2015 (5) TMI 955 - AT - Customs

Seizure of goods - Discrepancy in stock - Imposition of penalty - Held that - There is a clear admission statement about diversion of goods to the local market from the duty free shop. Seizure of goods have not been questioned. In such a situation, it is quite clear that the appellants are involved in diversion of duty free goods to the local market. Nevertheless, however, the entire quantity of goods have been confiscated and not allowed to be redeemed on payment of fine also. This would show that appellants have already lost the amount involved as far as the value of goods is concerned. Having regard to the fact that appellants are employees of the company and there is no evidence to show how much money they have earned by such activities, I consider that some reduction in penalty is warranted - Decided partly in favour of assessee.

Summary

Issues:
- Imposition of penalty on individuals for diversion of duty-free goods to the local market without payment of duty.
- Reduction of penalties imposed on the individuals by the Commissioner(Appeals).

Analysis:
1. Imposition of Penalty:
The case involved three individuals, including the General Manager of a duty-free shop and a senior executive, who were found to be involved in diverting duty-free goods to the local market without paying the required duty. The appellant General Manager was penalized for devising a plan to clear goods from the bonded warehouse without duty payment. Seizures of goods, including liquor bottles and a television, were made from the individuals' residences. The Commissioner(Appeals) noted discrepancies in stock at the duty-free shop and the confession of involvement in clandestine activities by the senior executive. The evidence indicated a systematic diversion of goods meant for international passengers to local buyers, with proceeds being deposited in the shop's account.

2. Reduction of Penalties:
Upon considering the submissions and evidence, the judge found clear admissions of diverting duty-free goods to the local market by the appellants. While the confiscation of goods had already resulted in a loss for the individuals, the judge acknowledged the lack of evidence regarding the exact earnings from these activities. Consequently, a reduction in the penalties imposed was deemed appropriate. The penalty for the General Manager was reduced to Rs. 25,000, while the penalties for the senior executive and the individual involved in real estate were reduced to Rs. 12,500 each. The reduction in penalties was based on the circumstances and the lack of clarity regarding the financial gains from the diversion activities.

In conclusion, the judgment addressed the issue of diverting duty-free goods to the local market without payment of duty, leading to penalties imposed on the involved individuals. The reduction in penalties reflected a balance between acknowledging the wrongdoing and considering the lack of evidence regarding the financial gains from the illegal activities.