue relied on statements that were not tested via cross-examination as mandated by law. Furthermore, the alleged nexus between the appellant and the smuggling activities was based on assumptions rather than concrete evidence. The Court noted irregularities in the investigation, specifically regarding the handling of seized consignments, and concluded that the essential ingredients for penalty—knowledge, mens rea, and active involvement—were absent.

Issues: Whether the Customs authorities correctly invoked Section 112 to impose penalties on the appellant; whether the evidence adduced by the Revenue met the legal threshold for establishing abetment or concealed involvement in smuggling.

Ratio Decidendi: Penalties under Section 112 require clear, tangible evidence of knowledge and active participation in the improper importation or handling of prohibited goods. Absent such evidence, and failing to provide witnesses for cross-examination as required by Section 138B, the Revenue cannot sustain a penalty based on mere supposition or peripheral association.

Result: Appeals allowed; penalties set aside.

Table of Content
1. factual overview of smuggling allegations and initiation of penalties. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17)

ORDER: [PER SHRI K. ANPAZHAKAN]

Shri Vikash Kumar, S/o. Bagishwar Sharma, Deputy Commissioner, G.S.T. Commissionerate, Flat No. 7-B-1, Area-I, Shrachi Greenwood Elements, Rajarhat, New Town, Kolkata – 700 157 (West Bengal) [hereinafter referred to as the “appellant”] has filed the present appeals challenging the imposition of penalties of Rs.10,00,000/- (Rupees Ten Lakhs only) and Rs.5,00,000/- (Rupees Five Lakhs only) under Section 112(a) and (b) of the Customs Act, 1962 on him vide the Order-in-Original No. KOL/CUS/A&A/Pr. COMMISSIONER/ADJN/11/2025 and Order-in Original No. KOL/CUS/A&A/Pr. COMMISSIONER/ADJN/12/2025 both dated 25.06.2025 passed by the Principal Commissioner of Customs (Airport & A.C.C.), Kolkata.

Brief facts of the cases are that acting on specific intelligence gathered by the Special Investigation Branch (SIB) of Airport & A.C.C. Commissionerate, Kolkata, it was revealed that 05 consignments [live consignments] (in respect of Appeal No. C/76686/2025) and 26 consignments (C/76751/2025) had been removed without complying with the established procedure and payment of legitimate Customs Duty thereon, for which separate proceedings have been initiated by the Revenue. The investigating agency alleged the involvement of the Airport Authority of India/AAICLAS staff and staff of Ground Handling Agency, namely, M/s. Bhadra International India Limited (BIIL) in the modus operandi, amongst others, thereby leading to evasion of huge Customs Duty and loss to the government exchequer.

Five (05) live consignments:

The Revenue alleged clandestine removal of goods from the Customs Area without complying with the established procedure at ACC, Kolkata in respect of 05 live consignments, which are as under:-

(i) Air Way Bill No. 17658439592

(ii) Air Way Bill No. 17656329022

(iii) Air Way Bill No. 17656233004

(iv) Air Way Bill No. 176 5191 8716

(v) Air Way Bill No.17656389023

It has been alleged that restricted and prohibited goods were imported in the name of normal goods and subsequently they were concealed and removed from the ACC Customs area at Kolkata without filing Bills of Entry.

(I) Air Way Bill No.17658439592

(a) The goods declared as Wall Paper (2578 KG) imported under the IEC holder namely M/s. KEI Industries Ltd. were seized on 18.08.2017, which on examination were found to be Cigarettes (22,86,540 sticks) of different foreign brands having estimated assessable value of Rs. 1,82,08,540/- that having chargeable duty of Rs. 2,27,97,196/-.

(b) The investigation revealed that the IEC was used by the fraudsters without the knowledge of its owner. Therefore the importer (IEC holder) i.e. M/s. KEI Industries Ltd. has been absolved by the previous adjudicating authority vide Order in Original No. KOL/CUS/COMMISSIONER//AP/Admn./21/2018 dt. 06.09.2018.

(II) Air Way Bill No.17656329022

(a) The goods declared as Mobile Phones/Accessories (2609 KG) imported under the IEC holder namely M/s Arcturus System Pvt. Ltd. were seized on 06.09.2017, which on examination were found to be "Branded shoes, Branded sandals, Branded watches, Branded Mobiles, Mobile Batteries, Electronic wrist bands/bracelet, Ladies handbag with "remote, battery and circuit inside", Microphone, Car keys, Remotes, Resistor, Adhesive tapes etc." having estimated assessable value of Rs. 2,28,32,500/- that having chargeable duty of Rs. 65,12,773/-.

(b) The said consignment was also containing goods that were reported to be poker game cheating instruments used for doing frauds during the game of poker for gambling purpose, which has rendered the goods to be prohibited in nature under section 11 of Customs Act, 1962.

(c) Further, the said consignment was again re-examined on 04.12.2017 on some intelligence, where upon after opening 06 nos. LCD screen separators, 35205 nos. of memory cards were found concealed inside, whose

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2026 Supreme(Online)(CESTAT) 2040

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALAshok Jindal, Judicial Member, K. Anpazhakan, Technical MemberVikash Kumar – AppellantVersusCommissioner of Customs (Airport & A.C.C.) – RespondentCustoms Appeal No. 76686 of 2025 | Customs Appeal No. 76751 of 2025

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
Vikash Kumar – Appellant
Versus
Commissioner of Customs (Airport & A.C.C.) – Respondent
Customs Appeal No. 76686 of 2025 | Customs Appeal No. 76751 of 2025