2004 (9) TMI 539 - AT - Customs

Summary

Issues:
Penalties imposed under Section 112(b) of the Customs Act, 1962 on the appellant by the Commissioner of Customs for involvement in clearing imported goods without actual payment of duty and diversion of goods under Bills of Entry for warehousing.

Analysis:
1. The appeals challenged penalties imposed under Section 112(b) of the Customs Act by the Commissioner of Customs. The appellant, associated with a Customs House Agent (CHA), was involved in the affairs of the business concern. The investigation revealed imported goods were cleared without duty payment and goods under warehousing Bills were diverted. Show-cause notices were issued, resulting in the impugned orders demanding duty and imposing penalties under Sections 112(b) and 114A. Imported goods and substituted goods were held liable to confiscation under relevant sections.

2. The appellant's counsel argued that penalties should be disallowed as the basic requirement for a penalty under Section 112(b) was not fulfilled. Reference was made to previous findings indicating a lack of evidence linking the appellant to the dealing of confiscated goods. It was contended that without proof of physical involvement, penalties under Section 112(b) were unjustified.

3. The Department's representative contended that the appellant's association with the CHA's business was evident from various statements and argued that the appellant was involved in dealing with the confiscated goods. The Department expressed concern that following a previous decision could hinder penalizing wrongdoers under Section 112(b).

4. The Tribunal noted discrepancies in the citation of the penalty provision in the impugned orders and clarified that all cases were to be considered under Section 112(b). Referring to a previous decision, the Tribunal analyzed the requirements of a penalty under Section 112(b) which necessitated physical dealing or possession of goods known to be liable to confiscation. The Tribunal emphasized the doctrine of ejusdem generis to interpret the provision.

5. Relying on the doctrine, the Tribunal concluded that the appellant's actions did not meet the criteria of Section 112(b) as there was no evidence of physical dealing with the confiscated goods. The absence of such findings in the show-cause notice rendered the penalties unsustainable in law. Consequently, the Tribunal set aside the penalties and allowed the appeals in favor of the appellant, granting consequential relief.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Tribunal's reasoning leading to the decision to set aside the penalties imposed under Section 112(b) of the Customs Act.