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Issues:
1. Imposition of penalty under Sec. 112B of the Customs Act on the Managing Director for contraventions related to Notification No. 13/81-Cus. Analysis: 1. The appeal questioned the imposition of a penalty of Rs. 2 lakhs on the Managing Director for not fulfilling the terms of Notification No. 13/81-Cus. The company, a 100% EOU, failed to set up a factory and carry out manufacturing and export activities as required. The Department initiated proceedings for recovery of customs duty, confiscation, and penalty. The appellant argued that the Managing Director did not commit any personal offense warranting a penalty. 2. The appellant cited previous judgments where penalties on Managing Directors were set aside, emphasizing that the Managing Director did not expose himself to penal action as the goods were intact and unused. On the other hand, the SDR referenced a case where a penalty on a Managing Director was upheld for failing to meet export performance requirements. 3. The Tribunal observed that penalties on Managing Directors, in addition to penalties on companies, were unjustified without evidence of their involvement in the offense. In this case, as the imported goods were unused and not sold against the EXIM policy, the penalty on the company was deemed justified. For a personal penalty on the Managing Director, evidence of connivance in the offense was required, which was lacking. Therefore, the personal penalty was set aside, following precedents where penalties on Managing Directors were overturned due to insufficient evidence of their involvement in the offenses. 4. The Tribunal distinguished the present case from the one cited by the SDR, where the Managing Director was involved in not meeting export obligations. As such circumstances were not present in the current case or the cases cited by the Counsel, the personal penalty on the Managing Director was revoked, and the appeal was allowed.
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