No Evidence Linking His Valuation to Alleged Stone Over-Invoicing: CESTAT Quashes Penalties on Govt-Approved Valuer
Sangeetha Prathap
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata has granted major relief to Government-approved valuer Amit Bhutoria by quashing penalties aggregating to ₹1.80 crore imposed on him under Sections 112(a)(iii) and 114AA of the Customs Act, 1962 in connection with an alleged over-valuation racket involving rough precious and semi-precious stones. The Bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) held that the penalties were unsustainable as the Department failed to establish any evidence showing that Bhutoria’s valuation reports were relied upon by Customs authorities or that his valuations facilitated a misdeclaration or trade-based money laundering attempt.
The Directorate of Revenue Intelligence (DRI) had alleged that importers sourced rough stones such as sapphires and rubies from Hong Kong and Dubai and artificially inflated their declared values to illegally transfer funds overseas. Bhutoria, being a Government-certified valuer, was accused of aiding the importers by issuing valuation certificates allegedly supporting inflated invoices. Two adjudication orders issued in May and June 2022 imposed substantial penalties on him, and the Commissioner (Appeals), through orders dated June 2023, partly upheld the penalties. The total penalty confirmed was ₹1.80 crore across two appeals.
During the hearing before the Tribunal, it emerged that the valuation reports issued by Bhutoria were not used by the customs officers for assessing the goods at the time of import. The Tribunal noted that the goods in question were cleared based on independent assessments carried out by customs officials and not on the basis of Bhutoria’s reports. It found that there was “nothing on record to show that the appellant derived any benefit or intentionally assisted the importers” and that the allegation of connivance was “baseless and unsupported by evidence.”
Another significant factual finding was that the samples on which the DRI relied were stones allegedly recovered from roadside locations through another accused and were not the same stones examined and valued by Bhutoria. The Tribunal observed that this disconnect undermined the Department’s theory that the valuer knowingly issued reports relating to inflated goods. Since the statutory requirements for invoking Sections 112(a)(iii) and 114AA require proof of intentional abetment or use of false or incorrect materials to facilitate evasion, the Tribunal held that the record did not disclose any ingredient of deliberate assistance, misrepresentation, or wrongful gain attributable to the valuer.
The Tribunal emphasized that mere issuance of a valuation certificate, without any material indicating that the certificate was used to effect clearance or that the valuer knowingly participated in a fraudulent design, cannot trigger penal liability. It concluded that the penalties had been imposed on assumptions and not on evidence, and that negligence, even if presumed, could not substitute the legal requirement of intention embedded in Section 112(a)(iii) and Section 114AA.
Allowing the appeals in both penalty matters, the Tribunal ordered: “Penalties imposed on the appellant under Sections 112(a)(iii) and 114AA of the Customs Act are set aside. Appeals allowed with consequential relief.”
Appearance
Counsel For Petitioner: V.N. Dwivedi and Smt. Jayanti Char
Counsel For Respondent: Ashwini Kr. Choudhary
Cause Title: Amit Bhutoria Versus Commissioner of Customs (Airport & ACC)
Case No: Customs Appeal No. 75778 of 2023
Coram: R. Muralidhar (Judicial Member), K. Anpazhakan (Technical Member)
