Sole Reliance on Retracted and Untested Statements Impermissible: CESTAT Sets Aside Penalty on Diamond Broker in Overvaluation Case

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has set aside a penalty imposed on a diamond broker, ruling that sole reliance on retracted and untested statements is impermissible. The broker was accused of facilitating overvaluation of diamonds to remit excess foreign exchange. The penalty was initially imposed under Section 112(a) of the Customs Act but was contested on the grounds that the statements were retracted and not subjected to cross-examination. CESTAT emphasized that penalties cannot be based on assumptions or presumptions without corroborative evidence. This decision underscores the importance of due process and the need for reliable evidence in customs-related adjudications.