Customs Act : No penalties in absence intentional misdeeds or false valuation by a government-approved valuer.

Customs Tribunal Overturns Penalties Against Valuer in High-Profile Import Case CESTAT Eastern Zonal Bench Rules Lack of Evidence in Overvaluation Allegations Against Amit Bhutoria

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Eastern Zonal Bench in Kolkata, has set aside the penalties imposed on government-approved valuer Amit Bhutoria. The penalties were initially levied under Sections 112(a)(iii) and 114AA of the Customs Act, 1962, for alleged connivance in the overvaluation of imported goods purported to be precious and semi-precious stones.

The tribunal, comprising Judicial Member Shri R. Muralidhar and Technical Member Shri K. Anpazhakan, heard appeals numbered 75778 and 75779 of 2023. The penalties were originally upheld by the lower appellate authority based on the findings of the Directorate of Revenue Intelligence (DRI), which accused Bhutoria of facilitating trade-based money laundering through inflated valuations.

The case stemmed from intelligence reports suggesting that importers were misdeclaring low-value stones as high-value items like Blue Sapphire and Ruby, primarily from Hong Kong and Dubai. The DRI contended that Bhutoria, among others, provided false certifications to support these overvaluations.

However, the tribunal found that there was insufficient evidence to prove Bhutoria's involvement in intentional misconduct or collusion. Key to the tribunal's decision was the lack of corroborative evidence linking the stones examined by Bhutoria to those evaluated by the Geological Survey of India or any government-appointed valuer. The tribunal noted that the samples allegedly involved in the misconduct were not the same as those Bhutoria appraised.

Furthermore, the tribunal observed that the customs authorities had cleared the goods based on their valuation, not on Bhutoria's assessment. This critical gap in the evidence led to the ruling that the penalties were unsustainable.

In their detailed judgment, the tribunal highlighted the principle of presumption of innocence and the necessity for concrete evidence in imposing penalties under the Customs Act. The tribunal's decision underscores the importance of due process and thorough investigation in customs-related offenses.

The tribunal's ruling provides significant relief to Bhutoria, who maintained that his professional valuation was done in good faith and without any intention to defraud. This decision may set a precedent for similar cases where valuation discrepancies arise without clear evidence of fraudulent intent.

Bottom Line:

Penalties imposed under Sections 112(a)(iii) and 114AA of the Customs Act, 1962 cannot be sustained in absence of evidence proving intentional misdeeds or false valuation by a government-approved valuer.

Statutory provisions: Sections 112(a)(iii), 114AA of the Customs Act, 1962

Amit Bhutoria v. Commissioner of Customs (Airport & ACC), (CESTAT)(Eastern Zonal Bench: Kolkata)(Regional Bench) : Law Finder Doc Id # 2816417