2008 (2) TMI 684 - AT - Customs

Duty liability - Special Economic Zone Unit - The appellant s main contention is that the goods having been cleared against the proper CT-3 certificate and re-warehousing certificate having been received by them from 100% EOU, the duty liability cannot be fastened upon them - Held that - There is nothing on record to show, much less any allegation, that it is the appellants who had prepared forged re-warehousing certificate. On the contrary, the investigations revealed that the consignee, a 100% EOU, was indulging in preparation of forged and fake re-warehousing certificate, in which case, the appellant cannot be doubted or penalized for placing the same before the authority - the duty liability cannot be fastened upon the appellant. Penalty - Held that - there is no evidence on record to show that the appellant was in any way involved in procurement of fake and forged re-warehousing certificate or in the diversion of the goods. As such, we find no justification for imposition of penalty upon them. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Duty liability on appellant for goods cleared against forged re-warehousing certificates.
2. Imposition of penalty on the appellant.

Analysis:
1. The appellant, located in a Special Economic Zone, cleared goods against CT-3 certificate to a 100% EOU, which were later found to be diverted to the local market with forged re-warehousing certificates. The Commissioner initiated proceedings for duty realization and penalty imposition. The appellant argued that since they received proper certificates from the EOU, any duty liability should be on the EOU as per CBEC Circular No. 76/99-Cus. The Tribunal noted that the appellant did not prepare the forged certificates and cited precedents where duty liability was not imposed on manufacturers in similar cases. The Tribunal ruled that duty liability cannot be imposed on the appellant as they did not have control over the diverted goods and were not involved in the forgery. The appellant's argument was upheld based on legal principles and past decisions.

2. The Tribunal found no evidence implicating the appellant in the procurement or use of forged certificates or in the diversion of goods. Therefore, the penalty imposed on the appellant was deemed unjustified. Citing lack of proof of involvement, the Tribunal set aside the penalty. The decision was based on the absence of any connection between the appellant and the fraudulent activities related to the re-warehousing certificates. Consequently, the imposition of the penalty was considered unwarranted, and the appeal was allowed with consequential relief. The ruling highlighted the importance of establishing direct involvement or culpability before penalizing an entity in such cases.