2007 (10) TMI 460 - AT - Customs

Penalty and redemption fine - Warehoused goods - Clandestine removal - Interest - Penalty, personal penalty - Imposition of

Summary

Issues:
1. Penalty imposition on the appellants for clandestine removal of goods.
2. Redemption fine imposition by the Commissioner.
3. Demand of interest on duty.
4. Penalty imposition on the Managing Director under Section 112(a) of the Act.

Issue 1: Penalty imposition on the appellants for clandestine removal of goods:
The appellants imported Base Mineral Oil V-60 and warehoused it under a bond. Investigations revealed illegal diversion and consumption of the goods without proper procedures, leading to evasion of customs duty. The Commissioner ordered confiscation of the goods but allowed redemption on payment of a fine. The appellants contested the penalty imposition, citing case law and previous judgments. The JCDR argued that penalty under Section 114A was rightly imposed due to established mens rea. The Tribunal upheld the penalty, citing the Supreme Court's ruling in a similar case against Sony India Ltd. The penalty was sustained as the act of clandestine removal was considered a graver offense.

Issue 2: Redemption fine imposition by the Commissioner:
The appellants challenged the redemption fine, arguing that it should not be imposed when goods are not physically available for redemption. The JCDR contested this plea, referring to a Supreme Court judgment. The Tribunal considered the argument and set aside the redemption fine, stating that imposing a fine in such circumstances was not appropriate.

Issue 3: Demand of interest on duty:
The appellants contested the demand of interest on duty, claiming that the provisions of Section 28AB of the Act did not apply to their case as duty was paid before a specific date. The JCDR referred to a Board's circular to resist this claim. The Tribunal analyzed the timeline of duty payment and found that interest was not liable to be levied from the appellants. The demand of interest was set aside based on the timeline of duty payment.

Issue 4: Penalty imposition on the Managing Director under Section 112(a) of the Act:
The Managing Director contested the penalty imposition under Section 112(a), stating that mens rea was not established against him. The Tribunal agreed with the Managing Director, setting aside the penalty. It was noted that the penalty on the company did not automatically render its Managing Director liable, as no personal involvement in acts leading to confiscation was found. The penalty on the Managing Director was overturned based on the lack of evidence supporting his penal liability.

This detailed analysis of the legal judgment from the Appellate Tribunal CESTAT, Chennai, provides insights into the issues surrounding penalty imposition, redemption fine, interest on duty, and penalty on the Managing Director, offering a comprehensive understanding of the case and its legal implications.