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 “Indirect Tax I Indirect Tax Litigation I Customs & FTP I Central Licensing I Arbitration I Advisory”

Dated: 04.03.2025

CESTAT New Delhi rules that merely handling documents does not make an employee liable for customs violations

CESTAT New Delhi has overturned a ₹15 lakh penalty imposed on office assistant Shamsher Singh in an export fraud case, ruling that merely handling documents does not constitute abetment. The tribunal emphasized that low-level employees cannot be held liable for employer misconduct without clear evidence.

Case Background

Who is Shamsher Singh?

Shamsher Singh was employed as an office assistant for exporter Sajjan Kumar, earning ₹15,000 per month. His duties included:

• Delivering invoices and documents to customs brokers.
• Supervising the unloading of export cargo at Inland Container Depot (ICD), Tughlakabad.
• Handing over shipping bills to shipping lines for further processing.

The Allegations Against Him

The Directorate of Revenue Intelligence (DRI) launched an investigation into over-invoicing of carpets, garments, and fabrics by multiple exporters to fraudulently claim export incentives.

• Multiple searches were conducted, including at Shamsher Singh’s residence, but no incriminating evidence was found.
• Despite this, customs authorities alleged that Singh knew about invoice fabrication and played a role in the fraud.
• He was penalized ₹15 lakh under Sections 114(iii) and 114AA of the Customs Act, 1962, which apply to individuals involved in wrongful exports or falsification of documents.
• Singh appealed the decision, arguing that he had no role in export pricing, document preparation, or fraudulent activities.

CESTAT’s Key Observations & Findings

1. No Direct Role in Export Fraud

• Singh was not involved in document preparation, pricing, or fraud planning—his job was purely clerical.
• Delivering invoices and supervising cargo unloading does not constitute abetment under Section 114(iii).

2. Knowledge Does Not Equal Criminal Liability

• Customs authorities assumed that since Singh saw invoices being signed, he was complicit—CESTAT ruled that mere knowledge is not a crime.

3. Penalty Under Section 114(iii) Was Unjustified

• This section applies to individuals actively attempting to export goods improperly or assisting in such actions.
• The tribunal found no evidence that Singh took any such action.

4. Penalty Under Section 114AA Did Not Apply

• This section applies only if a person knowingly makes or uses false documents.
• Singh never created, altered, or used any fraudulent documents, making the penalty invalid.

Final Verdict: Penalty Revoked

• CESTAT set aside all penalties against Shamsher Singh.
• Ruled that clerical staff cannot be held liable for employer misconduct.
• Established that customs penalties must be based on clear evidence of direct involvement.

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Source: CESTAT New Delhi

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