2011 (8) TMI 1077 - HC - Customs

Diversion of imported goods - raw silk which was duty free imported goods under Advance Licence Scheme - whether penalty can be imposed based on the statements of co-accused or co-noticee in the absence of any corroborative evidences? - Held that - penalty cannot be imposed based on the statement of co-accused or co-noticee in the absence of corroborative evidence - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Confiscation of imported goods under Customs Act, 1962
2. Demand of customs duty due to wilful mis-statement and suppression of facts
3. Demand of interest under Section 28AB of Customs Act, 1962
4. Imposition of penalty under Sections 112(a) and 114A of Customs Act, 1962

Analysis:

Confiscation of Imported Goods:
The appeal before the Madras High Court stemmed from a show cause notice issued to the assessee regarding the confiscation of raw mulberry silk imported under specific licenses. The notice alleged violations under Sections 111(o) and 111(d) of the Customs Act, 1962. The Commissioner of Customs (Seaport) Chennai had confirmed the duty amount and imposed penalties, leading to the appeal before the CESTAT.

Demand of Customs Duty:
The show cause notice also demanded the customs duty, amounting to Rs. 36,50,486, which was not levied due to wilful mis-statement and suppression of facts by the importer. The demand was made under the proviso to Section 28(m) of the Customs Act, 1962. The CESTAT considered whether the notice was served on the assessee and if they were given an opportunity to be heard, ultimately ruling in favor of the assessee on these grounds.

Demand of Interest and Imposition of Penalty:
Additionally, interest under Section 28AB and penalties under Sections 112(a) and 114A of the Customs Act, 1962 were also contested in the appeal. The CESTAT examined if penalties could be imposed based on statements of co-accused without corroborative evidence. The High Court referenced a Tribunal judgment and a Supreme Court decision to support the view that penalties cannot be solely based on co-accused statements without additional evidence.

Court's Decision:
The High Court, after hearing arguments from the appellant's counsel, upheld the CESTAT's findings. It declined to consider the question of imposing penalties based on co-accused statements without corroborative evidence, citing previous legal precedents. The appeal was dismissed, emphasizing that no legal question merited further consideration as the Tribunal's decision was fact-based. No costs were awarded in the judgment.