2006 (2) TMI 523 - AT - Customs

Summary

Issues:
- Imposition of penalty under Section 114 of the Customs Act, 1962 based on the show cause notice invoking Section 112
- Allegations of fraudulent activities related to the DEEC Scheme for Silk Yarn
- Challenge to the impugned order by the appellant
- Legal arguments regarding the scope of the show cause notice and the imposition of penalty
- Review of the records and decision on the sustainability of the Order-in-Original

Analysis:
The appellant was accused of engaging in fraudulent activities under the DEEC Scheme for Silk Yarn, involving the export of goods by importing them back through E.O.Us to clear them duty-free, allegedly in collusion with an Inspector of Central Excise. The Adjudicating authority imposed a penalty of Rs. 20 lakhs under Section 114(1) of the Customs Act, 1962. The appellant challenged this order, leading to the appeal before the Tribunal.

During the proceedings, the appellant's counsel argued that the show cause notice invoked Section 112 for penalty imposition, but the lower authority exceeded its scope by applying Section 114. The counsel highlighted that as duty demand was dropped, no penalty could be levied under Section 112. The appellant's counsel also contended that the case laws cited by the Commissioner were irrelevant to the case facts. On the other hand, the Departmental Representative supported the penalty imposition under Section 114 by the Commissioner.

Upon careful review of the case records, the Tribunal found a serious error in not invoking Section 114 in the show cause notice, rendering the Order-in-Original unsustainable. The Tribunal concluded that the inclusion of Section 114 in the Order-in-Original went beyond the notice's scope, leading to the appeal being allowed with consequential relief. The judgment was pronounced on 13-2-2006 after completion of the hearing.